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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ALLEN TELECOM INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALLEN TELECOM INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[ALLEN TELECOM LOGO]
Philip Wm. Colburn
Chairman of the Board
March 14, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Allen Telecom Inc. which will be held at the Cleveland Marriott at Key Center,
127 Public Square, Cleveland, Ohio on Friday, April 25, 1997 at 9:30 A.M. The
purposes of the meeting are set forth in the accompanying notice and proxy
statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
Sincerely,
/s/ Philip Wm. Colburn
PHILIP WM. COLBURN
Chairman of the Board
<PAGE> 3
ALLEN TELECOM INC.
25101 CHAGRIN BOULEVARD
BEACHWOOD, OHIO 44122
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 1997
March 14, 1997
To the Common Stockholders of
ALLEN TELECOM INC.
Notice is hereby given that the Annual Meeting of Stockholders of Allen
Telecom Inc. will be held at the Cleveland Marriott at Key Center, 127 Public
Square, Cleveland, Ohio, on Friday, April 25, 1997, at 9:30 A.M., local time,
for the following purposes:
1. To elect a Board of 10 directors;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as auditors
for the Company for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on Monday, March 3, 1997 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting or any adjournment thereof.
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. The
giving of such proxy will not affect your right to revoke the proxy or to vote
in person if you attend the meeting.
By order of the Board of Directors
MCDARA P. FOLAN, III
Secretary
<PAGE> 4
ALLEN TELECOM INC.
25101 CHAGRIN BOULEVARD
BEACHWOOD, OHIO 44122
------------------------
PROXY STATEMENT
March 14, 1997
The accompanying proxy is solicited on behalf of the Board of Directors of
Allen Telecom Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held on April 25, 1997, or at any adjournment thereof. Any proxy received
pursuant to this solicitation may be revoked by the stockholder executing it by
notifying the Secretary of the Company before it is voted at the Annual Meeting,
by duly executing a proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The Board of Directors has fixed March 3, 1997 as the record date for the
determination of holders of Common Stock, $1.00 par value, of the Company
("Common Stock") entitled to vote at the meeting. At the close of business on
that date, the Company had outstanding 26,832,305 shares of Common Stock
(exclusive of 2,829,241 shares held in its treasury). Each share of Common Stock
will be entitled to one vote at the meeting. Presence in person or by proxy of a
majority of the outstanding shares of Common Stock will constitute a quorum.
At the Annual Meeting, the results of stockholder voting will be tabulated
by the inspectors of election appointed for the Annual Meeting. Under Delaware
law and the Company's Restated Certificate of Incorporation, as amended, and
By-Laws, as amended, properly executed proxies that are marked "abstain" or are
held in "street name" by brokers that are not voted on one or more particular
proposals (if otherwise voted on at least one proposal) will be counted for
purposes of determining whether a quorum has been achieved at the Annual
Meeting. Abstentions will have the same effect as a vote against the proposal to
which such abstention applies. Broker non-votes will not be treated as a vote
for or a vote against any of the proposals to which such broker non-vote
applies.
This proxy statement and the accompanying proxy are first being mailed on
or about March 14, 1997.
ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual Meeting to hold office until
the next annual meeting and until their successors have been elected and
qualified. The Board of Directors proposes election of the persons listed below,
all of whom are currently directors. It is not contemplated that any of the
nominees will be unable or unwilling to serve as a director; however, if that
should occur, the proxies will be voted for the election of such other person or
persons as are nominated by the Board of Directors, unless the Board reduces the
number of directors. The 10 nominees for director receiving a plurality of the
votes cast at the Annual Meeting in person or by proxy shall be elected.
INFORMATION REGARDING NOMINEES
<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
- ------------------------------ -------------------------------------------------------------
<S> <C>
George A. Chandler (67)....... Business consultant, Princeton, New Jersey, since May 1991.
April 27, 1978 Mr. Chandler was Chairman and Chief Executive Officer,
Advanced Aluminum Products, Inc., a manufacturer of
aluminum products for the building products industry,
Hammond, Indiana, from July 1990 to May 1991. Mr. Chandler
is also a director of Cumberland Holdings, Inc., DeVlieg
Bullard Inc., and Kimmins Environmental Services Corp.
</TABLE>
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<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
- ------------------------------ -------------------------------------------------------------
<S> <C>
Philip Wm. Colburn (68)....... Chairman of the Board, Allen Telecom Inc., since December 6,
April 29, 1975 1988 and a consultant to the Company since December 31, 1991.
Mr. Colburn was also Chief Executive Officer of the Company
from March 9, 1988 to February 26, 1991 and President from
March 9, 1988 to December 5, 1989. Mr. Colburn was
President, PWC Associates, management consulting, Los
Angeles, California, from June 1981 to March 9, 1988. He
had been Executive Vice President of the Company from
February 1976 to June 1981 and thereafter until March 9,
1988 was a consultant to the Company. Mr. Colburn is also a
director of Earl Scheib, Inc., Spinnaker Industries, Inc.,
Superior Industries International, Inc. and TransPro, Inc.
Dr. Jill K. Conway (62)....... Visiting Scholar, Program in Science, Technology and Society,
April 28, 1987 Massachusetts Institute of Technology, Cambridge,
Massachusetts, since July 1985. Dr. Conway was President of
Smith College, Northampton, Massachusetts, from July 1975
to July 1985. Dr. Conway is also a director of Arthur D.
Little, Inc., Colgate-Palmolive Company, Merrill Lynch &
Co. and Nike Inc.
Albert H. Gordon (95)......... Advisor and director, Deltec Inc., a money manager, New York,
December 6, 1971 New York, since January 1997 and 1980, respectively. Mr.
Gordon was Advisory Director, Investment Banking Division
of PaineWebber Incorporated, investment bankers, New York,
New York, from January 1995 to January 1997. He was
Honorary Chairman, Kidder, Peabody Group Inc., investment
bankers, New York, New York, from October 1986 to January
1995, and Chairman of the Board of Kidder, Peabody & Co.
Incorporated, the predecessor of Kidder, Peabody Group
Inc., from 1957 to October 1986.
William O. Hunt (63).......... Chairman of the Board, Chief Executive Officer, President and
September 10, 1992 director, Intellicall, Inc., a manufacturer of network and
customer premise equipment, such as intelligent pay phones
and intelligent network platforms, and provider of long
distance resale, operator and prepaid calling services,
Dallas, Texas, since December 1992. Mr. Hunt was Chairman
of the Board and director, Hogan Systems, Inc., a designer
of integrated online application software products for
financial institutions, Dallas, Texas, from August 1990 to
August 1993, and Vice Chairman of the Board and director,
Hogan Systems, Inc., from August 1993 to March 1996. Mr.
Hunt was Chairman of the Board, Chief Executive Officer and
President of Alliance Telecommunications Corporation, a
manufacturer of wireless telecommunications products,
Dallas, Texas, from July 1989 until its acquisition by the
Company on July 30, 1992, and Chairman of the Board and
Chief Executive Officer from February 1986 to October 1988.
Mr. Hunt is also a director of American Homestar
Corporation and Dr. Pepper Bottling Holdings, Inc.
J. Chisholm Lyons (69)........ Counsel, Smith Lyons, barristers and solicitors, Toronto,
October 27, 1969 Canada. Mr. Lyons was a partner of the law firm for 31 years
until May 1, 1993 and has been counsel to the law firm
since that date. Mr. Lyons has been Vice Chairman of the
Board of the Company since September 1979. He was an
employee of the Company from September 1979 to September
30, 1989 and is presently a consultant to the Company.
John F. McNiff (54)........... Vice President-Finance and director, Dover Corporation, a
June 14, 1995 manufacturer of industrial products and equipment, New York,
New York, since 1983 and 1996, respectively. Mr. McNiff is
also a director of the Haven Fund, a public mutual fund.
</TABLE>
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<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
- ------------------------------ -------------------------------------------------------------
<S> <C>
Robert G. Paul (55)........... President and Chief Executive Officer, Allen Telecom Inc.,
March 6, 1990 since February 26, 1991. Mr. Paul was President and Chief
Operating Officer of the Company from December 5, 1989 to
February 26, 1991, Senior Vice President-Finance from April
1987 to December 5, 1989, Vice President-Finance from
January 1987 to April 1987 and a Vice President from 1974
to January 1987. He was also President of the Antenna
Specialists Company division of the Company from 1978 to
June 1990. Mr. Paul is also a director of Dynatech
Corporation.
Charles W. Robinson (77)...... Chairman, Robinson & Associates Inc., a venture capital
April 24, 1979 investment firm, Santa Fe, New Mexico, since January 1989,
Chairman, Energy Transition Corporation, energy
consultants, Santa Fe, New Mexico, since January 1979 and
President, Dyna Yacht Inc., sailboat designer, LaJolla,
California, since early 1991. Mr. Robinson is also a
director of Nike Inc.
William M. Weaver, Jr. (85)... Limited Partner Emeritus, Alex. Brown & Sons Incorporated,
April 21, 1970 investment bankers, New York, New York, since February 1986.
Mr. Weaver was a general partner of Alex. Brown & Sons, the
predecessor of Alex. Brown & Sons Incorporated, from 1966
until 1986.
</TABLE>
INFORMATION REGARDING BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction of
its Board of Directors, whose members are elected annually by the stockholders.
