<PAGE> 1
DEFINITIVE COPIES
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):
(X) $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:
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(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 0-11 (1):
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(4) Proposed maximum aggregate value of transaction:
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( ) 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:
- 0 -
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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, 1996
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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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<PAGE> 2
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Tellabs, Inc., 4951 Indiana Avenue, Lisle, Illinois 60532
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Notice of Annual Meeting of Stockholders To Be Held April 25, 1996
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The Annual Meeting of Stockholders of Tellabs, Inc., a Delaware
corporation, will be held on Thursday, April 25, 1996, 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 three directors to serve until the 1999 Annual Meeting
of Stockholders; and
2. 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
28, 1996, 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, 1996
<PAGE>
<PAGE> 3
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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 Thursday,
April 25, 1996.
Only stockholders of record as of the close of business on February
28, 1996, will be entitled to notice of and to vote at the meeting. At
the close of business on that date, the Company had 88,875,441 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 FOR the election of directors.
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. 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 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
<PAGE>
<PAGE> 4
be present and entitled to vote with respect to the election of
directors. 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 given will
thus have no effect on the election of directors. Shares cannot be
voted for more than three nominees; there is no right to cumulative
voting.
A separate notice of stockholders meeting, proxy statement and proxy
will be provided to each participant in the Tellabs Advantage Program
(the "Program"). Pursuant to the Program, each participant is entitled
to direct the trustee with respect to voting of the shares of common
stock allocated to the participant's accounts. Subject to its fiduciary
duties, the trustee will vote allocated shares in accordance with the
instructions received, and will vote shares with respect to which no
instructions are received in the same proportions as the shares with
respect to which instructions are received. Program participants should
return the proxy as directed therein. Pursuant to the Program, the
trustee will not disclose the directions set forth on the proxy to the
Company or its directors or officers, except as may otherwise be
required by law.
A copy of the Annual Report of the Company for the fiscal year ended
December 29, 1995, 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, 1996.
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Election of Directors
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Effective January 1, 1996, the Board of Directors amended the bylaws
of the Company to increase the number of directors from eight to nine.
Ms. Stephanie Pace Marshall was elected to the Board to fill the vacancy
thus created and to serve until the 1996 Annual Meeting of Stockholders.
Mr. Robert P. Reuss, previously a Class I director and a director of the
Company since 1985, has informed the Company that he will not stand for
re-election to the Board, although Mr. Reuss has agreed to continue his
relationship with the Company as "Director Emeritus." Therefore,
effective as of the 1996 Annual Meeting of Stockholders, the bylaws will
<PAGE>
<PAGE> 5
be amended to reduce the numbers of directors from nine to eight.
The Company has three classes of directors, with staggered terms,
with the members of each class serving three-year terms. At this
Annual Meeting, the terms of the Class I directors will expire.
The three nominees for Class I director are Brian J. Jackman,
Stephanie Pace Marshall and William F. Souders. Each of the nominees is
currently a Class I director of the Company. These persons have been
nominated for election to three-year terms expiring in 1999 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 II and Class III
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.
<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
Principal Occupation or Employment Director
Name Age for Past Five Years Since
- --------------------------------------------------------------------------------------------------------
Nominees For Election Whose Terms Will Expire In 1999
<S> <C> <C> <C>
Brian J. Jackman 54 President, since 1993, Tellabs Operations, Inc.; 1993
Executive Vice President, 1990-present,
Tellabs, Inc.
Stephanie Pace Marshall 50 Executive Director, since 1986, Illinois 1996
Mathematics and Science Academy
William F. Souders 67 Chairman and Chief Executive Officer, 1988-1989 1990
(retired), Emery Air Freight Corporation
(air freight carrier); formerly Executive Vice
President, Xerox Corporation (business machines
and systems)
Class III Directors Continuing in Office Until 1998
Michael J. Birck 58 President and Chief Executive Officer, Tellabs, Inc. 1975
Frederick A. Krehbiel 54 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. 71 Director of Engineering Studies (retired), 1988
University of Puget Sound; Professor (retired),
University of Washington
Peter A. Guglielmi 53 President, since 1993, Tellabs International, Inc.; 1993
Executive Vice President, Chief Financial Officer,
1990-present, Secretary, 1988-1993, Treasurer,
1988-present, Tellabs, Inc.
