<PAGE>
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ODETICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ODETICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 11, 1998
----------------
To the Stockholders of Odetics, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Odetics, Inc., a Delaware corporation (the "Company"), will be held at the
Company's principal executive offices located at 1515 South Manchester Avenue,
Anaheim, California 92802, on Friday, September 11, 1998 at 10:00 a.m.,
Pacific Time, for the following purposes, as more fully described in the Proxy
Statement accompanying this Notice:
1. To elect a Board of Directors of nine directors to serve on the Company's
Board of Directors. The nominees for election by the holders of Class A Common
Stock are Crandall Gudmundson, Jerry F. Muench and Leo Wexler. The nominees
for election by the holders of the Class B Common Stock are Kevin C. Daly,
Ph.D., Gregory A. Miner, Ralph R. Mickelson, John W. Seazholtz, Joel Slutzky
and Paul E. Wright.
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999.
3. To transact any other business which may properly come before the Annual
Meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on July 31, 1998 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting and at any continuation or adjournment
thereof. A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection at the Company's principal executive offices.
You are cordially invited to attend the Annual Meeting in person. Whether or
not you plan to attend the Annual Meeting, please mark, sign, date and return
the enclosed proxy card as soon as possible in the envelope enclosed for your
convenience. Should you receive more than one proxy because your shares are
registered in different names and addresses, each proxy should be signed and
returned to assure that all of your shares will be voted. You may revoke your
proxy at any time prior to the Annual Meeting. If you attend the Annual
Meeting and vote by ballot, your proxy will be revoked automatically and only
your vote at the Annual Meeting will be counted.
Please read the enclosed proxy material carefully. Your vote is important.
The Company appreciates your cooperation in considering and acting on the
matters presented.
Anaheim, California By Order of the Board of Directors
August 7, 1998
JERRY F. MUENCH
Secretary
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE>
ODETICS, INC.
PROXY STATEMENT
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD SEPTEMBER 11, 1998
----------------
GENERAL
These proxy materials and the enclosed proxy card are being furnished in
connection with the solicitation of proxies by the Board of Directors of
Odetics, Inc., a Delaware corporation (the "Company"), to be voted at the
Annual Meeting of Stockholders of the Company to be held on September 11, 1998
at 10:00 a.m., Pacific Time, or any adjournment or postponement thereof (the
"Annual Meeting"). These proxy materials and the related form of proxy were
first mailed to the Company's stockholders on or about August 10, 1998.
The mailing address of the Company's principal executive offices is 1515
South Manchester Avenue, Anaheim, California 92802.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of the
Stockholders. Each proposal is described in more detail in this Proxy
Statement.
VOTING RIGHTS
The record date for determining those stockholders who are entitled to
notice of, and to vote at, the Annual Meeting has been fixed as July 31, 1998.
At the close of business on the record date, 6,202,778 shares of the Company's
Class A Common Stock were issued and outstanding and 1,062,041 shares of the
Company's Class B Common Stock were issued and outstanding. The Company's
Class A Common Stock and Class B Common Stock are collectively referred to
herein as the "Common Stock."
Holders of the Class A Common Stock will be entitled to elect 25% of the
Board (rounded up to the nearest whole number) or three directors. The balance
of the Board (six directors) will be elected by the holders of the Class B
Common Stock. With respect to the election of directors, the stockholders of
each class of Common Stock will be entitled to one vote for each share then
held unless cumulative voting is in effect. Directors standing for election by
each class of Common Stock will be elected by a majority of the voting power
of each class of Common Stock present in person or represented by proxy at the
Annual Meeting, unless cumulative voting is in effect.
Pursuant to the Company's Bylaws, no stockholder is entitled to cumulate his
or her votes (as described below) except as to candidates whose names have
been placed in nomination prior to the commencement of voting and unless at
least one stockholder has given notice prior to commencement of the voting of
his or her intention to cumulate votes. If any stockholder has given such
notice, then each stockholder may cumulate votes by multiplying the number of
shares of each class of Common Stock the stockholder is entitled to vote by
the number of directors to be elected by such class. The number of cumulative
votes thus determined may be distributed among two or more candidates or cast
for one candidate. The candidates receiving the highest number of votes, up to
the number of directors to be elected by each class of Common Stock, will be
elected. If cumulative voting is in effect, the persons named in the
accompanying proxy will vote the shares of each class of the Common Stock
covered by proxies received by them (unless authority to vote for directors is
withheld) among the candidates named herein as they determine.
Except as described above for the election of directors, holders of each
class of Common Stock will vote at the Annual Meeting as a single class on all
matters, with each holder of shares of Class A Common Stock entitled
<PAGE>
to one-tenth of one vote per share held and each holder of shares of Class B
Common Stock entitled to one vote per share held. All matters submitted for
stockholder approval at the Annual Meeting other than the election of
directors will be decided by the affirmative vote of a majority of the voting
power of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote on each matter.
The majority of the aggregate of the outstanding shares of the Company's
Class A Common Stock and Class B Common Stock entitled to vote will constitute
a quorum for the transaction of business at the Annual Meeting. Abstentions
may be specified on all proposals except the election of directors.
Abstentions and broker nonvotes (shares held by a broker or other nominee
having discretionary power to vote on some matters but not others) are counted
as being present for purposes of determining a quorum. If shares are not voted
by the broker who is the record holder of the shares, or if shares are not
voted in other circumstances in which proxy authority is defective or has been
withheld with respect to any matter, these nonvoted shares are not deemed to
be present or represented for purposes of determining whether stockholder
approval of that matter has been obtained.
Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is made on proxies, such proxies will be voted
FOR the election of all nominees named under the caption "Election of
Directors" as directors of the Company and FOR the ratification of the
selection of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending March 31, 1999.
At July 24, 1998, directors and executive officers of the Company may be
deemed to be the beneficial owners of an aggregate of 1,813,391 shares of
Class A Common Stock and 435,720 shares of Class B Common Stock (excluding
shares issuable upon exercise of outstanding stock options), constituting
approximately 31% of the total voting power of all of the outstanding
securities of the Company which are entitled to vote at the Annual Meeting.
Such directors and executive officers have indicated to the Company that each
such person intends to vote or direct the vote of all shares of each class of
Common Stock held or owned by such persons, or over which such person has
voting control, in favor of all of the Proposals. See "Principal Stockholders
and Common Stock Ownership of Certain Beneficial Owners and Management."
REVOCABILITY OF PROXIES
The enclosed proxy is revocable at any time before it is voted. A proxy may
be revoked by the holder of record by filing with the Company's Secretary, at
the Company's principal executive office, a written notice of revocation or a
new duly executed proxy bearing a date later than the date indicated on the
previous proxy. Proxies may also be revoked by any stockholder present at the
Annual Meeting who elects to vote his or her shares in person. Attendance at
the Annual Meeting will not, by itself, revoke a proxy.
SOLICITATION
The enclosed proxy is being solicited by the Company's Board of Directors.
The Company will bear the entire cost of proxy solicitation, including costs
of preparing, assembling, printing and mailing this Proxy Statement, the proxy
card and any additional material furnished to the stockholders. Copies of the
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to the beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services.
In the discretion of management, the Company reserves the right to retain a
professional firm of proxy solicitors to assist in solicitation of proxies.