During 1996, the Board of Directors of the Company had Audit, Management
Compensation and Nominating Committees. Messrs. Chandler, Robinson and McNiff
are the members of the Audit Committee; Dr. Conway and Messrs. Gordon and Weaver
are the members of the Management Compensation Committee; and Dr. Conway and
Messrs. Lyons and Weaver are the members of the Nominating Committee.
The Audit Committee recommends to the Board of Directors the appointment of
the independent auditors and reviews the degree of their independence from the
Company; approves the scope of the audit engagement, including the cost of the
audit; reviews any non-audit services rendered by the auditors and the fees
therefor; reviews with the auditors and management the Company's policies and
procedures with respect to internal accounting and financial controls and, upon
completion of an audit, the results of the audit engagement; and reviews
internal accounting and auditing procedures with the Company's financial staff
and the extent to which recommendations made by the internal audit staff or by
the independent auditors have been implemented.
The Management Compensation Committee recommends to the Board salaries and
incentive compensation awards for officers of the Company and its subsidiaries;
reviews and approves guidelines for the administration of incentive compensation
programs for other management employees; makes recommendations to the Board with
respect to major compensation programs; administers the Company's 1982 Stock
Plan, as amended (the "1982 Stock Plan"), the Company's 1992 Stock Plan, as
amended (the "1992 Stock Plan"), and the Company's Key Management Deferred Bonus
Plan (the "KMDB Plan") and grants stock options and restricted shares of the
Company's Common Stock under the 1992 Stock Plan; and issues the Report on
Executive Compensation required to be included in the Company's proxy statement
by the rules of the Securities and Exchange Commission. The Management
Compensation Committee's Report on Executive Compensation for 1996 is set forth
on pages 6 to 9 of this proxy statement.
The Nominating Committee selects and recommends to the Board nominees for
election as directors and considers the performance of incumbent directors in
determining whether to recommend them for nomination for re-election. The
Nominating Committee has recommended all incumbent directors for re-election at
the Annual Meeting. The Nominating Committee will consider nominees recommended
by stockholders for election at the 1998 Annual Meeting of Stockholders that are
submitted prior to the end of 1997 to the Secretary of the Company at the
Company's offices, 25101 Chagrin Boulevard, Beachwood, Ohio 44122. Any such
recommendation must be in writing and must include a detailed description of the
business experience
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<PAGE> 7
and other qualifications of the recommended nominee as well as the signed
consent of such person to serve if nominated and elected.
During 1996, the Board of Directors of the Company held six meetings, the
Audit Committee held three meetings, the Management Compensation Committee held
three meetings, and the Nominating Committee held one meeting. Except for Mr.
McNiff, all of the directors attended 75 percent or more of the meetings held by
the Board of Directors and by the Committees on which they served during 1996.
COMPENSATION OF DIRECTORS
Each director of the Company (other than Messrs. Colburn and Lyons, who are
consultants to the Company, and Mr. Paul, who is an employee of the Company) is
paid $15,000 per year for his or her services as a director and $1,000 for each
meeting of the Board of Directors attended. Each member of the Audit Committee
is paid $2,000 per year, each member of the Management Compensation Committee is
paid $3,000 per year, and each member of the Nominating Committee (other than
Mr. Lyons) is paid $1,000 per year, for his or her services as such member, and
each such Committee member (other than Mr. Lyons) is paid $500 for each meeting
of a Committee attended. Directors are not paid fees for their participation in
meetings by conference telephone or for actions by unanimous written consent.
Each director and Committee member is reimbursed for travel and related expenses
incurred in attending meetings.
The stockholders approved The Allen Group Inc. 1994 Non-Employee Directors
Stock Option Plan (the "Directors Option Plan") at the Company's 1994 Annual
Meeting of Stockholders. The Directors Option Plan provides that each year, on
the first Friday following the Company's Annual Meeting of Stockholders, each
individual elected, re-elected or continuing as a director who is not a current
or former employee of the Company automatically receives a nonqualified stock
option for 1,000 shares of Common Stock. The Directors Option Plan also permits
discretionary grants to directors who are not current employees of, but were
previously employed by, the Company. On April 26, 1996, Dr. Conway and Messrs.
Chandler, Gordon, Hunt, McNiff, Robinson and Weaver each received a
non-qualified stock option for 1,000 shares of Common Stock of the Company under
the Directors Option Plan at an exercise price of $23.00 per share. Each of the
foregoing options expires 10 years from date of grant and is exercisable 50
percent after two years from date of grant, 75 percent after three years from
date of grant and 100 percent after four years from date of grant. In addition,
each of the foregoing options becomes immediately exercisable upon the death of
the optionholder prior to the expiration of such option or upon the cessation of
such optionholder's service as a director of the Company six months or more
after the date of grant and prior to the expiration of such option.
In connection with their post-employment consulting agreements described
below, on February 19, 1997, Mr. Colburn, Chairman of the Board of the Company,
received a nonqualified stock option for 65,000 shares of Common Stock, and Mr.
Lyons, Vice Chairman of the Board of the Company, received a nonqualified stock
option for 17,000 shares of Common Stock, at an exercise price of $23.125 per
share. Each of the foregoing options expires 10 years from date of grant and is
exercisable 33 1/3 percent after one year from date of grant, 66 2/3 percent
after two years from date of grant and 100 percent after three years from date
of grant. In addition, each of the foregoing options becomes immediately
exercisable upon the death of the optionholder prior to the expiration of such
option or upon the cessation of such optionholder's service as a director of the
Company six months or more after the date of grant and prior to the expiration
of such option.
The Company maintains a Matching Gift Program for the benefit of the
directors of the Company. Pursuant to the Matching Gift Program, in 1996, the
Company matched gifts to charitable organizations made by the directors in
amounts up to $2,500 for each director.
Mr. Colburn was employed as Chief Executive Officer of the Company until
February 26, 1991, and as Chairman of the Board of the Company until December
31, 1991, pursuant to an employment agreement that was entered into in 1988. On
December 31, 1991, Mr. Colburn elected to terminate his status as an employee of
the Company (although he continues as Chairman of the Board of the Company) and
to provide post-employment consulting services to the Company pursuant to his
consulting agreement described below. Mr. Colburn's employment agreement
provides that the Company will continue to provide Mr. Colburn and his spouse
medical and hospitalization benefits for their lives at least equal to the
benefits they were entitled to while he was an employee of the Company and will
provide life insurance coverage on Mr. Colburn for his life
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in an amount equal to five times his 1991 salary, which is the amount of life
insurance that the Company provided to Mr. Colburn while he was an employee of
the Company and the same level of life insurance that the Company provides to
all its officers and key employees. The Company is fulfilling its obligations to
provide such life insurance benefits to Mr. Colburn pursuant to the terms of a
Split Dollar Insurance Agreement between the Company and Mr. Colburn.
Mr. Colburn's employment agreement provides for mandatory arbitration of
all disputes relating to his employment agreement, his post-employment
consulting agreement described below or his supplemental pension benefit
agreement described on page 15 hereof and requires the Company to pay all
reasonable legal expenses incurred by Mr. Colburn in connection with resolution
of disputes under the agreements.
Pursuant to an agreement entered into in 1976, and subsequently amended,
Mr. Colburn provided post-employment consulting services to the Company for
several years prior to March 9, 1988, when he became Chief Executive Officer of
the Company, and has provided and will continue to provide post-employment
consulting services to the Company for an additional period that commenced upon
termination of his employment, which was December 31, 1991, through December 31,
1998 and continuing thereafter for successive periods of 12 months each, unless
either the Company or Mr. Colburn gives at least three months notice to the
contrary. The agreement provides for the payment by the Company to Mr. Colburn
annually, during the consulting period, of $248,605, increased each June 30
during the consulting period for increases in the consumer price index, and,
except after a "Change in Control" of the Company (which is defined as it is in
the severance agreements described on pages 16 to 17 of this proxy statement),
reduced to the extent of any benefits paid to him prior to January 1, 1994 under
his supplemental pension benefit agreement described on page 15 hereof but not
reduced by any benefits paid to him under the Allen Telecom Inc. Corporate
Retirement Plan. During 1996, the Company paid Mr. Colburn $283,082 in
consulting fees and furnished him an automobile at the Company's expense. In
addition, during the consulting period, the Company provides Mr. Colburn with
furnished office space and support services while he is performing consulting
services. During the consulting period, Mr. Colburn is required to furnish
consulting services to the Company for up to 34 percent of his time each year,
except when he is engaged in governmental service or charitable work, during
which periods consulting services and compensation will be suspended, and he has
agreed not to engage in or be employed by any business in competition with the
Company during the term of his agreement. If the Company breaches any material
provision of the consulting agreement and such breach continues for at least 30
days after notice to the Company, all benefits under the consulting agreement
become nonforfeitable, and the Company will pay Mr. Colburn an amount equal to
the present value of all remaining consulting compensation for the remaining
consulting period.
