SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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permitted by Rule 14a-6(e)(2))
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RICHARDSON ELECTRONICS, LTD.
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(Name of Registrant as Specified In Its Charter)
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RICHARDSON ELECTRONICS, LTD.
40W267 Keslinger Road
LaFox, Illinois 60147
_____________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 6, 1998
To the Stockholders of Richardson Electronics, Ltd.
The Annual Meeting of Stockholders of Richardson Electronics, Ltd.,
a Delaware corporation, will be held on Tuesday, October 6, 1998 at
3:15 P.M., Chicago time, at the offices of the Corporation, 40W267
Keslinger Road, LaFox, Illinois, for the following purposes:
1. To elect ten directors;
2. To approve the adoption of the Richardson Electronics, Ltd.
Employees' 1998 Incentive Compensation Plan, the granting of
Options, Stock Awards and Cash Bonuses thereunder and the
issuance of shares upon the exercise of such Options.
3. To transact such other business as may properly come before
the meeting and any adjournments thereof.
All stockholders are cordially invited to attend the meeting,
although only stockholders of record at the close of business as of
August 20, 1998 are entitled to notice of, and to vote at, the
Annual Meeting and at any adjournment thereof. If you would like
directions to the location of the Annual Meeting, please contact
the company at (630) 208-2371.
By order of the Board of Directors
EDWARD J. RICHARDSON
Chairman of the Board
and Chief Executive Officer
LaFox, Illinois
September 3, 1998<PAGE>
RICHARDSON ELECTRONICS, LTD.
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
The enclosed proxy is solicited by Richardson Electronics, Ltd.
(the "Company") whose principal executive offices are located at
40W267 Keslinger Road, P.O. Box 393, LaFox, Illinois 60147-0393,
for use at the Annual Meeting of Stockholders of the Company, to be
held Tuesday, October 6, 1998 at 3:15 P.M., Chicago Time, at the
offices of the Company, 40W267 Keslinger Road, LaFox, Illinois, or
at any adjournments thereof. In addition to solicitation of
proxies by mail, proxies may be solicited by the Company's
directors, officers and regular employees by personal interview or
telephone, telegram or similar means, and the Company will request
brokers and other custodians, nominees and fiduciaries to forward
proxy soliciting material to the beneficial owners of shares which
are held of record by them. The expense of all such solicitation,
including printing and mailing, will be paid by the Company. Any
proxy may be revoked at any time before its exercise, by written
notice to the Secretary of the Company, by executing a subsequent
proxy or by attending the meeting and electing to vote in person.
This Proxy Statement and accompanying proxy were first sent or
given to stockholders on or about September 3, 1998.
Only stockholders of the Company of record at the close of business
on August 20, 1998 are entitled to vote at the meeting or any
adjournment thereof. As of that date there were outstanding
11,288,726 shares of Common Stock, par value $.05 per share, and
3,235,621 shares of Class B Common Stock, par value $.05 per share.
Holders of Common Stock are entitled to one (1) vote per share and
holders of Class B Common Stock are entitled to ten (10) votes per
share on all matters voted upon at the meeting. The Common Stock
and the Class B Common Stock will vote together as a single class
on all proposals presented in this Proxy Statement. Outstanding
shares of the Company, represented in person or by proxy, having a
majority of the voting power shall constitute a quorum at the
meeting. A plurality of the voting power of the shares represented
at the meeting is required to elect directors and the ten nominees
who receive the most votes will be elected. The affirmative vote of
a majority of the voting power of the shares represented at the
meeting is required to approve the adoption of the Richardson
Electronics, Ltd. Employees' 1998 Incentive Compensation Plan, the
granting of Options, Stock Awards and Cash Bonuses thereunder and
the issuance of shares upon the exercise of such Options. A proxy
in the accompanying form which is properly signed, dated, returned
and not revoked will be voted in accordance with the instructions
contained therein. Unless authority to vote for the election of
directors (or for any nominee) is withheld, proxies will be voted
for the directors proposed by the Board, and, if no contrary
instructions are given, proxies will be voted for approval of the
Richardson Electronics, Ltd. Employees' 1998 Incentive Compensation
Plan, the granting of Options, Stock Awards and Cash Bonuses
thereunder and the issuance of shares upon the exercise of such
Options. Discretionary authority is provided in the proxy as to
any matters not specifically referred to therein. Management is
not aware of any other matters which are likely to be brought
before the meeting. However, if any such matters properly come
before the meeting, it is understood that the proxy holder or
holders are fully authorized to vote thereon in accordance with his
or their judgment and discretion. Stockholders of record who are
present at the meeting in person or by proxy and who abstain,
including brokers holding customers' shares of record who cause
abstentions to be recorded at the meeting, are considered stock
holders who are present and entitled to vote and they count toward
the quorum. Brokers holding shares of record for customers
generally are not entitled to vote on certain matters unless they
receive voting instructions from their customers. As used herein,
"uninstructed shares" means shares held by a broker who has not
received instructions from its customers on such matters and the
broker has so notified the Company on a proxy form in accordance
with industry practice or has otherwise advised the Company that it
lacks voting authority. As used herein, "broker non-votes" means
the votes that could have been cast on the matter in question by
brokers with respect to uninstructed shares if the brokers had
received their customers' instructions. An abstention and broker
non-vote will have the same effect as a negative vote on the
approval of the adoption of the Richardson Electronics, Ltd. 1998
Incentive Compensation Plan. However, if a stockholder specifies
that a proxy is being voted for less than all shares registered in
the stockholder's name it will be counted as present for quorum
purposes and voted only for the number of shares specified.
ELECTION OF DIRECTORS
A Board of ten directors will be elected to serve until the next
annual meeting, or until their successors are elected and shall
have qualified subject to their earlier resignation or removal as
permitted by law. The proxies returned pursuant to this solicita
tion will be voted by the persons named therein for the election as
directors of the persons named below under "Information Relating to
Directors, Nominees and Executive Officers" as nominees for
election as directors unless specifically directed to withhold
authority in the proxy. Should any nominee be unable to accept the
office of director (which is not presently anticipated), the
persons named in the proxies will vote for the election of such
other persons as they shall determine.
Information Relating to Directors, Nominees and Executive Officers
The following table sets forth the name, principal occupation and
position and offices with the Company, age, and length of service
of each of the directors, nominees for director and executive
officers of the Company and ownership of Common Stock and Class B
Common Stock of the Company (by number of shares and as a percent
age of the total outstanding shares of each class and as a
percentage of the total voting power of all outstanding voting
shares combined) of each director and nominee and each executive
officer named in the "Summary Compensation Table" below and of all
executive officers and directors as a group. Because Class B
Common Stock is convertible into Common Stock the number of shares
listed as owned under the Common Stock column in the table also
includes the number of shares listed under the Class B Common Stock
column. The information in the table has been furnished to the
Company by the persons listed.
<TABLE>
Name, Principal Common Stock and Class B Common Stock
Occupation and Director Beneficially Owned
Company Position Age Since As of August 20, 1998
<CAPTION> Percent of
Number of Total Voting
Number of Shares of if Class
Shares of Percent Class B Percent voting not
Common (1)(2) of Class Common (2) of Class applicable (3)
Directors and Nominees for
Election as Director
<S> <C> <C> <C> <C> <C> <C> <C>
Edward J. Richardson (4)(25) 56 1965 3,787,106(10) 26.14% 3,191,421 98.63% 74.47%
Chairman of the Board,
and Chief Executive
Officer of the Company
Scott Hodes(5)(6)(7)(8) 61 1983 48,424(11) * 3,712 * *
Partner, Ross & Hardies,
Attorneys at Law, which firm provides
legal services to the Company
Samuel Rubinovitz 68 1984 45,431(12) * 825 * *
(4)(5)(6)(8)(9)
Management Consultant and
Chairman of the Board,
LTX Corporation
Arnold R. Allen 66 1986 75,000(13) * 11,782(14) * *
Management Consultant
Kenneth J. Douglas 75 1987 51,344(15) * 1,347 * *
(5)(6)(7)
Chairman of the Board,
West Suburban Hospital
Medical Center
Jacques Bouyer (9) 70 1990 42,000(16) * 0 * *
Management Consultant
William J. Garry (26) 50 1994 48,215(17) * 0 * *
Senior Vice President of
Finance and Chief Financial
Officer of the Company
Harold L. Purkey (7) 54 1994 22,000(18) * 0 * *
President
Forum Capital Markets
Ad Ketelaars (9) 41 1996 57,200(19) * 0 * *
Consultant
Bruce W. Johnson (4) (27) 57 1996 33,524(20) * 0 * *
President and Chief Operating
Officer of the Company
Non-Director Executive Officers
of Company
Charles J. Acurio (28) 39 N.A. 25,170(21) * 0 * *
Executive Vice President -
Display Products Group
William G. Seils (29) 63 N.A. 66,657(22) * 0 * *
Senior Vice President,
General Counsel and Secretary
Joseph C. Grill (30) 53 N.A.
Vice President-Human
Resources
Bart F. Petrini (31) 59 N.A.
Executive Vice President-Electron
Device Group
Flint Cooper (32) 36 N.A.
Executive Vice President-
Security Systems Division
Robert Prince (33) 36 N.A.
Executive Vice President of
Worldwide Sales
Norman A. Hilgendorf (34) 37 N.A.
Vice President- Solid State &
Components
Pierlugi Calderone (35) 40 N.A.
Vice President and
Managing Director of
European Operations
Executive Officers and Directors 4,416,768(23) 29.41% 3,209,087(24) 98.82% 76.28%
as a group (18 persons)
</TABLE>
(*) Less than 1%.
(1) Includes the number of shares listed under the column "Number
of Shares of Class B Common."
(2) Except as noted, beneficial ownership of each of the shares
listed is comprised of either sole investment and sole voting
power, or investment power and voting power that is shared
with the spouse of the Director or officer, or voting power
that is shared with the Trustees of the Company's Employees
Stock Ownership Plan ("ESOP") with respect to shares
identified as allocated to the individual's ESOP account.
(3) Common Stock is entitled to one vote per share and Class B
Common Stock is entitled to ten votes per share. Computation
assumes that Class B Common Stock held or subject to
acquisition pursuant to stock option is not converted.
(4) Member of Executive Committee.
(5) Member of Compensation Committee.
(6) Member of Stock Option Committee.
(7) Member of Audit Committee.
(8) Member of Directors' Executive Oversight Committee.
(9) Member of Strategic Planning Committee.
(10) Includes 3,191,421 shares of Common Stock which would be
issued upon conversion of Mr. Richardson's Class B Common
Stock, 23,591 shares of Common Stock allocated to the account
of Mr. Richardson under the ESOP and 804 shares of Common
Stock which would be issued upon conversion of $17,000
principal amount of the Corporation's 7-1/4% Convertible
Subordinated Debentures, and 4,611 shares of Common Stock
which would be issued upon conversion of $83,000 principal
amount of the Corporation's 8-1/4% Convertible Senior
Subordinated Debentures owned by a Trust of which Mr.
Richardson is a Co-Trustee and as such shares investment and
voting power. Does not include 10,900 shares of Common Stock
held by William G. Seils as custodian for Mr. Richardson's
sons, Alexander and Nicholas, as to which Mr. Richardson
disclaims beneficial ownership.
(11) Includes 3,712 shares of Common Stock which would be issued
upon conversion of Mr. Hodes' Class B Common Stock. Also
includes 40,000 shares of Common Stock to which Mr. Hodes
holds stock options exercisable within 60 days.
(12) Includes 825 shares of Common Stock which would be issued upon
conversion of Mr. Rubinovitz' Class B Common Stock. Also
includes 40,000 shares of Common Stock to which Mr. Rubinovitz
holds stock options exercisable within 60 days.
