LOJACK CORP, DEF 14A, 1998-06-03

LOJACK CORP
DEF 14A, 1998-06-03
COMMUNICATIONS EQUIPMENT, NEC

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<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 (S)240.14a-11(c) or (S)240.14a-12

LoJack Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

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:

________________________________________________________________________

(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.:

________________________________________________________________________

(3) Filing Party:

________________________________________________________________________

(4) Date Filed:

________________________________________________________________________

<PAGE>

LOJACK CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1998

You are hereby notified that the annual meeting of stockholders of LoJack
Corporation (the "Company") will be held on the 15th day of July, 1998 at
10:00 a.m. at the Sheraton Tara Hotel, 37 Forbes Road, Braintree,
Massachusetts, for the following purposes:

1. To consider and act upon a proposal to fix the number of directors of
the Company at seven (7) and to elect seven (7) directors for the
ensuing year.

2. To consider and act upon such other business as may properly come before
the Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on May 22, 1998 as
the record date for the Meeting. Only stockholders on the record date are
entitled to notice of and to vote at the Meeting and at any adjournment
thereof.

By order of the Board of Directors,

THOMAS A. WOOTERS, Clerk

June 3, 1998

IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF ADDITIONAL
PROXY SOLICITATION, PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE MEETING PERSONALLY. YOUR COOPERATION IS GREATLY
APPRECIATED.
<PAGE>

LOJACK CORPORATION

EXECUTIVE OFFICES
333 ELM STREET
DEDHAM, MASSACHUSETTS 02029

PROXY STATEMENT

SOLICITATION AND VOTING OF PROXIES

This proxy statement and the accompanying proxy form are being mailed by
LoJack Corporation (the "Company") to the holders of record of the Company's
outstanding shares of common stock, $.01 par value ("Common Stock"),
commencing on or about June 3, 1998. The accompanying proxy is solicited by
the Board of Directors of the Company for use at the annual meeting of
stockholders to be held on July 15, 1998 (the "Meeting") and at any
adjournment thereof. The cost of solicitation of proxies will be borne by the
Company. Directors, officers and employees may assist in the solicitation of
proxies by mail, telephone, telegraph, telefax, telex, in person or otherwise,
without additional compensation.

When a proxy is returned, prior to or at the Meeting, properly signed, the
shares represented thereby will be voted by the proxies named in accordance
with the stockholder's instructions indicated on the proxy card. You are urged
to specify your choices on the enclosed proxy card. If the proxy card is
signed and returned without specifying choices, the shares will be voted FOR
the election of directors as set forth in this proxy statement and in the
discretion of the proxies as to other matters that may properly come before
the Meeting. Sending in a proxy will not affect a stockholder's right to
attend the Meeting and vote in person. A proxy may be revoked by notice in
writing delivered to the Clerk of the Company at any time prior to its use, by
a written revocation submitted to the Clerk of the Company at the Meeting, by
a duly-executed proxy bearing a later date, or by voting in person by ballot
at the Meeting. A stockholder's attendance at the Meeting will not by itself
revoke a proxy.

VOTING SECURITIES AND RECORD DATE

The only outstanding class of stock of the Company is its Common Stock. Each
share of Common Stock is entitled to one vote per share. The Board of
Directors has fixed May 22, 1998 as the record date for the Meeting. Only
stockholders of record on the record date are entitled to notice of and to
vote at the Meeting and any adjournment thereof. On May 22, 1998, there were
issued and outstanding 18,127,461 shares of Common Stock.

The Company's Articles of Organization and By-laws provide that a quorum
shall consist of the representation in person or by proxy at the Meeting of
stockholders entitled to vote fifty-one percent (51%) in interest of the votes
that are entitled to be cast at the Meeting. The election of directors is by
plurality of the votes cast at the Meeting either in person or by proxy. The
approval of a majority of the votes properly cast at the Meeting, either in
person or by proxy, is required for the approval of any other business which
may properly be brought before the Meeting or any adjournment thereof.
<PAGE>

With regard to the election of directors, votes may be left blank, cast in
favor or withheld. Votes that are left blank will be counted in favor of the
election of the directors named on the proxy card. Votes that are withheld
will have the effect of a negative vote. Abstentions may be specified on all
proposals (other than the election of directors) and will be counted as
present for purposes of the proposal on which the abstention is noted. Broker
non-votes (i.e., shares held by a broker or nominee which are represented at
the Meeting, but with respect to which the broker or nominee is not empowered
to vote on a particular proposal) will be counted in determining a quorum for
each proposal. However, broker non-votes will be treated as unvoted shares
and, accordingly, will not be counted in determining the outcome of any
proposal which requires the affirmative vote of a majority of the votes cast.