Pursuant to an agreement entered into in September 1989, as amended in
1990, Mr. Lyons provides post-employment consulting services to the Company for
the period that commenced upon termination of his employment, which was
September 30, 1989, through September 30, 1992 and continuing thereafter for
successive periods of 12 months each, unless either the Company or Mr. Lyons
gives at least three months notice to the contrary. No such notice was given by
either party in 1996. The agreement provides for the payment by the Company to
Mr. Lyons annually, during the consulting period, of $25,000. In addition,
during the consulting period, the Company includes Mr. Lyons in the Company's
life, medical and hospitalization and disability insurance benefit plans and
furnishes him an automobile at the Company's expense. During the consulting
period, Mr. Lyons is required to furnish consulting services to the Company for
up to 10 percent of his time each year, and he has agreed not to engage in or be
employed by any business in competition with the Company during the term of his
agreement.
The Company also has entered into supplemental pension benefits agreements
with Messrs. Colburn and Lyons. For a description of the terms of these
agreements, see "EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT --
Retirement Plans -- Other Supplemental Pension Benefits Agreements" on page 15
of this proxy statement.
For additional information with respect to the directors of the Company,
see "EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT -- Transactions
with Executive Officers and Directors" on page 19 and "STOCK OWNERSHIP --
Directors and Officers" on pages 21 to 22, of this proxy statement.
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<PAGE> 9
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to the proxy rules promulgated by the Securities and Exchange
Commission designed to enhance disclosure of corporations' policies toward
executive compensation, Dr. Conway (Chair) and Messrs. Weaver and Gordon, as
members of the Management Compensation Committee of the Board of Directors of
the Company (the "Compensation Committee"), submit the following report
outlining the Company's compensation plans and policies as they pertain to
Robert G. Paul, President and Chief Executive Officer of the Company, and the
other executive officers of the Company:
The Company's executive compensation plans have been designed to attract,
retain and reward high caliber executives who will formulate and execute the
business plans of the Company in a manner that will provide the stockholders of
the Company with a satisfactory return while assuring that the Company's
executive compensation levels are fair and appropriate to both its executives
and its stockholders. With these goals in mind, the Company's compensation plans
and policies have been designed to ensure that total executive compensation is
linked significantly to the performance of the Company, as measured by both the
operating performance of the Company and the increase in the value of its
shares. Although the Compensation Committee recognizes that improvement in
operating performance and higher stock prices do not necessarily move in tandem
over the short term, we expect that the two measurements will correlate over the
long term.
The Compensation Committee regards stock ownership by the Company's
executive officers, encouraged by equity-based compensation plans, as an
effective way to align the interests of the executive officers with those of the
stockholders of the Company. Accordingly, the Compensation Committee does not
plan to pay above-average base salaries to its executive officers. The Committee
does expect to utilize performance-oriented and equity-based compensation to
reward outstanding performance.
By receiving some equity-based compensation during their term of employment
by the Company, executive officers of the Company should become larger holders
of Company stock. The use of equity-based compensation is intended to strengthen
their identification with the stockholders of the Company and make increasing
stockholder value a continuing focus for the Company's management group. The
Compensation Committee considers that equity-based compensation, combined with a
focus on the operating performance of the Company, will have a long-term impact
on improving the Company's financial results and increasing its stockholder
value.
STOCK OWNERSHIP GUIDELINES
In early 1994, the Compensation Committee established stock ownership
guidelines for key executives of the Company. These guidelines provide that
executive officers should hold shares of the Company's Common Stock in varying
amounts as a multiple of salary, ranging from a minimum of five times annual
salary for the Chief Executive Officer to one times annual salary for key
executives below the Vice President level.
The Compensation Committee recognizes that newer employees or those
recently promoted may require some period of time to achieve these levels. Even
though the guidelines have provided for a transition period of up to 10 years
for the suggested levels to be met, we note that as of year end 1996 many of the
key executives exceeded their ownership guidelines and as a group continued to
accumulate shares of the Company's Common Stock. The Compensation Committee
intends to continue to monitor each executive's progress towards these
guidelines and will consider each executive's progress towards achieving these
guidelines when deciding on future stock option awards and equity grants.
MEASURING PERFORMANCE
The evaluation of the performance of the key executive officer group, and
the Chief Executive Officer in particular, is primarily based on measurable
criteria and, to a lesser extent, certain subjective criteria. The measurable
criteria include both the total return to stockholders, determined by changes in
the stock price and any dividends which may be paid, and the financial
performance of the business, determined by the amount of earnings per share, the
return on equity and the rate of increase in earnings per share.
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Because of the dynamic nature of many of the Company's businesses and the
desire to focus on long-term objectives, these criteria are measured over
one-year, three-year and five-year periods. When evaluating performance with
regard to an increase in base salary, the Compensation Committee assigns more
weight to longer-term results, i.e., three and five-year comparisons, than to
the results of a single year. It also considers comparisons of salaries for
similar positions in companies of comparable size, as well as changes in the
cost of living. When determining an annual incentive bonus, the Compensation
Committee places more weight on the performance of the year just completed, with
significantly less weight on the three and five-year results.
Through 1993, the Company had a significant tax-loss carryforward which was
fully utilized during 1993. Subsequently, the Company acquired majority, but not
100%, ownership in a German and two Italian companies. The earnings from these
subsidiaries are subject to significantly higher tax rates and a deduction from
income for the minority interest. Therefore, the Company's earnings performance
is reviewed on both a pre-tax, pre-minority interest earnings per share and an
after-tax earnings per share when evaluating the Company's and the Chief
Executive Officer's performance. For comparative purposes, the Compensation
Committee plans to review the after-tax earnings per share for 1994 and future
years against pro forma fully taxed earnings per share for pre-1994 years. The
after-tax earnings from continuing operations in 1996, excluding a noncash
write-off on research and development in connection with an acquisition, of
$23.2 million and $.86 per share were 14% and 16%, respectively, lower than 1995
results. The pre-tax earnings, before interest, minority interest and the
above-mentioned write-off, were $52.0 million, 1% below 1995 results, but
approximately 50% or more above any other year in the Company's history. The
Company's return on equity from continuing operations (before the
above-mentioned write-off) of 10.7% decreased from the past year's 13.5%.
At the end of 1995, the Company's Common Stock price was $22.25,
representing a one-year decrease in stockholder value based on stock price and
dividends of 1%. The longer-term performance saw the three-year average annual
increase in stockholder value equal 12% and the five-year average annual
increase equal 21% as shown on the performance graph set forth on page 18 of
this proxy statement, which compares favorably to the industry averages over the
longer time period.
The subjective criteria utilized by the Board and Compensation Committee in
evaluating the performance of the Company, the Chief Executive Officer and all
other key executives of the Company, include but are not necessarily limited to:
(i) the success of the Company in implementing and achieving its
corporate strategic goals and the strategic goals of its
individual businesses;
(ii) the success in the development of management depth; and
(iii) the development and maintenance of timely communication and
credibility with its stockholders, financial analysts and other
outside audiences.
The corporate executives are paid annual incentive bonuses commensurate
with the Compensation Committee's evaluation of the Company's performance as
described above. One half of the 1996 maximum incentive bonus for the corporate
executives was based on the Company's 1996 earnings per share and the remaining
half was based on subjective criteria. The 1996 earnings per share were below
the minimum target, so no payment on this half was made. The corporate
executives' annual incentive bonuses were significantly below the maximum for
their positions, and well below 1995 bonuses. These bonuses averaged 23% of
salary.
The annual performance bonuses for the senior managers who are responsible
for specific operating businesses and subsidiaries within the Company are based
primarily on the annual operating profits of their individual businesses as
measured against their profit plans. Some non-financial objectives, mutually
established by those executives and the Company's senior officers at the
beginning of each year, are also evaluated. Consistent with previous years,
bonuses for 1995 could have ranged from zero to 75% of salary. The largest bonus
in 1996 was 27% of salary, and the average bonus for this group was 19% of
salary.
7
<PAGE> 11
COMPENSATION STUDY
During late 1994 and early 1995, the Compensation Committee engaged William
M. Mercer Incorporated, a nationally recognized executive compensation
consulting firm, to review the Company's executive compensation practices. This
review included an examination of the Company's practices and their consistency
with general corporate practices and with the Compensation Committee's
philosophy. Mercer utilized a number of national compensation surveys and
private databases for companies of similar size to the Company as well as
specific analysis of the compensation information contained in proxy statements
of a number of companies in similar industries.
Based on this evaluation, the Compensation Committee decided to
discontinue, effective January 1, 1995, the Key Management Deferred Bonus Plan.
The Committee felt that the KMDB Plan, which was designed to focus on the return
on equity of the Company, had the desired impact of significantly increasing the
return on equity of the Company over the past seven years. Although the KMDB
Plan awards are paid out over a five-year period, each annual award was based on
the return on equity in a particular year. The Compensation Committee concluded
that this Plan, when combined with the annual incentive bonus, based too large a
percentage of total executive compensation on one year's results. The
compensation study indicated that the Company's annual incentive bonus formulas,
as a percent of salary, were in line with the 50th percentile of the broad base
of companies, so no changes were adopted to the annual incentive bonus plan.
The compensation study also indicated that the Company was below the 50th
percentile in the use of stock options as a means of long-term compensation and
in the levels of executive retirement benefits. As a result, the Compensation
Committee moved to annual stock option grants for most senior employees starting
in 1995 with average annual grants being at higher levels than was previously
the case and expanded the pool of employees participating in the 1992 Stock
Plan. In addition, the Company has adopted and implemented expanded
supplementary restoration and target executive retirement arrangements for
senior employees.