(13) Includes 11,781 shares of Common Stock to which Mr. Allen
holds stock options exercisable within 60 days and an
additional 11,782 shares of Common Stock which would be issued
upon conversion of 11,782 shares of Class B Common Stock as to
which he also holds stock options exercisable within 60 days.
(14) Includes 11,782 shares of Class B Common Stock as to which Mr.
Allen holds stock options exercisable within 60 days.
(15) Includes 1,347 shares of Common Stock which would be issued
upon conversion of Mr. Douglas' Class B Common Stock. Also
includes 40,000 shares of Common Stock to which Mr. Douglas
holds stock options exercisable within 60 days.
(16) Includes 40,000 shares of Common Stock to which Mr. Bouyer
holds stock options exercisable within 60 days.
(17) Includes 25,000 shares of Common Stock to which Mr. Garry
holds stock options exercisable within 60 days. Also includes
1,776 shares of Common Stock allocated to the account of Mr.
Garry under the ESOP.
(18) Includes 20,000 shares of Common Stock as to which Mr. Purkey
holds stock options exercisable within 60 days.
(19) Includes 57,200 shares of Common Stock as to which Mr.
Ketelaars holds stock options exercisable within 60 days,
provided however that 2,400 shares are subject to forfeiture
if leaves Company employment prior to August 23, 1998, 2,400
shares are subject to forfeiture if he leaves prior to August
23, 1999 and 2,400 shares are subject to forfeiture if he
leaves prior to August 23, 2000.
(20) Includes 20,000 shares of Common Stock for which Mr. Johnson
holds stock options exercisable within 60 days. Also includes
524 shares of Common Stock allocated to the account of Mr.
Johnson under the ESOP.
(21) Includes 16,500 shares of Common Stock as to which Mr. Acurio
holds stock options exercisable within 60 days and 5,570
shares of Common Stock allocated to the account of Mr. Acurio
under the ESOP.
(22) Includes 56,970 shares of Common Stock as to which Mr. Seils
holds stock options exercisable within 60 days. Also includes
8,504 shares of Common Stock allocated to the account of Mr.
Seils under the ESOP. Does not include shares held as
custodian - see (10).
(23) Does not include 10,900 shares of Common Stock held by certain
members of such group as custodians under Uniform Gift to
Minors Acts. Includes 3,191,421 shares of Common Stock which
would be issuable on conversion of Class B Common Stock,
512,989 shares of Common Stock issuable upon options
exercisable within 60 days, 11,782 shares of Common Stock
which would be issuable on conversion of Class B Common Stock
issuable upon options exercisable within 60 days, 804 shares
of Common Stock which would be issued upon conversion of
$17,000 principal amount of the Corporation's 7-1/4%
Convertible Subordinated Debentures, and 4,611 shares of
Common Stock which would be issued upon conversion of $83,000
principal amount of the Corporation's 8-1/4% Convertible
Senior Subordinated Debentures. Includes 50,164 shares of
Common Stock held in trust for the benefit of the Company's
profit sharing trust and ESOP allocated to the accounts of all
executive officers and directors as a group; such shares are
ratably forfeitable in the event the officer leaves the employ
of the Company prior to completing six years of service.
(24) Includes 11,782 shares of Class B Common Stock issuable upon
exercise of options exercisable within 60 days.
(25) Mr. Richardson has been employed by the Company or its
predecessor since 1961, holding several positions. He was
Chairman of the Board, President and Chief Executive Officer
of the Company from September 1989 until November 1996 when
Mr. Johnson became President. Mr. Richardson continues to
hold the offices of Chairman of the Board and Chief Executive
Officer.
(26) Mr. Garry was Vice President of Finance, Chief Financial
Officer and Director since joining the Company in June 1994
and was elected Senior Vice President of Finance in July 1998.
Prior to joining the Company he was vice president of finance
and chief financial officer and a director of GEO
International Corporation of Chicago, Illinois from August
1986 until May 1994. GEO International Corporation filed a
Voluntary Petition for Bankruptcy Protection in October 1993
and emerged from bankruptcy under a plan of reorganization
effective May 12, 1995.
(27) Mr. Johnson has been President, Chief Operating Officer and
Director since joining the Company in November 1996. Prior
thereto, from January 1992 until January 1996, he was
president of Premier Industrial Corporation, a New York Stock
Exchange listed company which was acquired by Farnell Ltd. in
April 1996. He was executive vice president of Premier from
February 1987 until January 1992. Premier is a full service
business to business supplier of electronic components for
industrial and consumer products, essential maintenance and
repair products for industrial, commercial and institutional
applications, and manufactured high-performance fire-fighting
equipment.
(28) Mr. Acurio has been Executive Vice President - DPG since
February 1998. He was Vice President - DPG from April 1993
until February 1998 and prior thereto held the titles of CRT
Division Manager and DPG Strategic Business Unit Manager since
June 1988.
(29) Mr. Seils has been Senior Vice President since January 1992
and General Counsel and Secretary since May 1986. Prior to
joining the Company in 1986, he was a partner in the law firm
of Arvey, Hodes, Costello and Burman, Chicago, Illinois.
(30) Mr. Grill has served as an officer of the Company since 1987
and became an executive officer in the position of Vice
President - Corporate Administration in 1992. In 1994 his
title was changed to Vice President, Human Resources.
(31) Mr. Petrini has been Executive Vice President - EDG since
February 1998. He was Vice President - EDG from April 1994
until February 1998. From June 1989 until joining the Company
in April 1994, he was a consultant with Petrini, Frank & Co.
(32) Mr. Cooper has been Executive Vice President - SSD since
joining the Company in November 1994. He was director of CCTV
Sales with Arius, Inc. from February 1991 until November 1994
and purchasing agent at ADT Security Systems, a distributor of
electronic security equipment, from August 1988 to January
1991.
(33) Mr. Prince has been Executive Vice President of Worldwide
Sales since February 1998 and was Vice President of Worldwide
Sales from November 1996 until February 1998. He was Vice
President of Sales from November 1991 until November 1996 and
held several other positions since joining the Company in
November 1978.
(34) Mr. Hilgendorf has been Vice President - SSC since January
1998. He joined the Company in May 1994 ands has served as
Product Manager and Business Unit Manager in SSC from May 1994
until January 1998. From June 1990 until May 1994 he was
employed by W.W. Grainger, Inc.
(35) Mr. Calderone has been Vice President and Managing Director
for European Operations since March 1998. He joined the
Company in July 1990 as District Sales Manager for Italy and
served as Regional Sales Manager of Italy from February 1991
until March 1998.
Each nominee's and executive officer's principal occupation and
employment for the last five years has been as listed in the table
or footnotes thereto, except as follows:
Mr. Allen joined the Company as its President and Chief
Operating Officer in September 1995. He retired as President
of the Company in September 1989. Since his retirement, Mr.
Allen has been a management consultant and presently provides
management consulting services to the Company. He served as
Chairman of the Strategic Planning Committee of the Company's
Board of Directors from April 1991 until April 1992.
Mr. Hodes is a partner at the law firm of Ross & Hardies,
which firm provides legal services to the Company.
Mr. Rubinovitz serves the Company as a consultant. He was
Executive Vice President of EG&G, Inc., a diversified
manufacturer of instruments and components, from April 1989
until his retirement in January 1994. He is also chairman of
the board of directors of LTX Corporation, and a director of
KLA-Tencor Corporation and Kronos, Inc.
Mr. Douglas was vice chairman of Dean Foods Company for the
period from December 1988 to September 1992, when he retired.
Prior to becoming vice chairman, he served as chairman of Dean
Foods for many years. He is now the chairman of the board of
West Suburban Hospital Medical Center. He is also a dirctor
of Andrew Corporation.
Mr. Bouyer served as chairman of the board of Philips
Composants of Paris, France, engaged in the manufacture and
sale of electronic components and a subsidiary of N.V. Philips
of The Netherlands, from April 1, 1990 until January 1, 1994
when he became honorary chairman of the board and a director
until December 31, 1995. Mr. Bouyer also was vice chairman of
the BIPE Institute for Economic and Market Research from 1981
until 1997. He has been a consultant in business strategies
and management since January 1994. Mr. Bouyer is serving the
Company as an independent management consultant principally
with respect to European matters. He is also a director of
LTX Corporation.
Mr. Purkey has been President of Forum Capital Markets since
May 1997 and senior managing director of such company since
May 1994. From July 1990 until February 1994 he was employed
by Smith Barney Shearson, holding the position of senior
managing director and manager of the convertible bond
department.
Mr. Ketelaars presently serves the Company as an employee of
certain foreign subsidiaries. He joined the Company as Vice
President and Managing Director of Europe in May 1993 and
resigned from that position effective May 31, 1996 to become
chief executive officer of EnerTel, a new telecommunications
company established by Dutch electric utility companies and
CATV companies from which position he resigned on July 10,
1998. Prior to joining the Company he was general manager of
Philips Printed Circuit Boards since 1988 and product group
manager professional tubes of Philips Components since 1987.
Executive officers serve for a term until their respective
resignation, death or removal.
Board and Committee Meetings
During the last fiscal year, the Company's Board of Directors held
4 meetings and acted once by consent without a meeting. Each
Director attended at least 75% of the aggregate number of such
meetings, and meetings of the Committee(s) on which he served.
The Board's Executive Committee did not meet during the last fiscal
year, but acted on 1 occasion by unanimous written consent. The
Executive Committee, during the interval between meetings of the
Board of Directors, may exercise all authority of the Board in the
management of the Company, except as otherwise provided in the
Company's By-laws or by applicable law.
The Board's Audit Committee held 3 meetings in the last fiscal
year. It meets for the purpose of reviewing and making
recommendations regarding the engagement of an independent
accounting firm for the Company; the scope of the independent
accountants' audit procedures; the adequacy and implementation of
internal controls; and such other matters relating to the Company's
financial affairs and accounts as it deems desirable or in the best
interest of the Company.
The Board's Directors' Executive Oversight Committee held 4
meetings in the last fiscal year. It is charged with monitoring
the Company's Government contracting activities and compliance with
its Code of Conduct, and policies on ethical business practices and
reporting on the same.
The Board's Compensation Committee held 1 meeting in the last
fiscal year. It is responsible for reviewing and establishing the
compensation policy and guidelines for executive officers and the
compensation of the chief executive officer.
The Board's Stock Option Committee held 3 meetings in the last
fiscal year. It administers the Company's Incentive Stock Option
Plan, Incentive Compensation Plan, 1994 Incentive Compensation
Plan, 1996 Incentive Compensation Plan, Stock Purchase Plan and
1996 Stock Purchase Plan, including determining the employees to
whom stock options, awards or cash bonuses are granted, the number
of shares subject to each option or award, and the date or dates
upon which each option or award may be exercised.
The Board's Strategic Planning Committee which is responsible for
developing and reviewing long term strategic plans for the Company
met 2 times in the last fiscal year.
The Company has no standing Nominating Committee or committee
performing a similar function.
Directors Compensation
Directors who are not Company employees receive a quarterly fee of
$3,000 and a fee of $500 for each Board or Committee meeting
attended, plus travel expenses. In addition each current
"Non-Employee Director" has received a grant of options to acquire
25,000 shares of the Company's Common Stock at exercise prices
ranging from $5.25 to $12.875 per share (the fair market value on
the date of grant) under the Company's Stock Option Plan for
Non-Employee Directors ("Directors' Plan"). In addition, each
current Non-Employee Director, in April 1996, other than Mr.
