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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 19, 1998
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, May 1, 1998 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 MAY 1, 1998
March 19, 1998
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, May 1, 1998, at 9:30 A.M., local time, for
the following purposes:
1. To elect a Board of nine directors;
2. To approve an amendment to increase the number of shares available
under the Company's 1992 Stock Plan;
3. To ratify the appointment of Coopers & Lybrand L.L.P. as auditors
for the Company for the year ending December 31, 1998; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on Wednesday, March 4, 1998 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 19, 1998
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 May 1, 1998, 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 4, 1998 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 27,291,743 shares of Common Stock
(exclusive of 2,445,357 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 19, 1998.
ELECTION OF DIRECTORS
Nine 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 nine 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>
Philip Wm. Colburn (69).............. Chairman of the Board, Allen Telecom Inc., since December 6, 1988 and a
April 29, 1975 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.
</TABLE>
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<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
----------------------- -----------------------------------------
<S> <C>
Dr. Jill K. Conway (63).............. Visiting Scholar, Program in Science, Technology and Society, Massachu-
April 28, 1987 setts 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 (96)................ Advisor and director, Deltec Inc., a money manager, New York, New York,
December 6, 1971 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 (64)................. Chairman of the Board, Chief Executive Officer and director, Intellicall,
September 10, 1992 Inc., a manufacturer of network and customer premise equipment, such as
intelligent pay phones and intelligent network platforms, and pro-
vider 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 wire-
less 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, Dr.
Pepper Bottling Holdings, Inc. and DSC Communications Corporation.
J. Chisholm Lyons (70)............... Counsel, Smith Lyons, barristers and solicitors, Toronto, Canada. Mr.
October 27, 1969 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 Allen Telecom Inc. 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 (55).................. Vice President-Finance and director, Dover Corporation, a manufacturer of
June 14, 1995 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.
Robert G. Paul (56).................. President and Chief Executive Officer, Allen Telecom Inc., since February
March 6, 1990 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 Presi-
dent-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.
</TABLE>
2
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<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
----------------------- -----------------------------------------
<S> <C>
Charles W. Robinson (78)............. Chairman, Robinson & Associates Inc., a venture capital investment firm,
April 24, 1979 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, San Diego,
California, since early 1991. Mr. Robinson is also a director of Nike
Inc.
William M. Weaver, Jr. (86).......... Limited Partner Emeritus, Alex. Brown & Sons Incorporated, investment
April 21, 1970 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.
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. Messrs. Hunt, McNiff and Robinson are the
current members of the Audit Committee. The Board of Directors appointed Mr.
Hunt to succeed George A. Chandler as a member of the Audit Committee at its
meeting held on June 25, 1997. Mr. Chandler resigned as a member of the Board of
Directors and the Audit Committee on June 25, 1997.
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 1997 is set forth
on pages 5 to 8 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 1999 Annual Meeting of Stockholders that are
submitted prior to the end of 1998 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 and other qualifications of the recommended nominee as well
as the signed consent of such person to serve if nominated and elected.
During 1997, the Board of Directors of the Company held five meetings, the
Audit Committee held three meetings, the Management Compensation Committee held
three meetings, and the Nominating Committee held
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one meeting. 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
1997.
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 Telecom Inc. 1994 Non-Employee
Directors Stock Option Plan (the "Directors Option Plan") at the Company's 1994
Annual Meeting of Stockholders. Prior to February 17, 1998, the Directors Option
Plan provided 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. On
February 17, 1998, the Board of Directors amended the Directors Option Plan to
increase the number of options automatically granted each year to such directors
to 3,000. The Directors Option Plan also permits discretionary grants to
directors who are not current employees of, but were previously employed by, the
Company. On May 2, 1997, Dr. Conway and Messrs. 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
$20.00 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.
The Company maintains a Matching Gift Program for the benefit of the
directors of the Company. Pursuant to the Matching Gift Program, in 1997, 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 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 14 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
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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 (as
defined below on page 16 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 14 hereof but not reduced by any benefits
paid to him under the Allen Telecom Inc. Corporate Retirement Plan. During 1997,
the Company paid Mr. Colburn $290,489 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 1997. 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 14
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 18 and "STOCK OWNERSHIP --
Directors and Officers" on pages 19 to 20, of this proxy statement.
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. Gordon and Weaver, 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 compensa-
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tion 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 1997 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 sales growth, the amount of earnings
per share, the return on equity and the rate of increase in earnings per share.
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, five-year and longer 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 longer-term results.
The ordinary after-tax earnings from continuing operations in 1997,
excluding an extraordinary charge of $.02 per share and a one-time special
charge of $.22 per share, of $30 million and $1.10 per share was 29% higher than
1996 comparable results. The pre-tax earnings, before interest, minority
interest and the above-mentioned special charges, were $56.4 million, 15% above
1996 results, and higher than any other year in the Company's history. The
Company's return on equity from continuing operations (before the
above-mentioned special charge) of 12.2% increased from the past year's 10.7%.
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At the end of 1997, the Company's Common Stock price was $18.4375,
representing a one-year decrease in stockholder value based on stock price and
dividends of 17%. The longer-term performance saw the three-year average annual
decrease in stockholder value equal 4%, the five-year average annual increase
equal 10% and the 10-year average annual increase equal 20%.
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;
(iii) the development and maintenance of timely communication and
credibility with its stockholders, financial analysts and other
outside audiences; and
(iv) other items specific to each individual.
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 1997 maximum incentive bonus for the corporate
executives was based on the Company's 1997 earnings per share and the remaining
half was based on subjective criteria. The 1997 earnings per share of $1.10
before a one-time special charge and an extraordinary charge was above the
midpoint in the bonus range. The corporate executives' annual incentive bonuses
averaged slightly above the midpoint for their positions, and were above 1996
bonuses. The median of these bonuses was 22% of salary.