BASIS FOR CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Paul received a salary increase of $25,000 on January 1, 1996, which
was based on the objective and subjective criteria discussed above, peer
comparisons and cost of living factors. He did not receive a salary increase in
1993 and 1994 as a result of his receipt in 1992 of a performance-oriented
restricted stock grant.
Mr. Paul's performance bonus of $130,000 for 1996, which was paid in cash
in late February 1997, was 32% of his base salary. His employment agreement
states that his performance bonus can range from 0% to 80% of base salary. Half
of the maximum bonus for 1996 was based on achieving earnings per share between
$1.05 and $1.20. The earnings per share did not achieve this level so Mr. Paul
earned none of this portion of his bonus, and the bonus paid was based on the
continued success against the other objectives.
In April 1996, Mr. Paul was granted a non-qualified option for 32,400
shares at $20.50, the market price on the date of grant. This option was
consistent with the recommendations of the above-mentioned compensation study.
COMPLIANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to a public corporation for compensation over $1
million paid to the corporation's chief executive officer and four other most
highly compensated executive officers. Qualifying performance-based compensation
will not be subject to the cap if certain requirements are met. The Compensation
Committee and the Board of Directors intend to structure the compensation of its
executive officers in a manner that should ensure that the Company does not lose
any tax deductions because of the $1 million compensation limit in the
foreseeable future.
The Company's salaries for its highest paid executives will be set, based
on independent studies, at levels approximating the average for companies of
comparable size in similar industries and, when added to annual bonus targets,
are not expected to approach $1 million in the foreseeable future. The Company
has been an early proponent of using more equity-based compensation, which can
often be designed to ensure that tax deductibility is not compromised.
8
<PAGE> 12
In February 1995, the Company's Board of Directors amended the 1992 Stock
Plan incorporating maximum limitations on individual annual stock option and
restricted stock grants so as to meet the requirements of Section 162(m). They
also amended the 1992 Stock Plan to identify the performance measures to be used
if the Compensation Committee decides to use performance-based vesting
restricted stock in the future to meet the requirements of Section 162(m). These
amendments were approved by the Company's stockholders at the Company's 1995
Annual Meeting.
The November 30, 1993 incentive restricted stock grants to seven
individuals contain both time-based vesting and provisions for performance-based
acceleration, and therefore are subject to the $1 million cap. These restricted
stock grants, however, include provisions to ensure that the amount vested in
any one year will not place the individual's earnings over the $1 million cap.
The 1992 incentive restricted stock grants were grandfathered under Section
162(m). Thus, no tax deduction will be lost to the Company as a result of these
restricted stock grants.
Respectfully submitted,
Dr. Jill K. Conway, Chair
Albert H. Gordon
William M. Weaver, Jr.
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by the Company and its subsidiaries to those persons who were (i) the
Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers"), for services rendered by them in all capacities in which they served
the Company and its subsidiaries during 1994, 1995 and 1996. The number of
restricted shares and options reported in the Summary Compensation Table set
forth below (and the footnotes thereto), the Option/SAR Grants In Last Fiscal
Year Table set forth on page 11 of this proxy statement, and the Aggregated
Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End Option/SAR Values
Table set forth on page 12 of this proxy statement have been adjusted, to the
extent applicable, for the Spinoff Distribution declared by the Board of
Directors of the Company on September 8, 1995 and paid to the holders of the
Company's Common Stock of record on September 29, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- RESTRICTED UNDERLYING
NAME AND BONUS OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) ($)(a) COMPENSATION($) AWARDS($)(c) SARS(#) COMPENSATION($)(e)
- -------------------------------- --------- -------- --------------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Paul 1996 $405,000 $130,000 (b) $ -0- 32,400 $ 83,049
President and Chief 1995 380,000 255,000 (b) -0- 16,712 96,563
Executive Officer 1994 350,000 374,490 (b) 91,804(d) 89,129 66,404
Robert A. Youdelman 1996 248,000 60,000 (b) -0- 18,500 57,135
Executive Vice President 1995 232,000 124,000 (b) -0- 8,913 58,409
and Chief Financial
Officer 1994 222,000 186,481 (b) 51,754(d) 55,706 51,294
McDara P. Folan, III 1996 142,000 23,000 (b) -0- 5,600 13,466
Vice President, 1995 135,000 45,000 (b) -0- 5,571 13,466
Secretary and 1994 125,000 69,064 (b) 24,586(d) -0- 13,616
General Counsel
James L. LePorte, III 1996 165,000 33,000 (b) -0- 8,300 19,259
Vice President, Treasurer 1995 151,000 66,000 (b) -0- 8,913 20,242
and Controller 1994 144,000 104,411 (b) 31,462(d) 5,571 13,174
Erik H. van der Kaay 1996 252,000 47,000 (b) -0- 18,500 67,011
Executive Vice President 1995 240,000 65,000 (b) -0- 17,826 64,924
1994 200,000 128,897 (b) 41,674(d) -0- 45,999
</TABLE>
9
<PAGE> 13
- ---------------
(a) Amounts listed as bonuses for each of the respective fiscal years include
(i) annual performance bonuses earned by the Named Executive Officers with
respect to such fiscal year and (ii) the cash portion of bonuses awarded
under the Company's KMDB Plan to the Named Executive Officers for such
fiscal year, even though the payment of the cash portion of such bonuses is
paid in five equal annual installments on September 15 of each year
commencing in the year following the year with respect to which such award
is made and even though the right to any unpaid portions of such bonuses
will be forfeited upon termination of employment for certain reasons
enumerated in the Plan. The KMDB Plan was discontinued as of December 31,
1994. Accordingly, no bonuses were awarded under the Company's KMDB Plan to
the Named Executive Officers for fiscal years 1995 and 1996.
(b) Aggregate amount of such compensation is less than the lesser of $50,000 or
10 percent of the total annual salary and bonus reported for such Named
Executive Officer under "Salary" and "Bonus" for such fiscal year.
(c) The dollar values of the restricted stock awards are based on the closing
market price of the Company's Common Stock on the date of such awards. At
December 31, 1996, the Named Executive Officers held 132,528 restricted
shares of the Company's Common Stock in the aggregate, which are subject to
forfeiture under certain circumstances for periods up to 10 years with an
aggregate value (calculated by multiplying the number of restricted shares
held by $22.25, the closing market price of the Company's Common Stock on
December 31, 1996) of $2,948,748 as follows: Mr. Paul (45,010 shares with a
value of $1,001,473), Mr. Youdelman (27,806 shares with a value of
$618,684), Mr. Folan (19,554 shares with a value of $435,077), Mr. LePorte
(17,584 shares with a value of $391,244) and Mr. van der Kaay (22,574 shares
with a value of $502,272). Dividends are paid on restricted shares of the
Company's Common Stock at the same rate as paid on other outstanding shares
of the Company's Common Stock.
(d) On February 22, 1995, the Named Executive Officers were awarded the
following numbers of restricted shares of the Company's Common Stock under
the 1992 Stock Plan, which restricted shares constitute 50 percent of the
bonuses awarded for 1994 to each Named Executive Officer under the Company's
KMDB Plan: Mr. Paul (4,464), Mr. Youdelman (2,516), Mr. Folan (1,196), Mr.
LePorte (1,529) and Mr. van der Kaay (2,026). These restricted shares of the
Company's Common Stock vest in five equal annual installments on September
15 of each year commencing in 1995, provided that the right to receive any
such restricted shares which are not vested will be forfeited upon
termination of employment for certain reasons enumerated in the KMDB Plan.
(e) All Other Compensation includes $1,200 made as matching Company
contributions for each of the Named Executive Officers under the Company's
Employee Before-Tax Savings Plan for each of 1996, 1995 and 1994, as
applicable. In addition, All Other Compensation includes (i) insurance
premiums of $156 paid by the Company with respect to term life insurance for
the benefit of each of the Named Executive Officers during each of 1996,
1995 and 1994, respectively, and (ii) the following amounts equal to the
full dollar value of the remainder of the premiums paid by the Company in
connection with life insurance policies issued pursuant to the Split Dollar
Insurance Agreements between the Company and the following Named Executive
Officers during 1996, 1995 and 1994, respectively, as applicable: Mr. Paul
($81,693, $95,207 and $65,048), Mr. Youdelman ($55,779, $57,053 and
$49,938), Mr. Folan ($12,110, $12,110 and $12,260), Mr. LePorte ($17,903,
$18,886 and $11,848) and Mr. van der Kaay ($65,655, $63,568 and $44,643).
The premiums paid by the Company in connection with the life insurance
policies issued pursuant to such Split Dollar Insurance Agreements set forth
in the preceding sentence generally will be recovered in full by the Company
upon the cancellation or purchase by a Named Executive Officer of any such
life insurance policy or the payment of any death benefits under any such
life insurance policy.