<PAGE>
<PAGE> 7
Thomas H. ("Tommy") Thompson 68 Chairman of the Board, 1990-1991, President and 1987
Chief Executive Officer, 1989-1991 (retired),
Bio-Recovery Systems, Inc. (industrial waste water
treatment systems); formerly President, Rio Grande
Technology Foundation (educational and economic
development research); formerly Vice President,
AT&T Information Systems, Inc. (telecommunications)
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</TABLE>
Mr. Birck is currently also a director of USF&G Corporation, Molex
Incorporated, 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. Ms. Marshall is a director of CBI Industries,
Inc. Mr. Guglielmi is a director of The Cherry Corporation and Internet
Communications Corporation. Mr. Jackman is a director of Universal
Electronics Inc. and Advanced Fibre Communications, Inc. No director
has any family relationship with any other director.
The Board of Directors has a standing Audit Committee, the members
of which are 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, during 1995, were Messrs.
Foulkes, Krehbiel, Reuss, Souders and Thompson. Effective January,
1996, Ms. Marshall became a member of the Compensation Committee. 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 1995, seven meetings of the Board
of Directors, one meeting of the Audit Committee and four 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 each director served during
fiscal 1995.
<PAGE>
<PAGE> 8
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Security Ownership of Management and Certain Other Beneficial Owners
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The table below sets forth certain information as of February 28,
1996, 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>
- ------------------------------------------------------------------------
Beneficial Amount of
Name Ownership Percent (1)
- ------------------------------------------------------------------------
<S> <C> <C>
Michael J. Birck (2) 10,256,041 (3) 11.1%
Charles C. Cooney 893,714 (4) *
Peter A. Guglielmi 252,976 (5) *
Brian J. Jackman 215,271 (6) *
Frederick A. Krehbiel 84,000 (7) *
Robert P. Reuss 39,200 (8) *
Jon C. Grimes 36,348 (9) *
William F. Souders 36,000 (10) *
Thomas H. ("Tommy") Thompson 19,100 (11) *
John D. Foulkes, Ph.D. 15,200 (12) *
Stephanie Pace Marshall 0 *
All current executive officers 12,313,188 (14) 13.4%
and directors as a group
(19 persons) (13)
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</TABLE>
(1) Based on 88,875,441 shares of common stock outstanding as of
February 28, 1996, and 3,280,739 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 19, 1995.
<PAGE>
<PAGE> 9
(2) The address of Mr. Birck is 4951 Indiana Avenue, Lisle, Illinois
60532.
(3) Includes 792,000 shares held by Mr. Birck's wife. Mr. Birck
disclaims beneficial ownership of such shares.
(4) Includes 807,286 shares held by Mr. Cooney as trustee of a trust
and 86,250 shares which Mr. Cooney has rights to acquire under
stock options either currently exercisable or exercisable within 60
days of February 28, 1996.
(5) Includes 229,000 shares which Mr. Guglielmi has rights to acquire
under stock options either currently exercisable or exercisable
within 60 days of February 28, 1996.
(6) Includes 195,000 shares which Mr. Jackman has rights to acquire
under stock options either currently exercisable or exercisable
within 60 days of February 28, 1996.
(7) Includes 6,000 shares which Mr. Krehbiel has rights to acquire
under currently exercisable stock options.
(8) Includes 18,000 shares which Mr. Reuss has rights to acquire under
currently exercisable stock options.
(9) Includes 60 shares held by Mr. Grimes' daughter. Mr. Grimes
disclaims beneficial ownership of such shares. Also includes
35,000 shares which Mr. Grimes has rights to acquire under stock
options either currently exercisable or exercisable within 60 days
of February 28, 1996.
(10) Includes 18,000 shares which Mr. Souders has rights to acquire
under currently exercisable stock options.
(11) Includes 12,000 shares which Mr. Thompson has rights to acquire
under currently exercisable stock options.
(12) Includes 3,200 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 6,000 shares
which Mr. Foulkes has rights to acquire under currently exercisable
stock options.
(13) 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.