The annual performance bonuses for most of 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. Bonuses for 1997
could have ranged from zero to 65% of salary. The largest bonus in 1997 was 59%
of salary, and the median bonus for this group was 19% of salary.
Compensation Study
During 1997, the Compensation Committee engaged William M. Mercer
Incorporated, a nationally recognized executive compensation consulting firm, to
perform an extensive review of 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.
This study indicated that the company's actual compensation practice was
consistent with the Compensation Committee's philosophy, and competitive with
the universe of companies used as comparators. As a result, the Company is
increasing the amount of annual incentive bonus for 1998 related to earnings per
share growth, but not making any major changes to executive compensation.
Basis for Chief Executive Officer's Compensation
Mr. Paul received a salary increase of $16,000 (a 4% increase) on January
1, 1997, which was based on the objective and subjective criteria discussed
above, peer comparisons and cost of living factors.
Mr. Paul's performance bonus of $182,000 for 1997, which was paid in cash
in late February 1998, was 43% 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 1997 was based on achieving earnings per share growth
over the $.86 earned from continuing operations in 1996 before deducting 1996's
write-off of research and development in connection with an acquisition. The
1997 earnings per share before the special charges was $1.10 so Mr. Paul
7
<PAGE> 11
earned 80% of the objective portion of his bonus, and the remainder of his bonus
paid was based on the continued success against the other subjective criteria.
In April 1997, Mr. Paul was granted a non-qualified option for 30,000
shares at $17.00, the market price on the date of grant. This option was on the
low end of the range recommended by 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.
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 incentive restricted stock grants made by the Company in 1993 and
thereafter 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 $1 million cap.
The 1992 incentive restricted stock grants were grandfathered under Section
162(m). Thus, no tax deduction will be lost to the Company as a result of these
restricted stock grants.
Respectfully submitted,
Dr. Jill K. Conway, Chair
Albert H. Gordon
William M. Weaver, Jr.
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by the Company and its subsidiaries to those persons who were (i) the
Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers"), for services rendered by them in all capacities in which they served
the Company and its subsidiaries during 1995, 1996 and 1997. The number of
restricted shares and options reported in the Summary Compensation Table set
forth below (and the footnotes thereto), the Option/SAR Grants In Last Fiscal
Year Table set forth on page 10 of this proxy statement, and the Aggregated
Option/SAR Exercises In Last Fiscal Year And Fiscal Year-End Option/SAR Values
Table set forth on page 11 of this proxy statement have been adjusted, to the
extent applicable, for the
8
<PAGE> 12
Spinoff Distribution declared by the Board of Directors of the Company on
September 8, 1995 and paid to the holders of the Company's Common Stock of
record on September 29, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES
-------------------------------------- RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($)(b) SARS(#) Compensation($)(c)
------------------ ---- --------- -------- --------------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Paul 1997 421,000 182,000 (a) -0- 30,000 83,049
President and Chief 1996 405,000 130,000 (a) -0- 32,400 83,049
Executive Officer 1995 380,000 255,000 (a) -0- 16,712 96,563
Erik H. van der Kaay 1997 262,000 76,000 (a) -0- 17,000 61,232
Executive Vice President 1996 252,000 47,000 (a) -0- 18,500 67,011
1995 240,000 65,000 (a) -0- 17,826 64,924
Robert A. Youdelman 1997 260,000 91,000 (a) -0- 17,000 71,346
Executive Vice President, 1996 248,000 60,000 (a) -0- 18,500 57,135
Chief Financial Officer 1995 232,000 124,000 (a) -0- 8,913 58,409
and Assistant Secretary
McDara P. Folan, III 1997 156,000 34,000 (a) -0- 5,700 16,915
Vice President, 1996 142,000 23,000 (a) -0- 5,600 13,466
Secretary and 1995 135,000 45,000 (a) -0- 5,571 13,466
General Counsel
James L. LePorte, III 1997 174,000 49,000 (a) -0- 7,500 19,109
Vice President, Treasurer 1996 165,000 33,000 (a) -0- 8,300 19,259
and Controller 1995 151,000 66,000 (a) -0- 8,913 20,242
</TABLE>
- ---------------
(a) 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.
(b) At December 31, 1997, the Named Executive Officers held 124,006 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 $18.4375, the closing market price of the Company's Common Stock on
December 31, 1997) of $2,286,361 as follows: Mr. Paul (41,584 shares with a
value of $766,705), Mr. van der Kaay (21,081 shares with a value of
$388,681), Mr. Youdelman (25,909 shares with a value of $477,697), Mr. Folan
(18,994 shares with a value of $350,202) and Mr. LePorte (16,438 shares with
a value of $303,076). 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.
(c) 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 1997, 1996 and 1995, 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 1997,
1996 and 1995, 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 1997, 1996 and 1995, respectively, as applicable: Mr. Paul
($81,693, $81,693 and $95,207), Mr. van der Kaay ($59,876, $65,655 and
$63,568), Mr. Youdelman ($69,990, $55,779 and $57,053), Mr. Folan ($15,559,
$12,110 and $12,110) and Mr. LePorte ($17,753, $17,903 and $18,886). The
premiums paid by the Company in connection with the life insurance policies
issued pursuant to such Split Dollar Insurance Agreements set forth in the
preceding sentence generally will be recovered in full by the Company upon
the cancellation or purchase by a Named Executive Officer of any such life
insurance policy or the payment of any death benefits under any such life
insurance policy.
