<PAGE>
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
HEI, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number
or the form or schedule and the date of filing.
1) Amount previously paid:
------------------------------------------------------------------------
2) Form schedule or registration statement no.:
------------------------------------------------------------------------
3) Filing party:
------------------------------------------------------------------------
4) Date filed: 11-21-95
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
HEI, INC.
P.O. BOX 5000
1495 STEIGER LAKE LANE
VICTORIA, MINNESOTA 55386
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 17, 1996
------------------------
Dear HEI Shareholder:
The Annual Meeting of Shareholders of HEI, Inc., a Minnesota corporation,
will be held on Wednesday, January 17, 1996, at 3:00 p.m., Central Standard
Time, at The Planets, 50th Floor of the IDS Center, 80 South 8th Street,
Minneapolis, Minnesota 55402 for the following purposes:
(1) To elect the Board of Directors for the ensuing year; and
(2) To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on November 21, 1995
will be entitled to notice of and to vote at the meeting. A copy of the HI
Annual Report for fiscal 1995 is included in this mailing, first made on
approximately December 4, 1995.
BY ORDER OF THE BOARD OF DIRECTORS
Jerald H. Mortenson
CORPORATE SECRETARY
December 4, 1995
Shareholders unable to attend this meeting are urged to sign the enclosed
Proxy and return it in the envelope provided.
<PAGE>
HEI, INC.
P.O. BOX 5000
1495 STEIGER LAKE LANE
VICTORIA, MINNESOTA 55386
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 17, 1996
------------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy is furnished to the Shareholders of HEI, Inc. (the "Company" or
"HEI") in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of the Shareholders to be held on January 17, 1996. The
enclosed Proxy is solicited by the Board of Directors of the Company.
The person giving the enclosed Proxy has the power to revoke it at any time
prior to the convening of the Annual Meeting. Revocation must be in writing,
signed in exactly the same manner as the Proxy, and dated. Revocations of Proxy
will be honored if received at the offices of the Company, addressed to Eugene
W. Courtney, on or before January 16, 1996. In addition, on the day of the
meeting, prior to the convening thereof, revocations may be delivered to the
tellers, who will be seated at the door of the meeting room. Revocation may also
be effected by delivery of an executed, later dated Proxy. Unless revoked, all
properly executed Proxies received in time will be voted.
Proxies not revoked will be voted in accordance with the choice specified by
shareholders on the Proxy. Proxies which are signed but which lack any such
specification will, subject to the following, be voted FOR the slate of
directors proposed by the Board of Directors and listed herein. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. Abstentions, therefore, as
to any proposal will have the same effect as votes against such proposal. If a
broker turns in a "non-vote" Proxy, indicating a lack of voting instruction by
the beneficial holder of the shares and lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote Proxy shall be deemed present at the meeting for purposes of
determining a quorum but shall not be deemed to be represented at the meeting
for purposes of calculating the vote required for approval of such matter.
HEI will pay for costs of soliciting Proxies, including the costs of
preparing and mailing the Notice of Annual Meeting of Shareholders and this
Proxy Statement. Solicitation will be primarily by mailing this Proxy Statement
to all shareholders entitled to vote at the meeting. Proxies may be solicited by
officers or other employees of HEI who will receive no special compensation for
their services. HEI may reimburse brokers, banks, and others holding shares in
their names for others for the costs of forwarding proxy materials to, and
obtaining Proxies from, beneficial owners.
The Annual Report of HEI, including financial statements, for the year ended
August 31, 1995, is being mailed to each shareholder with this Proxy Statement.
Copies of this Proxy Statement and proxies will first be mailed to shareholders
on or about December 4, 1995.
<PAGE>
SHARES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on November 21, 1995,
are entitled to notice of and to vote at the meeting or at any adjournment
thereof. As of that date, there were 3,801,597 outstanding shares of Common
Stock of HEI, the only class of securities entitled to vote at the meeting.
Each shareholder of record is entitled to one vote for each share registered
in his or her name. Cumulative voting is not permitted.
The following table shows as of November 21, 1995, information regarding the
share ownership of each person or group known to HEI to own beneficially more
than 5% of the outstanding Common Stock of HEI, each director or nominee to
become a director of the Company, each Named Executive Officer (as defined
below), and all directors and executive officers as a group. Except as otherwise
indicated, the persons listed in the table have sole voting and investment
powers with respect to the shares owned. Information regarding share ownership
of persons other than directors and officers is based on the records of the
Company's transfer agent and on information supplied to the Company by the
holders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
----------------------------
NUMBER OF
NAME SHARES PERCENTAGE
- ----------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
William R. Franta............................................................ 35,211(2) *
Eugene W. Courtney........................................................... 135,780(3) 3.5%
Kenneth A. Schoen............................................................ 67,108(4) 1.7%
Robert L. Brueck............................................................. 14,000(5) *
Frederick M. Zimmerman....................................................... 10,300(6) *
Jerald H. Mortenson.......................................................... 115,000(7) 3.0%
Dale A. Nordquist............................................................ 54,432(8) 1.4%
All directors and executive officers
as a group (7 persons)...................................................... 431,831(9) 10.7%
</TABLE>
- ------------------------
* Less than 1%
(1) Represents outstanding shares beneficially owned both directly and
indirectly as of November 21, 1995, including shares that may be acquired by
exercise of options within 60 days after November 21, 1995 ("currently
exercisable options"). Percentage of class is shown to the nearest tenth of
a percent.