PRINCIPAL AND MANAGEMENT STOCKHOLDERS

The following table sets forth certain information as of May 22, 1998 with
respect to the voting securities of the Company owned by (1) any person
(including any "group" as that term is defined in section 13(d)(3) of the
Securities Exchange Act of 1934) who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of a class of
voting securities of the Company, (2) each director or nominee for director of
the Company, (3) each of the executive officers named in the Summary
Compensation Table in this proxy statement, and (4) all directors, nominees
for director and executive officers of the Company as a group. In accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a
person is deemed to be the beneficial owner, for purposes of this table, of
any voting securities of the Company if he or she has or shares voting power
or investment power with respect to such securities or has the right to
acquire beneficial ownership thereof at any time within 60 days of May 22,
1998. As used herein "voting power" is the power to vote or direct the voting
of shares, and "investment power" is the power to dispose of or direct the
disposition of shares. Except as indicated in the notes following the table
below, each person named has sole voting and investment power with respect to
the shares listed as being beneficially owned by such person.

Leon G. Cooperman 1,466,100(2) 8.09%
c/o Omega Advisors, Inc.
88 Pine Street
Wall Street Plaza--31st Floor
New York, NY 10005

C. Michael Daley 1,230,686(3) 6.45%

James A. Daley 27,000(4) *

Lee T. Sprague 243,634(5) 1.34%

Harold W. Shad, III 108,742(6) *

Robert J. Murray 47,500(7) *

Larry C. Renfro 27,000(8) *

</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME OF AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
---------------- -------------------- -------------
<S> <C> <C>
Joseph F. Abely 342,950(9) 1.86%
Kevin M. Mullins 28,750(10) *
William R. Duvall 228,500(11) 1.24%
Peter J. Conner 301,500(12) 1.64%
Harvey Rosenthal 4,500(13) *
All executive officers and directors
as a group (11 persons) 2,590,762(14) 12.89%
</TABLE>
- ---------------------
* Less than one percent (1%) of the outstanding Common Stock.
(1) According to a report filed with the SEC on Amendment No. 7 to Schedule
13G, dated February 10, 1998, Capital Guardian Trust Company and Capital
Research and Management Company, operating subsidiaries of The Capital
Group Companies, Inc., exercised as of February 10, 1998, investment
discretion with respect to 1,609,700 and 1,347,000 shares, respectively.
The Capital Group Companies, Inc. disclaims beneficial ownership as to
2,956,700 shares.
(2) According to a report filed with the SEC on Amendment No. 3 to Schedule
13D, dated March 18, 1998, Leon G. Cooperman is the managing member of
Omega Associates, L.L.C. (which is the sole general partner of Omega
Capital Partners, L.P., Omega Institutional Partners, L.P., and Omega
Capital Investors, L.P.), the President and majority stockholder of Omega
Advisors, Inc., investment advisor to Omega Overseas Partners, Ltd. and
Omega Partners II, Ltd., and investment manager to certain unrelated third
parties. Mr. Cooperman exercises sole voting and sole investment power
with respect to 1,151,100 shares and shared voting and investment power
with respect to 315,000 shares.
(3) Includes (i) 23,809 shares held jointly with spouse, (ii) 5,167 shares
held by spouse as to which beneficial ownership is disclaimed, (iii) 5,800
shares held as custodian under the Massachusetts Uniform Transfer to
Minors Act as to which beneficial ownership is disclaimed and (iv) 967,000
shares issuable upon exercise of certain options which options are
currently exercisable or become exercisable within 60 days of May 22, 1998
("Currently Exercisable Options").
(4) Includes 27,000 shares issuable upon exercise of Currently Exercisable
Options.
(5) Includes 5,000 shares held by spouse as to which beneficial ownership is
disclaimed and 27,000 shares issuable upon exercise of Currently
Exercisable Options.
(6) Includes (i) 12,565 shares held by spouse as to which beneficial ownership
is disclaimed, (ii) 8,612 shares held by controlled corporations, (iii)
9,000 shares held by a retirement account, and (iv) 27,000 shares issuable
upon exercise of Currently Exercisable Options.
(7) Includes 20,500 shares held jointly with spouse and 27,000 shares issuable
upon exercise of Currently Exercisable Options.
(8) Includes 27,000 shares issuable upon exercise of Currently Exercisable
Options.
(9) Includes (i) 200 shares held by spouse as to which beneficial ownership is
disclaimed, (ii) 1,000 shares held jointly with spouse, and (iii) 307,750
shares issuable upon exercise of Currently Exercisable Options.
(10) Includes 28,750 shares issuable upon exercise of Currently Exercisable
Options.
(11) Includes 228,500 shares issuable upon exercise of Currently Exercisable
Options.
(12) Includes 301,500 shares issuable upon exercise of Currently Exercisable
Options.
(13) Includes 2,500 shares issuable upon exercise of Currently Exercisable
Options.
(14) Includes 1,971,000 shares issuable upon exercise of Currently Exercisable
Options. See footnotes (3) through (13).