9
<PAGE> 13
OPTIONS GRANTED IN 1997
The following table sets forth information with respect to grants of
options to purchase shares of the Company's Common Stock to the Named Executive
Officers during 1997 pursuant to the Company's 1992 Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR Option Term(b)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------
NAME GRANTED (#) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
---- ------------ -------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Paul 30,000(a) 6.0 17.00 4/27/07 320,736 812,809
Erik H. van der Kaay 17,000(a) 3.4 17.00 4/27/07 181,751 460,592
Robert A. Youdelman 17,000(a) 3.4 17.00 4/27/07 181,751 460,592
McDara P. Folan, III 5,700(a) 1.1 17.00 4/27/07 60,940 154,434
James L. LePorte, III 7,500(a) 1.5 17.00 4/27/07 80,184 203,202
</TABLE>
- ---------------
(a) Each of these options was granted on April 25, 1997. 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 (as defined below on page 16 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 1997 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 1997, 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, 1997.
10
<PAGE> 14
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
SHARES AT FISCAL YEAR-END (#) Fiscal Year-End($)(b)
ACQUIRED ON VALUE ------------------------------- -------------------------------
NAME EXERCISE (#) REALIZED($)(b) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Paul 24,510 378,452 259,031 93,038 2,635,573 118,953
Erik H. van der Kaay (a) -- 45,122 44,412 356,786 24,438
Robert A. Youdelman 7,353 113,535 83,002 53,882 631,290 71,829
McDara P. Folan, III 8,913 136,852 2,786 14,085 0 8,194
James L. LePorte, III 2,451 37,845 40,499 21,648 461,949 16,768
</TABLE>
- ---------------
(a) Named Executive Officer did not exercise any options to purchase shares of
the Company's Common Stock during 1997.
(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, 1997, 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 1998, that annual limit is $130,000. 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 1998,
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 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
11
<PAGE> 15
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. In
addition, at any time after an employee commences receiving benefits from the
Restoration Plan, the employee may request that 90 percent of the present value
of all remaining benefits payable to the employee under the Restoration Plan be
paid to the employee in a single lump sum cash payment. If an employee elects to
receive such a payment, the remaining 10 percent of such present value would be
forfeited. 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,
1998 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................... $ 7,659 $15,319 $ 22,978 $ 30,637 $ 38,297 $ 45,956
150,000................... 9,347 18,694 28,040 37,387 46,734 56,081
175,000................... 11,034 22,069 33,103 44,137 55,172 66,206
200,000................... 12,722 25,444 38,165 50,887 63,609 76,331
225,000................... 14,409 28,819 43,228 57,637 72,047 86,456
250,000................... 16,097 32,194 48,290 64,387 80,484 96,581
300,000................... 19,472 38,944 58,415 77,887 97,359 116,831
350,000................... 22,847 45,694 68,540 91,387 114,234 137,081
400,000................... 26,222 52,444 78,665 104,887 131,109 157,331
450,000................... 29,597 59,194 88,790 118,387 147,984 177,581
500,000................... 32,972 65,944 98,915 131,887 164,859 197,831
600,000................... 39,722 79,444 119,165 158,887 198,609 238,331
700,000................... 46,472 92,944 139,415 185,887 232,359 278,831
</TABLE>
- ---------------
(a) The current final average earnings for the Named Executive Officers during
1997 are $633,200 for Mr. Paul, $314,220 for Mr. van der Kaay, $360,240 for
Mr. Youdelman, $169,445 for Mr. Folan and $220,200 for Mr. LePorte. The
calculation of the foregoing amounts includes the amounts shown under
"Salary" and "Bonus" in the Summary Compensation Table set forth on page 9
of this proxy statement.
(b) Years of credited service as of January 1, 1998 under the Retirement Plan
for the Named Executive Officers are 27.9 for Mr. Paul, 7.5 for Mr. van der
Kaay, 20.9 for Mr. Youdelman, 5.3 for Mr. Folan and 16.8 for Mr. LePorte.
Target Benefit Agreements
The Company has entered into separate Supplemental Target Pension Benefit
Agreements (each, a "Target Agreement") with Messrs. Paul, van der Kaay,
Youdelman and LePorte (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 Target Officer's Retirement
Plan benefit, Restoration Plan benefit, Employee Before-Tax Savings Plan
matching
12
<PAGE> 16
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 below on pages 15 to 16 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. In
addition, at any time after a Target Officer commences receiving benefits from
his Target Agreement, the Target Officer may request that 90 percent of the
present value of all remaining benefits payable to the Target Officer under his
Target Agreement be paid to the Target Officer in a single lump sum cash
payment. If a Target Officer elects to receive such a payment, the remaining 10
percent of such present value would be forfeited.
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, 1998.
<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 $ -- $ -- $ -- $ -- $ 240 $ 730
150,000 308 305 697 1,666 2,636 3,605
175,000 787 1,263 2,135 3,583 5,031 6,480
200,000 1,266 2,222 3,572 5,500 7,427 9,355
225,000 1,745 3,180 5,010 7,416 9,823 12,230
250,000 2,224 4,138 6,447 9,333 12,219 15,105
300,000 3,183 6,055 9,322 13,166 17,011 20,855
350,000 4,141 7,972 12,197 17,000 21,802 26,605
400,000 5,099 9,888 15,072 20,833 26,594 32,355
450,000 6,058 11,805 17,947 24,666 31,386 38,105
500,000 7,016 13,722 20,822 28,500 36,177 43,855
600,000 8,933 17,555 26,572 36,166 45,761 55,355
700,000 10,849 21,388 32,322 43,833 55,344 66,855
</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 12 of this proxy statement.
13
<PAGE> 17
(b) For benefit calculation purposes under the Target Agreements, years of
credited service as of January 1, 1998 for the applicable Target Officers
are as follows: Mr. Paul (27.9), Mr. van der Kaay (8.7), Mr. Youdelman
(20.9) and Mr. LePorte (16.8).
The Company has adopted an Executive Benefit Plan, payments under which (if
made) would offset all or a portion of the benefits payable to the Named
Executive Officers under the Restoration Plan and the Target Agreements. For a
description of the terms of the Executive Benefit Plan, see "EXECUTIVE
COMPENSATION AND TRANSACTIONS WITH MANAGEMENT -- Employment, Termination and
Change in Control Arrangements" on pages 14 to 16 of this proxy statement.