(2) Includes 30,000 shares purchasable pursuant to currently exercisable
options.
(3) Includes 60,000 shares purchasable pursuant to currently exercisable
options. Also includes 46,974 shares held jointly with Mr. Courtney's
spouse.
(4) Includes 40,000 shares purchasable pursuant to currently exercisable
options.
(5) Includes 10,000 shares purchasable pursuant to currently exercisable options
and 2,000 shares held in a trust for the benefit of Mr. Brueck's adult son
for which Mr. Brueck serves as trustee.
(6) Includes 10,000 shares purchasable pursuant to currently exercisable
options.
(7) Includes 50,000 shares purchasable pursuant to currently exercisable
options.
(8) Includes 17,500 shares purchasable pursuant to currently exercisable
options.
(9) Includes 217,500 shares subject to currently exercisable options.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The five directors are standing for reelection. Management recommends that
these individuals be elected to serve as directors. If elected, these persons
will serve as directors until the next Annual Meeting of Shareholders and until
their successors have been elected and qualified.
Each of the nominees has consented to being named in this Proxy Statement
and to serve if elected. It is the intention of the persons named in the
accompanying Proxy, unless authority is specifically withheld, to vote for the
nominees listed below. Should any nominee become unable to serve, the persons
voting the enclosed Proxy may, in their discretion, vote for a substitute
nominee.
Following is certain information about the current directors. Unless
otherwise indicated, each person has held the principal occupation indicated for
more than the past five years.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
- ------------------------------------------------------ --- ---------------
<S> <C> <C>
WILLIAM R. FRANTA 53 1985
Vice President-Research and
Advanced Development, Chief
Technical Officer, Network
Systems Corporation
EUGENE W. COURTNEY 59 1989
President and Chief Executive
Officer of the Company; Director,
DRS Data & Research Services, PLC
KENNETH A. SCHOEN 68 1989
Executive Vice President,
3M Company, until retirement
in October 1989
ROBERT L. BRUECK 59 1995
Semi-retired; Business Consultant;
General Partner, Business Development
Partners, 1981 - 1986
FREDERICK M. ZIMMERMAN 59 1995
Chair of Manufacturing Systems
Engineering Department and Director
of Graduate Programs in Manufacturing
Systems and Engineering at the
University of St. Thomas, St. Paul, MN
</TABLE>
MEETINGS OF THE BOARD AND CERTAIN COMMITTEES
During the fiscal year ended August 31, 1995, the Board held a total of five
meetings. Each director attended at least 75% of the aggregate of the total
number of meetings of the Board plus the total number of meetings of all
committees of the Board on which he served.
The Audit Committee, which consists of the four outside directors, reviews
the annual audit plan and results with the independent accountants and also
reviews the Company's financial statements and its accounting and reporting
practices. The Audit Committee held three meetings during fiscal 1995 to review
the Company's fiscal 1994 financial statements and the related audit and to
consider the selection of independent accountants for fiscal 1995.
The Nominating Committee, consisting of all directors, met once during
fiscal 1995 to recommend nominees for the Board of Directors.
3
<PAGE>
The Compensation Committee, which consists of the four nonemployee
directors, met informally several times during the 1995 fiscal year to discuss
executive compensation.
DIRECTORS' FEES
The nonemployee directors receive $750 per quarter plus $700 for each
regular board meeting and $300 for each committee or special board meeting
attended. Each committee chairperson receives an annual fee of $300. For
services during the fiscal year ended August 31, 1995, $26,600 in directors'
fees was paid or accrued, in the aggregate, to the four nonemployee directors,
plus expenses.
DIRECTORS' STOCK OPTIONS
Under the Company's Stock Option Plan for Nonemployee Directors (the "1991
Plan"), an option to purchase 10,000 shares of Common Stock at an exercise price
equal to the fair market value (as defined) on the date of grant is granted each
year to all directors then in office on the business day next following the
annual shareholders' meeting or April 1, whichever is earlier. Awards under the
1991 Plan may be made to any director who is not a regular employee of the
Company or any subsidiary or affiliate. The options become exercisable on the
earlier of one year following the date of grant or the next annual shareholders
meeting, so long as the director is still serving on such date, and terminate
five years following the date of grant. Upon the death or disability of an
optionee prior to the end of one year following grant, the option will become
immediately fully exercisable. Effective January 19, 1995, each of the Company's
nonemployee directors was granted an option to purchase 10,000 shares at an
exercise price of $4.7125 per share. These options become exercisable on January
19, 1996, and are exercisable until January 19, 2000.
During fiscal year 1995, none of the nonemployee directors exercised
options.