Although management does not currently expect to retain such a firm, it
estimates that the fees of such firm would range from $5,000 to $10,000 plus
out-of-pocket expenses, all of which would be paid by the Company.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors of the Company is currently comprised of nine
members. Nine directors are to be elected at the Annual Meeting and hold
office until their successors are duly elected and qualified at the next
Annual Meeting. Holders of Class A Common Stock are entitled to elect three of
the nine directors to be elected at the Annual Meeting, and the holders of
Class B Common Stock are entitled to elect the other six directors. The three
candidates receiving the highest number of affirmative votes of shares of
Class A Common Stock present in person or represented by proxies and entitled
to vote at the Annual Meeting will be elected directors of the Company, and
the six candidates receiving the highest number of affirmative votes of shares
of Class B Common Stock entitled to vote at the Annual Meeting will be elected
directors of the Company. If cumulative voting is in effect, however, the
proxy holders of each class of Common Stock will have the right to cumulate
and allocate votes among those nominees standing for election with respect to
such class of Common Stock as such proxy holders in their discretion elect.
Messrs. Gudmundson, Muench and Wexler will stand for election by the holders
of Class A Common Stock, and Messrs. Miner, Mickelson, Seazholtz, Slutzky and
Wright and Dr. Daly will stand for election by the holders of Class B Common
Stock.
INFORMATION WITH RESPECT TO NOMINEES
The following table sets forth certain information concerning the nominees
for director of the Company as of July 31, 1998.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- --------
<C> <C> <S> <C>
Joel Slutzky........... 59 Chairman of the Board and Chief
Executive Officer of the Company 1969
Chairman of the Board of Odetics ITS,
Inc.
Kevin C. Daly, Ph.D.... 54 President and Chief Executive Officer
of ATL Products, Inc. 1993
Crandall Gudmundson.... 67 Former President of the Company 1979
Ralph R. Mickelson (1). 70 Investor 1975
Gregory A. Miner....... 43 Chief Operating Officer and Chief
Financial Officer of the Company 1998
Chief Financial Officer of Odetics ITS,
Inc.
Jerry F. Muench........ 63 Secretary and former Vice President,
Marketing of the Company 1969
John W. Seazholtz...... 61 President and Chief Executive Officer
of Telesoft America 1998
Leo Wexler (1)......... 88 Investor 1969
Paul E. Wright (1)..... 67 President of Wright Associates-- 1993
Engineering and Business
Consultants
</TABLE>
- --------
(1) Member of the Compensation and Stock Options Committee and the Audit
Committee.
JOEL SLUTZKY founded the Company in 1969 and has served as Chairman of the
Board of Directors since 1969 and the Chief Executive Officer since 1975. From
August 1993 until January 1994, Mr. Slutzky assumed the additional
responsibilities of Chief Financial Officer on an interim basis following the
retirement of the Company's former Chief Financial Officer. Mr. Slutzky also
served as the President of the Company from 1969 to 1975, and has served as a
Director of ATL Products, Inc. ("ATL") since its formation in 1993. Prior to
founding the Company, Mr. Slutzky was an engineering manager at Leach
Corporation, now part of the Lockheed Electronics Division of Lockheed
Corporation.
3
<PAGE>
KEVIN C. DALY, PH.D. has served as a director of the Company and President,
Chief Executive Officer and a director of the Company's former subsidiary,
ATL, since its formation in 1993. Dr. Daly has also served as Vice President
and Chief Technical Officer of the Company from 1987 until 1997 when the
Company consummated the spin-off of its interest in ATL. Prior to that, Dr.
Daly served as the Director of Space Systems of the Company since 1985 when he
joined the Company. From March 1974 until June 1985, Dr. Daly served as the
Director of the Control and Dynamics Division of the Charles Stark Draper
Laboratory. During that period, Dr. Daly participated in the design and
development of guidance, navigation and control systems for several major
space programs, including the United States Space Shuttle program. Dr. Daly
also served as a manager of electronic systems for a major space program of
the United States Air Force from March 1970 to March 1974.
CRANDALL GUDMUNDSON is a co-founder of the Company and has served as its
President since 1975 until his retirement in 1998, and as a director since
1979. Mr. Gudmundson has also served as a director of ATL since 1993. Prior to
co-founding the Company, Mr. Gudmundson was the lead project engineer for
Leach Corporation.
RALPH R. MICKELSON has been an outside member of the Board of Directors
since 1975 and was a senior partner in the Chicago law firm of Rudnick & Wolfe
until August 1997. Mr. Mickelson is currently an investor and involved in
various business matters as an arbitrator and mediator.
GREGORY A. MINER has served as Vice President and Chief Financial Officer of
the Company and its former subsidiary, ATL, since joining the Company in
January 1994. In 1998, Mr. Miner joined the Board of Directors of the Company
and was promoted to the position of Chief Operating Officer of the Company.
Mr. Miner has also served as the Chief Financial Officer and Secretary of
Odetics ITS since its incorporation in 1998. From December 1984 until joining
the Company, Mr. Miner served as Vice President and Chief Financial Officer
and a member of the Board of Directors of Laser Precision Corporation, a
manufacturer of telecommunications test equipment.
JERRY F. MUENCH is a founder of the Company and has served as a Director and
Secretary since 1969. Mr. Muench has also served as the Vice President,
Marketing of the Company since 1975 until his retirement in December 1997.
Prior to founding the Company, Mr. Muench was the manager of applications
engineering at Leach Corporation.
JOHN W. SEAZHOLTZ was appointed as a director of the Company in May 1998.
Mr. Seazholtz is the President and Chief Executive Officer of Telesoft
America. Mr. Seazholtz retired in April 1998 as the Chief Technology Officer
of Bell Atlantic after 36 years of service with that company and its
predecessor. Mr. Seazholtz was a senior officer of Bell Atlantic since 1986,
serving in various positions including as its Vice President, Operations and
Engineering, its Vice President, Marketing, its Vice President of New
Services, and its Vice President, Technology and Information Systems. Prior to
1986, Mr. Seazholtz held positions at New Jersey Bell Telephone Co. and AT&T.
LEO WEXLER has been an outside member of the Board of Directors since 1969.
Mr. Wexler has been self-employed as a private investor since his retirement
in 1978 as the Secretary and Treasurer of Silverman & Wexler, Inc., a food
processing corporation.
PAUL E. WRIGHT was appointed as a director of the Company in June 1993. Mr.
Wright is the President of Wright Associates--Engineering and Business
Consultants, a company he formed in 1997. Mr. Wright served as the Chairman of
Chrysler Technologies Corp., the aerospace and defense electronics subsidiary
of Chrysler Corporation, a position he held from 1988 until his retirement in
1997. From 1986 to 1988, Mr. Wright served as the President and Chief
Operating Officer of Fairchild Industries, Inc. Prior to joining Fairchild, he
was employed for 28 years by RCA Corporation, where he last served as the
Senior Vice President responsible for planning RCA's merger into General
Electric Corporation.
All directors currently are elected annually and hold office until the next
Annual Meeting of the Stockholders and until their successors are duly elected
and qualified. All of the nominees are currently directors
4
<PAGE>
of the Company and have indicated that they are willing to continue to serve
as directors. In the event any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for an
additional nominee who shall be designated by the current Board of Directors.
As of the date of this Proxy Statement, the Board of Directors is not aware of
any nominee who is unable or will decline to serve as director.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual fee of
$12,000 per year, paid quarterly, in addition to $1,500 for each Board meeting
attended in person and $250 for each telephone conference Board meeting. All
directors are reimbursed for their out-of-pocket expenses incurred in
attending meetings of the Board of Directors and its committees.