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. In addition, Mr. Colburn may at any time
request that 90 percent of the present value of his supplemental pension
benefits under his agreement be paid to him in a single lump sum cash payment.
If Mr. Colburn elects to receive such a payment, the remaining 10 percent of
such present value would be forfeited.
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. In addition, Mr. Lyons may at
any time request that 90 percent of the present value of his supplemental
pension benefits under his agreement be paid to him in a single lump sum cash
payment. If Mr. Lyons elects to receive such a payment, the remaining 10 percent
of such present value would be forfeited.
The supplemental pension benefits payable to Messrs. Colburn and Lyons are
funded through a so-called "rabbi trust" established by the Company.
EMPLOYMENT, TERMINATION OF EMPLOYMENT AND CHANGE IN 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
14
<PAGE> 18
Company or Mr. Paul gives at least three months' notice to the contrary. No such
notice was given by either party in 1997. The agreement provides for an annual
salary of $300,000 commencing February 26, 1991, which amount was increased to
$441,500 effective as of January 1, 1998, 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.
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 (as defined 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 (as defined below) or if the employee terminates his
employment for "Good Reason" after a "Change in Control." "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
15
<PAGE> 19
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 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 Messrs. Paul, van der Kaay, Youdelman and LePorte, 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 12 to 14
of this proxy statement.
In 1997, the Company adopted the Allen Telecom Inc. Executive Benefit Plan
(the "Executive Benefit Plan") under which designated employees of the Company,
including the Named Executive Officers, are entitled to receive an immediate
cash payment if there is a "Change in Control" of the Company (as defined below)
and the following conditions are satisfied. The employee will be entitled to a
cash payment only if the employee remains employed by the Company for six months
after such Change in Control or terminates employment with the Company during
the six-month period after the Change in Control by reason of death, disability,
retirement or involuntary termination by the Company. In addition, the employee
will be entitled to a cash payment if the employee's employment terminates
during the 90-day period preceding such Change in Control by reason of death,
disability, retirement or involuntary termination by the Company. The amount of
the cash payment to which an employee is entitled in such event is determined by
the Company from time to time and allocated to an account under the Executive
Benefit Plan in the name of the employee. The Company has also established a
trust to hold the amounts allocated to these accounts. Any amount an employee
receives from the Executive Benefit Plan offsets the amount to which the
employee is entitled under the Restoration Plan and such employee's Target
Agreement (if any). Amounts allocated to the account of each Named Executive
Officer under the Executive Benefit Plan to date have not exceeded the present
value of benefits payable to such Named Executive Officer under the Restoration
Plan and the Named Executive Officer's Target Agreement.
For purposes of the arrangements described above, 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. For purposes of the Executive
Benefit Plan, "Change in Control" also includes (A) the Company voluntarily
filing a petition for bankruptcy under federal bankruptcy law, or an involuntary
bankruptcy petition being filed against the Company under federal bankruptcy
law, if such involuntary petition is not dismissed within 120 days of the
filing; (B) the Company making a general assignment for the benefit of
creditors; or (C) the Company seeking or consenting to the appointment of a
trustee, receiver, liquidator or similar person.
16
<PAGE> 20
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, 1997. 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
MEASUREMENT PERIOD S&P SMALLCAP COMMUNICATIONS
(FISCAL YEAR COVERED) ALLEN TELECOM INC. 600 INDEX EQUIPMENT INDEX
<S> <C> <C> <C>
1992 100 100 100
1993 135 119 96
1994 180 113 110
1995 191 147 164
1996 190 178 192
1997 158 224 251
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on December 31, 1992 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.
17
<PAGE> 21
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
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
1997 and 1998, 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 1997 and 1998, to perform legal services for the
Company and its subsidiaries. The Company paid $592,077 in fees and expenses to
Benesch, Friedlander, Coplan & Aronoff in 1997 for the performance of legal
services for the Company and its subsidiaries.
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1997 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 PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNERSHIP CLASS(%)
------------------------------------- ---------- --------
<S> <C> <C>
Lazard Freres & Co. LLC................................. 2,609,660(a) 9.6
30 Rockefeller Plaza
New York, New York 10020
State of Wisconsin Investment Board..................... 2,631,600(b) 9.6
P.O. Box 7842
Madison, Wisconsin 53707
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Lazard Freres & Co. LLC held sole dispositive power over all of such shares, and sole voting power over
2,455,560 of such shares, as of December 31, 1997, based on its Schedule 13G filed under the Securities
Exchange Act of 1934 on February 13, 1998.
(b) State of Wisconsin Investment Board held sole dispositive power and sole voting power over all of such
shares as of December 31, 1997, based on its Schedule 13G, as amended, filed under the Securities
Exchange Act of 1934 on January 20, 1998.
</TABLE>
18
<PAGE> 22
DIRECTORS AND OFFICERS
The following table sets forth information as of March 4, 1998 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>
Philip Wm. Colburn................................... 379,415(a) 1.4%
Dr. Jill K. Conway................................... 10,466(b) *
McDara P. Folan, III................................. 32,072(c) *
Albert H. Gordon..................................... 24,554(d) *
William O. Hunt...................................... 42,450(e) *
James L. LePorte, III................................ 104,321(f) *
J. Chisholm Lyons.................................... 52,498(g) *
John F. McNiff....................................... 5,790(h) *
Robert G. Paul....................................... 483,057(i) 1.8%
Charles W. Robinson.................................. 15,434(j) *
Erik H. van der Kaay................................. 103,811(k) *
William M. Weaver, Jr................................ 16,650(l) *
Robert A. Youdelman.................................. 200,558(m) *
All directors and executive officers as a group
(14 persons)....................................... 1,499,357(n) 5.3%
</TABLE>
- ---------------
* Less than 1%.