10
<PAGE> 14
OPTIONS GRANTED IN 1996
The following table sets forth information with respect to grants of
options to purchase shares of the Company's Common Stock to the Named Executive
Officers during 1996 pursuant to the Company's 1992 Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
PERCENT OF
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(b)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------- ------------ ------------ ------------ ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Robert G. Paul 32,400(a) 8.3% $ 20.50 4/25/06 $417,712 $1,058,564
Robert A. Youdelman 18,500(a) 4.7 20.50 4/25/06 238,508 604,427
McDara P. Folan, III 5,600(a) 1.4 20.50 4/25/06 72,197 186,962
James L. LePorte, III 8,300(a) 2.1 20.50 4/25/06 107,006 271,175
Erik H. van der Kaay 18,500(a) 4.7 20.50 4/25/06 238,508 604,427
</TABLE>
- ---------------
(a) Each of these options was granted on April 23, 1996. Each of these options
is exercisable 50 percent after two years from date of grant, 75 percent
after three years from date of grant and 100 percent after four years from
date of grant. If the optionee's employment by the Company or any of its
subsidiaries terminates for any reason, this option may be exercised to the
extent exercisable at the time of such termination of employment within
three months after such termination of employment. If the optionee dies
within such three-month period or if the termination of his employment is
due to his death, this option may be exercised within one year after his
death. Each of these options contains a tandem stock appreciation right
providing that the Company will, if requested by the optionee prior to the
exercise thereof and if approved by the Compensation Committee, purchase
that portion of the option which is then exercisable at a price equal to the
difference between the exercise price and the market price of the shares.
The purchase price may be paid by the Company in either cash or Common Stock
of the Company, or any combination thereof, as the Compensation Committee
may determine. In addition, each of these options contains a tandem limited
stock appreciation right exercisable six months after grant and immediately
after a " Change in Control" of the Company (which is defined as it is in
the severance agreements described on pages 16 to 17 of this proxy
statement). Pursuant to this tandem limited stock appreciation right, the
Company will purchase the option for cash at a price equal to the difference
between the exercise price and the "market value" (as defined in the 1992
Stock Plan) of the shares covered by the option. Such market value generally
is defined to relate to the highest market value of the Company's Common
Stock during the period in which the circumstances giving rise to the
exercise of the limited stock appreciation right occurred.
(b) The dollar amounts set forth in the columns are the result of calculations
of the 5% and 10% rates set forth in the Securities and Exchange
Commission's rules regarding the disclosure of executive compensation, and
therefore are not intended to forecast possible future appreciation of the
Company's Common Stock. Actual gains, if any, on the exercise of this option
is dependent on the future performance of the Company's Common Stock, as
well as the applicable Named Executive Officer's continued employment
throughout the vesting period.
OPTION EXERCISES AND 1996 YEAR-END VALUES
The following table sets forth information with respect to (i) options to
purchase shares of the Company's Common Stock granted under the Company's 1982
Stock Plan and 1992 Stock Plan, respectively, which were exercised by the Named
Executive Officers during 1996, and (ii) unexercised options to purchase shares
of the Company's Common Stock granted under the Company's 1982 Stock Plan and
1992 Stock Plan, respectively, to the Named Executive Officers and held by them
at December 31, 1996.
11
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS MONEY OPTIONS/SARS AT FISCAL
SHARES AT FISCAL YEAR-END (#) YEAR-END($)(b)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE (#) REALIZED($)(b) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Paul (a) -- 252,903 93,676 $3,792,094 $403,215
Robert A. Youdelman 7,353 117,223 71,972 55,265 938,738 246,655
McDara P. Folan, III (a) -- 8,913 11,171 102,313 18,120
James L. LePorte, III 4,902 81,519 37,100 19,998 624,217 50,432
Erik H. van der Kaay (a) -- 33,980 38,554 475,503 78,324
</TABLE>
- ---------------
(a) Named Executive Officer did not exercise any options to purchase shares of
the Company's Common Stock during 1996.
(b) The dollar values are calculated by determining the difference between the
fair market value of the shares of the Company's Common Stock underlying the
options and the exercise price of such options at exercise or at December
31, 1996, as applicable.
RETIREMENT PLANS
Corporate Retirement Plan
Participants in the Allen Telecom Inc. Corporate Retirement Plan (the
"Retirement Plan") consist of a majority of the full-time employees of the
Company and its subsidiaries in the United States, including the Named Executive
Officers, and Messrs. Colburn and Lyons as former employees of the Company. The
Retirement Plan generally provides a retirement benefit based upon the
participant's years of credited service (not in excess of 30 years) and his or
her final average earnings, with final average earnings consisting of the sum of
(i) the average of the salaries of the participant during the five years of
highest salaries of the participant in the 10 years preceding the participant's
retirement or termination date, and (ii) the average of the performance bonuses
and overtime earnings of the participant during the five years of highest
aggregate bonuses and overtime earnings of the participant in the 10 years
preceding the participant's retirement or termination date. Retirement benefits
are payable either as a straight life annuity, a joint and survivor annuity or
in other optional forms. Normal retirement is at age 65, but certain early
retirement benefits may be payable to participants who have attained age 55 and
completed 10 years of continuous service, and survivor benefits may be payable
to the surviving spouse of a vested participant who dies prior to early or
normal retirement. A participant's benefit under the Retirement Plan vests after
five years of credited service, all benefits funded by the Company are based
upon actuarial computations, and no contributions are made by participants.
Restoration Plan
The Internal Revenue Code (the "IRC") imposes a maximum limit on annual
retirement benefits payable under tax-qualified retirement plans, such as the
Retirement Plan. For 1997, that annual limit is $125,000. In addition, the IRC
limits the amount of annual compensation that may be taken into account for
benefit calculation purposes under tax-qualified retirement plans. For 1997,
that annual limit is $160,000. Effective January 1, 1996, the Company adopted
the Allen Telecom Inc. Restoration Plan (the "Restoration Plan"). Under the
Restoration Plan, each employee whose Retirement Plan benefit is limited by
these IRC restrictions or as a result of his deferral of income under the
Company's Deferred Compensation Plan will be entitled to a supplemental
restoration benefit equal to the difference between the full amount of his
pension benefits determined under the Retirement Plan (calculated without regard
to these IRC restrictions or to deferral of income under the Company's Deferred
Compensation Plan) and the maximum amount payable from the Retirement Plan. If
(i) the Company breaches any material provision of the Plan and such breach
continues for at least 30 days after notice to the Company, or (ii) the Company
makes a general assignment for the benefit of creditors, or (iii) any proceeding
under the U.S. Bankruptcy Code is instituted by or against
12
<PAGE> 16
the Company and, if instituted against the Company, is consented to or
acquiesced in by it or the Company fails to use its best efforts to obtain the
dismissal thereof for 60 days, or (iv) a receiver or trustee in bankruptcy is
appointed for the Company, the Company will pay each employee affected thereby
an amount equal to the present value of his benefits under the Restoration Plan.
Except as specified above, the vesting of benefits, the timing of payments and
the form of payments under the Restoration Plan are determined in accordance
with the terms of the Retirement Plan. The Restoration Plan is unfunded. All of
the Named Executive Officers are participants in the Restoration Plan.
Pension Benefits Table
The following table shows estimated annual benefits payable under the
Retirement Plan and the Restoration Plan to participants in specified
compensation (final average earnings) and years-of-service classifications on a
straight life annuity basis, assuming normal retirement at age 65 on January 1,
1997 and application of the current U.S. social security covered compensation
base. The benefits payable under the Retirement Plan and the Restoration Plan
are not subject to any deduction for U.S. social security or other offset
amounts.
<TABLE>
<CAPTION>
YEARS OF SERVICE(b)
FINAL AVERAGE -----------------------------------------------------------------------
EARNINGS(a) 5 10 15 20 25 30
- ----------------------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000.............. $ 7,705 $15,410 $ 23,115 $ 30,820 $ 38,525 $ 46,229
150,000.............. 9,392 18,785 28,177 37,570 46,962 56,354
175,000.............. 11,080 22,160 33,240 44,320 55,400 66,479
200,000.............. 12,767 25,535 38,302 51,070 63,837 76,604
225,000.............. 14,455 28,910 43,365 57,820 72,275 86,729
250,000.............. 16,142 32,285 48,427 64,570 80,712 96,854
300,000.............. 19,517 39,035 58,552 78,070 97,587 117,104
350,000.............. 22,892 45,785 68,677 91,570 114,462 137,354
400,000.............. 26,267 52,535 78,802 105,070 131,337 157,604
450,000.............. 29,642 59,285 88,927 118,570 148,212 177,854
500,000.............. 33,017 66,035 99,052 132,070 165,087 198,104
600,000.............. 39,767 79,535 119,302 159,070 198,837 238,604
700,000.............. 46,517 93,035 139,552 186,070 232,587 279,104
</TABLE>
- ---------------
(a) The current final average earnings for the Named Executive Officers during
1996 are $619,000 for Mr. Paul, $350,240 for Mr. Youdelman, $168,715 for Mr.
Folan, $212,400 for Mr. LePorte and $295,820 for Mr. van der Kaay. The
calculation of the foregoing amounts includes the amounts shown under
"Salary" and "Bonus" (exclusive of bonuses awarded under the Company's KMDB
Plan) in the Summary Compensation Table set forth on page 9 of this proxy
statement.
(b) Years of credited service as of January 1, 1997 under the Retirement Plan
for the Named Executive Officers are 26.9 for Mr. Paul, 19.9 for Mr.
Youdelman, 4.3 for Mr. Folan, 15.8 for Mr. LePorte and 6.5 for Mr. van der
Kaay.