Nonemployee directors are also eligible to receive periodic option grants
pursuant to the Automatic Option Grant Program under the Company's 1997 Stock
Incentive Plan. Under this plan, as proposed, each nonemployee director will
receive an option to purchase 5,000 shares of Class A Common Stock in
connection with his initial appointment to the Board of Directors and an
additional option to purchase 4,000 shares of Class A Common Stock on the date
of each Annual Meeting thereafter. Each such option will have an exercise
price equal to the fair market value of the Class A Common Stock on the grant
date and will have a maximum term of ten years, subject to earlier termination
following the optionee's cessation of service as a Board member.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met a total of three times during the fiscal year
ended March 31, 1998. Each of the directors nominated for reelection attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings held by all committees of
the Board on which such director served.
The Company has two standing committees, the Compensation and Stock Option
Committee and the Audit Committee. The Company has no standing nominating
committee, and the Board as a whole acts upon matters which would otherwise be
the responsibility of a nominating committee.
The Audit Committee supervises and reviews the audit and audit review
programs and procedures of the Company's independent auditors, the Company's
internal accounting staff and the results of internal auditing procedures. The
Audit Committee also reviews the independence, professional services, fees,
plans and results of the independent auditors' engagement, and recommends
their retention or discharge to the Board. The members of the Company's Audit
Committee are Messrs. Mickelson, Wexler and Wright. The Audit Committee held
one meeting during the fiscal year ended March 31, 1998.
The Compensation and Stock Option Committee makes recommendations to the
Board concerning the compensation of all officers of the Company and
administers the Company's stock option plans. The members of the Company's
Compensation and Stock Option Committee are Messrs. Mickelson, Wexler and
Wright. The Company's Compensation and Stock Option Committee held two
meetings during the fiscal year ended March 31, 1998.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
PROXIES RETURNED TO THE COMPANY WILL BE VOTED "FOR" EACH NOMINEE UNLESS
OTHERWISE INSTRUCTED IN WRITING ON SUCH PROXY.
5
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's independent
auditors for the fiscal year ended March 31, 1998. The Board of Directors has
selected that firm to continue in this capacity for the current fiscal year.
The Company is asking the stockholders to ratify the selection by the Board of
Directors of Ernst & Young LLP as the Company's independent auditors to audit
the financial statements of the Company for the fiscal year ending March 31,
1999 and to perform other appropriate services. Stockholder ratification of
the selection of Ernst & Young LLP as the Company's independent auditor is not
required by the Company's Bylaws or otherwise. In the event that the
stockholders fail to ratify the appointment, the Board of Directors will
reconsider its selection. Even if the selection is ratified, the Board of
Directors, in its discretion, may direct the appointment of a different
independent accounting firm at any time during the year if the Board of
Directors feels that such a change would be in the best interest of the
Company and its stockholders.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting to respond to stockholders' questions, and that representative
will be given an opportunity to make a brief presentation to the stockholders
if he or she so desires.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding shares of the Company
present or represented and entitled to vote at the Annual Meeting will be
required for ratification of the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending March 31, 1999.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION AND APPROVAL OF THE SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
6
<PAGE>
PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 24, 1998, the number and
percentage ownership of the Company's Class A Common Stock and Class B Common
Stock by (i) all persons known to the Company to beneficially own more than 5%
of either class of outstanding Common Stock (based upon reports filed by such
persons with the Commission), (ii) each of the Named Executive Officers in the
Summary Compensation Table which appears elsewhere herein, (iii) each director
of the Company and director nominee named under "Election of Directors," and
(iv) all executive officers and directors of the Company as a group. To the
Company's knowledge, except as otherwise indicated, each of the persons named
in this table has sole voting and investment power with respect to the Common
Stock shown as beneficially owned, subject to community property and similar
laws, where applicable.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
---------------------------- ----------------------------
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) (3) CLASS (2) OWNERSHIP (2) (3) CLASS (2)
- ---------------------------------------- ----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
Gerald A. Weber......... 231,858(4) 3.7% 195,524 18.4%
Joel Slutzky............ 188,716(5) 3.0 258,644(6) 24.4
Crandall Gudmundson..... 109,931(7) 1.8 69,743 6.6
Jerry F. Muench......... 107,416(8) 1.7 61,537(9) 5.8
Kevin C. Daly, Ph.D..... 59,349(10) * -- --
Gregory A. Miner........ 53,949 * -- --
Ralph R. Mickelson...... 25,100(11) * 20,445(12) 1.9
Leo Wexler.............. 31,100(13) * 24,728(14) 2.3
Paul E. Wright.......... 31,900 * -- --
John W. Seazholtz....... -- -- -- --
All executive officers
and directors as a
group (14 persons)..... 813,391 13.1% 435,720 41.1%
</TABLE>
- --------
* Less than 1%
(1) The address for Gerald A. Weber is 222 North LaSalle, Suite 899,
Chicago, Illinois 60601. The address of Messrs. Slutzky, Gudmundson and Muench
is 1515 South Manchester Avenue, Anaheim, California 92802.
(2) Based on 6,202,778 shares of Class A Common Stock and 1,062,041 shares
of Class B Common Stock outstanding as of July 24, 1998. Shares of each class
of Common Stock subject to options which are exercisable within 60 days of
July 24, 1998 are deemed to be beneficially owned by the person holding such
options for the purpose of computing the percentage of ownership of such
person but are not treated as outstanding for the purpose of computing the
percentage of any other person. Other than as described in the preceding
sentence, shares issuable upon exercise of outstanding options are not deemed
to be outstanding for purposes of this calculation.
(3) In addition to shares held in the individual's name, this column also
includes shares held for the benefit of the named person in the Company's
Section 401(k) Plan and Associate Stock Ownership Plan.
(4) All of such shares are owned beneficially of record by various trusts
with respect to which Mr. Weber serves as trustee or co-trustee. Mr. Weber
shares investment and voting power as to 69,718 shares of Class A Common Stock
and 120,977 shares of Class B Common Stock. Mr. Weber exercises sole
investment and voting power over the remaining 162,140 shares of Class A
Common Stock and 74,547 shares of Class B Common Stock. The shares shown
include an aggregate of 203,979 shares of Class A Common Stock and 168,546
shares of Class B Common Stock, respectively, held in trust for the benefit of
the children and relatives of Mr. Slutzky, as to which shares Mr. Slutzky has
no investment or voting power and disclaims any beneficial ownership. The
shares shown also include 27,879 shares of Class A Common Stock and 26,978
shares of Class B Common
7
<PAGE>
Stock, respectively, held in trust for the benefit of the children of Mr.
Wexler, as to which shares Mr. Wexler has no investment or voting power and
disclaims any beneficial ownership.
(5) Excludes 203,979 shares held in trust for the benefit of the children
and relatives of Mr. Slutzky, as to which Mr. Slutzky has no investment or
voting power and disclaims any beneficial ownership. See note 4.
(6) Excludes 168,546 shares held in trust for the benefit of the children
and relatives of Mr. Slutzky, as to which Mr. Slutzky has no investment or
voting power and disclaims any beneficial ownership. See note 4.
(7) Includes 4,500 shares held by Mr. Gudmundson's IRA.
(8) Includes 31,114 shares held by Mr. Muench's spouse.
(9) Includes 23,235 shares held by Mr. Muench's spouse.
(10) Includes 100 shares held by Dr. Daly's spouse.
(11) Includes 7,000 shares held by Mr. Mickelson's IRA.