<TABLE>
<S> <C>
(a) Includes 101,502 shares owned directly and 277,913 shares issuable upon exercise of stock options that
are exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(b) Includes 440 shares owned directly and 10,026 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(c) Includes 3,534 shares owned directly; 2,565 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 18,994 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 6,979 shares issuable upon exercise of stock options that are exercisable as of March 4, 1998
or become exercisable within 60 days thereafter.
(d) Includes 12,300 shares owned directly and 12,254 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 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 2,450 shares issuable upon exercise of stock options that
are exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(f) Includes 33,405 shares owned directly; 10,067 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 12,580 restricted shares of Common Stock awarded under the 1992 Stock Plan; and
48,269 shares issuable upon exercise of stock options that are exercisable as of March 4, 1998 or become
exercisable within 60 days thereafter.
(g) Includes 10,054 shares owned directly; 39,090 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter; and 3,354 shares owned
by Mr. Lyons' spouse, of which Mr. Lyons disclaims beneficial ownership.
(h) Includes 3,062 shares owned directly and 2,728 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(i) Includes 153,255 shares owned directly; 12,055 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 31,938 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; 279,409 shares issuable upon exercise of stock options that are exercisable as of March 4, 1998 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 3,180 shares owned directly and 12,254 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
</TABLE>
19
<PAGE> 23
<TABLE>
<S> <C>
(k) Includes 26,924 shares owned directly; 1,939 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 16,120 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 58,828 shares issuable upon exercise of stock options that are exercisable as of March 4, 1998
or become exercisable within 60 days thereafter.
(l) Includes 14,200 shares owned directly and 2,450 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(m) Includes 78,125 shares owned directly; 8,107 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 19,846 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 94,480 shares issuable upon exercise of stock options that are exercisable as of March 4, 1998
or become exercisable within 60 days thereafter.
(n) Includes 490,357 shares owned by directors and executive officers; 35,442 shares held for executive
officers by the trustee under the Company's Employee Before-Tax Savings Plan; 114,478 restricted shares
of Common Stock awarded under the Company's 1992 Stock Plan; and 859,080 shares issuable to directors
and executive officers upon exercise of stock options that are exercisable as of March 4, 1998 or become
exercisable within 60 days thereafter.
</TABLE>
APPROVAL OF 1998 AMENDMENT TO THE 1992 STOCK PLAN
At the Annual Meeting, the stockholders will be asked to approve an
amendment to increase the number of shares available under the 1992 Stock Plan
(the "Amendment"). The Board of Directors of the Company adopted the proposed
Amendments, subject to stockholder approval, on February 17, 1998.
The Board of Directors is of the opinion that the 1992 Stock Plan, and its
predecessor plans, the 1970 Non-Qualified Stock Option Plan and the 1982 Stock
Plan, have been of significant importance and benefit to the Company and its
stockholders in enabling the Company to attract and retain officers and other
key employees and in increasing their commitment to the Company's continued
success and their identification with the Company and its stockholders. In the
view of the Board of Directors, the proposed Amendment will enable the Company
to continue to realize the benefits of employee stock options and restricted
shares of the Company's Common Stock.
A summary of the proposed Amendment is set forth below, followed by a
description of the terms of the 1992 Stock Plan. The full text of the Amendment
is annexed to this proxy statement as Exhibit A, and the summary is qualified in
its entirety by reference to Exhibit A.
AMENDMENT
The Amendment increases the number of shares of the Company's Common Stock
with respect to which options may be granted and restricted shares of the
Company's Common Stock ("Restricted Shares") may be awarded under the 1992 Stock
Plan by 1,300,000 shares. At March 6, 1998, there were only 534,812 shares
remaining for grant as stock options or Restricted Shares under the 1992 Stock
Plan. The Amendment increases the total number of shares with respect to which
stock options or Restricted Shares may be granted under the 1992 Stock Plan to
3,528,221, subject to adjustment (together with the exercise price of options
and the purchase price, if any, of Restricted Shares) to reflect any change in
the Company's outstanding shares by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations or other similar events affecting the
number or kind of outstanding shares.
The 1992 Stock Plan provides that any shares covered by outstanding options
and outstanding Restricted Shares that expire unexercised or are forfeited will
again be available for future grant either as stock options or as Restricted
Shares. The Plan further provides that upon the full or partial payment of any
option price by the transfer to the Company of shares of Common Stock or upon
satisfaction of tax withholding obligations in connection with any such exercise
or the lapsing of restrictions on any Restricted Shares or any other payment
made or benefit realized under the 1992 Stock Plan by the transfer or
relinquishment of shares of Common Stock, only the net number of shares of
Common Stock actually issued or transferred by the Company, after subtracting
the number of shares of Common Stock so transferred or relinquished by the
employee to the Company, will be charged against the maximum share limitation
for the 1992 Stock Plan.
If the requisite stockholder approval is not obtained, the Amendment will
have no force or effect.
20
<PAGE> 24
ADMINISTRATION
The 1992 Stock Plan is administered by the Management Compensation
Committee of the Board of Directors of the Company, consisting of not less than
two directors of the Company. Each member of the Compensation Committee at the
time of designation and service must qualify under Rule 16b-3 of the Securities
and Exchange Commission. The Compensation Committee may interpret the 1992 Stock
Plan and may at any time adopt such rules and regulations for the administration
of the Plan as it deems advisable. If the Compensation Committee is at any time
succeeded by another committee of the Board of Directors, such other committee
shall thereafter administer the 1992 Stock Plan and, during any period that the
administering committee is for any reason unable to act, the Board of Directors
may act in its place and perform any or all of its functions.