Purkey, received a grant of an option to acquire an additional
5,000 shares of the Company's Common Stock at an exercise price of
$10.8125 per share (the fair market value on the date of grant), in
April 1997, an additional 5,000 shares of the Company's Common
Stock at an exercise price of $7.375 per share (the fair market
value on the date of grant), and in April 1998, an additional 5,000
shares of the Company's Common Stock at an exercise price of $12.50
per share (the fair market value on the date of grant) under the
Company's 1996 Stock Option Plan for Non-Employee Directors ("1996
Directors' Plan"). Under the Directors' Plan and the 1996
Directors' Plan, options are granted to any director of the Company
who is not an officer or employee of the Company or any of its
subsidiaries or affiliates and who has not been such for a period
of one year prior to his first being elected to the Board
("Non-Employee Director"). Options issued under the Directors'
Plan and 1996 Directors' Plan are intended to be non-qualified
stock options, not entitled to special tax treatment under Section
422A of the Internal Revenue Code of 1986, as amended, from time to
time. The Directors' Plan and the 1996 Directors' Plan are
administered by the Board of Directors of the Company which has the
sole responsibility for construing and interpreting said Plans.
Each option granted is evidenced by an option agreement between the
optionee and the Company and, subject to the provisions of the
Directors' Plan or the 1996 Directors' Plan, contains such terms
and conditions as may be approved by the Board. The purchase price
of each share that may be purchased upon exercise of an option is
the fair market value of the share on the date the option is
granted. These options are exercisable for a period of
approximately ten years. Under the Directors' Plan, any new
"Non-Employee Director" elected or appointed was granted an option
to purchase 25,000 shares of the Company's Common Stock on the date
such director took office. All options granted under the
Directors' Plan vest over a five-year period from the date of grant
with 20% of the option shares becoming first exercisable on each
anniversary of the grant date. The Directors' Plan was terminated
with respect to future grants on April 10, 1996. Under the 1996
Directors' Plan, any new non-employee director elected or appointed
after April 30, 1996 is granted an option to purchase 25,000 shares
of the Company's Common Stock on the date such director takes
office. All such options granted to new non-employee directors
vest over a five-year period from the date of grant with 20% of the
option shares becoming first exercisable on the anniversary of the
grant date. On each April 30 (after April 30, 1996) which is on or
after the fifth anniversary of a non-employee director's initial
election as a director, such director is granted an additional
option for 5,000 shares (subject to adjustment). Unless earlier
terminated by the Board, the 1996 Directors' Plan shall terminate
on June 1, 2006. The Directors' Plan and the 1996 Directors' Plan
provide, among other things, that the option of any optionee, whose
status as a director terminates because of retirement, or removal
from the Board within one year after a change of control (as
defined in the Directors' Plan and 1996 Directors' Plan), shall
become fully exercisable with respect to all shares covered thereby
and not previously purchased upon exercise of the option and shall
remain fully exercisable until the option expires by its terms.
Messrs. Allen, Bouyer and Rubinovitz are serving as consultants to
the Company and received $14,000, $40,000 and $40,000,
respectively, for such services in fiscal 1998. Mr. Allen also has
non-qualified stock options for 11,781 shares of Common Stock and
11,782 shares of Class B Common Stock at an exercise price of
$12.95 per share.
Affiliations
There is no family relationship between any director and any other
director or nominee for director or executive officer of the
Company. No nominee or director is a director of any other public
company, except Mr. Rubinovitz is a director of KLA Instruments,
Inc., Kronos, Inc., and LTX Corporation, Mr. Douglas is a director
of Andrew Corporation, Mr. Bouyer is a director of LTX Corporation
and Mr. Purkey is a director of Hybridon, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who may be
deemed to own beneficially more than ten percent of the Company's
stock to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission and
NASDAQ. Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive
officers and directors, the Company believes that during fiscal
1998 all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than ten percent
beneficial owners were complied with on a timely basis, except that
1 report covering 1 transaction involving 3,000 shares was filed
late by Charles Acurio, an executive officer of the Company.
PRINCIPAL STOCKHOLDERS
As of August 20, 1998, no person or firm owned of record, and, so
far as it is known to the Company, no person or firm owned
beneficially 5% or more of the outstanding Common Stock or Class B
Common Stock of the Company, except for Edward J. Richardson whose
ownership of Common Stock and Class B Common Stock is set forth
above in the table under the caption "Election of Directors -
Information Relating to Directors, Nominees and Executive
Officers"; and those entities identified and whose ownership of
Company stock is set forth in the following table:
<TABLE>
Common Stock and Class B Common Stock
Beneficially Owned
As of August 20, 1998
<CAPTION>
Percent of
Number of Total Voting
Shares of if Class
Name of Beneficial Number of Shares Percent Class B Percent Voting not
Owner of Common of Class Common of Class applicable
<S> <C> <C> <C> <C> <C>
Royce & Associates,Inc., 1,402,633<F1> 12.15% 0 0 3.19%
Royce Management Company
and Charles M. Royce
T. Rowe Price 753,651<F2> 6.66% 0 0 1.73%
Associates, Inc.
Loomis Sayles & 1,090,691<F3> 9.00% 0 0 2.45%
Company, L.P.
Kalmar Investments, Inc. 662,414<F4> 5.87% 0 0 1.52%
<FN>
<F1> Charles M. Royce may be deemed a controlling person of Royce
& Associates, Inc. ("Royce") and Royce Management Company
("RMC") and as such may be deemed to beneficially own the
shares of Common Stock beneficially owned by Royce and RMC
which own 1,145,178 shares of Common Stock and 53,122 shares
of Common Stock which would be issued upon conversion of the
Company's 7-1/4% Convertible Subordinated Debentures and
204,333 shares of Common Stock which would be issued upon
conversion of the Company's 8-1/4% Convertible Senior
Subordinated Debentures owned by Royce and RMC. Mr. Royce
does not own any shares outside of Royce and RMC, and
disclaims beneficial ownership of the shares held by Royce and
RMC. Information disclosed in this table was obtained from
Royce on August 6, 1998. The address for Royce is 1414 Avenue
of the Americas, New York, NY 10019.
<F2> Includes 23,651 shares of Common Stock which would be issued
on conversion of the Company's 7-1/4% Convertible Subordinated
Debentures owned by T. Rowe Price. These securities are owned
by various individual and institutional investors including T.
Rowe Price Small Cap Value Fund, Inc. which owns 700,000
shares, representing 6.47% of the shares outstanding, which T.
Rowe Price Associates, Inc. ("Price Associates") serves as
investment advisor with power to direct investments and/or
sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934,
Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that
it is, in fact the beneficial owner of such securities.
Price Associates has sole dispositive power for all 753,651
shares of Common Stock and sole voting power for 30,000 shares
of Common Stock. Information disclosed in this table was
obtained from Price Associates on August 12, 1998. The
address for Price Associates is 100 East Pratt Street,
Baltimore, MD 21202.
<F3> Loomis Sayles & Company, L. P. ("Loomis"), an investment
advisor, shares the power to dispose of the shares and shares
the power to vote 255,434 shares of the 1,090,691 shares held
by Loomis (9.00%). Clients of Loomis have the economic
interest but no one client has such an interest relating to
more than 5% of the class. Loomis indicates that the shares
reported for Loomis relate to such party's ownership of the
Company's convertible debentures. Information disclosed in
this table was obtained from Loomis on August 10, 1998. The
address for Loomis is One Financial Center, Boston, MA 02111.
<F4> Kalmar Investments, Inc. ("Kalmar"), is an investment advisor
having sole power to dispose of these shares. Information
disclosed in this table was obtained from Kalmar Investments,
Inc. on August 5, 1998. The address for Kalmar is Barley Mill
House, 37601 Kenner Pike, Greenville, DE 19807.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term
compensation for the Company's chief executive officer and the four
highest paid executive officers (named executives), as well as the
total compensation paid to each such individual for the Company's
two prior fiscal years:
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
--------------------------------- ---------------------- ---------
Other Long- All
Annual Restricted Stock Term Other
Name and Compen- Stock Option Incentive Compen-
Principal Position Year Salary Bonus sation <F1> Awards SARs Payouts sation<F2>
- - ---------------------- ---- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward J. Richardson 1998 $387,541 $195,740 $ - - - $- $9,679
Chairman and Chief 1997 374,783 - - - - - 7,263
Executive Officer 1996 361,783 162,220 - - - - 7,998
Bruce W. Johnson <F4> 1998 312,000 162,324 - 10,000 15,000 - 9,679
President and Chief 1997 160,385 - - 50,000 - - 7,263
Operating Officer 1996 - - - - - - -
William G. Seils 1998 177,217 108,425 - - 10,000 - 9,679
Senior Vice President, 1997 172,056 75,950 - - 10,000 - 7,263
General Counsel and 1996 172,056 98,873 - - 10,000 - 7,998
Secretary
William J. Garry 1998 176,748 90,000 - - 10,000 - 9,679
Senior Vice President, 1997 169,855 58,226 - - 10,000 - 7,263
Finance and Chief 1996 168,173 84,226 - - 10,000 - 7,998
Financial Officer
Charles J. Acurio 1998 160,700 83,144 - - 15,000 - 9,679
Executive Vice President 1997 154,067 54,860 - - 15,000 - 7,263
Display Product Group 1996 150,000 182,302 - - 15,000 - 7,998
<FN>
<F1> While officers enjoy certain perquisites, such perquisites do
not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus.
<F2> The restricted stock issued to Bruce W. Johnson vests in five
equal annual installments.
<F3> These amounts represent the Company's discretionary and 401(k)
matching contributions to the Company's Profit Sharing Plan.
<F4> Mr. Johnson's salary and bonus is paid pursuant to an
employment agreement entered into as of November 7, 1996. See
"Report on Executive Compensation" below. The agreement also
provides that in the event of termination by the Company,
other than for cause, or by Mr. Johnson for cause or within 6
months after a change in control of the Company, Mr. Johnson
will be entitled to receive compensation, including bonus for
a period of one year after termination.
</FN>
</TABLE>
The following table sets forth certain information concerning
Options granted during fiscal 1998 to the named executives:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
% of Total
Options Exercise Fair
Options Granted to or Base Value
Granted Employees Price Expiration at Grant
Name <F1> <F2> in FY98 ($/sh) Date Date
- - ----------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Edward J. Richardson - - $ - - $-
Bruce W. Johnson 15,000 6.0% 8.500 9/22/07 50,400
William G. Seils 10,000 4.0% 8.500 9/22/07 33,600
William J. Garry 10,000 4.0% 8.500 9/22/07 33,600
Charles J. Acurio 15,000 6.0% 8.500 9/22/07 50,400
<FN>
<F1> Options granted become exercisable in annual increments of 20%
beginning September 22, 1998.
<F2> Options granted under the option plan are exercisable for a
period of up to ten years from the date of grant. Options
terminate upon the optionee's termination of employment with
the Company, except under certain circumstances.
<F3> The fair value of the option at the grant date was calculated
using the Black-Scholes option-pricing model, using the
following assumptions: $.16 annual dividend per share,
expected annual standard deviation of stock price of 40% and
a risk-free interest rate of 5.5%.
</FN>
</TABLE>
The following table summarizes options exercised during fiscal year
1998 and presents the value of the unexercised options held by the
named executives at fiscal year end:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR END
AND FISCAL YEAR END OPTION / SAR VALUES
At May 31, 1998
<CAPTION>
Number of Unexercised Value of Unexercised,
Options Exercised Options held at In-the-money options
--------------------- Fiscal Year end at Fiscal Year end <F1>
Shares Value ----------------------- -----------------------
Name Acquired Realized Exercisable Unexercisable Exercisable Unexercisable
- - ------------------------ --------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edward J. Richardson - $- - - $- $-
Bruce W. Johnson - - 10,000 55,000 51,875 277,813
William G. Seils - - 50,970 24,000 306,657 124,750
William J. Garry 5,000 26,200 31,000 24,000 270,563 124,750
Charles J. Acurio 53,000 342,336 7,500 36,000 42,844 187,125
<FN>
<F1> Represents the difference between $13.1875 per share (the
closing price of the Company's common stock on May 29, 1998)
and the exercise price of the options.