Target Benefit Agreements
Effective January 1, 1996, the Company entered into separate Supplemental
Target Pension Benefit Agreements (each, a "Target Agreement") with five
executives of the Company, including Messrs. Paul, Youdelman, LePorte and van
der Kaay (collectively, the "Target Officers"). Pursuant to each Target
Agreement, the Company will provide annual pension benefits to a Target Officer
supplemental to the annual benefits paid to him under the Retirement Plan and
the Restoration Plan if warranted by the formula under the Target Agreement. For
all Target Officers but Mr. van der Kaay, the target benefit is 1.733% of the
Target Officer's five-year average earnings (as defined in the Retirement Plan
but without regard to IRC limitations or to deferral of income under the
Company's Deferred Compensation Plan), multiplied by his years of credited
service, but not in excess of 30 years. For Mr. van der Kaay, the 1.733
multiplier is increased to 2.733 for each year after 1995 (for purposes of the
Target Benefits Table set forth below, this 2.733 multiplier equates to
crediting Mr. van der Kaay with 1.577 years of service for each year of service
he completes after 1995). The target benefit is reduced by an amount, expressed
as a single life annuity, equal to the sum of the
13
<PAGE> 17
Target Officer's Retirement Plan benefit, Restoration Plan benefit, Employee
Before-Tax Savings Plan matching benefit and social security benefit. For this
purpose, the Employee Before-Tax Savings Plan matching benefit assumes the
Company contributed each year to the Company's Employee Before-Tax Savings Plan
for the Target Officer the maximum permissible matching contribution (currently
$1,200 per year) and such amounts accumulated at the rate of 8% compounded
annually. Each target benefit may not exceed an annual amount of $250,000
reduced by four-twelfths of one percent (4/12%) for each month (if any) by
which the applicable Target Officer's target benefit commences before such
Target Officer's attainment of age 65. Each Target Agreement is unfunded.
Under each Target Agreement, if, after the Target Officer ceases to be a
senior executive officer, (i) the Company's bank indebtedness is accelerated, or
(ii) the Company breaches any material provision of the Target Agreement and
such breach continues for at least 30 days after notice to the Company, or (iii)
the consolidated tangible net worth of the Company falls below $90 million
(provided that such tangible net worth at the time the affected Target Officer
ceases to be a senior executive officer is at least $130 million, or if such
tangible net worth at the time he ceases to be a senior executive officer is
less than $130 million, the tangible net worth of the Company declines by $40
million), or (iv) the Company makes a general assignment for the benefit of
creditors, or (v) any proceeding under the U.S. Bankruptcy Code is instituted by
or against the Company and, if instituted against the Company, is consented to
or acquiesced in by it or the Company fails to use its best efforts to obtain
the dismissal thereof for 60 days, or (vi) a receiver or trustee in bankruptcy
is appointed for the Company, the Company will pay the affected Target Officer
an amount equal to the present value of his target benefits under his Target
Agreement. Similarly, under each Target Agreement, if the Target Officer's
employment is terminated within the two-year period following a "Change in
Control" of the Company either by the Company other than for "Cause" or because
the Target Officer is disabled or by the Target Officer for "Good Reason" (as
such terms are defined in the employment agreement or severance agreement
applicable to the Target Officer described on pages 15 to 17 of this proxy
statement), the Company will pay the affected Target Officer an amount equal to
the present value of his target benefits under his Target Agreement. In
addition, a Target Officer's benefit under the Restoration Plan is required to
be transferred to his Target Agreement in the event of a "Change in Control" of
the Company.
The following table shows the estimated annual target benefits payable
under the Target Agreements to the Target Officers, assuming normal retirement
at age 65 on January 1, 1997.
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE(b)
AVERAGE -------------------------------------------------------------------
EARNINGS(a) 5 10 15 20 25 30
--------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 0 $ 0 $ 0 $ 0 $ 400 $ 916
150,000 294 278 924 1,880 2,836 3,791
175,000 773 1,236 2,362 3,797 5,231 6,666
200,000 1,253 2,195 3,799 5,713 7,627 9,541
225,000 1,732 3,153 5,237 7,630 10,023 12,416
250,000 2,211 4,111 6,674 9,547 12,419 15,291
300,000 3,169 6,028 9,549 13,380 17,211 21,041
350,000 4,128 7,945 12,424 17,213 22,002 26,791
400,000 5,086 9,861 15,299 21,047 26,794 32,541
450,000 6,044 11,778 18,174 24,880 31,586 38,291
500,000 7,003 13,695 21,049 28,713 36,377 44,041
600,000 8,919 17,528 26,799 36,380 45,961 55,541
700,000 10,836 21,361 32,549 44,047 55,544 67,041
</TABLE>
- ---------------
(a) For benefit calculation purposes under the Target Agreements, the current
final average earnings for Messrs. Paul, Youdelman, LePorte and van der Kaay
are the same as those listed in footnote (a) to the Pension Benefits Table
on page 13 of this proxy statement.
(b) For benefit calculation purposes under the Target Agreements, years of
credited service as of January 1, 1997 for the applicable Target Officers
are as follows: Mr. Paul (26.9), Mr. Youdelman (19.9), Mr. LePorte (15.8)
and Mr. van der Kaay (7.1).
14
<PAGE> 18
Other Supplemental Pension Benefits Agreements
Pursuant to an agreement entered into in 1983, and subsequently amended,
with Mr. Colburn, the Company currently provides annual pension benefits to Mr.
Colburn, supplemental to the annual benefits paid to him under the Retirement
Plan and as social security benefits, in an amount equal to $189,528, with an
equivalent annual benefit payable to Mr. Colburn's spouse for her life after his
death. Pursuant to such agreement, this amount is based upon (i) his final
average earnings, as defined in the Retirement Plan but during the year of
highest salary and performance bonus in the four years preceding his termination
date, which was December 31, 1991 when Mr. Colburn elected not to extend his
employment agreement with the Company, and (ii) 36 years of service as an
employee and as a director of the Company. If the consolidated tangible net
worth of the Company falls below $90 million, if the Company's bank indebtedness
is accelerated or if the Company breaches any material provision of Mr.
Colburn's supplemental pension benefit agreement or post-employment consulting
agreement described on pages 4 to 5 hereof and such breach continues for at
least 30 days after notice to the Company, the Company will pay him or his
spouse, as applicable, an amount equal to the present value of his supplemental
pension benefits under his agreement.
Pursuant to an agreement entered into in 1983, as amended, with Mr. Lyons,
the Company provides annual pension benefits to Mr. Lyons, supplemental to the
annual benefits paid to him under the Retirement Plan, in an amount based upon
(i) his final average earnings, as defined in the Retirement Plan but during the
three years of highest salaries and performance bonuses in the 10 years
preceding his termination date, which was September 30, 1989 (when his
employment as an officer of the Company terminated), and (ii) his number of
years of service as a director, prior to becoming an officer, of the Company
plus his number of years of credited service under the Retirement Plan. The
annual supplemental pension benefit is reduced by the amount paid to Mr. Lyons
annually under the Retirement Plan. If the consolidated tangible net worth of
the Company falls below $90 million, if the Company's bank indebtedness is
accelerated or if the Company breaches any material provision of Mr. Lyons'
supplemental pension benefit agreement or his post-employment consulting
agreement described on page 5 hereof and such breach continues for at least 30
days after notice to the Company, the Company will pay him an amount equal to
the present value of his supplemental pension benefits under his agreement. The
annual benefit payable to Mr. Lyons under his supplemental pension benefit
agreement, exclusive of amounts payable under the Retirement Plan and social
security benefits, is $34,064, based upon his final average earnings and 20
years of service under his agreement, with an annual benefit of $17,032 payable
to Mr. Lyons' spouse for her life after his death.
EMPLOYMENT, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Robert G. Paul is employed as President and Chief Executive Officer of the
Company pursuant to an employment agreement entered into in June 1991, which
provides for a term of employment extending through December 31, 1993 and
thereafter continuing for successive periods of 12 months each, unless either
the Company or Mr. Paul gives at least three months' notice to the contrary. No
such notice was given by either party in 1996. The agreement provides for an
annual salary of $300,000 commencing February 26, 1991, which amount was
increased to $421,000 effective as of January 1, 1997, and is subject to such
further future increases as the Board of Directors deems appropriate. The
Company may terminate Mr. Paul's employment for "Cause" (as defined in such
agreement), or in the event of his disability, and he may terminate his
employment for "Good Reason" (as defined in such agreement), such as his not
being elected, or his being assigned duties other than those of, President and
Chief Executive Officer of the Company, a significant adverse alteration in the
nature or status of his responsibilities or the conditions of his employment, a
reduction of his salary (except for across-the-board salary reductions similarly
affecting all management personnel of the Company), a relocation of Mr. Paul by
more than 25 miles, the failure by the Company to continue any material
compensation or benefit plan or the Company giving notice to Mr. Paul that his
employment agreement is not continuing for any period of 12 months after
December 31, 1993.
In the event of Mr. Paul's disability, the Company will continue to pay him
his salary and estimated bonus until the expiration of the term of his
employment agreement and, thereafter, will pay him benefits equal to the maximum
amount currently provided by the Company's executive long-term disability plan,
which is 60 percent of salary and estimated bonus up to a maximum of $420,000
per year, until the earlier of his normal retirement date or commencement of
benefits under the Retirement Plan.
15
<PAGE> 19
If the Company terminates Mr. Paul's employment other than for "Cause" or
his disability, or if Mr. Paul terminates his employment for "Good Reason", the
Company will pay him an amount equal to his salary for two years, plus all
awards made to him under the Company's KMDB Plan, and will provide his life,
disability, accident, medical and hospitalization insurance benefits for a
period of two years after such termination. In addition, if termination of Mr.