ELIGIBILITY
Options and Restricted Shares may be granted only to officers and other key
employees of the Company and its subsidiaries, presently estimated to be 229
persons, of whom 9 are officers of the Company. Neither options nor Restricted
Shares may be granted under the 1992 Stock Plan to any director who is not an
officer or employee of the Company or any of its subsidiaries. The Compensation
Committee determines which persons shall receive options and Restricted Shares
and the number of shares subject to options and awarded as Restricted Shares.
Options may be either incentive stock options ("ISOs") or non-qualified options.
As required by the IRC, the aggregate fair market value of the shares of
the Company's Common Stock (determined as of the date of grant) for which ISOs
may first be exercisable by any individual during any calendar year under the
1992 Stock Plan, together with that of shares of Common Stock subject to ISOs
under any other plan of the Company, shall not exceed $100,000. No eligible
employee may be granted stock options for more than 200,000 shares of Common
Stock, or awarded more than 100,000 Restricted Shares, under the 1992 Stock Plan
in any fiscal year. Except for the annual limitation on grants described in the
previous sentence, there is no limitation on the aggregate number of shares as
to which non-qualified options or Restricted Shares may be granted to any one
employee, and the grant of non-qualified options and Restricted Shares does not
affect the number of ISOs that may be granted.
TIME OF OPTION EXERCISE; OPTION PRICE AND PAYMENT
ISOs and non-qualified options may be exercised during periods expiring not
more than ten years and ten years and two days, respectively, after the date of
the grant, and the option price must be at least equal to 100% of the fair
market value of the Common Stock covered thereby on the date of grant. For
purposes of the 1992 Stock Plan, fair market value is defined as the last sale
price of the Company's Common Stock on the day next preceding the date of grant
on which there was a sale as reported on the New York Stock Exchange Composite
Tape, or the fair market value on the date of grant as determined by the
Committee in accordance with applicable law and regulations. At March 6, 1998,
the last sale price of the Company's Common Stock on the New York Stock Exchange
Composite Tape was $16.75. The option price must be paid in full upon exercise
either in cash or, with the approval of the Committee, in shares of Common
Stock. Each optionee must agree to remain in the employ of the Company or a
subsidiary for not less than two years from the date of grant of an option. The
Company may extend credit or arrange for the extension of credit to optionees to
assist them in the purchase of Common Stock upon the exercise of options to the
extent allowed by regulations of the Federal Reserve Board.
TANDEM STOCK APPRECIATION RIGHTS
Any option may contain, or be amended to contain, 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 an option which is then exercisable at a price equal to
the difference between the option 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. Any option or portion thereof so purchased must be surrendered to the
Company, and the shares covered thereby will not be available for the granting
of further options or Restricted Shares.
21
<PAGE> 25
RELOAD OPTIONS
In the discretion of the Compensation Committee, any option granted under
the 1992 Stock Plan may be accompanied by a "Reload Option." A Reload Option may
be granted to an optionee who pays for exercise of all or part of an option with
shares of Common Stock and represents an additional option to acquire the same
number of shares of Common Stock as is used by the optionee to pay for the
exercise of his or her original option. A Reload Option is subject to all of the
same terms and conditions as the original option, except that the option price
for shares acquired pursuant to a Reload Option will be at least equal to 100%
of the fair market value of the Common Stock covered thereby on the date the
Reload Option is granted (i.e., the date that the original option is exercised).
The Reload Option would only be exercisable if (i) the optionee is then an
employee of the Company or any of its subsidiaries, (ii) the exercise occurs at
least six months after its date of grant and (iii) the option period of the
option to which the Reload Option relates has not expired.
ACCELERATION OF EXERCISABILITY; LIMITED STOCK APPRECIATION RIGHTS
Outstanding options which by their terms are not otherwise exercisable will
be exercisable in full after, and may, in the Compensation Committee's
discretion, contain a tandem limited stock appreciation right exercisable six
months after grant and immediately after, a "Change in Control" of the Company,
which is defined in the 1992 Stock Plan as it is defined on page 16 of this
proxy statement. Pursuant to a tandem limited stock appreciation right, the
Company will purchase the option for cash at a price equal to the difference
between the option price and the "market value" (as defined in the 1992 Stock
Plan) of the shares covered by the option. Such market value is generally
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. Any option or portion thereof
purchased pursuant to any such stock appreciation right must be surrendered to
the Company, and the shares covered thereby will not be available for the
granting of further options or Restricted Shares.
RESTRICTED SHARES
The Compensation Committee may from time to time in its discretion award
Restricted Shares to employees eligible to participate in the 1992 Stock Plan
and determine the number of Restricted Shares awarded and the terms and
conditions of, and the amount of any payment by the employee for, such
Restricted Shares. The award of performance-based vesting Restricted Shares to
employees who are "covered employees" within the meaning of Section 162(m) of
the Code shall be based on one or more of the following criteria: earnings per
share, market value per share, return on invested capital, return on operating
assets and return on equity.
Awards of Restricted Shares may be made in lieu of or in addition to grants
of options under the 1992 Stock Plan. Each award of Restricted Shares will be
evidenced by a written agreement containing terms and conditions not
inconsistent with the 1992 Stock Plan as the Compensation Committee shall
determine to be appropriate in its sole discretion.