</FN>
</TABLE>
Compensation Committee Interlocks and Insider Participation
Edward J. Richardson, Chief Executive Officer of the Company
participated in determining the compensation of other executive
officers for fiscal 1998. The Company leased facilities in
Franklin Park, Illinois from a trust, of which Edward J. Richardson
is the principal beneficiary, for a term which expired June 30,
1998 and the facility was vacated at that time. Under the terms of
this net lease, the Company made rental payments of $68,705 per
year. In the opinion of management, the lease was on terms no less
favorable to the Company than similar leases which would have been
available from unrelated third parties.
Report on Executive Compensation
Traditionally, the Company's executive officers' compensation has
been determined by the Company's Chief Executive Officer due to the
relatively small number of other executive officers and the Chief
Executive Officer's personal knowledge of the relative performance
and responsibilities of each executive officer. Compensation for
the Company's executive officers, other than the Chief Executive
Officer, for the fiscal year ended May 31, 1998 was established in
this manner, except for long-term incentive compensation in the
form of stock option grants which was established by the Stock
Option Committee. The compensation for the Company's Chief Execu-
tive Officer for fiscal 1998 was determined pursuant to a formula
set by the Board of Directors in 1983, prior to the effective date
of the Securities and Exchange Commission rules mandating
disclosure of bases for such compensation, at a fixed base salary
of $250,000, adjusted annually on each June 1 for changes in the
cost of living, and a bonus equal to 2% of the Company's after tax
profits. Mr. Richardson's bonus for fiscal 1998, based on 2% of
net income was $195,740. The Company expects that the Chief
Executive Officer will continue to set compensation for the
Company's other executive officers with the advice and guidance of
the Compensation Committee of the Board of Directors and the
Company's President, Bruce W. Johnson, with respect to other
executive officers, that the Stock Option Committee will determine
the granting of options, and that the Chief Executive Officer's
compensation will be set by the Compensation Committee.
Bruce W. Johnson became the Company's President and Chief Operating
Officer on November 12, 1996 pursuant to an agreement dated as of
November 7, 1996, which provides for an annual base salary of
$300,000, subject to adjustment in certain circumstances, and a
bonus if the Company's earnings per share for the year exceeds its
earnings per share for the prior fiscal year with the amount of
such bonus, if any, determined by the Company's actual earnings per
share performance in relation to the Company's budgeted earnings
per share for the year. Mr. Johnson's base salary for fiscal year
1998 was $312,000 and his bonus was $162,324. The agreement also
provides for payments to Mr. Johnson for one year equal to his
salary and bonus and other employee benefits if his employment is
terminated under certain circumstances, including, without cause or
from a change-in-control, or a breach by the Company. Mr. Johnson
also received an option under the Company's Employees' 1996
Incentive Compensation Plan for 50,000 shares at an exercise price
of $7.00 per share (the fair market value on the grant date)
vesting at the rate of 10,000 shares per year on each anniversary
date of the grant and on September 5, 1997 an option under the
Company's Employee's 1996 Incentive Compensation Plan for 15,000
shares at an exercise price of $8.50 per share (the fair market
value on the grant date) vesting at the rate of 3,000 shares per
year on each anniversary date of the grant. Mr. Johnson also
received a Restricted Stock Award in the amount of 10,000 shares in
November 1997 which will vest at the rate of 2,000 shares per year
on each anniversary date of the grant.
Individual compensation has been established to maintain equitable
internal relationships taking into account the responsibilities,
experience, seniority, and work performance of the individual
executive, the overall performance of the Company and the unit or
area of responsibility of the executive, and the strategic
objectives and budget considerations of the Company. The relative
weight given to each of these factors varies from individual to
individual and from year to year. Increases in executive officers'
base salaries for the year ended May 31, 1998 ranged from 3% to
38%, and increases of 4% in base salaries of executive officers are
planned for the year ending May 31, 1999.
A significant portion of each executive officer's compensation is
in the form of a bonus (in fiscal 1998 it was budgeted to be from
40 to 60% of base compensation depending on the executive) which is
performance-related. Bonuses are designed to reward executives for
achieving and exceeding Company performance goals and/or individual
performance goals. Bonuses or portions thereof, in fiscal 1998,
were based upon targeted levels of the Company's earnings and were
paid at 104% of the target bonus. For bonuses or portions thereof
based upon individual performance, the performance criteria or
goals varied with each executive as set by the chief executive
officer in his annual review with the executive. For example, an
executive responsible for a business unit may receive a bonus or a
portion thereof based upon the business unit meeting its financial
goals while an executive in charge of other functions may receive
a bonus or portion thereof based upon his achieving individual
performance objectives which are generally subjective, established
specifically for him by the Chief Executive Officer. For the
fiscal year ended May 31, 1998 such individual performance bonuses
or portions thereof were paid at percentages of target, ranging
from 57% to 109%. Financial measures (e.g. earnings per share,
return on invested capital, gross margin) and targets for each
executive officer are set at the beginning of the fiscal year by
the Chief Executive Officer, or of the Chief Operating Officer and
reviewed by the Chief Executive Officer, although discretionary
adjustments are possible should unforeseen events occur.
Salary levels, bonus criteria and performance objectives for the
Company's executive officers are examined each year to take into
account factors discussed above and other additional factors
believed appropriate at the time. Executive compensation
structures and levels for each year's targeted overall Company and
individual performance goals are determined following regular
structured annual reviews of each executive officer conducted by
the Chief Executive Officer and/or Chief Operating Officer. Target
performance levels take into account historic patterns of Company
performance and strategic objectives.
Individual stock option grants in fiscal 1998 were determined
giving consideration to the factors discussed above and previous
option grants and to give the executive officers additional
incentive to improve the overall performance of the Company. This
resulted in total options granted to executive officers in fiscal
1998 of 111,000 shares. Options granted in fiscal 1998 to the
President totaled 15,000 and grants to the rest of the executive
officers remained the same in fiscal 1998 as in fiscal 1997. The
President also was granted a stock award of 10,000 shares in
November, 1997. The Chief Executive Officer is not eligible for
option grants.
In addition all executive officers, including the Chief Executive
Officer, participate in broad based benefits generally available to
all U.S. employees of the Company, such as medical, dental,
disability, life insurance, profit sharing (which includes a 401(k)
feature), employees stock ownership and employees stock purchase
plans.
The Omnibus Budget Reconciliation Act of 1993 (the "Act") amended
the Internal Revenue Code, section 162(m), to limit deductibility
for the Company for income tax purposes of compensation paid to the
Chief Executive Officer and the 4 other highest paid executive
officers to $1 million per year, per person, subject to certain
exceptions. The Company does not currently have any executive
exceeding that limitation. If at a future date it appears likely
that such limitation may be exceeded, the Committee will consider
recommending restructuring of executive compensation programs in
light of the requirements of the Act and the regulations that may
be promulgated thereunder to permit them to meet the exceptions to
the limitation so such compensation may continue to be deductible.
Kenneth J. Douglas Edward J. Richardson
Scott Hodes
Samuel Rubinovitz
The following graph sets forth the cumulative total stockholder
return (assuming reinvestment of dividends) to the Company's
stockholders during the five-year period ended May 31, 1998, as
well as an broad equity market index (NASDAQ Stock Market (US &
Foreign) Index) and a published industry index (NASDAQ Electronic
Component Stock Index). All three indices reflect the value of an
investment of $100 made on June 1, 1993. The stock price
performance shown below is not necessarily indicative of future
stock price performance.
PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total return among Richardson
Electronics Stock Index, NASDAQ Composite Index, and NASDAQ
Electronic
Components Index
Measurement Period REL NASDAQ Elec Comp
(Fiscal Year Covered)
Measurement Pt 6/1/93 100 100 100
FYE 5/31/94 65 105 180
FYE 5/31/95 107 124 211
FYE 5/31/96 148 180 361
FYE 5/31/97 120 202 473
FYE 5/31/98 195 256 746
PROPOSAL TO APPROVE THE RICHARDSON ELECTRONICS, LTD.
EMPLOYEES' 1998 INCENTIVE COMPENSATION PLAN
On July 14, 1998, the Board of Directors of the Company adopted,
subject to stockholder approval, the Richardson Electronics, Ltd.
Employees' 1998 Incentive Compensation Plan ("Plan") providing for
the grant of stock options ("Options"), stock awards ("Awards") and
cash bonuses ("Bonuses") to permit the Company to continue to offer
these Options, Awards and Bonuses as incentive compensation to
attract and retain capable executives and other key employees. The
options and awards authorized under similar prior plans are nearly
exhausted. The new Plan is proposed to permit continuation of the
stock option and stock award program for the recruitment,
motivation and retention of employees. The full text of the Plan
is set forth in Exhibit A to this proxy statement. The following
description of the Plan is qualified in its entirety by reference
to the text of such Plan. The Plan is designed to comply with the
requirements of Section 16(b) of the Securities Exchange Act of
1934.
Under the Plan, Options, Awards and Bonuses may be granted to key
administrative, managerial or executive employees of the Company.
Options permit the Grantee to purchase (at a price fixed by the
Compensation/Stock Option Committee) shares of the Company's Common
Stock, $.05 par value, upon exercise of the Option. Options may be
either options intended to be incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, (the "Code"), or non-qualified stock options not intended
to meet the requirements of Section 422 of the Code. Incentive
Stock Options which first become exercisable in any calendar year
for shares with a fair market value on the date of grant in excess
of $100,000 are treated as non-qualified stock options to the
extent of such excess. Awards are a grant of shares of Common
Stock without the payment of additional consideration by the
employee Grantee and may be unrestricted or restricted, in which
the employees' right to the shares vest over time. Bonuses, if
granted, generally are intended to be in an amount and with timing
that would approximate the tax payable by a Grantee of an Option or
an Award to encourage the Grantee to hold the shares acquired
rather than sell them to pay taxes. The purpose of the Plan is to
attract and retain capable executives and other key employees in
the employ of the Company (currently approximately 130 persons) by
giving these individuals the opportunity to acquire or increase
their equity interest in the Company. 800,000 shares of the
Company's Common Stock, $.05 par value, subject to adjustment in
accordance with the provisions of the Plan, are being reserved for
issuance on exercise of Options granted pursuant to the Plan or for
Awards granted pursuant to the Plan. No one Grantee may receive
Options and Awards for more than 100,000 shares in any one year.
Such shares may be either authorized but unissued shares of the
Company, or shares which have been or may be reacquired by the
Company, including treasury shares.
The Plan is administered by the members of the Stock Option
Committee appointed by the Board of Directors who are "Non-Employee
Directors" as that term is defined in Rule 16b-3 of the Securities
and Exchange Commission. No member of the Committee is eligible to
participate in the Plan. The Committee has the authority to grant
Options, Awards and Bonuses to eligible employees, to determine the
terms of those Options and Awards and to interpret the Plan. The
Plan will continue until April 9, 2006. Neither the grant of an
Option or of an Award by the Company shall create any obligation on
the Company to retain the services of the Grantee for any stated
period of time. Options and Awards granted under the Plan shall be
evidenced by an Option or Restricted Stock Award agreement between
the Optionee or Grantee, as the case may be, and the Company, and
subject to the provisions of the Plan. The Committee has the
discretion to fix the purchase price of each share that may be
purchased upon exercise of an Option, so long as it is not less
than 50% of the fair market value on the date of grant for non-
qualified stock options and 100% of the fair market value on the
date of grant for incentive stock options. Options granted may be
exercisable for such period of time as fixed by the Committee, but
in no event for a period greater than ten years from the date of
grant. The Committee has the discretion to determine what if any
vesting schedule shall apply with respect to the Options and the
Awards granted under the Plan. Except for any vesting restrictions
that the Committee may place upon any Option, it may be exercised
at any time or from time to time during the Option period as to all
or any part of the shares of Common Stock subject to the Option.