(12) Includes 18,445 shares held in trust for the benefit of Mr. Mickelson's
wife, as to which Mr. Mickelson shares investment and voting power with his
wife.
(13) Excludes 27,879 shares held in trust for the benefit of relatives of
Mr. Wexler, as to which Mr. Wexler has no investment or voting power and
disclaims any beneficial ownership. See note 4 above.
(14) Includes 20,940 shares held in trust for the benefit of Mr. Wexler and
his relatives, as to which Mr. Wexler shares investment and voting power with
his son. Excludes 26,978 shares held in trust for the benefit of relatives of
Mr. Wexler, as to which Mr. Wexler has no investment or voting power and
disclaims any beneficial ownership. See note 4.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The following table sets forth certain information regarding all executive
officers of the Company as of July 31, 1998.
<TABLE>
<CAPTION>
NAME AGE CAPACITIES IN WHICH SERVED
- ---- --- --------------------------
<S> <C> <C>
Joel Slutzky............ 59 Chairman of the Board and Chief Executive Officer of the Company
Chairman of the Board of Odetics ITS, Inc.
Thomas G. Bartholet..... 50 Vice President, Corporate Development of the Company
Frank Borst............. 39 Vice President of the Company
President of Gyyr, Inc.
Timothy Crabtree........ 43 Vice President of the Company
General Manager of the Broadcast Division
Jack Johnson............ 51 Vice President of the Company
Chief Executive Officer and President of Odetics ITS, Inc.
Gregory A. Miner........ 43 Chief Operating Officer and Chief Financial Officer and
Director of the Company
Chief Financial Officer and Secretary of Odetics ITS, Inc.
Gary Smith.............. 41 Vice President and Controller of the Company
</TABLE>
The following is a brief description of the capacities in which each of the
executive officers has served during the past five years. The biographies of
Messrs. Miner and Slutzky appear earlier in this Proxy Statement. See
"Election of Directors."
THOMAS G. BARTHOLET has served as the Vice President, Corporate Development
of the Company since 1993, and as the Director, Corporate Development of the
Company from 1990 to 1993. Prior to that, Mr. Bartholet served as the General
Manager of the Advanced Intelligent Machines Division of the Company from 1986
to 1990 and as the Director of Strategic Planning of the Company from 1983 to
1986.
FRANK BORST has served as the Vice President of the Company since 1994 and
President of the Company's wholly-owned subsidiary, Gyyr, Inc., since its
formation in 1997. Prior to that, Mr. Borst served as the Director of Global
Business Development from 1992 to 1997. Mr. Borst has also served as the
Managing Director for Odetics Europe Limited and Odetics Asia Pacific Pte.,
Ltd., subsidiaries of the Company.
TIMOTHY CRABTREE has served as the General Manager of the Broadcast Division
and a Vice President of the Company since 1994. Between 1988 and 1994, Mr.
Crabtree served as the Director of Engineering for the Broadcast Division.
Prior to that, Mr. Crabtree served as a Senior Project Engineer since joining
the Company in 1983.
JACK JOHNSON has served as the Vice President of the Company since 1986 and
has served as the President of the Company's subsidiary, Odetics ITS, Inc.,
since its incorporation in 1998, and prior to that, as General Manager of the
ITS Division from 1996 to 1998. From 1990 to 1996, Mr. Johnson served as the
General Manager of the Gyyr Customer Service Division. Mr. Johnson served in
various other capacities with the Company since joining the Company in 1974,
including the Vice President and General Manager of the Omutec Division from
1986 to 1990, the Director of Contracts for the Space Division from 1980 to
1986, the Controller of Infodetics, a former subsidiary of the Company from
1975 to 1980 and the Controller of the Company from 1974 to 1975. Prior to
joining the Company, Mr. Johnson served as a certified public accountant with
Peat Marwick.
9
<PAGE>
GARY SMITH has served as the Vice President and Controller of the Company
since 1992 and was appointed Vice President in August 1994. Prior to that, Mr.
Smith served as Assistant Controller of the Company between 1990 and 1992, and
Senior Financial Analyst from 1986 until 1990.
Officers serve at the discretion of the Board of Directors.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for each of the three fiscal years ended
March 31, 1998, 1997 and 1996, the compensation earned by the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company whose total cash salary and bonus during the fiscal
year ended March 31, 1998 exceeded $100,000 as well as two additional officers
who retired during 1998 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
AWARDS
----------------------
ANNUAL COMPENSATION SECURITIES
FISCAL ----------------------- RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY ($)(1) BONUS ($) STOCK ($) OPTIONS (#) COMPENSATION ($)(2)
- ---------------------------- ------ ------------- --------- ---------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Joel Slutzky............. 1998 325,627 -- -- 50,000 3,710
Chairman of the Board 1997 326,362 84,000 3,200 55,000 4,817
and Chief Executive
Officer of the Company 1996 279,214 68,800 2,567 48,000(3) 3,229
Chairman of the Board of
Odetics ITS, Inc.
Gregory A. Miner......... 1998 151,946 -- -- 25,000 4,009
Chief Operating Officer 1997 167,551 30,744 3,200 35,000 4,125
and Chief Financial
Officer of the Company 1996 141,642 38,800 2,567 20,667(3) 1,662
Chief Financial Officer
of Odetics ITS, Inc.
Jack Johnson............. 1998 153,815 -- -- 12,000 3,315
Vice President of the 1997 145,854 30,000 1,656 25,000 2,303
Company
President and Chief 1996 157,540 31,600 2,550 16,667(3) 3,418
Executive Officer
of Odetics ITS, Inc.
Frank Borst.............. 1998 140,384 -- -- 12,000 2,384
Vice President of the 1997 108,879 -- 2,452 -- 2,827
Company
President of Gyyr, Inc. 1996 93,923 13,700 1,597 8,667(3) 2,700
Timothy Crabtree......... 1998 149,264 -- -- 12,000 3,589
Vice President of the 1997 152,252 -- 3,200 -- 3,723
Company
General Manager of the 1996 130,366 31,800 2,216 11,333(3) 3,657
Broadcast Division
Crandall Gudmundson...... 1998 163,094 -- -- -- 103,278(4)
Former President of the 1997 190,860 40,000 2,817 -- 4,141
Company
1996 185,653 35,900 2,404 22,000(3) 3,158
Jerry F. Muench.......... 1998 168,366 -- -- -- 60,602(5)
Secretary and 1997 186,735 22,400 2,587 -- 3,655
Former Vice President, 1996 178,813 29,300 2,175 20,667(3) 3,222
Marketing
</TABLE>
- --------
(1) Represents all amounts earned from the Company and its subsidiaries during
the fiscal years shown, including amounts deferred under the Company's
Executive Deferral Plan and the Company's Section 401(k) Plan.
(2) Unless otherwise indicated, consists solely of the Company's matching
contribution to the respective accounts of the Named Executive Officers
under the Company's Section 401(k) Plan.
(3) During fiscal 1996, the Company offered all holders of options that were
granted in fiscal 1994 the opportunity to have the option exercise price
of outstanding fiscal 1994 options reduced to the then current 1996
trading price. In connection with any such option repricing, one-third of
any repriced options were required to be cancelled. According, the number
of options indicated for Messrs. Borst, Crabtree, Gudmundson, Johnson,
Miner, Muench and Slutzky, include options which were repriced for the
purchase of 667, 1,333, 10,000, 6,667, 8,667 and 22,000 shares,
respectively, of the Company's Class A Common Stock. The option
information contained in this table does not take into account any options
that may have been cancelled in connection with any option repricing.