3
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who own more than 10% of the outstanding Common
Stock of the Company to file with the Securities and Exchange Commission
("SEC") and NASDAQ reports of ownership and changes in ownership of voting
securities of the Company and to furnish copies of such reports to the
Company. Based solely on review of the copies of such reports furnished to the
Company or written representations from certain persons that no reports were
required for those persons, the Company believes that all Section 16(a) filing
requirements were satisfied in a timely fashion during the fiscal year ended
February 28, 1998, except for the following: each of Peter J. Conner and
William R. Duvall made one late filing through administrative inadvertence,
reporting their disposition of beneficial ownership of 13,000 shares and
16,500 shares of Common Stock, respectively.

PROPOSAL NO. 1--ELECTION OF DIRECTORS

One of the purposes of the Meeting is to fix the number of directors of the
Company at seven (7) and to elect seven (7) directors to serve until the next
annual meeting of stockholders and until their successors shall have been duly
elected and qualified. It is intended that the proxies solicited by the Board
of Directors will be voted in favor of the seven (7) nominees named below
unless otherwise specified on the proxy form. All of the nominees are
currently members of the Board. There are no family relationships between any
nominees, directors or executive officers of the Company except that Mr. James
A. Daley and Mr. C. Michael Daley are brothers.

The Board knows of no reason why any of the nominees will be unavailable or
unable to serve as a director, but in such event, proxies solicited hereby
will be voted for the election of another person or persons to be designated
by the Board of Directors.

The following information is furnished with respect to the persons nominated
for election as directors:

<TABLE>
<CAPTION>
PRESENT PRINCIPAL EMPLOYER
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- -----------------------------
<S> <C> <C>
C. Michael Daley 61 Mr. C. Michael Daley has served as Chairman of the Board,
Chief Executive Officer and Treasurer of the Company since
July 1986. Mr. Daley was also President of the Company from
July 1986 to January 11, 1996. Mr. Daley has been director
of the Company since 1981. Prior to July 1986, he was Presi-
dent and a principal of Daley Care Management Company, a
company engaged in the health care business.
James A. Daley 57 Mr. James A. Daley has served as a director of the Company
since 1985. Mr. Daley is President and a principal of Daley
Hotel Group, Inc., and several affiliated entities, all of
Boston, Massachusetts, which are in the hotel and restaurant
business.
Harold W. Shad, III 51 Mr. Shad has served as a director of the Company since July
1988. From 1984 to April 1997 Mr. Shad was the owner, Presi-
dent and Chief Executive Officer of Mike Shad Ford, Inc. and
Mike Shad Chrysler, Plymouth Jeep, Eagle, Inc. of Jackson-
ville, Florida. Since April 1997, Mr. Shad has continued to
serve as President of Mike Shad Ford, Inc. and Mike Shad
Chrysler, Plymouth, Jeep, Eagle, Inc. of Jacksonville, Flor-
ida. Mr. Shad is a former director of the National Automo-
bile Dealers Association, representing Florida. Mr. Shad is
also a past Chairman of the Ford Motor Company's National
Dealer Counsel.
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
PRESENT PRINCIPAL EMPLOYER
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- -----------------------------
<S> <C> <C>
Lee T. Sprague 58 Mrs. Sprague has served as a director of the Company since
1981. Mrs. Sprague has been a private investor for more than
the past seven years. Mrs. Sprague also serves on the boards
of various private, educational and charitable institutions.
Robert J. Murray 56 Mr. Murray has served as a director of the Company since
1992. Mr. Murray has been Chairman of the Board, President
and Chief Executive Officer of New England Business Service,
Inc. since December 13, 1995. From January 1991 to December
1995, Mr. Murray was Executive Vice President, North Atlan-
tic Group, of The Gillette Company. Prior to January 1991,
Mr. Murray served as Chairman of the Board of Management of
Braun AG, a Gillette subsidiary headquartered in Germany. He
has also held a variety of other management positions in
Gillette since 1961. Mr. Murray also serves on the Board of
Directors of Fleet National Bank, Allmerica Financial Corpo-
ration and Hannaford Bros. Co.
Larry C. Renfro 44 Mr. Renfro has served as a director of the Company since
1993. Mr. Renfro is currently the Chief Executive Officer of
LCR Financial Group, Inc. From 1990 to 1997, Mr. Renfro held
the office of Vice President, Financial Services and served
as a member of the Operating Committee of Allmerica Finan-
cial. From 1989 to 1990, he was Executive Vice President of
State Street Bank and Trust Company. From 1988 to 1989, he
was Chairman of Boston Financial Data Services, Inc., a sub-
sidiary of State Street Bank and Trust Company.
Harvey Rosenthal 55 Mr. Rosenthal has served as a director of the Company since
1997. Now retired, Mr. Rosenthal held the offices of Presi-
dent and Chief Operating Officer and was a member of the
Board of Directors of Melville Corporation (now known as CVS
Corporation) from 1994 to 1996. From 1984 to 1994, Mr. Ro-
senthal was the President and Chief Executive Officer of the
CVS Division of Melville Corporation, preceded by 15 years
of executive positions in merchandising, marketing and oper-
ations at CVS. Mr. Rosenthal also serves on the Board of Di-
rectors of Cosmetic Centers, Inc. and on the Board of Trust-
ees of EQ Advisors Trust.
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED ABOVE.

5
<PAGE>

BOARD OF DIRECTORS

Meetings of the Board of Directors and Committees

The Board of Directors met four times during the fiscal year ended February
28, 1998. The Board of Directors has standing Audit and Compensation
Committees. The Board does not have a nominating committee. All of the
directors attended 75% or more of the aggregate number of meetings of the
Board of Directors and the committees on which they served during the fiscal
year ended February 28, 1998.

The Compensation Committee, which currently consists of Mrs. Sprague and
Messrs. Murray and Renfro, reviews the Company's compensation philosophy and
programs and exercises authority with respect to the payment of compensation
to directors and officers and the administration of the stock incentive plans
of the Company. The Compensation Committee met once during the fiscal year
ended February 28, 1998.

The Audit Committee, which consists of Messrs. James Daley, Shad and
Rosenthal, recommends the selection of and confers with the Company's
independent accountants regarding the scope and adequacy of annual audits,
reviews reports from the independent accountants, and meets with such
independent accountants and with the Company's financial personnel to review
the adequacy of the Company's accounting principles, financial controls and
policies. The Audit Committee met once during the fiscal year ended February
28, 1998.

Compensation of Directors

Each director of the Company, in addition to stock options granted as
described below, is entitled to an annual stipend at the rate of $8,000 (based
on a minimum of four directors meetings a year and for directors elected
between annual meeting dates, prorated based upon the term of service), an
attendance fee for each Board meeting of $800 and reimbursement of travel and
hotel expenses (for out-of-state directors only). In addition, the Chairman of
the Audit Committee and the Chairman of the Compensation Committee are
entitled to an additional $500 stipend per year.