Options granted under the Plan may be exercised by (i) cash payment
of the full amount of the exercise price, or (ii) in the discretion
of the Committee, through the delivery of shares of the Company's
Common Stock previously held by the Optionee with a fair market
value equal to the full amount of the exercise price, or (iii) by
a combination of such methods. Neither Awards nor Options intended
to qualify as incentive stock options granted under the Plan are
transferable, except by will or by the laws of descent and
distribution, so that during the life of the Grantee, the Grantee's
Options and Awards may be exercised or received only by the
Grantee. The Committee may provide for transferability of non-
qualified Options to the Grantee's family members, trusts for such
family members or partnerships of such family members. The
Committee may in its sole discretion permit the option holder to
exercise the Option after his termination of employment. The
exercise of an Option shall be subject to such other requirements,
if any, as may in the opinion of the Committee be necessary or
advisable for the purpose of complying with applicable statues and
regulations (including securities laws and regulations), and the
rules of the stock exchange or the over-the-counter market in which
the Company's Common Stock is traded.
The Board of Directors may from time to time amend, consistent with
applicable laws and regulations, suspend, or terminate the Plan,
without action by the Company's stockholders, except for an
amendment which would increase the aggregate number of shares of
the Company's Common Stock subject to the Plan or reduce the
minimum Option price (unless to conform to the Code or governing
law), and no amendment, suspension or termination of the Plan shall
impair or adversely alter any outstanding Option or Award without
the consent of the Grantee.
Federal Income Tax Consequences
The federal income tax consequences of Options, Stock Awards and
Cash Bonuses are summarized below. The Company expresses no
opinion as to the tax consequences of an Option, Stock Award or
Cash Bonus as to any particular employee.
(1) Options. Options granted under the Plan may be either intended
to qualify or not qualify as "incentive stock options" under
Section 422A of the Internal Revenue Code at the discretion of the
Committee.
(a) Non-Qualified Options. The employee will not realize ordinary
income upon the grant of a non-qualifying Option, but at the time
of exercise will realize ordinary income for federal income tax
purposes in an amount equal to the excess of the fair market value
of the stock acquired over the Option Price. The Company will be
entitled to an income tax deduction in the amount of ordinary
income realized by the employee at the time the income is
recognized subject to the limitations of Section 162 (m) of the
Code. If shares so acquired are later sold or exchanged, the
difference between the sale price and the fair market value on the
date of exercise of the Option will generally be treated for tax
purposes as capital gain or loss to the employee.
If the employee pays the Option Price, in whole or in part, with
previously acquired shares, the employee will be deemed to have
exchanged previously acquired shares for an equal number of new
shares, and to have received any additional new shares for the
other consideration, if any, paid. No gain or loss is recognized
upon delivery of the previously acquired shares to the Company.
The shares received by the grantee equal in number to the
previously acquired shares exchanged therefor will have the same
basis and holding period as the previously acquired shares, and the
employee will not recognize income in respect of the receipt of
such shares. Employees will recognize taxable income with respect
to shares received in excess of the number of previously acquired
shares in accordance with the rules described above and such shares
will have a basis equal to the consideration paid, if any, plus the
amount of ordinary income recognized. The employee's holding
period for such shares commences as of the date ordinary income is
recognized.
(b) Incentive Stock Options. In general, an employee will not be
subject to tax at the time an Incentive Stock Option is granted or
exercised. However, the excess of the fair market value of the
shares received upon exercise of the Incentive Stock Option over
the Option Price is potentially subject to the alternative minimum
tax. Upon disposition of the shares acquired upon exercise of an
Incentive Stock Option, capital gain or capital loss will be
recognized in an amount equal to the difference between the sale
price and the Option Price, provided that the employee has not
disposed of the shares within two years of the date of grant or
within one year from the date of exercise and further provided that
the employee has been employed by the Company at all times from the
Grant Date until the date three months before the date of exercise
(one year in the case of permanent disability). If the employee
disposes of the shares without satisfying both the holding period
and employment requirements (a "Disqualifying Disposition"), the
employee will recognize ordinary income at the time of such
Disqualifying Disposition to the extent of the difference between
the Option Price and the lesser of the fair market value of the
shares on the date the Incentive Stock Option is exercised or the
amount realized on such Disqualifying Disposition. Any remaining
gain or loss is treated as a capital gain or capital loss.
If the employee pays the Option Price, in whole or in part, with
previously acquired shares, the exchange will not affect the tax
treatment of the exercise. Upon such exchange, and except for
Disqualifying Dispositions, no gain or loss is recognized upon the
delivery of the previously acquired shares to the Company, and the
shares received by the employee equal in number to the previously
acquired shares exchanged therefor will have the same basis and
holding period for capital gain or capital loss purposes as the
previously acquired shares. However, the excess of the fair market
value of the shares received upon exercise of the Incentive Stock
Option over the Option Price is potentially subject to the
alternative minimum tax. Shares received by the employee in excess
of the number of previously acquired shares will have a basis equal
to the gain, if any, on exercise of the Incentive Stock Option and
any cash paid on the exercise. The holding period for such shares
commences as of the date the shares are issued to the employee. If
such an exercise is effected using shares previously acquired
through the exercise of an Incentive Stock Option, the exchange of
the previously acquired shares will be considered a disposition of
such shares for the purpose of determining whether a Disqualifying
Disposition has occurred. The Company is not entitled to a tax
deduction upon either the exercise of an Incentive Stock Option or
upon disposition of the shares acquired pursuant to such exercise,
except to the extent that the employee recognized ordinary income
in a Disqualifying Disposition and in such event subject to the
limitations of Section 162(m) of the Code.
(2) Stock Awards. In the case of a Stock Award, an employee will
generally realize income for federal income tax purposes only when
his rights to the underlying stock either become transferable or
are no longer subject to a substantial risk of forfeiture. For
most employees this will occur when their rights vest under their
Stock Award. An employee may also elect to recognize income as of
the date on which the Stock Award is granted as described below.
In any event, the amount of income so realized is equal to the
value of the shares of Common Stock at the time the employee
realizes income. The Company will be entitled to an income tax
deduction in the amount of ordinary income realized by the employee
at the time the income is recognized subject to the limitations of
Section 162(m) of the Code. If shares so acquired are later sold
or exchanged, the difference between the sale price and the fair
market value on the date of recognition of income for tax purposes
will generally be taxable as long-term capital gain or loss
depending upon whether the shares have been held for more than one
year. The Code may permit a grantee of a Restricted Stock Award to
elect to have the Restricted Stock Award treated as taxable income
in the year of the Award and to pay tax at ordinary income rates on
the fair market value of all of the shares awarded based on the
price of the shares on the date the recipient receives a beneficial
interest in such shares. The election must be made promptly within
the time limits prescribed by the Code. Any appreciation in value
thereafter would be taxed at capital gain rates when the
restrictions lapse and the Common Stock is subsequently sold.
However, should the market value of the Common Stock, at the time
the Common Stock is sold, be lower than at the date acquired, the
grantee would have a capital loss, to the extent of the difference.
In addition, if after electing to pay tax on the Award in the year
received the recipient subsequently forfeits the Award for any
reason, the tax previously paid is not recoverable.
(3) Cash Bonuses. At the time the Cash Bonus is paid, the
recipient will receive compensation income and the Company will
receive a deduction for compensation income in the amount of the
Cash Bonus.
Interests of Directors, Nominees and Executive Officers
No director or nominee (unless he is an employee of the Company
other than Mr. Richardson) is eligible for a grant of an Option,
Award or Cash Bonus. All executive officers of the Company, except
Mr. Richardson, are eligible to participate. However, except as
set forth in the above described limitations in the Plan, it is not
possible to identify the persons who will be granted Options,
Awards or Bonuses under the Plan, the number of shares subject to
any Option or constituting any Award, the amount of any Bonus, or
the terms and conditions, if any, of any Option, Award or Bonus,
because these matters will be determined by the Committee in the
future.
Stockholder Vote
The affirmative vote of the holders of shares possessing a majority
of the voting power present in person or represented by proxy and
entitled to vote at the meeting is required to adopt the proposed
Plan. The Plan and all options granted thereunder will terminate
and become null and void if the Plan is not approved by the
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE PROPOSED RICHARDSON ELECTRONICS, LTD. EMPLOYEES' 1998 INCENTIVE
COMPENSATION PLAN.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the current year
are Ernst & Young LLP who have been the Company's independent
accountants since December 1981. A representative of Ernst & Young
LLP is expected to be present at the meeting, with the opportunity
to make a statement if such representative desires to do so, and
such representative is expected to be available to respond to
appropriate questions from stockholders.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended May
31, 1998, including financial statements accompanies this Proxy
Statement. However, no action is proposed to be taken at the
meeting with respect to the Annual Report, and it is not to be
considered as constituting any part of the proxy soliciting
material.
STOCKHOLDER PROPOSALS
From time to time stockholders present proposals which may be
proper subjects for inclusion in the proxy statement and for
consideration at a meeting. To be considered, proposals must be
submitted on a timely basis. Proposals for the 1999 stockholders'
meeting submitted pursuant to SEC Rule 14a-8 must be received by
the Company no later than May 6, 1999. Any such proposals, as well
as any questions related thereto, should be directed to the
Secretary of the Company. Any stockholder proposal proposed for
submission at our next annual meeting outside the process of SEC
Rule 14a-8 after July 20, 1998 shall be considered untimely. If
such a proposal is submitted after that date the proxy holder or
holders may exercise their discretionary authority, as conferred in
the proxy, in voting on such proposal.
OTHER MATTERS
The management knows of no other business likely to be brought
before the meeting. If other matters do come before the meeting,
the persons named in the form of proxy or their substitute will
vote said proxy according to their best judgment.
A COPY OF THE COMPANY'S 1998 10-K REPORT IS AVAILABLE WITHOUT
CHARGE TO STOCK-HOLDERS UPON WRITTEN REQUEST TO INVESTOR RELATIONS
DEPARTMENT, RICHARDSON ELECTRONICS, LTD., 40W267 KESLINGER ROAD,
LAFOX, IL 60147.
By order of the Board of Directors
EDWARD J. RICHARDSON
Chairman of the Board and Chief Executive Officer
September 3, 1998
EXHIBIT A
RICHARDSON ELECTRONICS, LTD.
EMPLOYEES' 1998 INCENTIVE COMPENSATION PLAN
ARTICLE I
Purpose
The purposes of the Plan are to attract and retain capable
executives and other key employees in the employ of Richardson
Electronics, Ltd., a Delaware corporation (the "Company") and its
subsidiaries by giving these individuals the opportunity either to
acquire an equity interest or to increase their present equity
interest in the Company. The Company intends that certain of the
Options granted pursuant to the Plan will qualify and that certain
other of the Options will not qualify as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code, and
the terms of the Options shall be interpreted in accordance with
their designation in the Option Agreement.
ARTICLE II
Definitions
As used in this Plan, the following terms shall each have the
meaning set forth in this Article, unless a different meaning is
clearly required by the context. Whenever appropriate, words used
in the singular shall be deemed to include the plural and vice
versa and the masculine gender shall be deemed to include the
feminine gender.