(4) Includes (a) the Company's matching contribution of $4,140 under the
Company's Section 401(k) Plan, (b) accrued vacation benefits in the amount
of $65,698 paid to Mr. Gudmundson upon his retirement in January 1998 and
(c) retirement benefits of $33,440 paid to Mr. Gudmundson during fiscal
1998. Pursuant to Mr. Gudmundson's retirement package, the Company will
also pay to Mr. Gudmundson an additional $361,469 over the next four
years.
(5) Includes (a) the Company's matching contribution of $3,460 under the
Company's Section 401(k) Plan, (b) accrued vacation benefits in the amount
of $31,286 paid to Mr. Muench upon his retirement in January 1998 and
retirement benefits of $25,856 paid to Mr. Muench during fiscal 1998.
Pursuant to Mr. Muench's retirement package, the Company will also pay to
Mr. Muench an additional $347,629 payable over the next four years.
11
<PAGE>
OPTION GRANTS IN THE FISCAL YEAR ENDED MARCH 31, 1998
The following table sets forth information with respect to grants of options
to purchase Class A Common Stock during fiscal 1998 to each of the Named
Executive Officers. No stock appreciation rights were granted to any of the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS GRANTED FOR OPTION TERM (3)
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION ---------------------
NAME GRANTED (1) FISCAL 1998 BASE PRICE DATE 5% 10%
- ---- ------------------ ---------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joel Slutzky............ 50,000 10.0% $5.088(2) 01/08/08 122,282 345,403
Gregory A. Miner........ 25,000 5.0 4.625 01/08/08 72,716 184,276
Jack Johnson............ 12,000 2.4 4.625 01/08/08 34,904 88,453
Frank Borst............. 12,000 2.4 4.625 01/08/08 34,904 88,453
Timothy Crabtree........ 12,000 2.4 4.625 01/08/08 34,904 88,453
Crandall Gudmundson..... -- -- -- 01/08/08 -- --
Jerry F. Muench......... -- -- -- 01/08/08 -- --
</TABLE>
- --------
(1) All of the options were granted pursuant to the Company's 1997 Stock
Incentive Plan (the "1997 Plan") and entitle the holder to purchase shares
of Class A Common Stock. Such options have a maximum term of ten years,
subject to earlier termination in the event of the optionee's termination
of employment with the Company or its subsidiaries. The options vest in
three equal annual installments commencing January 9, 1999 subject to
acceleration of vesting (at the discretion of the Committee of the Board
of Directors that administers the 1997 Plan) in the event of the merger,
consolidation or reorganization of the Company. The vesting schedule of
all options to purchase the Company's Class A Common Stock outstanding was
accelerated in August 1997 in anticipation of the Company's spin-off of
its interest in ATL.
(2) The exercise price per share of the options granted represented 110% of
the closing sales price of the underlying shares of Class A Common Stock
on the date the options were granted.
(3) The 5% and 10% assumed rates of appreciation are prescribed by the rules
and regulations of the Securities and Exchange Commission and do not
represent management's estimate or projection of future trading prices of
the Class A Common Stock. Unless the market price of the Common Stock does
in fact appreciate over the option term, no value will be realized from
the option grants.
OPTION EXERCISES IN THE FISCAL YEAR ENDED MARCH 31, 1999
The table below sets forth certain information with respect to the Company's
Named Executive Officers concerning their exercise of options to purchase
Class A Common Stock during fiscal 1998 and the unexercised options they held
as of the end of fiscal 1998. None of the Named Executive Officers held or
exercised any SARs during fiscal 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT MARCH 31, 1998 (#) AT MARCH 31, 1998 (#) (2)
ACQUIRED ON VALUE ------------------------- -------------------------
EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel Slutzky............ 135,600 769,725 -- 50,000 -- 183,125
Gregory A. Miner........ 53,333 293,747 -- 25,000 -- 103,125
Jack Johnson............ 43,917 256,097 -- 12,000 -- 49,500
Frank Borst............. 9,667 117,879 -- 12,000 -- 49,500
Timothy Crabtree........ 8,612 71,654 -- 12,000 -- 49,500
Crandall Gudmundson..... 36,000 288,813 -- -- -- --
Jerry F. Muench......... 34,067 273,078 -- -- -- --
</TABLE>
- --------
(1) Calculated based on the closing sale price per share of the Class A Common
Stock on the date of exercise less the applicable exercise price.
(2) Calculated based on the closing sale price per share of the Class A Common
Stock at March 31, 1998 ($8.75) less the applicable exercise price.
12
<PAGE>
TEN YEAR INFORMATION REGARDING REPRICING, CANCELLATION AND REGRANT OF OPTIONS
In May 1995, the Company repriced certain outstanding stock options which
were originally granted in January 1994. In connection with the repricing, the
Company made an offer to the holders of the options, including the Named
Executive Officers, to reduce by one-third the number of shares covered by
these options in consideration of a reduction in the exercise price of the
options from their original exercise price to the market price of the
Company's Class A Common Stock at the time of the offer. The following table
sets forth certain information with respect to the repricing of options held
by the Named Executive Officers.
TEN YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
AMENDED LENGTH OF
NUMBER OF ORIGINAL
ORIGINAL NUMBER SECURITIES MARKET PRICE OPTION TERM
OF SECURITIES UNDERLYING OF STOCK AT EXERCISE PRICE NEW REMAINING AT
UNDERLYING OPTIONS TIME OF AT TIME OF EXERCISE DATE OF
NAME DATE OPTIONS REPRICED REPRICED REPRICING REPRICING PRICE REPRICING
- ---- -------- ---------------- ---------- ------------ -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joel Slutzky............ 05/23/95 33,000 22,000 $4.25 $9.90 $4.675(1) 8.67 Years
Jack Johnson............ 05/23/95 10,000 6,667 4.25 9.00 4.25 8.67 Years
Gregory A. Miner........ 05/23/95 12,000 8,667 4.25 9.00 4.25 8.67 Years
Frank Borst............. 05/23/95 1,000 667 4.25 9.00 4.25 8.67 Years
Timothy Crabtree........ 05/23/95 2,000 1,333 4.25 9.00 4.25 8.67 Years
Crandall Gudmundson..... 05/23/95 15,000 10,000 4.25 9.00 4.25 8.67 Years
Jerry F. Muench......... 05/23/95 13,000 8,667 4.25 9.00 4.25 8.67 Years
</TABLE>
- --------
(1) Represents 110% of the closing sales price of the Class A Common Stock on
the date of the repricing.
ASSOCIATE BENEFIT PLANS
The Company maintains a Profit Sharing Plan and Trust (the "Profit Sharing
Plan") which qualifies under Section 401 of the Code. The Profit Sharing Plan
provides that associates who meet a six month service requirement
automatically become participants. Each fiscal year, the Company, at its
discretion, makes a contribution to the Profit Sharing Plan. The Company may
contribute Class A Common Stock or cash to the Profit Sharing Plan. These
contributions are allocated to separate accounts of the participants in
proportion to their relative compensation, and are held in trust and invested.
Participant accounts are credited with investment gains and losses. Vesting
depends on the participant's years of service, with contributions being fully
vested after the participant has five years of service. When an associate
leaves the Company, his account under the Profit Sharing Plan, if vested,
becomes distributable in a lump sum or over a period of time at the discretion
of the Profit Sharing Plan Administrator. No contributions were made to the
Profit Sharing Plan for the fiscal years ended March 31, 1998, 1997 and 1996.