A certificate for Restricted Shares will be issued in the name of each
employee to whom such Restricted Shares are awarded, but the certificate will
either be delivered to the employee with an appropriate legend or held in
custody by the Company or a bank for the employee's account. The Restricted
Shares will be subject to transfer restrictions for a period (the "Restricted
Period") of from one to 10 years from the date of award and such other
conditions as the Compensation Committee may prescribe. Subject to the foregoing
restrictions, the employee will, commencing on the date of award, have the
rights and privileges of a stockholder as to such Restricted Shares, including
the right to vote the Restricted Shares and, subject to the following, the right
to receive the dividends on such Shares. The Compensation Committee may, in its
discretion, have any dividends with respect to the Restricted Shares held for
the employee's account, with interest as determined by the Committee, rather
than paid directly to the employee on a current basis. The Compensation
Committee may in its discretion, at the time an award is made, prescribe
conditions for the incremental lapse of restrictions during the Restricted
Period and for the lapse or termination of restrictions upon the occurrence of
other conditions in addition to or other than the expiration of the Restricted
Period with respect to all or any portion of the Restricted Shares. Such
conditions may include, without limitation, the death or disability of the
employee to whom the Restricted Shares are awarded, retirement of the employee
pursuant to normal or early retirement under any
22
<PAGE> 26
retirement plan of the Company or termination by the Company of the employee's
employment other than for cause or a "Change in Control" of the Company, as
defined above under "Acceleration of Exercisability; Limited Stock Appreciation
Rights." The Compensation Committee may also, in its discretion, shorten or
terminate the Restricted Period or waive any conditions for the lapse or
termination of restrictions with respect to all or any portion of the Restricted
Shares at any time after the date the award is made. The Company may extend
credit or arrange for the extension of credit to employees to assist them in
paying the purchase price, if any, for Restricted Shares to the extent allowed
by regulations of the Federal Reserve Board.
Except as the Compensation Committee may otherwise determine, an employee
will forfeit all rights in Restricted Shares unless he remains an employee of
the Company or a subsidiary, or a consultant to the Company or a subsidiary
under a post-employment consulting arrangement, until the end of the Restricted
Period and the satisfaction of any applicable conditions prescribed by the
Compensation Committee. If the employee remains an employee or a consultant
until the expiration or termination of the Restricted Period and the
satisfaction of such conditions, the restrictions will lapse and a certificate
for such shares of Common Stock will be delivered to the employee free of any
legend or restriction, except any that may be imposed by law, together with any
dividends held for the account of the employee and interest thereon.
MODIFICATION AND TERMINATION
The Board of Directors may suspend, amend or modify the 1992 Stock Plan at
any time except that, without stockholder approval, no amendment or modification
may cause the exemptions under Rule 16b-3 to cease to be available to the Plan.
The 1992 Stock Plan may be terminated by the Board of Directors at any time,
except with respect to options or Restricted Shares then outstanding. No
termination, suspension or amendment of the Plans may adversely affect any
option or Restricted Shares previously granted, without the written consent of
the employee to whom such grant was made.
DURATION
The 1992 Stock Plan will terminate on February 27, 2002, and no options or
Restricted Shares may be granted or awarded under the Plan after such date.
Options and Restricted Shares granted prior to such dates may extend beyond such
dates, and the terms of the 1992 Stock Plan will continue to apply to such
options and Restricted Shares.
NON-TRANSFERABILITY
Options and stock appreciation rights may not be transferred or assigned
other than by will or the laws of descent and distribution and may be exercised
during an optionee's lifetime only by the optionee and during a limited period
following the termination of employment or the death of an optionee, provided
that, if upon an optionee's termination of employment the optionee becomes a
senior management consultant to the Company or its subsidiaries under a
post-employment consulting arrangement, options held by such optionee continue
to be exercisable during the period ending on the earliest of (i) the ninetieth
day following the date the optionee ceases to render consulting services for any
reason other than death, (ii) the expiration of one year following the
optionee's death during the consulting period or (iii) the expiration of five
years following the optionee's termination of employment. Restricted Shares may
not be transferred, assigned or pledged during the Restricted Period and until
the satisfaction of any conditions prescribed by the Compensation Committee.
WITHHOLDING OF TAXES
To the extent that the Company is required to withhold or receive federal,
state, local or foreign taxes in connection with any payment made or benefit
realized by an employee or other person under the 1992 Stock Plan, the Plan
provides that it shall be a condition to the receipt of any such payment or the
realization of any such benefit that the employee or such other person make
arrangements satisfactory to the Company for payment of any taxes required to be
withheld. At the discretion of the Compensation Committee, any such arrangements
may include, without limitation, relinquishment of a portion of any such payment
or benefit or the surrender of outstanding shares of Common Stock, and any
agreement pertaining to a grant of options or an award of Restricted Shares
under the 1992 Stock Plan may make such relinquishment the elective or mandatory
form of
23
<PAGE> 27
satisfying such taxes. At the discretion of the Compensation Committee, in
connection with any such payment or benefit, the Company and any such employee
or other person also may make similar arrangements with respect to the payment
of any taxes with respect to which withholding is not required.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the U.S. Federal income tax consequences of
grants and exercises under the 1992 Stock Plan is based on an analysis of the
IRC as currently in effect, existing laws, judicial decisions and administrative
rulings and regulations, all of which are subject to change. In addition to
being subject to the U.S. Federal income tax consequences described below, an
individual who receives a grant of options, related rights or Restricted Shares
may also be subject to state and/or local income tax consequences in the
jurisdiction in which he or she works and/or resides.
Tax Consequences to Employees
NON-QUALIFIED STOCK OPTIONS. In general, (i) at the time a non-qualified
stock option is granted, no income will be recognized by an employee; (ii) at
the time of exercise of a non-qualified option, ordinary income will be
recognized by the employee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares if they
are non-restricted on the date of exercise; and (iii) at the time of sale of
shares acquired pursuant to the exercise of a non-qualified stock option, any
appreciation (or depreciation) in the value of the shares after the date of
exercise will be treated as a capital gain (or loss).
ISOS. No income generally will be recognized by an employee upon the grant
or exercise of an ISO. If shares of Common Stock are issued to an optionee
pursuant to the exercise of an ISO and no disqualifying disposition of the
shares is made by the employee within two years after the date of grant or
within one year after the transfer of the shares to the employee, then upon the
sale of the shares any amount realized in excess of the option price will be
taxed to the employee as a capital gain and any loss sustained will be a capital
loss.