2.1 Board shall mean the Board of Directors of the Company.
2.2 Cash Bonus shall mean the right granted by the Committee
pursuant to Section 6.11 with respect to certain Options and
pursuant to Section 8.4.9 with respect to certain Stock Awards,
which right shall entitle the Grantee to a cash payment from the
Company in addition to the shares of Common Stock subject to such
Option or Stock Award.
2.3 Code shall mean the Internal Revenue Code of 1986, as now in
effect or as hereafter amended and any regulation issued pursuant
thereto by the Internal Revenue Service. Whenever any provision of
the Code is renumbered or otherwise amended, this Plan shall, to
the extent possible, be construed by reference to the successor to
such provision.
2.4 Committee shall mean the Committee appointed by the Board in
accordance with the provisions of Article IV to administer the
Plan.
2.5 Common Stock shall mean the common stock, $.05 par value, of
the Company.
2.6 Company shall mean Richardson Electronics, Ltd., a Delaware
corporation, and any successor to it.
2.7 Disinterested Person shall mean any member of the Board, who
at the time discretion under the Plan is exercised is not eligible,
and who has not at any time for one year prior thereto been
eligible, for selection as a Grantee either under this Plan or as
a grantee under any other plan of the Company, or any of the
affiliates (as that term is used in the Securities Exchange Act of
1934, as amended) of the Company entitling the participants therein
to acquire stock, stock appreciation rights, or stock options of
the Company or any of its affiliates; provided that a member of the
Board who is not an Employee shall not fail to qualify as a
Disinterested Person solely as a result of having received a stock
option upon becoming a member of the Board without any exercise of
discretion by the Board.
2.8 Effective Date shall mean July 14, 1998, subject to the
approval of a majority of the stockholders of the Company entitled
to vote thereon at the next annual meeting of the stockholders of
the Company or any adjournment thereof. In the event the
stockholders of the Company shall fail to so approve the Plan, each
Option or Restricted Stock Award granted under the Plan on or after
the Effective Date shall be and become null and void.
2.9 Employee shall mean any individual employed by and receiving
compensation from the Company or any Subsidiary.
2.10 Fair Market Value of Common Stock shall mean an amount equal
to the mean of the closing bid and asked quotations for a share of
Common Stock in the over-the-counter market as of the date for
which such value is being determined, as reported by the National
Association of Securities Dealers, Inc. through NASDAQ or, in the
event that the Common Stock is listed on any exchange (including,
without limitation, the NASDAQ National Market System), the price
established by the last sale on such exchange on that date or, if
there were no sales on that date, the mean of the bid and asked
prices for Common Stock on that exchange at the close of business
on that date.
2.11 Grantee shall mean an Employee who is granted either an Option
or a Stock Award by the Committee under the Plan.
2.12 Incentive Stock Option means an Option qualifying as an
"incentive stock option" under Section 422 of the Code.
2.13 Nonqualified Stock Option means an Option which is not an
Incentive Stock Option.
2.14 Option shall mean an option to purchase a specific number of
shares of the Common Stock that is granted by the Committee on or
subsequent to the Effective Date pursuant to the terms of the Plan.
2.15 Option Agreement shall mean a written agreement evidencing the
right of the Grantee to purchase Common Stock pursuant to the terms
of this Plan which agreement shall be in the form described in
Article VI.
2.16 Option Price means the purchase price for Common Stock under
an Option as determined pursuant to Article VI below.
2.17 Plan shall mean the Richardson Electronics, Ltd. Employees'
1998 Incentive Compensation Plan, as set forth herein, as amended
from time to time.
2.18 Restricted Stock Agreement shall mean a written agreement
evidencing the right of the Grantee to receive Common Stock
pursuant to the terms of this Plan which agreement shall be in the
form described in Article VIII.
2.19 Stock Award shall mean a grant by the Committee of a specific
number of shares of Common Stock to an eligible Employee pursuant
to the terms of the Plan in recognition of the services performed
by such Employee for the Company and without payment of any other
consideration by the Employee.
2.20 Subsidiary shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" contained in Section 424(f) of the Code,
as that section may be amended from time to time.
ARTICLE III
Shares Subject to Plan
3.1 Number of Shares Available for Grant. Subject to adjustment
as provided in Section 3.2 and Article X, the aggregate number of
shares of Common Stock which may be issued under the Plan is Eight
Hundred Thousand (800,000) and no Grantee may be issued Options and
Stock Awards under the Plan for more than One Hundred Thousand
(100,000) shares in any one year.
3.2 Shares Subject to Options and Awards that Terminate. In the
event that any Option terminates for any reason (whether vested or
non-vested at the time of termination) without having been
exercised in full, a number of shares of the Common Stock equal to
the number of unpurchased shares of Common Stock subject to that
Option shall become available for issuance under the Plan. In the
event that any of the shares of Common Stock that have been issued
in connection with any Stock Award are subsequently forfeited, such
shares shall once again become available for issuance under the
Plan but only if the Grantee received no benefits of ownership from
such shares, such as dividends.
3.3 Source of Shares. The shares of Common Stock issued under the
Plan shall be made available, in the discretion of the Board,
either from the authorized but unissued Common Stock or from any
outstanding Common Stock which has been reacquired by the Company.
ARTICLE IV
Administration
4.1 Authority of Committee. The authority to control and manage
the operations and administration of the Plan shall be vested
exclusively in the Committee which shall be appointed by the Board
and shall consist of not less than two (2) members of the Board.
All members of the Committee shall be Disinterested Persons.
Members of the Committee shall serve at the pleasure of the Board.
The Board may appoint new members to the Committee to fill any
vacancies occurring in the membership of the Committee.
4.2 Determinations to be made by Committee. Subject to the
provisions of this Plan, the Committee shall determine: (1) the
Grantees, (2) the number of shares of Common Stock subject to an
Option or Stock Award, (3) the dates upon which Options and Stock
Awards are granted, (4) subject to Section 6.3, the date or dates
upon which an Option may be exercised, (5) the manner in which an
Option may be exercised, (6) whether and for what period the Option
may be exercised after the Grantee ceases to be an Employee, (7)
whether or not the Option is to an Incentive Stock Option, (8) such
other terms to which an Option or Stock Award is subject (including
the time at which it vests and whether it entitles the Grantee to
receive a Cash Bonus), and (9) the form of any Option Agreements
and of any Restricted Stock Agreements.
4.3 Interpretation of Plan. The Committee shall interpret the
Plan and from time to time may adopt such rules and regulations for
carrying out the terms and purposes of the Plan and may take such
other actions in the administration of the Plan as it deems
advisable. The interpretation and construction by the Committee of
any provisions of, and the determination of any question arising
under the Plan, any such rule or regulation, or any Option
Agreement or Restricted Stock Agreement shall be final and binding
on all persons interested in the Plan. Option Agreements or
Restricted Stock Agreements may be amended by the Committee
consistent with the Plan, provided that no such amendment may
become effective without the consent of the Grantee except to the
extent that such amendment operates solely to the benefit of the
Grantee.
4.4 Actions by Committee. The Committee shall maintain written
minutes of its proceedings. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present or acts
approved in writing by all the members, shall be the acts of the
Committee. The Committee shall make such rules and regulations for
the conduct of its business as it deems advisable.
4.5 Actions Performed in Good Faith. No member of the Committee
shall be liable for any action or determination made in good faith
with respect to the Plan.
ARTICLE V
Eligibility
All key administrative, managerial and executive Employees, as
determined in the sole discretion of the Committee, shall be
eligible to receive both Options and Stock Awards.
ARTICLE VI
Terms and Conditions of Options
All Options granted by the Committee under the Plan shall be
evidenced by an Option Agreement which shall be in such form as the
Committee may from time to time approve and shall be executed on
behalf of the Company by one or more officers of the Company. Each
such Option Agreement shall be subject to the terms and conditions
of the Plan as well as such other terms and conditions as the
Committee may deem desirable, including but not limited to the
period or times at which the Grantee's rights vest, and shall
provide in substance as follows:
6.1 Number of Shares and Option Price. Each Option Agreement
shall specify the number of shares of Common Stock subject to such
Option and the purchase price per share for such shares. The
purchase price per share shall not be less than 50% of the Fair
Market Value of the Common Stock on the date that the Option is
granted and the purchase price per share of Common Stock subject to
an Incentive Stock Option shall not be less than the Fair Market
Value of the Common Stock on the date that the Option is granted.
The number of shares and the purchase price per share shall be
subject to adjustment as provided in Article X. For all Incentive
Stock Options granted, the aggregate Fair Market Value of the
Common Stock (determined at the time the Option is granted) of the
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time in any calendar year (together with
options granted under all incentive stock option plans of the
Company, any parent corporation or Subsidiary) shall not exceed One
Hundred Thousand Dollars ($100,000) for any one Grantee.
6.2 Transferability of Options. At the direction of the
Committee, exercised upon grant of an Option, each Option Agreement
shall provide either: (i) that during the life of the Grantee the
Option is non-transferable and non-assignable by the Grantee and
may be exercised (to the extent vested) only by the Grantee or his
guardian or legal representative and in the event the Grantee dies
prior to the expiration of the term of the Option, the Option (to
the extent vested) may be exercised only by the Grantee's
designated Beneficiary or in the absence of such designation by his
legal representative or other successor in trust; or (ii) that
during the life of the Grantee the Option is non-transferable and
non-assignable by the Grantee except that it may be transferred and
assigned to members of the Grantee's family, trusts for such family
members, or partnerships whose only partners are such family
members and may be exercised (to the extent vested) only by the
Grantee or his guardian or legal representative or such permitted
assignee and in the event the Grantee dies prior to the expiration
of the term of the Option, the Option (to the extent vested) may be
exercised only by the Grantee's designated Beneficiary or in the
absence of such designation by his legal representative or other
successor in trust, or if assigned prior to his death only by the
permitted assignee to whom assigned. For purposes hereof a family
member of a Grantee shall mean the Grantee's spouse, children and
grandchildren. No consideration may be received by the Grantee for
the transfer or assignment of an Option. The assignee of any
Option transferred or assigned by a Grantee shall be subject to all
conditions of the Option prior to its transfer or assignment and
may not make any further assignments or transfers of the Options.
These restrictions shall be set forth in the Option Agreement.
6.3 Maximum Term. Each Option Agreement shall set forth the
period during which it may be exercised; provided, however, that
any Option granted pursuant to this Plan shall expire not more than
ten (10) years from the date that the Option is granted.
6.4 Exercise of Options Upon Termination of Employment. Except as
otherwise provided in this Plan each Option Agreement shall provide
that:
(a) If a Grantee ceases to be an Employee, for any reason
other than the Grantee's death, disability, or termination for
cause, the Grantee may exercise his or her Options in accordance
with their terms for a period of three months after such
termination of employment unless such Option provides otherwise,
but only to the extent the Grantee was entitled to exercise the
Options on the date of termination. For purposes of the Plan: (i)
a leave of absence, duly authorized in writing by the Company, for
military service or for any other purpose approved by the Company
if the period of such leave does not exceed 90 days; and (ii) a
leave of absence in excess of 90 days, duly authorized in writing
by the Company, provided the Employee's right to reemployment is
guaranteed either by statute or contract, shall not be deemed a
termination of employment.
(b) If a Grantee ceases to be an Employee due to the
Grantee's disability, he or she may exercise his or her Option in
accordance with its terms for one year after he or she ceases to be
employed unless such Option earlier expires by its terms, but only
to the extent that the Grantee was entitled to exercise the Option
on the date of such termination.