(14) Includes 795,260 shares of which Messrs. Birck, Grimes and Foulkes
disclaim beneficial ownership as noted above. Also includes
950,350 shares which certain officers have rights to acquire under
stock options either currently exercisable or exercisable within 60
days of February 28, 1996. Also includes 60,000 shares which
certain outside directors have rights to acquire under stock
options, as noted above.
<PAGE>
<PAGE> 10
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Executive Compensation
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The table below sets forth certain information for fiscal years
1995, 1994 and 1993 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 1995 (collectively, the "Named Executive
Officers") for services in all capacities to the Company and its
subsidiaries.
<PAGE>
<PAGE> 11
<TABLE>
<CAPTION>
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Summary Compensation Table
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Long Term
Compensation
Annual Compensation Awards
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Name Securities
and Other Underlying
Principal Annual Options/ All Other
Position Year Salary Bonus Compensation(1) SARs #(2) Compensation(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Birck 1995 $341,354 $150,000 $ 18,621 0 $129,351
President ----
and Chief Executive Officer 1994 $317,304 $165,000 $ 13,036 0 $110,429
----
1993 $291,339 $ 90,000 $ 10,250 0 $ 98,131
----
Brian J. Jackman 1995 $234,808 $110,000 $ 13,519 20,000 $ 54,970
President, ----
Tellabs Operations, Inc. 1994 $220,385 $115,000 $ 10,908 0 $ 48,414
----
1993 $204,808 $ 63,000 $ 7,484 80,000 $ 26,159
----
Peter A. Guglielmi 1995 $234,808 $100,000 $ 12,797 20,000 $ 44,583
President, ----
Tellabs International, Inc. 1994 $220,385 $115,000 $ 8,463 0 $ 40,066
and Chief Financial Officer ----
1993 $204,808 $ 63,000 $ 7,348 80,000 $ 24,328
----
Charles C. Cooney 1995 $158,922 $ 65,000 $ 8,587 10,000 $ 22,561
Vice President, ----
Sales and Service, 1994 $153,462 $ 80,000 $ 5,370 0 $ 18,819
Tellabs Operations, Inc. ----
1993 $148,269 $ 70,000 $ 6,332 40,000 $ 17,863
----
<PAGE>
<PAGE> 12
Jon C. Grimes 1995 $163,269 $ 52,000 $ 5,211 10,000 $ 26,524
Vice President and General Manager, ----
Network Access Systems Division, 1994 $158,154 $ 56,000 $ 4,570 0 $ 23,585
Tellabs Operations, Inc. ----
1993 $151,231 $ 46,200 $ 4,751 40,000 $ 17,952
----
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</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
for 1995 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 $21,568,
$15,528, $20,294, $4,500 and $6,000 for Mr. Birck; $22,358, $8,282,
$13,830, $4,500 and $6,000 for Mr. Jackman; $19,681, $3,737,
$10,665, $4,500 and $6,000 for Mr. Guglielmi; $0, $0, $12,061,
$4,500 and $6,000 for Mr. Cooney; and $6,766, $2,143, $7,115, $4,500
and $6,000 for Mr. Grimes. All Other Compensation for 1995 for Mr.
Birck also includes $61,461, which represents the present value to
Mr. Birck of premiums paid by the Company with respect to a split
dollar life insurance arrangement between the Company and Mr. Birck.
The present value was calculated as an interest-free loan of the
whole life portion of the premium over the maturation of the policy.
Mr. Birck pays the term portion of the premium.
2. Figures reflect the effect of the 2-for-1 stock split in the form of
a stock dividend effective May 19, 1995.
The table below sets forth certain information with respect to stock
options granted during fiscal 1995 to the Named Executive Officers under
the Company's employee stock option plans.