If shares of Common Stock of the Company acquired upon the exercise of an
ISO are disposed of prior to the expiration of either holding period described
above, the employee generally will recognize ordinary income in the year of
disposition in an amount equal to any excess of the fair market value of the
shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares in the sale or exchange) over the option price paid
for the shares. Any further gain (or loss) realized by the employee generally
will be taxed as a capital gain (or loss).
RELOAD OPTIONS. An employee will not be subject to tax in connection with
the grant of a Reload Option. The exercise of a Reload Option will be taxed as
an ISO or a non-qualified stock option, as the case may be, as described above.
APPRECIATION RIGHTS. No income will be recognized by an employee in
connection with the grant of a stock appreciation right. When the appreciation
right is exercised, the employee normally will be required to include as taxable
ordinary income in the year of exercise an amount equal to the amount of any
cash, and the fair market value of any non-restricted shares of Common Stock,
received pursuant to the exercise.
RESTRICTED SHARES. An employee receiving Restricted Shares generally will
be subject to tax at ordinary income rates on the fair market value of the
Restricted Shares reduced by any amount paid by the employee at such time as the
shares are no longer subject to a risk of forfeiture or restrictions on transfer
for purposes of Section 83 of the IRC. However, an employee who so elects under
Section 83(b) of the IRC within 30 days of the date of transfer of the
Restricted Shares will have taxable ordinary income on the date of transfer of
the Shares equal to the excess of the fair market value of the Shares
(determined without regard to the risk of the forfeiture or restrictions on
transfer) over any purchase price paid for the Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares that are subject at that time to a risk of forfeiture or restrictions on
transfer generally will be treated as compensation that is taxable as ordinary
income to the employee.
24
<PAGE> 28
Tax Consequences to the Company
To the extent that an employee recognizes ordinary income in the
circumstances described above, the Company will be entitled to a corresponding
deduction provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an "excess
parachute payment" within the meaning of Section 280G of the IRC, and is not
disallowed by the $1 million limitation on certain executive compensation
contained in Section 162(m) of the IRC.
NEW PLAN BENEFITS TABLE
It is not possible to determine the specific amounts that may be awarded to
various individuals in the future under the 1992 Stock Plan. The following table
sets forth the stock options and Restricted Shares received by or allocated to
(i) each of the Named Executive Officers, (ii) all current executive officers as
a group, (iii) all current directors who are not executive officers as a group,
and (iv) all employees, including all current officers who are not executive
officers, as a group, for the year ended December 31, 1997.
NEW PLAN BENEFITS TABLE
1992 STOCK PLAN, AS AMENDED
<TABLE>
<CAPTION>
RESTRICTED SHARES STOCK OPTIONS
------------------- -------------------
DOLLAR DOLLAR
VALUE NUMBER VALUE NUMBER
NAME AND POSITION ($)(a) OF UNITS ($)(b) OF UNITS
----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Robert G. Paul 0 0 43,125 30,000
President and Chief Executive
Officer
Erik van der Kaay 0 0 24,438 17,000
Executive Vice President
Robert A. Youdelman 0 0 24,438 17,000
Executive Vice President,
Chief Financial Officer and
Assistant Secretary
McDara P. Folan, III 0 0 8,194 5,700
Vice President, Secretary and
General Counsel
James L. LePorte, III 0 0 10,781 7,500
Vice President, Treasurer and
Controller
Executive Group 284,063 15,000 118,738 82,600
Non-Executive Director Group 0 0 0 0
Non-Executive Officer Employee 473,438 25,000 443,181 324,300
Group
</TABLE>
- ---------------
(a) Based on the closing market price of the Company's Common Stock on the date
of such awards.
(b) Calculated by subtracting the exercise price from $18.4375 the closing
market price of the Company's Common Stock on December 31, 1997, and
multiplying the difference by the number of stock options.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock which are represented in person or by proxy and entitled to vote at the
Annual Meeting is required to approve the Amendment, provided that a majority of
the outstanding shares is voted with respect hereto.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
1998 AMENDMENT TO THE 1992 STOCK PLAN.
25
<PAGE> 29
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, 1998, 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 1968. 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 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 1997 is enclosed herewith but is not a part of the proxy soliciting
material.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company for inclusion in its
proxy statement relating to that meeting no later than November 19, 1998. 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 19, 1998
26
<PAGE> 30
EXHIBIT A
TEXT OF 1998 AMENDMENT TO THE
ALLEN TELECOM INC. 1992 STOCK PLAN
Section 2 of the 1992 Stock Plan hereby is amended by deleting the first
sentence of Section 2 in its entirety and inserting in place thereof the
following sentence:
"The total numbers of shares of Common Stock with respect to which
options may be granted and Restricted Shares may be awarded under the
Plan shall not exceed 3,528,221."
A-1
<PAGE> 31
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, 2 AND 3.
<TABLE>
<CAPTION>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS --
Nominees: [ ] [ ] [ ]
--------
P. Wm. Colburn, J.K. Conway, A.H. Gordon, W.O. Hunt,
J.C. Lyons, J.F. McNiff, R.G. Paul, C.W. Robinson
and W.M. Weaver, Jr.
---------------------------------------------
Nominee Exception(s)
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Approval of Amendment to increase the number of
shares available under the 1992 Stock Plan. [ ] [ ] [ ]
3. Ratification of appointment of Coopers &
Lybrand L.L.P. as auditors for the year ending
December 31, 1998. [ ] [ ] [ ]
</TABLE>
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, 2 and 3.
Date:
-------------------------
Signature(s)
------------------
Signature(s)
-----------------
NOTE: 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.
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
<PAGE> 32
PROXY PROXY
ALLEN TELECOM INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 1, 1998.
The undersigned hereby appoints Philip Wm. Colburn, Jill K. Conway and John F.
McNiff, 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 May 1, 1998
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.
................................................................................
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