Paul's employment is disputed and the dispute is ultimately resolved in his
favor, the Company may be obligated to pay his salary through the date of final
resolution of the dispute.
If the Company terminates Mr. Paul's employment other than for "Cause" or
his disability, or if Mr. Paul terminates his employment for "Good Reason"
following a "Change in Control" of the Company (which is defined as it is in the
severance agreements described below), the Company will pay him an amount equal
to 2.99 times his average annual taxable compensation from the Company during
the five years preceding termination of employment, plus all awards made to him
under the Company's KMDB Plan, and will pay him an amount equal to the excess of
the "Fair Market Value" (as defined in Mr. Paul's employment agreement), on the
date of termination, over the option price of the shares subject to each stock
option held by him, whether or not exercisable at the time, in exchange for
surrender of the option.
Mr. Paul's employment agreement provides for mandatory arbitration of all
disputes relating to Mr. Paul's employment agreement and requires the Company to
pay all reasonable legal expenses incurred by Mr. Paul in connection with
resolution of disputes under his employment agreement.
The Company has severance agreements with each of the Named Executive
Officers, other than Mr. Paul whose severance arrangements are contained in his
employment agreement described above, which provide severance benefits if the
Company terminates the employee's employment other than for "Cause" (as defined
in such severance agreements) or disability before or after a "Change in
Control" of the Company or if the employee terminates his employment for "Good
Reason" after a "Change in Control". A "Change in Control" of the Company is
defined as (i) the acquisition of more than 30 percent of the outstanding Common
Stock of the Company by any person or group of related persons, (ii) the change
in a majority of the directors of the Company during a consecutive two-year
period, unless the election of each new director was approved by at least
two-thirds of the directors then still in office who were directors at the
beginning of such period, (iii) the stockholders approve a merger or
consolidation of the Company with any other corporation, other than (a) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80 percent of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person acquires more than 30 percent of the combined voting power of
the Company's then outstanding securities, or (iv) the stockholders approve a
plan of complete liquidation or an agreement for the sale or disposition of all
or substantially all of the Company's assets. "Good Reason" includes the
assignment of duties inconsistent with the employee's position with the Company,
a significant adverse alteration in the nature or status of the employee's
responsibilities or the conditions of his employment, a reduction of the
employee's salary (except for across-the-board salary reductions similarly
affecting all management personnel of the Company), a relocation of the employee
by more than 25 miles or the failure by the Company to continue any material
compensation or benefit plan. Severance payments under the agreements will be
six months' salary plus an additional month for each full year of service but in
no event more than 18 months' salary, and will be paid in normal pay periods,
except that upon termination after a "Change in Control", the Company will pay
the employee in a lump sum six months' salary plus an additional month for each
full year of service with a maximum of 18 months' salary plus 50 percent (except
Mr. van der Kaay who will receive 100 percent so long as his severance payments
do not exceed an amount in excess of 27 months' salary), plus all awards under
the Company's KMDB Plan and an amount equal to the excess of the "Fair Market
Value" (as defined in such severance agreements), on the date of termination,
over the option price of the shares subject to each stock option held by him,
except previously issued incentive stock options, whether or not exercisable at
the time, in exchange for surrender of the option. Life, disability, accident
and health insurance benefits will continue during the period of severance
payments. Severance payments in excess of the base amount of six months' salary
will be reduced by any compensation received by the employee from other
employment (other than self employment) prior to a "Change in Control", and all
severance payments
16
<PAGE> 20
and all insurance benefits will be discontinued if the employee engages in
competition with the Company or engages in conduct which is injurious to the
Company, prior to a "Change in Control."
The Company also has entered into separate Supplemental Target Pension
Benefit Agreements with five executives of the Company, including Messrs. Paul,
Youdelman, LePorte and van der Kaay, which contain "Change in Control"
provisions. For a description of the terms of these Target Agreements, see
"EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT -- Retirement Plans --
Target Benefit Agreements" on pages 13 to 14 of this proxy statement.
17
<PAGE> 21
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return of the Company's Common Stock against
the cumulative total return of (i) the S&P SmallCap 600 Index and (ii) the S&P
Communications Equipment Index for the period of five fiscal years ended
December 31, 1996. The comparisons in this graph are required by the proxy rules
promulgated by the Securities and Exchange Commission and are not intended to
forecast future performance of the Company's Common Stock.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN*
COMPANY'S COMMON STOCK, S&P SMALLCAP 600 INDEX AND
S&P COMMUNICATIONS EQUIPMENT INDEX
<TABLE>
<CAPTION>
S&P COMMUNICA-
MEASUREMENT PERIOD ALLEN TELECOM S&P SMALLCAP 600 TIONS EQUIPMENT
(FISCAL YEAR COVERED) INC. INDEX INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 139 121 108
1993 188 144 104
1994 249 137 118
1995 266 178 177
1996 264 216 207
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on December 31, 1991 and that all dividends on the
Company's Common Stock and on each stock included in each index were
reinvested. Included in the dividends reinvested is the spinoff distribution
by the Company to its stockholders on September 29, 1995, of all of the
common stock of the Company's former wholly owned subsidiary, TransPro, Inc.
(the "Spinoff Distribution"). For purposes of this graph, it is assumed that
the shares of TransPro, Inc. common stock received in the Spinoff
Distribution were sold at the when-issued closing market price on October 3,
1995, and the proceeds reinvested in shares of the Company's Common Stock at
the when-issued closing market price on October 3, 1995. Such date is the
first day both TransPro, Inc. common stock and the Company's Common Stock
traded on a when-issued basis after the Spinoff Distribution.
18
<PAGE> 22
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
On July 30, 1992, the Company acquired Alliance Acquisition Corporation
("Alliance"). Pursuant to the Amended and Restated Agreement for Merger dated as
of July 7, 1992 (the "Merger Agreement"), between the Company, Allen
Telecommunications Corporation, a newly formed Delaware corporation and wholly
owned subsidiary of the Company ("Allensub"), and Alliance, Allensub was merged
into Alliance to accomplish this acquisition. On June 30, 1993, Alliance was
merged into the Company. Immediately after the consummation of the acquisition
of Alliance by the Company, and pursuant to the terms of the Merger Agreement,
William O. Hunt entered into a Noncompetition Agreement with the Company and
Alliance (the "Noncompetition Agreement"). In exchange for his agreement not to
compete with the Company and Alliance in their "Core Business" (as defined in
the Noncompetition Agreement) for a period of five years, the Company agreed to
pay Mr. Hunt an aggregate consideration of $1,017,500. Pursuant to the terms of
the Noncompetition Agreement, Mr. Hunt received $203,500 on each of July 30,
1992, 1993, 1994, 1995 and 1996.
PaineWebber Incorporated, of which firm Albert H. Gordon was an Advisory
Director in 1996, has been retained by the Company for several years, including
1996 and 1997, to perform investment banking services for the Company and its
subsidiaries. The Company paid $15,000 in fees and expenses to PaineWebber
Incorporated in 1996 for the performance of investment banking services for the
Company and its subsidiaries.
Smith Lyons, of which firm J. Chisholm Lyons formerly was a partner and
currently is counsel, has been retained by the Company for many years, including
1996 and 1997, to perform legal services for the Company and its Canadian
subsidiaries.
Benesch, Friedlander, Coplan & Aronoff, of which firm Margaret Kennedy, the
spouse of Robert G. Paul, is a partner, has been retained by the Company for
several years, including 1996 and 1997, to perform legal services for the
Company and its subsidiaries. The Company paid $739,385 in fees and expenses to
Benesch, Friedlander, Coplan & Aronoff in 1996 for the performance of legal
services for the Company and its subsidiaries.
19
<PAGE> 23
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1996 with
respect to the only persons known to the Company to be the beneficial owners
(for purposes of the rules of the Securities and Exchange Commission) of more
than 5% of the outstanding shares of the Company's Common Stock as of that date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNERSHIP OF CLASS
- ----------------------------------------------- ---------- --------
<S> <C> <C>
FMR Corp....................................... 1,390,445 (a) 5.2%
82 Devonshire Street
Boston, Massachusetts 02109
Forstmann-Leff Associates Inc.................. 1,702,070 (b) 6.3
FLA Asset Management, Inc.
55 East 52nd Street
New York, New York 10055
Lazard Freres & Co. LLC........................ 1,889,630 (c) 7.0
30 Rockefeller Plaza
New York, New York 10020
State of Wisconsin Investment Board............ 2,531,600 (d) 9.4
P.O. Box 7842
Madison, Wisconsin 53707
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) FMR Corp., through its wholly owned subsidiaries, Fidelity Management & Research Company
and Fidelity Management Trust Company, held sole dispositive power over all of such
shares, and sole voting power over 78,045 of such shares, as of December 31, 1996, based
on its Schedule 13G filed under the Securities Exchange Act of 1934 on February 14, 1997.
(b) Forstmann-Leff Associates Inc. held sole dispositive power over 1,159,995 of such shares,
and sole voting power over 1,039,995 of such shares, and together with FLA Asset
Management, Inc., its wholly owned subsidiary, held shared dispositive power over 542,075
of such shares, and shared voting power over 225,950 of such shares, as of December 31,
1996, based on their joint Schedule 13G filed under the Securities Exchange Act of 1934
on February 13, 1997.