<PAGE>
<PAGE> 13
<TABLE>
<CAPTION>
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Options/SAR Grants in Last Fiscal Year
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Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants(1) Option Term(2)
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% of Total
Options/SARs
Options/SARs Granted to Exercise or
Granted Employees Base Price Expiration
Name (#)(1) in Fiscal Year ($/Share) Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Birck -0- N/A N/A N/A N/A N/A
Brian J. Jackman 20,000 4.8% $33.375 4/25/05 $420,525 $1,061,325
Peter A. Guglielmi 20,000 4.8% $33.375 4/25/05 $420,525 $1,061,325
Charles C. Cooney 10,000 2.4% $33.375 4/25/05 $210,263 $ 530,663
Jon C. Grimes 10,000 2.4% $33.375 4/25/05 $210,263 $ 530,663
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</TABLE>
1. All options reported were granted on April 25, 1995 (and have been
adjusted to reflect the 2-for-1 stock split in the form of a stock
dividend effective May 19, 1995) and become exercisable in
cumulative annual installments of 25% of the shares covered thereby
on each of the first, second, third and fourth anniversaries of the
grant date. No stock appreciation rights were granted during fiscal
1995.
<PAGE>
<PAGE> 14
2. The amounts set forth represent the value that would be received by
the Named Executive Officer upon exercise of the option on the date
before the expiration date of the option based upon assumed annual
growth rates in the market value of the Company's common stock of 5%
and 10%, rates prescribed by applicable Securities and Exchange
Commission rules. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Company's common
stock and other factors such as the general condition of the stock
markets and the timing of the exercise of the options. The Company
did not use an alternative formula for a potential realizable value
as the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or
volatile factors.
The table below sets forth certain information with respect to
options and SARs exercised by the Named Executive Officers during fiscal
1995 and with respect to options and SARs held by the Named Executive
Officers at the end of fiscal 1995.
<PAGE>
<PAGE> 15
<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 ($)(2)
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Number of Securities
Underlying Options/ Value Realized
Name SARs Exercised (#)(1) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Birck 50,000 $1,235,938 0 0 $ 0 $ 0
Brian J. Jackman 15,000 $ 443,750 195,000 90,000 $6,341,665 $2,170,625
Peter A. Guglielmi 195,000 $6,055,836 239,000 90,000 $8,020,934 $2,170,625
Charles C. Cooney 0 $ 0 113,750 41,250 $3,722,889 $ 958,047
Jon C. Grimes 40,000 $ 825,938 40,000 45,000 $1,288,437 $1,085,313
- ---------------------------------------------------------------------------------------------------------------------------
</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 19, 1995.
2. The value of unexercised options and SARs at the end of fiscal 1995
is based on the closing price of $37.00 reported on the Nasdaq
National Market System ("Nasdaq/NMS") on December 29, 1995, the last
trading day of fiscal 1995.
<PAGE>
<PAGE> 16
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Employment Agreements
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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.
<PAGE>
<PAGE> 17
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Director Compensation
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During 1995, each director who is not an officer of the Company was
paid an annual retainer of $15,000 plus a fee of $1,500 and expenses for
each Board of Directors meeting attended. 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 10,000 shares of
the Company's stock and, provided such person is still serving as a non-
employee director, automatically will be granted options to purchase
6,000 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, the 2-for-1 stock split in the
form of a stock dividend effective May 20, 1994, and the 2-for-1 stock
split in the form of a stock dividend effective May 19, 1995. During
1995, the Board of Directors amended the 1987 Plan to reduce the number
of shares in the initial grant from 30,000 to 10,000.
The options for the initial 10,000 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 or her. 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.
<PAGE>
<PAGE> 18
- ------------------------------------------------------------------------
Compensation Committee Interlocks and Insider Participation
- ------------------------------------------------------------------------
All decisions regarding the compensation of the executive officers
of the Company 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.
During 1995, Mr. Birck became a director of Molex Incorporated and is a
member of its compensation committee. Mr. Krehbiel is the chief
executive officer of Molex Incorporated and served on the Company's
Compensation Committee during 1995.
Under final Internal Revenue Service ("IRS") rules which become
applicable to the Company during 1996, Mr. Krehbiel may no longer
qualify as an "outside director" for purposes of Internal Revenue Code
("Code") Section 162(m) due to business transactions in the ordinary
course between the Company and Molex Incorporated. As a result, the
Board of Directors appointed Ms. Marshall to the Compensation Committee
in January 1996 to replace Mr. Krehbiel to maintain the Compensation
Committee's status as a committee of "outside directors" under the IRS
rules so that awards made by the Compensation Committee under the
Company's stock option plans will qualify as "performance-based
compensation" not subject to the tax deduction limitation of Code
Section 162(m).