The Profit Sharing Plan also includes the Odetics, Inc. Section 401(k) Plan
(the "401(k) Plan"). Under the 401(k) Plan, associates with at least six
months of service with the Company or any subsidiary may elect to defer up to
15% of their annual compensation, not to exceed the limits set by the Code.
The maximum deferral for calendar year 1998 is $10,000.
The Company maintains an Associate Stock Ownership Plan (the "ASOP"), which
qualifies under Section 401 of the Code. The ASOP provides that associates who
meet a six month service requirement automatically become participants. Each
fiscal year, the Company, at its discretion, makes a contribution to the ASOP.
The Company may contribute Class A Common Stock, or the cash to buy Class A
Common Stock. These contributions are allocated to separate accounts of the
participants in proportion to their relative compensation, and are held in
trust. Vesting depends on the participant's years of service, with
contributions being fully vested after the participant has five years of
service. When an associate leaves the Company, his account under the ASOP, if
vested, is distributed in shares of Class A Common Stock. The Company
contributed Class A Common Stock valued at approximately $511,000 as of the
date of the contribution to the ASOP for fiscal year 1998.
13
<PAGE>
The Company maintains an Executive Deferral Plan (the "Deferral Plan") which
is intended to provide deferred compensation benefits to designated executives
of the Company who contribute to the Company's growth and success. Eligible
executives may elect to defer up to 75%, but not less than $5,000, of their
annual compensation. Participation in the Deferral Plan is voluntary and may
be discontinued at any time. Payment of benefits commences upon the
retirement, death, disability or termination of employment of a participating
executive.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AGREEMENTS AND CHANGE OF
CONTROL ARRANGEMENTS
The Company does not currently have any employment contracts in effect with
any of its Named Executive Officers. The Company provides incentives such as
salary, benefits and option grants (which are typically subject to a three
year vesting schedule) to attract and retain executive officers and other key
associates. The Compensation Committee, as Plan Administrator of the 1997
Plan, has the authority to provide for the accelerated vesting of the shares
of Common Stock subject to any outstanding options held by such individual, in
connection with the termination of the individual's employment following an
acquisition in which these options are assumed or the repurchase rights with
respect to the unvested shares are assigned or certain hostile changes in
control of the Company. Other than such accelerated vesting, there is no
agreement or policy which would entitle any executive officers to severance
payments or any other compensation as a result of such officer's termination.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Company can
indemnify its directors and officers against liabilities they may incur in
such capacities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). The Company's Bylaws provide that the Company
will indemnify its directors and officers to the fullest extent permitted by
law and require the Company to advance litigation expenses upon receipt by the
Company of an undertaking by the director or officer to repay such advances if
it is ultimately determined that the director or officer is not entitled to
indemnification. The Bylaws further provide that rights conferred under such
Bylaws do not exclude any other right such persons may have or acquire under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
The Company's Certificate of Incorporation provides that, pursuant to
Delaware Law, its directors shall not be liable for monetary damages for
breach of the directors' fiduciary duty of care to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware Law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Company or its stockholders, for acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
The Company has entered into agreements to indemnify its directors and
certain of its officers in addition to the indemnification provided for in the
Certificate of Incorporation and Bylaws. These agreements, among other things,
indemnify the Company's directors and certain of its officers for certain
expenses (including attorneys' fees), judgments, fines and settlement amounts
incurred by such person in any action or proceeding, including any action by
or in the right of the Company, on account of services as a director or
officer of the Company, or as a director or officer of any other company or
enterprise to which the person provides services at the request of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Stock Options Committee of the Company's
Board of Directors during fiscal 1998 were Messrs. Mickelson, Wexler and
Wright. None of the executive officers of the Company
14
<PAGE>
has served on the Board of Directors or on the compensation committee of any
other entity, any of whose officers served either on the Board of Directors or
on the Compensation and Stock Options Committee of the Company. No member of
the Compensation and Stock Option Committee was an officer or employee of the
Company or its subsidiary during fiscal 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act or the Securities Exchange
Act of 1934, as amended, that might incorporate by reference previous or
future filings, including this Proxy Statement, in whole or in part, the
following Compensation Committee Report and the Performance Graph are not
"soliciting materials," are not deemed filed with the Commission and shall not
be incorporated by reference into any of such filings.
This report covers the Company's fiscal year ended March 31, 1998.
The Compensation and Stock Option Committee (the "Compensation Committee")
for fiscal 1998 was comprised of three outside directors, Messrs. Wexler,
Mickelson and Wright. The Compensation Committee recommends the general
compensation levels for executives. The Compensation Committee meets
periodically to review and recommend for approval by the Board of Directors,
the salaries, bonuses and benefit plans for officers and key associates. In
fiscal 1998, the Compensation Committee met on two occasions.
The guiding principle of the Compensation Committee is to establish a
compensation program that aligns executive compensation with the Company's
objectives and business strategies as well as with financial and operational
performance. In keeping with this principle the Compensation Committee seeks
to:
(1) Attract and retain qualified senior executives who can play a
significant role in the achievement of the Company's goals;
(2) Reward executives for strategic management and the long-term
enhancement of stockholder value; and
(3) Create a performance-oriented environment that rewards performance with
respect to the financial and operational goals of the Company.
In fiscal year 1998, the annual compensation plan for the executive officers
included base salaries, bonuses and stock options; provided however, that no
bonuses were paid to any executive officers in fiscal 1998.
The Company establishes salaries for the Chief Executive Officer and other
officers by considering the salaries of officers at comparably sized companies
according to data obtained by the Compensation Committee from executive
compensation consultants and from other independent outside sources, including
the American Electronics Association annual survey of executive compensation.
A portion of the annual bonuses payable to the Company's executive officers
are based upon the achievement by the Company and its divisions of certain
corporate financial targets established for each fiscal year. The remaining
portion of the bonuses is discretionary.
A substantial portion of the compensation of executive officers is based
upon the award of stock options which rely on increases in the value of the
Company's securities. The award of options is intended to encourage executives
to establish a meaningful, long-term ownership interest in the Company
consistent with the interests of the Company's stockholders. Under the
Company's stock option plans, options are granted from time to time to certain
officers and key associates of the Company and its subsidiaries at the fair
market value of the shares of Class A Common Stock at the time of grant.
Because the compensation element of options is dependent on increases over
time in the market value of such shares, stock options represent compensation
that is tied to the Company's long-term performance. The award of stock
options to the Chief Executive Officer and the other executive officers is
determined based upon individual performance, level of base salary and
position with the Company.
15
<PAGE>
The Committee has reviewed the fiscal year 1998 base salaries of the Chief
Executive Officer and each of the other executive officers and is of the
opinion that such salaries are not unreasonable in view of those paid by the
Company's competitors and by other companies of similar size. The Committee
also reviewed the stock options awarded to the executive officers for their
services in fiscal year 1998 and is of the opinion that the option awards are
reasonable in view of the officers' individual performance and positions with
the Company.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Code generally disallows a tax deduction to publicly held corporations for
compensation exceeding $1.0 million paid to certain of the corporation's
executive officers. The limitation applies only to compensation which is not
considered to be performance-based. The nonperformance based compensation to
be paid to the Company's executive officers for fiscal year 1998 did not
exceed the $1.0 million limit per officer, nor is it expected that the
nonperformance based compensation to be paid to the Company's executive
officers for fiscal year 1999 will exceed that limit. The Company's 1997 Plan
is structured so that any compensation deemed paid to an executive officer in
connection with the exercise of option grants made under that plan will
qualify as performance-based compensation which will not be subject to the
$1.0 million limitation. Because it is very unlikely that the cash
compensation payable to any of the Company's executive officers in the
foreseeable future will approach the $1.0 million limit, the Compensation
Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's
executive officers. The Compensation Committee will reconsider this decision
should the individual compensation of any executive officer ever approach the
$1.0 million level.