Non-employee directors (currently six persons) are eligible to receive Non-
Employee Director Options under the Company's Restated and Amended Stock
Incentive Plan (the "Stock Incentive Plan"). The provisions for Non-Employee
Director Options under the Stock Incentive Plan are designed to be a "formula
plan" under applicable rules promulgated by the SEC and are administered by
the Board of Directors. Pursuant to the Stock Incentive Plan, on the third
business day following the annual meeting of stockholders on July 20, 1994, an
option to purchase 10,000 shares of Common Stock was granted to each non-
employee director re-elected at such meeting at an exercise price of $7.375
per share, the fair market value on the date of grant. Thereafter, on the
third business day following an annual meeting of stockholders, each eligible
non-employee director elected or re-elected at such meeting receives an option
grant to purchase 5,000 shares of Common Stock at an exercise price equal to
the fair market value of the Company's Common Stock on that date. Pursuant to
the Stock Incentive Plan, an option to purchase 5,000 shares of Common Stock
was granted to each non-employee director re-elected at the annual meeting of
stockholders on July 19, 1995, July 17, 1996, and July 16, 1997 at an exercise
price of $12.375 per share, $9.625 per share and $15.00 per share
respectively, the fair market value on the date of each grant. Any non-
employee director elected other

6
<PAGE>

than at an annual meeting of stockholders will be granted a Non-Employee
Director Option to purchase 1,250 shares of Common Stock for each partial or
complete fiscal quarter remaining until the next annual meeting of
stockholders. There are 210,000 shares of Common Stock authorized for awards
as Non-Employee Director Options and to date the Company has issued Non-
Employee Director Options to purchase 130,000 shares of Common Stock.

Non-Employee Director Options are nonqualified stock options under the Stock
Incentive Plan. The exercise price of shares subject to Non-Employee Director
Options shall be equal to the fair market value of Common Stock on the date of
grant. Non-Employee Director Options have a term of ten years and become
exercisable in two annual installments beginning at the next annual meeting of
stockholders after the date of grant, subject to becoming fully exercisable if
a "Change in Control," as described in the Stock Incentive Plan, occurs or as
otherwise provided in the terms of the option.

7
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table and notes present the compensation paid by the Company
to its Chief Executive Officer and the Company's four most highly compensated
executive officers other than the Chief Executive Officer for each of the last
three fiscal years.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING ALL OTHER
NAME AND FISCAL OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR (1) SALARY ($) BONUS ($) (#)(2) ($)(3)
------------------ -------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. Michael Daley 1998 $347,499 $175,000 125,000 $3,799
(Chairman, Chief Execu-
tive 1997 322,596 162,500 125,000 3,600
Officer and Treasurer) 1996 302,884(6) 150,000 125,000 3,696
Joseph F. Abely 1998 186,153 92,500 35,000 3,799
(President and Chief 1997 176,316 90,000 30,000 3,600
Operating Officer) (4) 1996 153,533(6) 78,750 40,000 3,696
William R. Duvall 1998 133,115 65,000 30,000 3,503
(Senior Vice President, 1997 125,277 62,000 30,000 3,600
Operations and Technical 1996 119,378(6) 49,510 40,000 3,696
Development)
Kevin M. Mullins 1998 119,077 50,500 30,000 1,040
(Vice President, 1997 118,808 40,000 2,500 0
Sales and Marketing) 1996 8,308(5) 2,500 40,000 0
Peter J. Conner 1998 99,226 42,500 30,000 3,287
(Vice President, 1997 95,146 40,000 30,000 3,042
Government Relations) 1996 93,448(6) 32,244 40,000 3,696
</TABLE>
- ---------------------
(1) The Company's fiscal year ends on the last day of February.
(2) Options represent the right to purchase shares of Common Stock at a fixed
price per share (fair market value) in accordance with vesting schedules
applicable to each option. Certain options become immediately and fully
exercisable upon a "Change in Control." A "Change in Control" occurs if
the Company (i) ceases operations; (ii) merges or consolidates with
another entity and is not the surviving entity; (iii) sells or otherwise
transfers substantially all of its operating assets; or (iv) if more than
fifty percent (50%) of the capital stock of the Company is transferred in
a single transaction or in a series of related transactions other than a
public offering of stock of the Company.
(3) Represents the Company's match of the employee's contribution to the
401(k) plan.
(4) Mr. Abely was appointed President and Chief Operating Officer on January
11, 1996. Previously, he was Senior Vice President and Chief Financial
Officer.
(5) Mr. Mullins was hired as of January 29, 1996.
(6) Reflects 53 pay periods during the year.