COMPLIANCE WITH SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that officers and directors of the Company and persons who own more than 10% of
a registered class of the Company's equity securities file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1995 and written representation from certain reporting
persons, the Company believes that all filing requirements have been complied
with, except that a Form 3 reporting initial ownership by a trust of which
Robert Brueck is a trustee and of which his son is a beneficiary was filed late.
The acquisition was also reported on an Amended Form 4 for the month in which
the transaction occurred.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's chief
executive officer and the other executive officers whose total annual
compensation in fiscal 1995 (based on salary and bonus) exceeded $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION OTHER
FISCAL ---------------------- ------------------- ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS/OPTIONS (1) COMPENSATION (2)
- ----------------------------------------- --------- ----------- --------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
Eugene W. Courtney 1995 $ 150,091 $ 40,785 90,000 $ 3,648
Chief executive officer 1994 142,526 27,617 -- 3,792
1993 134,832 41,100 -- 2,482
Jerald H. Mortenson 1995 $ 105,946 $ 19,194 60,000 $ 2,401
Chief financial officer 1994 100,578 12,997 -- 2,743
1993 95,752 19,320 -- 1,845
Dale A. Nordquist 1995 $ 87,866 $ 30,608 52,500 $ 2,762
Vice president of sales 1994 83,684 19,360 -- 2,458
1993 80,954 26,500 -- 1,535
</TABLE>
- ------------------------
(1) The number indicated is the number of shares of common stock subject to
options granted in fiscal 1995, which will become exercisable in three
annual increments and expire in 2000.
(2) In each case, consists solely of Company matching contributions to 401(k)
plan.
OPTIONS GRANTED DURING FISCAL 1995
During fiscal 1995, the following options were granted to the Named
Executive Officers:
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION
NAME OPTIONS GRANTED FISCAL YEAR SHARE DATE
- ---------------------------------------------------- ----------------- ----------------- --------- -----------
<S> <C> <C> <C> <C>
Eugene W. Courtney.................................. 90,000 26.7% $ 4.7125 1/19/2000
Jerald H. Mortenson................................. 60,000 17.8% 4.7125 1/19/2000
Dale A. Nordquist................................... 52,500 15.6% 4.7125 1/19/2000
</TABLE>
AGGREGATED OPTION EXERCISES DURING FISCAL 1995 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to options exercised by the
Named Executive Officers during fiscal 1995 and the number and value of options
held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END (2)
SHARES ---------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED (1) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----------- ------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Eugene W. Courtney............................ 30,000 $ 104,250 30,000/90,000 $ 126,750/$93,375
Jerald H. Mortenson........................... 10,000 31,700 40,000/60,000 169,000/62,250
Dale A. Nordquist............................. 15,000 50,250 -0-/52,500 -0-/54,469
</TABLE>
- ------------------------
(1) Value realized is calculated as the difference between the fair market value
of the Common Stock on the date of exercise of the option and the option
exercise price multiplied by the number of shares acquired.
5
<PAGE>
(2) Value is calculated as the difference between the closing price of the
Common Stock on August 31, 1995, which was $5.75, and the option exercise
price multiplied by the number of shares subject to the option.
OTHER MATTERS
The Board does not intend to present any business to the meeting other than
as specifically set forth in the Notice of Annual Meeting of Shareholders and
currently knows of no other business to come before the meeting. If any other
matters are properly brought before the meeting, the Proxies will vote on such
matters in accordance with their judgment of the best interests of HEI.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. has been the independent accountants for the
Company since fiscal 1992. A representative of Coopers & Lybrand L.L.P. is
expected to be present at the Annual Meeting and will be given an opportunity to
make a statement if so desired and to respond to appropriate questions.
The Company has selected Coopers & Lybrand L.L.P. as its independent
accountants for fiscal 1996.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by HEI at its principal executive
offices no later than August 6, 1996.
AVAILABILITY OF REPORT ON FORM 10-KSB
The Company's 1995 Report on Form 10-KSB may be obtained by writing to HEI
Shareholder Relations, P.O. Box 5000, 1495 Steiger Lake Lane, Victoria,
Minnesota 55386.
By Order of the Board of Directors
Jerald H. Mortenson
CORPORATE SECRETARY
Dated: December 4, 1995
6
<PAGE>
PROXY FOR ANNUAL SHAREHOLDERS' MEETING
JANUARY 17, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eugene W. Courtney and Jerald H. Mortenson
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of HEI, Inc., held of record by the undersigned on November 21, 1995, at
the Annual Meeting of Shareholders to be held at 3:00 p.m., on Wednesday,
January 17, 1996 or any adjournment thereof.
(1) ELECTION OF DIRECTORS
<TABLE>
<S> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for ALL nominees below
</TABLE>
Nominees: Robert L. Brueck Eugene W. Courtney William R. Franta Kenneth A.
Schoen Frederick M. Zimmerman
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
- --------------------------------------------------------------------------------
(2) In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: ______________________________
Signed: _____________________________
Signed: _____________________________
PLEASE SIGN ABOVE EXACTLY AS NAME
APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS,
ETC. SHOULD SO INDICATE WHEN SIGNING.
IF A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY THE PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AN AUTHORIZED
PERSON.