COMPENSATION COMMITTEE:
Ralph R. Mickelson, Chairman
Leo Wexler
Paul E. Wright
16
<PAGE>
PERFORMANCE GRAPH FOR ODETICS, INC.
INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN
The Performance Graph shows the cumulative total return on investment
assuming an investment of $100 on April 1, 1994 in each of the Company's Class
A Common Stock and Class B Common Stock, the Nasdaq National Market Index and
Media General's Industry Group 836 for Diversified Electronics. The new Media
General Industry Group reflects a reclassification of groups in general by
Media General during the last fiscal year and a recharacterization of the
Company's business following the spin-off of the Company's interest in ATL.
The total stockholder return assumes reinvestment of dividends on a daily
basis, although dividends have not been declared on either class of the
Company's Common Stock. Until January 1994, the Company's Class A and Class B
Common Stock were traded on the American Stock Exchange ("AMEX"). Since such
time, the Company's Class A and Class B Common Stock have been listed on the
Nasdaq National Market. For prior periods, the Company has also included the
AMEX Index in its performance graph for comparison purposes for the years in
which the Company's securities were traded on AMEX. Because the periods
addressed by this performance graph no longer cover the period during which
the Company was listed on the AMEX, the Company has omitted the AMEX index
from its performance graph. The stockholder return shown in the following
graph is not necessarily indicative of future performance.
<TABLE>
- --------------------------------------------------------------------------------------------
<CAPTION>
MEASUREMENT PERIOD
-----------------------------------------------------------------------
1994 1995 1996 1997 1998
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Odetics, Inc.
Class A Common Stock 137.50 68.75 90.63 164.06 324.55
- --------------------------------------------------------------------------------------------
Odetics, Inc.
Class B Common Stock 128.36 74.36 83.58 170.15 239.16
- --------------------------------------------------------------------------------------------
Nasdaq National
Market Index 115.57 122.61 164.91 184.50 278.82
- --------------------------------------------------------------------------------------------
Media General
Industry Group 836 125.71 151.51 165.06 162.20 196.22
- --------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
CERTAIN TRANSACTIONS
Prior to the initial public offering of ATL in March 1997 (the "IPO"), ATL
was a wholly-owned subsidiary of the Company. As the sole stockholder, the
Company maintained substantial control over the operations of ATL and provided
ATL with significant management, financial, administrative and other
resources, including treasury, accounting, tax, internal audit, legal, human
resources, sales and marketing and other support services. ATL was charged
and/or allocated expenses of $1.5 million, $1.6 million and $482,000 for the
years ended March 31, 1996, 1997 and 1998, respectively. The costs of these
services have been directly charged and/or allocated using methods that ATL's
management believes are reasonable. Such charges and allocations are not
necessarily indicative of the costs ATL would have incurred to obtain these
services had it been a separate entity. Neither the Company nor ATL has
conducted any study or obtained any estimates from third parties to determine
what the cost of obtaining such services from third parties may have been.
ATL paid approximately $6.7 million of the proceeds from the IPO to the
Company to reduce the intercompany indebtedness. In addition, in April 1997,
the Company entered into a four year promissory note payable to the Company in
the original principal amount of approximately $13.0 million representing the
balance of ATL's intercompany borrowings from the Company. All outstanding
indebtedness under this Note was repaid by ATL in full in July 1998.
ATL and the Company have entered into a number of agreements for the purpose
of defining their continuing relationship. These agreements were negotiated in
the context of a parent-subsidiary relationship and therefore are not the
result of negotiations between independent parties. It is the intention of ATL
and the Company that such agreements and the transactions provided for
therein, taken as a whole, should accommodate the parties' interests in a
manner that is fair to both parties, while continuing certain mutually
beneficial joint arrangements. The parties intend that such agreements and
transactions provide fair market value to them on terms no less favorable to
ATL as would otherwise be available from unaffiliated parties. Because of the
complexity of the various relationships between ATL and the Company, however,
there can be no assurance that each of such agreements, or the transactions
provided for therein, will be effected on terms at least as favorable to ATL
as could have been obtained from unaffiliated third parties. While these
agreements will provide ATL with certain benefits, ATL is only entitled to the
ongoing assistance of the Company for a limited time and ATL may not be able
to continue to enjoy benefits from its relationship with the Company beyond
the term of the agreements. ATL has adopted a policy that all future
agreements between ATL and the Company will be on terms that ATL believes are
no less favorable to ATL than the terms ATL believes would be available from
unaffiliated parties.
SEPARATION AND DISTRIBUTION AGREEMENT
The Separation and Distribution Agreement set forth the agreements between
ATL and the Company with respect to the principal corporate transactions
required to effect the IPO, to separate the operations of ATL from the Company
(the "Separation"), and to facilitate the distribution of all of the Company's
shares of Class A Common Stock of ATL to the stockholders of the Company (the
"Distribution"). Pursuant to this agreement, the Company sold all assets
related to the business of ATL to ATL, and ATL has assumed and agreed to
faithfully perform and fulfill all related liabilities and obligations. All
assets conveyed have been transferred for a purchase price equal to their
respective book values, calculated in accordance with generally accepted
accounting principles, which the parties believe is equivalent to the fair
market value thereof.
The Separation and Distribution Agreement also provided for a full and
complete release and discharge after the IPO of all liabilities existing or
arising from all acts and events occurring or failing to occur or alleged to
have occurred or to have failed to occur and all conditions existing or
alleged to have existed on or before the IPO, between or among ATL and its
affiliates, on the one hand, and the Company and its affiliates, on the other
hand (including any contractual agreements or arrangements existing or alleged
to exist between or among them on or before the IPO), except as expressly set
forth in the Separation and Distribution Agreement.
18
<PAGE>
ATL has agreed to indemnify, defend and hold the Company and its affiliates
harmless from and against all liabilities relating to, arising out of or
resulting from (i) the failure of ATL or any other person to pay, perform or
otherwise promptly discharge any Company liabilities in accordance with their
respective terms, (ii) ATL's business, or any contract of ATL, (iii) any
breach by ATL or of the Separation and Distribution Agreement or any ancillary
agreements, and (iv) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, with respect to all information contained in ATL's Registration
Statement on Form S-1 in connection with the IPO.
The Company has agreed to indemnify, defend and hold ATL and its affiliates
from and against all liabilities relating to, arising out of or resulting from
(i) the failure of the Company or any other person to pay, perform or
otherwise promptly discharge any liabilities of the Company, (ii) the business
of the Company or any contract of the Company, and (iii) any breach by the
Company or any of its affiliates of the Separation and Distribution Agreement
or any ancillary agreements.
The Separation and Distribution Agreement also provided that during the
period prior to the Distribution, ATL will reimburse the Company for its
proportionate share of premiums paid or accrued on insurance policies under
which ATL continues to have coverage.