8
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table shows all options granted to each of the named executive
officers of the Company during the fiscal year ended February 28, 1998 and the
potential value at stock price appreciation rates of 5% and 10% over the ten-
year term of the options. The 5% and 10% rates of appreciation are required to
be disclosed by the SEC and are not intended to forecast possible future
actual appreciation, if any, in the Company's stock prices. The Company did
not use an alternative present value formula permitted by the SEC because the
Company is not aware of any such formula that can determine with reasonable
accuracy the present value based on future unknown or volatile factors.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE OR FOR OPTION TERM(3)
GRANTED IN FISCAL BASE PRICE EXPIRATION -----------------------
(#)(1) YEAR ($/SH)(2) DATE 5%($) 10%($)
---------- ---------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
C. Michael Daley 125,000 29.6% $9.75 3/19/07 $766,465 $1,942,373
Joseph F. Abely 35,000 8.3 9.75 3/19/07 214,610 543,865
William R. Duvall 30,000 7.1 9.75 3/19/07 183,952 466,170
Peter J. Conner 30,000 7.1 9.75 3/19/07 183,952 466,170
Kevin W. Mullins 30,000 7.1 9.75 3/19/07 183,952 466,170
</TABLE>
- ---------------------
(1) These Senior Management Options become exercisable in four equal
installments commencing on February 28, 1998, February 28, 1999, February
29, 2000, and February 28, 2001. These options are subject to earlier
vesting upon a "Change in Control" (see Summary Compensation Table Note
(2)). Options may be exercised by the employee only during the term of
employment and are not assignable other than by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations
order. Upon the death of the optionee, the estate or other beneficiary may
exercise the options for a period of up to twelve months, but prior to
expiration.
(2) The exercise price per share is the market price of the underlying Common
Stock on the date of grant.
(3) The values shown are based on the indicated assumed annual rates of
appreciation, compounded annually. Actual gains realized, if any, on stock
option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the values shown in this table will be achieved.

9
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

The following table sets forth information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT FY-END (#) FY-END ($)(2)
ACQUIRED ON REALIZED ------------------------- -------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. Michael Daley 123,250 $1,168,500 967,000 187,500 $7,286,572 $347,656
Joseph F. Abely 20,500 256,313 307,750 51,250 2,366,141 102,109
William R. Duvall 6,500 77,340 228,500 47,500 1,530,069 92,969
Peter J. Conner 0 0 301,500 47,500 2,273,756 92,969
Kevin M. Mullins 0 0 28,750 43,750 69,531 106,094
</TABLE>
- ---------------------
(1) Value realized equals fair market value on the date of exercise, less the
exercise price, times the number of shares acquired without deducting
taxes or commissions paid by employee.
(2) Value of unexercised options equals fair market value of the shares
underlying in-the-money options at February 27, 1998 ($12.1875 per share),
which was the last trading day of the Company's fiscal year, less exercise
price, times the number of options outstanding.

10
<PAGE>

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
report and the stock performance graph contained elsewhere herein shall not be
incorporated by reference into any such filings nor shall they be deemed to be
soliciting material or deemed filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended.

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee of the Board of Directors (the "Committee")
consists of Lee T. Sprague, Robert J. Murray and Larry C. Renfro, three non-
employee directors. The Committee is responsible for reviewing the Company's
compensation philosophy and programs and exercises oversight with respect to
the payment of annual salary, bonuses, and stock-based incentives (currently
stock options) to directors and officers and also exercises authority with
respect to the administration of the stock incentive plans of the Company.

COMPENSATION PHILOSOPHY AND PRACTICE

The Committee believes that leadership and motivation of the Company's
employees is critical to the continued success of the Company. In support of
this philosophy, the Committee structures its compensation programs to achieve
the following objectives:

. offer compensation opportunities that attract and retain exceptionally
talented individuals; motivate individuals to perform at their highest
levels; reward achievements that further the business strategy of the
Company.

. link a significant portion of an executive's total compensation to the
annual and long-term financial performance of the Company as well as to
the creation of stockholder value.

. encourage executives to manage from the perspective of persons with
ownership interests in the Company.

Each year the Committee conducts a full review of the Company's executive
compensation program. In fiscal 1997, the Company retained an independent
consultant to review the current executive compensation practices of the
Company, to assess the competitive level of the executive compensation and to
recommend objective performance measures to use in awarding bonus
compensation. The Committee expects to periodically retain independent
consultants in the future to further assist with developing, maintaining and
structuring the Company's executive compensation programs.

Based upon the findings of the independent consultant and its own
deliberations, the Committee believes that the Company's executive
compensation practices provide an overall level of compensation that is
competitive with the level of compensation of companies of similar size,
complexity, revenues and growth potential, and that its executive compensation
practices also recognize the caliber, level of experience and performance of
the Company's management.