<PAGE>
<PAGE> 19
- ------------------------------------------------------------------------
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.
In determining base salaries for the executive officers, including
the Named Executive Officers, for 1995, 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 1995 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.
<PAGE>
<PAGE> 20
For 1995, 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 (which were each given equal weight) were (i) the achievement
of substantial progress toward becoming a more global organization; (ii)
the achievement of ISO 9001 certification for the Company's Illinois
facilities; and (iii) the establishment of certain people management
programs.
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.
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 programs 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 granted options to each of the executive
officers, including the Named Executive Officers other than Mr. Birck,
during fiscal 1995 in furtherance of this long-standing philosophy. The
number of options granted to each executive officer reflects the
Compensation Committee's assessment of the particular officer's level of
responsibility. In light of Mr. Birck's personal holdings of Company
stock, the award of options or SARs was not deemed necessary by the
Compensation Committee in order to provide the incentives fostered by
grants to the other executive officers.
Effective April 25, 1995, the Compensation Committee elected to
expand the compensation program by adopting guidelines to encourage
outright share ownership by the executive officers. Starting in
February, 1997, the Compensation Committee will consider whether the
executive officer has met the guidelines in deciding whether to grant
additional stock options to such officer.
<PAGE>
<PAGE> 21
The Compensation Committee does not believe that the provisions of
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, 1996 John D. Foulkes, Ph.D.,
Frederick A. Krehbiel,
Robert P. Reuss,
William F. Souders and
Thomas H. Thompson
Members of the Compensation
Committee as of December 29, 1995.
- ------------------------------------------------------------------------
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 203
communications technology manufacturers, for the five-year period
beginning January 1, 1991.
<TABLE>
<CAPTION>
A FIVE-YEAR CUMULATIVE TOTAL RETURN COMPARISON
STOCK PERFORMANCE IN DOLLARS
- ------------------------------------------------------------------------------------------------
Company 1990 1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tellabs, Inc. 100 144.17 165.00 472.25 1,114.42 1,479.23
Peer Group Index 100 137.99 186.72 234.06 248.76 326.63
Nasdaq Market Index 100 128.38 129.64 155.50 163.26 211.77
- ------------------------------------------------------------------------------------------------
Assumes $100 invested on January 1, 1991, dividends reinvested,
fiscal year ending December 29, 1995
</TABLE>
<PAGE>
<PAGE> 22
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Selection of Auditors
- ------------------------------------------------------------------------
The Company has selected Grant Thornton LLP, independent public
accountants, as the Company's independent auditors in 1996, as it did
for 1995 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> 23
- ------------------------------------------------------------------------
Stockholder Proposals
- ------------------------------------------------------------------------
For inclusion in the Company's proxy statement and form of proxy
with respect to the 1997 Annual Meeting of Stockholders, any proposals
of stockholders must be received by the Secretary of the Company no
later than November 21, 1996.
To nominate one or more directors for consideration at the 1997
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 21, 1996.
The Company's bylaws 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, 1996
<PAGE>
<PAGE> 24
- ------------------------------------------------------------------------
APPENDIX
- ------------------------------------------------------------------------
Appendix 1. Proxy Card
<PAGE>
<PAGE> 25
Appendix 1
----------
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 Michael J. Birck 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 Holiday Inn Naperville, 1801 Naper
Boulevard, Naperville, Illinois 60563, on Thursday, April 25, 1996, 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.
(Please mark this proxy, date and sign it on the reverse side hereof and
return it in the enclosed envelope.)
(Continued and to be signed on the reverse side)
<PAGE>
<PAGE> 26
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE LISTED PROPOSAL.
PLEASE MARK VOTE IN SQUARE IN THE FOLLOWING MANNER
USING DARK INK ONLY. (X)
<S> <C> <C> <C>
1. Election of Three Directors ( ) FOR all nominees listed ( ) WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below). nominees listed below.
</TABLE>
Brian J. Jackman, Stephanie Pace Marshall and William F. Souders
(To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
---------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
DATED -------------------, 1996
- -----------------------------------------------
- -----------------------------------------------
Signature of Stockholder(s)
Please sign name exactly as imprinted (do not print). Please indicate any
change in address.
NOTE: Executors, administrators, trustees and others 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.