SERVICES AGREEMENT
ATL and the Company entered into an Administrative Services Agreement (the
"Services Agreement") in March 1997, pursuant to which the Company agreed to
continue to provide limited services to ATL, including treasury, accounting,
tax, internal audit, legal and human resources functions. The Company
anticipates that ATL's aggregate costs under the Services Agreement for the
fiscal year ended March 31, 1998 will be approximately $482,000.
TAX ALLOCATION AGREEMENT
ATL and the Company entered into a Tax Allocation Agreement pursuant to
which ATL agreed to make a payment to the Company in an amount equal to the
taxes attributable to the operations of ATL on the consolidated federal income
tax returns and combined or consolidated state income or franchise tax returns
filed by the Company for the period commencing on April 1, 1996 and ending on
the date on which ATL ceases to be a member of the Company' consolidated
group. The Tax Allocation Agreement also requires the Company to indemnify ATL
against any unpaid taxes due for periods prior to April 1, 1996. Neither ATL
nor the Company is aware of any such unpaid taxes. In addition, the Tax
Allocation Agreement provides that members of the Company consolidated group
generating tax losses after April 1, 1996 will be paid by the other members
which utilize such losses to reduce such other members' tax liability. For the
year ended March 31, 1997 and 1998, ATL paid $1.6 million and $1.9 million,
respectively, to the Company, representing its obligation for such periods.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and officers and
any persons holding more than 10% of the Company's Common Stock are required
to report their ownership of the Company's Common Stock and any changes in
that ownership to the Securities and Exchange Commission. Specific due dates
for these reports have been established, and the Company is required to report
in this Proxy Statement any failure to file by these dates. During fiscal
1998, all of these filing requirements were satisfied by its directors,
officers and 10% stockholders, except as follows: (i) between July 1997 and
October 1997, the following officers and directors exercised options to
purchase Class A Common Stock, but failed to report the grants on a Form 4 by
September 10, 1998: Frank Borst (9,667 shares), Timothy Crabtree (8,612
shares), Crandall Gudmundson (36,000 shares), Jack Johnson (43,917 shares),
Ralph R. Mickelson (25,100 shares), Gregory A. Miner (53,333 shares), Jerry F.
Muench (34,067 shares), Joel Slutzky (135,600 shares), Gary Smith (26,667
shares), Leo Wexler
19
<PAGE>
(23,200 shares) and Paul E. Wright (23,900 shares); and (ii) in January 1998,
the Company granted options to the following officers, but failed to report
the grants on a Form 5 by May 15, 1998: Frank Borst (12,000 shares), Timothy
Crabtree (12,000 shares), Jack Johnson (12,000 shares), Gregory A. Miner
(25,000 shares), Joel Slutzky (50,000 shares) and Gary Smith (15,000 shares).
The transactions were subsequently reported by these officers when the
oversight was brought to their attention by the Company's personnel charged
with assisting directors and officers with these filings.
In making these statements, the Company has relied upon a review of Forms 3,
4 and 5 and amendments thereto furnished to the Company during fiscal 1998
pursuant to Rule 16a-3 under the Securities Exchange Act of 1934, as amended.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Under the present rules of the Commission, the deadline for stockholders to
submit proposals to be considered for inclusion in the Company's Proxy
Statement for next year's Annual Meeting of Stockholders is anticipated to be
April 12, 1999. Such proposals may be included in next year's Proxy Statement
if they comply with certain rules and regulations promulgated by the
Commission. Stockholder proposals must be mailed to the attention of the
Company's Secretary at the Company's principal executive offices located at
1515 South Manchester, Anaheim, California 92802. The date after which notice
of a stockholder proposal submitted outside of Rule 14a-8 promulgated under
the Securities Exchange Act of 1934, as amended, is considered untimely is
June 26, 1999.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders, including the
Company's consolidated financial statements for the fiscal year ended March
31, 1998, accompanies the proxy materials being mailed to all stockholders.
The Annual Report is not incorporated into this Proxy Statement and is not
considered proxy solicitation materials.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which will be
presented for action at the Annual Meeting other than the matters set forth in
this Proxy Statement. If any other matter requiring a vote of the stockholders
arise, it is intended that the proxy holders will vote the shares they
represent as the Board of Directors may recommend. Discretionary authority
with respect to such other matters is granted by the execution of the enclosed
proxy card.
Anaheim, California By Order of the Board of Directors,
August 7, 1998
JERRY F. MUENCH
Secretary
20
<PAGE>
PROXY
ODETICS, INC.
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Class A Common Stock of ODETICS, INC. (the
"Company") hereby appoints THOMAS G. BARTHOLET and GARY SMITH, and each of
them, proxies of the undersigned, each with full power to act without the other
and with power of substitution, to represent the undersigned at the Annual
Meeting of Stockholders of the Company to be held at 1515 South Manchester
Avenue, Anaheim, California on September 11, 1998 at 10:00 a.m. (Pacific Time),
and at any adjournments thereof, and to vote all shares of Class A Common Stock
of the Company held of record by the undersigned on July 31, 1998, with all the
powers the undersigned would possess if personally present, in accordance with
the instructions on the reverse hereof.
The undersigned hereby revokes any other proxy to vote at such Annual
Meeting of Stockholders and hereby ratifies and confirms all that said proxies,
and each of them, may lawfully do by virtue hereof. The undersigned also
acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held
September 11, 1998, the Proxy Statement and Annual Report to Stockholders for
the year ended March 31, 1998 furnished herewith.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE
ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
1. Election of Directors
Nominees standing for election by holders of Class A Common Stock:
Crandall Gudmundson, Jerry F. Muench and Leo Wexler.
[ ] FOR [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
----------------------------------------------------------------------
2. Ratification of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending March 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Signature: Date
------------------------------ -------------------------------
Signature: Date:
------------------------------ -------------------------------
(This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the
stockholder is a corporation, a duly authorized officer should sign on behalf of
the corporation and should indicate his or her title.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY
ODETICS, INC.
CLASS B COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Class B Common Stock of ODETICS, INC. (the
"Company") hereby appoints THOMAS G. BARTHOLET and GARY SMITH, and each of them,
proxies of the undersigned, each with full power to act without the other and
with power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders of the Company to be held at 1515 South Manchester Avenue,
Anaheim, California on September 11, 1998 at 10:00 a.m. (Pacific Time), and at
any adjournments thereof, and to vote all shares of Class B Common Stock of the
Company held of record by the undersigned on July 31, 1998, with all the powers
the undersigned would possess if personally present, in accordance with the
instructions on the reverse hereof.
The undersigned hereby revokes any other proxy to vote at such Annual
Meeting of Stockholders and hereby ratifies and confirms all that said proxies,
and each of them, may lawfully do by virtue hereof. The undersigned also
acknowledges receipt of the Notice of Annual Meeting of Stockholders to be held
September 11, 1998, the Proxy Statement and Annual Report to Stockholders for
the year ended March 31, 1998 furnished herewith.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
[X] Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDER WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
1. Election of Directors
Nominees standing for election by holders of Class B Common Stock:
Kevin C. Daly, Ralph R. Mickelson, Gregory A. Miner, John W.
Seazholtz, Joel Slutzky and Paul E. Wright.
[ ] FOR [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
----------------------------------------------------------------------
2. Ratification of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending March 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Signature: Date:
------------------------------ -------------------------------
Signature: Date:
------------------------------ -------------------------------
(This Proxy must be signed exactly as your name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the
stockholder is a corporation, a duly authorized officer should sign on behalf of
the corporation and should indicate his or her title.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