11
<PAGE>

The Committee recently reviewed the performance standards by which it
determines annual bonus awards. These performance standards are based on a
combination of Company results and individual achievements, except for C.
Michael Daley whose award is determined completely by reference to corporate
results. In reviewing the performance of executive officers whose compensation
is detailed in this proxy statement (other than Mr. Daley), the Committee also
takes into account the views of Mr. Daley, the Company's Chief Executive
Officer. The Committee determines and recommends to the Board the compensation
of the Chief Executive Officer without his participation.

EXECUTIVE OFFICER COMPENSATION PROGRAM

BASE SALARY. Base salary compensation is generally set within the ranges of
salaries of executive officers with comparable qualifications, experience and
responsibilities at other companies of similar size, complexity, revenues and
growth potential taking into account the caliber and level of experience of
management. In addition, consideration is given to other factors, including an
officer's contribution to the Company as a whole. Over the past three years,
increases in base salary (other than for Mr. Daley) have generally been
modest. Mr. Abely's base salary was increased to $175,000 on January 11, 1996
to reflect his promotion to President and Chief Operating Officer.

ANNUAL BONUS COMPENSATION. The Company's executive officers are eligible for
an annual cash bonus. Early in the fiscal year, the Committee establishes
individual and Company performance standards. Executive officers are assigned
target bonus levels. In fiscal 1998, the corporate performance standards were
based on growth in revenues, growth in pre-tax earnings and market
penetration. The Committee also considered individual achievements in areas
such as departmental performance and leadership of special projects. Over the
past five fiscal years, the Committee has awarded cash bonuses to its
executive officers.

The awards for each year are generally declared and paid during the first
quarter of the following fiscal year and are paid during that fiscal year. The
Committee recommended, and the Board approved, allocating $250,500 for bonus
compensation to the executive management group (other than to Mr. Daley) for
fiscal 1998, which has been allocated and was paid in the first quarter of
fiscal 1999. The Committee has allocated more for bonuses in fiscal 1998 than
in fiscal 1997 because the Company has had an excellent year in which, among
other things, it had record sales growth and operating profits, expanded the
use of the Company's technology into new jurisdictions, and reduced the
manufactured and installed cost of the Company's products.

MANAGEMENT STOCK OWNERSHIP. Under the Stock Incentive Plan, stock options
may be granted to the executive officers, officers and other key employees of
the Company. The Committee believes that it is important for the Company's
executive officers to hold significant levels of stock ownership in order to
align the interests and objectives of the executive officers with those of the
Company's other stockholders. Furthermore, the Committee believes stock option
grants pursuant to the Stock Incentive Plan provide incentives for improving
the long-term performance of the Company and help retain superior talent in
the Company's senior management. The Committee awards stock options and
determines the size of stock option awards based on similar factors as are
used to determine the base salaries and annual bonus amounts, including
comparative compensation data.

On March 19, 1998, the Committee granted 130,000 Senior Management Options
to purchase Common Stock at $13.00 per share, as follows: Joseph F. Abely,
40,000, William R. Duvall, Peter J.

12
<PAGE>

Conner and Kevin M. Mullins, 30,000 each. The Committee considers these option
grants reflective of the excellent performance of senior management during
fiscal 1998 as measured by the corporate and individual performance standards
and consistent with the intent and purposes of the Company's compensation
philosophy. The Chief Executive Officer was also granted Senior Management
Options, as discussed below.

CHIEF EXECUTIVE OFFICER COMPENSATION

In determining the compensation of the Company's Chairman and Chief
Executive Officer, C. Michael Daley, the Committee considered the demonstrated
leadership he brings to the Company and the excellent performance of the
Company during the past fiscal year as measured against the Company
performance standards established by the Committee. In light of these factors,
Mr. Daley's salary was also increased to $375,000, effective April 1, 1998.
Based on the Company's achievements in fiscal 1998 as measured by its growth
in revenues, growth in net earnings and market penetration, the Board
approved, based on the Committee's recommendation, a bonus of $175,000 to be
paid in the first quarter of fiscal 1999 and the Committee granted Mr. Daley a
Senior Management Option to purchase 125,000 shares of the Company's Common
Stock on the same terms as the grants of Senior Management Options to other
executive officers.