(c) Lazard Freres & Co. LLC held sole dispositive power over all of such shares, and sole
voting power over 1,714,230 of such shares, as of December 31, 1996, based on its
Schedule 13G filed under the Securities Exchange Act of 1934 on February 14, 1997.
(d) State of Wisconsin Investment Board held sole dispositive power and sole voting power
over all of such shares as of December 31, 1996, based on its Schedule 13G, as amended,
filed under the Securities Exchange Act of 1934 on January 16, 1997.
</TABLE>
20
<PAGE> 24
DIRECTORS AND OFFICERS
The following table sets forth information as of March 3, 1997 with respect
to shares of Common Stock of the Company beneficially owned (for purposes of the
rules of the Securities and Exchange Commission) by each director and each Named
Executive Officer and by all directors and current executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- --------------------------------------------- ---------- --------
<S> <C> <C>
George A. Chandler........................... 15,650 (a) *
Philip Wm. Colburn........................... 313,434 (b) 1.2%
Dr. Jill K. Conway........................... 9,410 (c) *
McDara P. Folan, III......................... 34,706 (d) *
Albert H. Gordon............................. 23,498 (a) *
William O. Hunt.............................. 41,394 (e) *
James L. LePorte, III........................ 97,838 (f) *
J. Chisholm Lyons............................ 35,690 (g) *
John F. McNiff............................... 3,062 (h) *
Robert G. Paul............................... 444,853 (i) 1.6%
Charles W. Robinson.......................... 14,378 (a) *
Erik H. van der Kaay......................... 92,217 (j) *
William M. Weaver, Jr........................ 15,594 (k) *
Robert A. Youdelman.......................... 177,337 (l) *
All directors and executive officers as a
group
(14 persons)............................... 1,319,061 (m) 4.8%
</TABLE>
- ---------------
* Less than 1%.
<TABLE>
<S> <C>
(a) Includes shares owned directly and 11,198 shares issuable upon exercise of stock options
that are exercisable as of March 3, 1997 or become exercisable within 60 days thereafter.
(b) Includes 101,752 shares owned directly and 211,682 shares issuable upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter.
(c) Includes 440 shares owned directly and 8,970 shares issuable upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter.
(d) Includes 1,474 shares owned directly; 1,979 shares held by the trustee under the
Company's Employee Before-Tax Savings Plan; 19,554 restricted shares of Common Stock
awarded under the Company's 1992 Stock Plan; and 11,699 shares issuable upon exercise of
stock options that are exercisable as of March 3, 1997 or become exercisable within 60
days thereafter.
(e) Includes 40,000 shares owned directly by B&G Partnership Ltd., a Texas limited
partnership, which is owned jointly by Mr. Hunt and his spouse, and 1,394 shares issuable
upon exercise of stock options that are exercisable as of March 3, 1997 or become
exercisable within 60 days thereafter.
(f) Includes 30,264 shares owned directly; 9,491 shares held by the trustee under the
Company's Employee Before-Tax Savings Plan; 17,584 restricted shares of Common Stock
awarded under the 1992 Stock Plan; and 40,499 shares issuable upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter.
(g) Includes 10,054 shares owned directly; 22,282 shares issuable upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter; and 3,354 shares owned by Mr. Lyons' spouse, of which Mr. Lyons disclaims
beneficial ownership.
(h) All shares owned directly.
</TABLE>
21
<PAGE> 25
<TABLE>
<S> <C>
(i) Includes 145,316 shares owned directly; 11,378 shares held by the trustee under the
Company's Employee Before-Tax Savings Plan; 45,010 restricted shares of Common Stock
awarded under the Company's 1992 Stock Plan; 236,749 shares issuable upon exercise of
stock options that are exercisable as of March 3, 1997 or become exercisable within 60
days thereafter; and 6,400 shares owned by Mr. Paul's spouse, of which Mr. Paul disclaims
beneficial ownership.
(j) Includes 22,801 shares owned directly; 1,720 shares held by the trustee under the
Company's Employee Before-Tax Savings Plan; 22,574 restricted shares of Common Stock
awarded under the Company's 1992 Stock Plan; and 45,122 shares issuable upon exercise of
stock options that are exercisable as of March 3, 1997 or become exercisable within 60
days thereafter.
(k) Includes 14,200 shares owned directly and 1,394 shares issuable upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter.
(l) Includes 73,014 shares owned directly; 7,441 shares held by the trustee under the
Company's Employee Before-Tax Savings Plan; 27,806 restricted shares of Common Stock
awarded under the Company's 1992 Stock Plan; and 69,076 shares issuable upon exercise of
stock options that are exercisable as of March 3, 1997 or become exercisable within 60
days thereafter.
(m) Includes 472,063 shares owned by directors and executive officers; 32,009 shares held for
executive officers by the trustee under the Company's Employee Before-Tax Savings Plan;
132,528 restricted shares of Common Stock awarded under the Company's 1992 Stock Plan;
and 682,461 shares issuable to directors and executive officers upon exercise of stock
options that are exercisable as of March 3, 1997 or become exercisable within 60 days
thereafter.
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P.
as the independent auditors to audit the books and accounts of the Company for
the year ending December 31, 1997, and is requesting ratification of such
appointment by the stockholders at the Annual Meeting. Coopers & Lybrand L.L.P.
has served in this capacity since 1967. Should this appointment not be ratified
by the holders of a majority of the shares voting in person or by proxy at the
meeting, the Board of Directors will consider appointing other auditors to audit
the books and accounts of the Company. Representatives of Coopers & Lybrand
L.L.P. are expected to be present at the meeting with the opportunity to make a
statement, if they desire to do so, and to be available to respond to
appropriate questions.
OTHER MATTERS
Management of the Company knows of no matters other than those referred to
above to be voted upon at the Annual Meeting. However, if any other matters are
properly presented to the meeting, it is the intention of the persons named in
the accompanying proxy to vote such proxy in accordance with their judgment on
such matters.
MISCELLANEOUS
The Company will bear the expense of proxy solicitation. Directors,
officers and employees of the Company and its subsidiaries may solicit proxies
by telephone, telegraph or in person (but will receive no additional
compensation for such solicitation). The Company also has retained W. F. Doring
& Co. Inc., Jersey City, New Jersey, to assist in the solicitation of proxies in
the same manner at an anticipated fee of approximately $2,500, plus
out-of-pocket expenses. In addition, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward the soliciting material to
beneficial owners and to obtain authorizations for the execution of proxies, and
if they in turn so request, the Company will reimburse such brokerage houses and
other custodians, nominees and fiduciaries for their expenses in forwarding such
material.
The Charles Schwab Trust Company, as trustee under the Company's Employee
Before-Tax Savings Plan, will vote shares of the Company's Common Stock held in
the Plan in accordance with the written
22
<PAGE> 26
instructions, which it is required to request, received from the participants in
whose accounts the shares are held, whether or not vested, and, in accordance
with the terms of the Plan, it will vote all shares for which it does not
receive voting instructions in the same proportions as it votes the shares for
which it does receive instructions.
ANNUAL REPORT
The Annual Report, including financial statements, of the Company for the
year 1996 is enclosed herewith but is not a part of the proxy soliciting
material.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company for inclusion in its
proxy statement relating to that meeting no later than November 15, 1997. Such
proposals should be directed to the Secretary of the Company at the Company's
offices, 25101 Chagrin Boulevard, Beachwood, Ohio 44122.
By order of the Board of Directors
MCDARA P. FOLAN, III
Secretary
Dated: March 14, 1997
23
<PAGE> 27
PROXY PROXY
ALLEN TELECOM INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON APRIL 25, 1997
The undersigned hereby appoints Philip Wm. Colburn, Jill K. Conway and William
M. Weaver, Jr., and each of them (with full power of substitution), as proxies
of the undersigned to vote all stock of Allen Telecom Inc. which the undersigned
may be entitled to vote at the Annual Meeting of Stockholders to be held on
April 25, 1997 at 9:30 A.M. and at any adjournment thereof, as designated on the
reverse side hereof, and in their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Annual Meeting.
[ ] Check here for address change.
New address:___________________________________
________________________________________________
________________________________________________
PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN
THE ACCOMPANYING ENVELOPE.
<PAGE> 28
<TABLE>
ALLEN TELECOM INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<CAPTION>
FOR WITHHELD FOR ALL (EXCEPT NOMINEE(S) WRITTEN BELOW)
<S> <C> <C> <C>
1. Election of Directors, Nominees: G.A. Chandler, P. Wm. Colburn, J.K. [ ] [ ] [ ] __________________________________
Conway, A.H. Gordon, W.O. Hunt, J.C. Lyons, J.F. McNiff, R.G. Paul, Nominee Exception
C.W. Robinson and W.M. Weaver, Jr.
FOR WITHHELD ABSTAIN
2. Ratification of appointment of Coopers & Lybrand L.L.P. as auditors [ ] [ ] [ ]
for the year ending December 31, 1997.
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.
Date: __________________, 1997
Signature(s) _________________
______________________________
Please sign exactly as name
appears hereon. Joint owners
should each sign personally.
Executors, administrators,
trustees, attorneys, guardians
and officers signing for
corporations or partnerships
should give full title as
such.
</TABLE>