(c) If a Grantee dies either while an Employee or otherwise
during a time when the Grantee could have exercised an Option, the
Options issued to such Grantee shall be exercisable in accordance
with their terms by the Grantee's designated Beneficiary or in the
absence of such designation by the personal representative of such
Grantee or other successor to the interest of the Grantee for a
period of one year after such Grantee's death to the extent that
the Grantee was entitled to exercise the Option on the date of
death but not beyond the original term of the Option.
(d) If a Grantee's employment is terminated for cause, the
Grantee shall have no further right to exercise any Option
previously granted him or her.
6.5 Intra-Corporate Transfers. Each Option Agreement shall
provide that a transfer of employment from the Company to a
Subsidiary or vice versa or between two such Subsidiaries shall not
be deemed a termination of employment.
6.6 Method of Exercise of Options. Each Option Agreement shall
provide that the Option shall be exercised by delivering a written
notice of exercise to the Company and payment of the purchase price
as hereinafter provided. Each such notice shall state the number
of shares of Common Stock with respect to which the Option is being
exercised and shall be signed by the person (or persons) exercising
the Option and, in the event the Option is being exercised by any
person other than the Grantee, shall be accompanied by proof,
satisfactory to counsel for the Company, of the right of such
person to exercise the Option. A certified or cashier's check in
full payment of the purchase price for the number of shares of
Common Stock specified in the notice must accompany such notice;
provided, however, the purchase price may be paid in such other
manner or form as the Committee may approve, including, without
limitation, by delivery of a certificate or certificates for shares
of Common Stock owned by the Grantee having a Fair Market Value at
the date of exercise equal to the purchase price for such shares,
or any combination of the foregoing. Any stock certificate or
certificates delivered must be endorsed, or accompanied by an
appropriate stock power, to the order of the Company, with the
signature guaranteed by a bank or trust company or by a member firm
of the New York Stock Exchange. No shares of Common Stock shall be
issued in connection with an exercise of the Option until payment
for such shares has been made. The Company may make appropriate
arrangements with a broker or other institution to receive sale or
loan proceeds in the amount of the exercise price upon delivery of
an appropriate irrevocable exercise notice and instructions to
promptly deliver the sale or loan proceeds or similar arrangements
satisfactory to the Committee. The delivery of such notice and
instructions or compliance with similar arrangements approved by
the Committee shall be deemed conditional payment of the purchase
price authorizing delivery of the shares by the Company.
6.7 Forfeiture. An Option Agreement may provide for such
conditions on the right of the Grantee to exercise his Option as
the Committee, in its sole discretion, deems appropriate, which
conditions may, without limitation, include conditions based upon
either (i) the completion by the Grantee of a further period of
continued employment or (ii) the performance of the Company, of any
Subsidiary, or any division thereof, or of the Grantee. Without
limiting the foregoing, an Option Agreement may provide that the
Committee may, in its sole discretion, terminate in whole or in
part any portion of the Option which has not yet become vested if
it determines that the Grantee is not satisfactorily performing the
duties to which he was assigned on the date the Option was granted
or duties of at least equal responsibility.
6.8 Withholding. Each Option Agreement shall provide that the
Company shall have the right to require the Grantee to remit and
the Grantee shall have the obligation to remit to the Company, or
to withhold from other amounts due to the Grantee as compensation
or otherwise (including, but not limited to the Cash Bonus, if any,
granted as part of the Option or Option shares), an amount
sufficient to satisfy all applicable withholding taxes. At the
Committee's election, such amount shall be satisfied with cash or
shares of Common Stock.
6.9 Beneficiaries. Each Option Agreement may provide that the
Grantee may designate the person or persons (collectively the
"Beneficiary") who, in the event of the death of the Grantee, may
exercise the Option(s) held by the Grantee at the time of his death
and may also include restrictions on the ability of Beneficiaries
to exercise the Grantee's Options. Any designation of a
Beneficiary shall be in writing, shall be signed by the Grantee,
and shall be effective only when filed with the Committee. In the
event that the Grantee fails to designate a Beneficiary or that
none of his Beneficiaries survive the Grantee, the legal
representative of the Grantee may exercise the Grantee's vested
Options to the same extent as a Beneficiary. A Beneficiary
designation may be changed at any time and from time to time by the
Grantee; provided, however, that any such change shall become
effective only when filed with the Committee.
6.10 Section 422A(b) Statement. Each Option Agreement which is
intended to be a Non Qualified Stock Option shall contain the
statement "This Option shall not be treated as an Incentive Stock
Option within the meaning of Internal Revenue Code Section 422A."
6.11 Cash Bonus. In the event that the Committee, in its sole
discretion, grants a Cash Bonus to the Grantee as part of the
Option, then in addition to the provisions described above, the
Option Agreement shall contain provisions describing the amount of
such Cash Bonus, and the time or times at which the Grantee's right
to such Cash Bonus vests.
6.12 Surrender of Prior Options. An Option Agreement may, in the
Committee's discretion, provide that the Option is contingent upon
the Grantee agreeing to the cancellation without exercise of
another stock option granted under the Plan or any other plan
maintained by the Company or any Subsidiary. In the event that the
stockholders of the Company fail to approve the Plan as provided in
Section 2.8 above, then any option which has been surrendered for
cancellation without exercise pursuant to this Section 6.12 shall
remain in effect as originally granted and the agreement evidencing
such option shall be returned to the grantee of such option.
ARTICLE VII
Exercise of Options
7.1 Date of Exercise. For all purposes the date of exercise of
the Option shall be the date on which the notice described in
Section 6.6 shall have been delivered to the Company and pays the
purchase price for the shares then being purchased, but the
exercise of that Option shall not be effective unless and until the
person (or persons) exercising the Option complies with all the
provisions of the Plan, Option Agreement or of the Committee
governing the exercise of the Option within a reasonable time after
the delivery of such notice.
7.2 Delivery of Certificate. The Company shall deliver
certificates for the shares of Common Stock subject to the Option,
within a reasonable period of time after the day on which the
exercise of the Option is effective provided that the Company shall
not be required, upon the exercise of any Option, to issue or
deliver any shares of Common Stock prior to the completion of such
registration or other qualification of the Common Stock under any
applicable law, rule or regulation as the Company shall determine
to be necessary, and compliance with all other applicable laws,
rules or regulations as the Company shall determine to be
necessary, and in any such event the date of delivery shall be
extended for the period necessary and to assure and obtain
compliance with all other applicable laws, rules or regulations as
the Company shall determine to be necessary. No one shall be or be
deemed to be the holder of any Common Stock subject to an Option
unless and until certificates for the shares of such Common Stock
are issued to that person.
ARTICLE VIII
Terms and Conditions of Stock Awards
8.1 Generally. The Committee shall, in its sole and absolute
discretion, determine whether a Stock Award shall take the form of
(i) an unrestricted grant of shares of Common Stock or (ii) a grant
of shares of Common Stock which are subject to the risk of
forfeiture.
8.2 Fully Vested Grant of Stock. If the Committee determines that
the Stock Award shall take the form of an unrestricted grant of
shares of Common Stock, then it shall, after the payment of
applicable withholding taxes by the Grantee, cause a certificate
representing such shares to be delivered to the Grantee.
8.3 Grant of Stock Subject to the Risk of Forfeiture. If the
Committee determines that the Stock Award shall take the form of a
grant of shares of Common Stock which are to remain subject to the
risk of forfeiture for a period of time, then it shall take or
cause to be taken the steps set forth in this Section 8.3:
8.3.1 Restricted Stock Agreement. The Committee shall cause
the Stock Award to be evidenced by a Restricted Stock Agreement
which, subject to Section 8.4, shall be in such form as the
Committee may from time to time approve and shall be executed on
behalf of the Company by one or more officers of the Company.
8.3.2 Stock Certificates.
(a) The Company shall cause a certificate or certificates
representing the shares subject to the Restricted Stock Agreement
to be registered in the name of the Grantee which certificate(s)
shall bear the following legend:
The shares represented by this certificate have been issued
pursuant to the terms of a Restricted Stock Award made under
the Richardson Electronics, Ltd. Employees' 1998 Incentive
Compensation Plan and may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of until such time
as is set forth in that certain Restricted Stock Agreement
dated the day of , ____, by and between
Richardson Electronics, Ltd. and
.
(b) In order to enforce the restrictions on the shares
subject to the Restricted Stock Agreement, the Committee shall
require the Grantee, immediately upon receipt of a certificate or
certificates representing such shares, to deposit such
certificates, together with stock powers and other instruments of
transfer, appropriately endorsed in blank, with the Company or an
escrow agent designated by the Company under an escrow agreement in
such form as shall be determined by the Committee.
(c) At such time as any number of the shares of Common Stock
are no longer subject to the restrictions, terms, and conditions of
the Grantee's Restricted Stock Agreement (the "Unrestricted
Shares"), the Committee shall cause a new certificate to be
delivered to the Grantee, without the legend set forth above, for
the Unrestricted Shares. The shares remaining subject to the
Restricted Stock Agreement shall either be canceled or, if
appropriate under the terms of the Restricted Stock Agreement,
continue to be held by the Company or held in escrow subject to the
restrictions, terms, and conditions of the Restricted Stock
Agreement.
(d) In the event that a Grantee becomes entitled to receive
any new, additional, or different securities by virtue of a stock
dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, or any similar change affecting the Common
Stock subject to the Participant's Restricted Stock Agreement, such
securities shall be subject to the same restrictions, terms and
conditions as apply to the shares of Common Stock subject to such
Restricted Stock Agreement.
8.4 Form of Restricted Stock Agreement. Each Restricted Stock
Agreement shall be subject to the terms and conditions of the Plan
as well as such other terms and conditions as the Committee may
deem desirable and shall provide in substance as follows:
8.4.1 Number of Shares. Each Restricted Stock Agreement shall
specify the number of shares of Common Stock subject to such
Restricted Stock Agreement.
8.4.2 Non-Transferability of Restricted Stock. Each Restricted
Stock Agreement shall provide: (i) that during the life of the
Grantee the shares subject to the Restricted Stock Agreement may
not be transferred or assigned by the Grantee, and that such shares
may be received (to the extent vested) only by the Grantee or his
guardian or legal representative, and (ii) that upon the death of
the Grantee the shares of Common Stock (to the extent vested)
subject to any Restricted Stock Agreement held by him at the time
of his death which have not been previously delivered to the
Grantee shall be distributed to his designated Beneficiary or in
the absence of such designation to his legal representative or
other successor in interest.
8.4.3 Intra-Corporate Transfers. Each Restricted Stock
Agreement shall provide that a transfer of employment from the
Company to a Subsidiary or vice versa or between two such
Subsidiaries shall not be deemed a termination of employment.
8.4.4 Forfeiture. In addition to any other condition or other
vesting requirement, a Restricted Stock Agreement may provide that
a Grantee may forfeit in whole or in part any portion of the shares
of Common Stock subject to such Restricted Stock Agreement which
have not yet become vested if the Committee may, in its sole
discretion, determine that the Grantee is not satisfactorily
performing the duties to which he was assigned on the date the
Stock Award was granted or duties of at least equal responsibility.
8.4.5 Vesting. Each Restricted Stock Agreement shall contain
a schedule setting forth the period over which or the conditions
upon which the Grantee's rights in the shares of Common Stock
subject to the Restricted Stock Agreement vest (which may include
any conditions described in Section 6.7) and shall also provide
whether the Restricted Stock Agreement becomes vested, in whole or
in part, if the Grantee dies before his rights would otherwise have
become fully vested.