The Compensation Committee

Lee T. Sprague
Robert J. Murray
Larry C. Renfro

13
<PAGE>

STOCK PERFORMANCE GRAPH

The following line graph compares the yearly percentage change in the
cumulative stockholder return on the Company's Common Stock to the NASDAQ
Market Index and a company-selected peer group index, consisting of Audiovox
Corp., over a five-year period beginning February 28, 1993 and ending February
28, 1998. The peer group index was formed on a weighted average basis based on
market capitalizations. Cumulative total return is measured assuming an initial
investment of $100 and reinvestment of dividends. Cincinnati Microwave, Inc.
and Code Alarm, Inc. formerly were members of the company-selected peer group
index. Subsequent to March 1, 1997, Cincinnati Microwave, Inc. sold
substantially all of its assets in a bankruptcy liquidation sale and on April
9, 1997, its common stock was delisted from NASDAQ trading. In addition, on
April 24, 1997, Code Alarm, Inc.'s common stock was delisted from NASDAQ
trading.

[GRAPH APPEARS HERE]

COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- ------------------------------FISCAL YEAR ENDING-----------------------
COMPANY 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
LO-JACK CORP 100 157.33 157.33 224.00 218.67 260.00
PEER GROUP 100 208.47 96.61 71.19 90.68 94.07
BROAD MARKET 100 127.41 121.65 167.97 201.61 274.20
</TABLE>

14
<PAGE>

DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS

Any stockholder proposal intended to be presented at the Company's 1999
annual meeting of stockholders must be received at the executive offices of
the Company not later than February 3, 1999 in order to be considered for
inclusion in the Company's proxy statement and form of proxy for that meeting.

ANNUAL REPORT

The Company's Annual Report to Stockholders, including financial statements,
for the fiscal year ended February 28, 1998 is being furnished to stockholders
of record of the Company concurrently with this proxy statement. The Annual
Report to Stockholders does not, however, constitute a part of the proxy
soliciting material.

OTHER MATTERS

As of the date of this proxy statement, management of the Company knows of
no matter not specifically referred to above as to which any action is
expected to be taken at the Meeting. The persons named in the enclosed form of
proxy, or their substitutes, will vote the proxies, insofar as the same are
not limited to the contrary, in regard to such other matters and the
transaction of such other business as may properly be brought before the
Meeting, in their best judgement.

By order of the Board of Directors,

THOMAS A. WOOTERS,
Clerk

15
<PAGE>

PROXY LOJACK CORPORATION PROXY

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS

JULY 15, 1998

The undersigned hereby appoints C. Michael Daley and Joseph F. Abely (or
either of them) as proxies, each with full power of substitution, to vote all
shares of LoJack Corporation owned by the undersigned on May 22, 1998 at the
Annual Meeting of Stockholders of LoJack Corporation, to be held on July 15,
1998 at 10:00 a.m. at the Sheraton Tara Hotel, 37 Forbes Road, Braintree,
Massachusetts, and at any adjournments therof, hereby revoking any proxy
heretofore given, upon the matters and proposals set forth in the Notice of
Annual Meeting of Stockholders and Proxy Statement dated June 3, 1998, copies of
which have been received by the undersigned. The undersigned instructs such
proxies to vote as follows:

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" ALL THE NOMINEES IN PROPOSAL 1 AND IN THE
DISCRETION OF THE PROXIES ON PROPOSAL 2 ON THE REVERSE.

SEE REVERSE SIDE

<PAGE>

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF STOCKHOLDERS
LOJACK CORPORATION

JULY 15, 1998

FOR all WITHHOLD AUTHORITY
nominees to vote for all nominees

1. Election [_] [_] NOMINEES: C. MICHAEL DALEY
of JAMES A. DALEY
Directors HAROLD W. SHAD, III
LEE T. SPRAGUE
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE ROBERT J. MURRAY
FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S LARRY C. RENFRO
NAME IN THE SPACE PROVIDED BELOW. HARVEY ROSENTHAL

- ------------------------------------------------

2. In their discretion upon such other business as may properly come before the
meeting or any adjournment thereof.

PLEASE MARK, DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE.

SIGNATURE DATE
--------------------------------------- ------------------

SIGNATURE DATE
--------------------------------------- ------------------
Signature if held jointly

Note: Sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If more than one name is shown, including in the case of joint
tenants, each party should sign.