8.4.6 Stockholder Rights. Each Restricted Stock Agreement
shall provide that during its term the Grantee shall be entitled to
receive all dividends paid on all of the shares of Common Stock
subject to such Restricted Stock Agreement, to vote all such
shares, and to enjoy all other stockholder rights, except that the
Grantee shall neither (i) be entitled to the delivery of the
certificate evidencing shares except as provided in Section 8.3
above nor (ii) be able to sell, assign, transfer, pledge,
hypothecate or otherwise dispose of such shares until such time he
has received a certificate evidencing such shares.
8.4.7 Beneficiary. Each Restricted Stock Agreement shall
provide that the Grantee may designate the person or persons
(collectively the "Beneficiary") who, in the event of the death of
the Grantee, shall receive the certificate(s) evidencing shares of
Common Stock (to the extent vested) subject to the Restricted Stock
Agreement held by the Grantee at the time of his death. Any such
designation shall be in writing, shall be signed by the Grantee,
and shall be effective only when filed with the Committee. In the
event that the Grantee fails to designate a Beneficiary or that
none of his Beneficiaries survive the Grantee, the legal
representative of the Grantee shall receive the certificate(s)
evidencing the shares of Common Stock (to the extent vested)
subject to the Grantee's Restricted Stock Agreement. A Beneficiary
designation may be changed at any time and from time to time by the
Grantee; provided, however, that any such change shall become
effective only when filed with the Committee.
8.4.8 Withholding. Each Restricted Stock Agreement shall
provide that the Company shall have the right to require the
Grantee to remit and the Grantee shall have the obligation to remit
to the Company, or to withhold from other amounts due the Grantee,
as compensation or otherwise (including but not limited to any Cash
Bonus granted in connection with the related Stock Award), an
amount sufficient to satisfy all applicable withholding tax
requirements. At the Committee's election, such amount shall be
satisfied with cash or Common Stock.
8.4.9 Cash Bonus. In the event that the Committee grants a
Cash Bonus in connection with the Stock Award, then in addition to
the provisions described above, the Restricted Stock Agreement
shall contain provisions describing the amount of such Cash Bonus,
and the time or times at which the Grantee's right to such Cash
Bonus vests.
ARTICLE IX
Terms and Conditions of Cash Bonuses
9.1 Grant of Cash Bonuses. The Committee may, in its sole
discretion, grant Cash Bonuses as part of any Option or Stock Award
granted under the Plan. Such Cash Bonuses may be granted at any
time during the term of the Option or Stock Award to which it
relates.
9.2 Amount and Vesting of the Cash Bonuses.
(a) In the case of Cash Bonuses granted in connection with an
Option, the Grantee's (or his Beneficiary) right to receive a Cash
Bonus shall vest each time he purchases shares of Common Stock
subject to such Option. The amount of such Cash Bonus shall be
equal to the product obtained by multiplying (A) the excess, if
any, of the Fair Market Value (determined pursuant to paragraph (d)
below) of the shares so purchased over the purchase price for such
shares times (B) a fraction, the numerator of which is an amount
equal to the Combined Marginal Rate of Tax (as that term is defined
in Section 9.5 below) and the denominator of which is an amount
equal to the excess of one (1) over the Combined Marginal Rate of
Tax.
(b) In the case of Cash Bonuses granted in connection with a
Stock Award described in Section 8.2, the Grantee's right to a Cash
Bonus shall vest at the time the certificate representing the
shares subject to the Stock Award is delivered to the Grantee (or
his Beneficiary). The amount of the Cash Bonus shall be equal to
the product obtained by multiplying the Fair Market Value
(determined pursuant to paragraph (d) below) of such shares times
a fraction, the numerator of which is an amount equal to the
Combined Marginal Rate of Tax and the denominator of which is an
amount equal to the excess of one (1) over the Combined Marginal
Rate of Tax.
(c) In the case of Cash Bonuses granted in connection with a
Stock Award described in Section 8.3, the Grantee shall be entitled
to receive a Cash Bonus vesting at the times set forth in this
subparagraph (c). Right to a Cash Bonus shall vest when a
certificate representing Unrestricted Shares is delivered to the
Grantee (or his Beneficiary) pursuant to Section 8.3.2(c) or if the
employee makes an election under Section 83(b) of the Code, when a
certificate is issued in accordance with Section 8.3.2(a). The
amount of such Cash Bonus shall be equal to the product obtained by
multiplying the Fair Market Value (determined pursuant to paragraph
(d) below) of the Unrestricted Shares evidenced by such certificate
times a fraction, the numerator of which is an amount equal to the
Combined Marginal Rate of Tax and the denominator of which is an
amount equal to the excess of one (1) over the Combined Marginal
Rate of Tax.
(d) For purposes of this Section 9.2, the Fair Market Value
of the shares shall be determined as of the date on which the
shares "first become transferable or are not subject to a
substantial risk of forfeiture," (within the meaning of Code
Section 83) whichever occurs earlier as determined by the Committee
in its sole and absolute discretion.
9.3 Payment of Cash Bonus. The Company may either pay the Cash
Bonus to a Grantee or withhold all or a portion of the Cash Bonus
and apply such amount to the payment of withholding taxes due in
connection with amounts received by the Grantee pursuant to the
Plan.
9.4 Combined Marginal Rate of Tax. For purposes of this Article
IX, the term Combined Marginal Rate of Tax shall mean an amount
equal to the sum of the highest marginal rates of federal, state
and local income taxes applicable to individuals residing in the
state and city where the Grantee resides, giving effect to the
deductibility for federal income tax purposes of state and local
income taxes. In the event that the Grantee is neither a resident
nor citizen of the United States, this Section 9.4 shall be applied
by replacing the term "federal, state and local income taxes" with
the term "all applicable income taxes" wherever it appears herein.
9.5 Construction. It is the intention of the Company that the
amount of a Cash Bonus be calculated at the time at which the
ownership of the shares of Common Stock subject to the related
Option or Stock Award results in the inclusion of income by the
Grantee pursuant to Code Section 83 and this Section shall be so
construed and applied. Nothing contained herein shall be construed
as a guarantee by the Company that the Internal Revenue Service, or
other taxing authority, will agree with the determination of the
Committee as to the date upon which such inclusion income occurs or
the amount thereof. In the event of any such disagreement, nothing
contained herein shall be construed as a promise of an additional
payment by the Company to the Grantee.
ARTICLE X
Effect of Certain Changes
10.1 Anti-Dilution. If there is any change in the number of shares
of Common Stock through the declaration of stock dividends or
through a recapitalization which results in stock splits or reverse
stock splits, the number of shares of Common Stock available for
issuance under the Plan, the number of such shares covered by
outstanding Options and Restricted Stock Awards, and the price per
share of such Options, shall be proportionately adjusted by the
Committee to reflect any increase or decrease in the number of
issued shares of Common Stock; provided, however, that any
fractional shares resulting from such adjustment shall be
eliminated.
10.2 Change in Par Value. In the event of a change in the Common
Stock of the Company, as presently constituted as of the date of
this Amendment and Restatement of the Plan, which is limited to a
change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value,
the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
10.3 Mergers, Recapitalization, Etc. In the event that the Company
enters into an agreement or plan to merge or consolidate with any
other corporation, to reclassify, reorganize or otherwise
substantially alter its capital or business structure, to sell all
or a substantial part of its business or assets, or to dissolve,
the Committee may make such changes in the terms of outstanding
Option Agreements and Restricted Stock Agreements as may be
equitable and appropriate in the context of such transaction,
including without limitation substituting for the shares of Stock
subject to such Agreements equity interests in any entity which
will succeed to the business of the Company pursuant to such
transaction, accelerating the vesting schedule in such Agreement,
and providing that outstanding Options will lapse if not exercised
during a reasonable period prior to such transaction.
10.4 Adjustments to be made by Committee. The foregoing
adjustments shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive.
10.5 Rights of Option Grantee. A Grantee of an Option shall not
have any of the rights or privileges of a stockholder of the
Company unless and until certificates evidencing the shares of
Common Stock subject to such Option have been issued and delivered
to the Grantee.
10.6 Right of Company to Make Adjustments. The grant of an Option
or a Stock Award shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structures or to merge or to
consolidate or to dissolve, liquidate or sell or transfer all or
part of its business or assets.
ARTICLE XI
Amendment and Termination
The Board shall have the right to amend or suspend, or
terminate the Plan at any time, provided that unless first approved
by the stockholders of the Company, no amendment shall be made to
the Plan (except to conform the Plan, the Option Agreements or
Restricted Stock Agreements thereunder to changes in the Code or
governing law) which: (1) increases the total number of shares of
Common Stock which may be issued under the Plan, or (2) lowers the
minimum option price specified in Article VI. No amendment to the
Plan shall be made by the Board that materially changes the terms
of the Plan as to impair or adversely alter the rights of a Grantee
or other option holder without such person's consent.
ARTICLE XII
Application of Funds
Any proceeds received by the Company as a result of the
exercise of Options granted under the Plan may be used for any
valid corporate purpose.
ARTICLE XIII
Notice
Any notice to the Company required under this Plan shall be in
writing and shall either be delivered in person or sent by
registered or certified mail, return receipt requested, postage
prepaid, to the Company at its offices at 40W267 Keslinger Road,
P.O. Box 393, LaFox, Illinois 60147-0393, Attention: Stock Option
Committee.
ARTICLE XIV
Term of Plan
The Board may terminate the Plan at any time but if not sooner
terminated it shall terminate at the close of business on April 9,
2006. Options may not be granted and Restricted Stock Awards may
not be made after the Plan terminates. Termination of the Plan
shall not, however, affect the rights of Grantees under previously
granted Options or Restricted Stock Awards, and all unexpired
Options and Restricted Stock Awards shall continue in force and
operation after termination of the Plan until they are exercised,
lapse or terminate by their own terms and conditions, and the Plan
shall continue in effect solely with respect to such Options and
Restricted Stock Awards for so long as they remain outstanding.
ARTICLE XV
No Contract of Employment
Neither the adoption of the Plan nor the grant of any Option
or Restricted Stock Award shall be deemed to obligate either the
Company or any Subsidiary to continue the employment of any
Employee.
ARTICLE XVI
Section 16 of the Securities Exchange Act
With respect to Grantees subject to Section 16 of the
Securities Exchange Act of 1934 ("1934 Act"), transactions under
this plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee.
RICHARDSON ELECTRONICS, LTD. PROXY
40W267 Keslinger Road
P.O. Box 393
LaFox, Illinois 60147-0393
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Edward J. Richardson and William
G. Seils 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 Richardson
Electronics, Ltd. held of record by the undersigned on August 20,
1998 at the Annual Meeting of stockholders to be held on October 6,
1998 or any adjournment thereof.
1. ELECTION OF DIRECTORS
[__] FOR ALL nominees listed below [__] WITHHOLD AUTHORITY
(except as marked to the contrary below)
to vote for all nominees listed below
Edward J. Richardson, Scott Hodes, Samuel Rubinovitz,
Arnold R. Allen, Kenneth J. Douglas, Jacques Bouyer,
William J. Garry, Harold L. Purkey, Ad Ketelaars,
Bruce W. Johnson
INSTRUCTION: To withhold authority to vote for any
individual nominee write that nominee's name in the space provided
below:
2. To approve the adoption of the Richardson Electronics, Ltd.
Employees' 1998 Incentive Compensation Plan, the granting of
Options, Stock Awards and Cash Bonuses thereunder and the issuance
of shares upon the exercise of such Options.
3. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted for Proposals 1 and 2.
Please sign exactly as name appears below. For joint tenants,
all tenants should sign. If signing for an estate, trust,
corporation, partnership or other entity, title or capacity should
be stated. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
DATED: 1998
Signature
_______________________________________
Signature if held jointly
