<PAGE> 1
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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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<PAGE> 2
[ALLEN TELECOM LOGO]
Philip Wm. Colburn
Chairman of the Board
March 19, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Allen Telecom Inc. which will be held at the Cleveland Marriott at Key Center,
127 Public Square, Cleveland, Ohio on Friday, April 30, 1999 at 9:30 A.M. The
purposes of the meeting are set forth in the accompanying notice and proxy
statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
Sincerely,
/S/ PHILIP WM. COLBURN
PHILIP WM. COLBURN
Chairman of the Board
<PAGE> 3
ALLEN TELECOM INC.
25101 CHAGRIN BOULEVARD
BEACHWOOD, OHIO 44122
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1999
March 19, 1999
To the Common Stockholders of
ALLEN TELECOM INC.
Notice is hereby given that the Annual Meeting of Stockholders of Allen
Telecom Inc. will be held at the Cleveland Marriott at Key Center, 127 Public
Square, Cleveland, Ohio, on Friday, April 30, 1999, at 9:30 A.M., local time,
for the following purposes:
1. To elect a Board of eight directors;
2. To ratify the appointment of PricewaterhouseCoopers LLP as auditors
for the Company for the year ending December 31, 1999; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on Wednesday, March 3, 1999 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, 1999
The accompanying proxy is solicited on behalf of the Board of Directors of
Allen Telecom Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held on April 30, 1999, or at any adjournment thereof. Any proxy received
pursuant to this solicitation may be revoked by the stockholder executing it by
notifying the Secretary of the Company before it is voted at the Annual Meeting,
by duly executing a proxy bearing a later date or by attending the Annual
Meeting and voting in person.
The Board of Directors has fixed March 3, 1999 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 27,504,546 shares of Common Stock
(exclusive of 2,254,552 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, 1999.
ELECTION OF DIRECTORS
Eight 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. Three current directors, William M. Weaver,
Jr., Albert H. Gordon and William O. Hunt, who have been members of the Board
for 29, 28 and 6 years, respectively, will not be standing for re-election at
the Annual Meeting. 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 to eliminate the vacancy. The eight nominees for director receiving a
plurality of the votes cast at the Annual Meeting in person or by proxy shall be
elected.
<PAGE> 5
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 (70).............. 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., Superior Industries
International, Inc. and TransPro, Inc.
Dr. Jill K. Conway (64).............. 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.
J. Chisholm Lyons (71)............... 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 (56).................. 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 (57).................. 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.
Charles W. Robinson (79)............. 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.
Dr. Martyn F. Roetter (54)........... Vice President, Communications and Information Technology, Arthur D.
July 1, 1998 Little, Inc., a consulting firm, Cambridge, Massachusetts, since Febru-
ary 1996, and Vice President, Communications and Information Tech-
nologies, Decision Resources, a consulting firm, Waltham,
Massachusetts, from April 1992 to February 1996.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE AND DATE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
FIRST BECAME A DIRECTOR AND OTHER DIRECTORSHIPS
----------------------- -----------------------------------------
<S> <C>
Gary B. Smith (40)................... Management Consultant, Cornelius, North Carolina, since December 1998.
February 16, 1999 Director and President of Glenayre Technologies, Inc., manufacturer of
paging products and systems, Charlotte, North Carolina, from June 1996
to December 1998, Chief Executive Officer of Glenayre from January 1997
to December 1998, Executive Vice President and General Manager,
Wireless Messaging Group, of Glenayre from September 1994 to June 1996,
and various management positions, including Chief Technology Officer,
with Glenayre from 1983 to September 1994.
</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 1998, the Board of Directors of the Company had Audit, Management
Compensation and Nominating Committees. Currently, Dr. Conway and Messrs. Gordon
and Weaver are the members of the Management Compensation Committee; Dr. Conway
and Messrs. Lyons and Weaver are the members of the Nominating Committee; and
Messrs. Hunt, McNiff and Robinson are the members of the Audit Committee.
Effective April 1, 1999, the members of the Management Compensation Committee
will be Dr. Conway, Mr. Robinson and Dr. Roetter; the members of the Nominating
Committee will be Dr. Conway and Messrs. Colburn and Lyons; and the members of
the Audit Committee will be Messrs. Lyons, McNiff and Smith.
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 1998 is set forth
on pages 6 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. Having
received indications from Messrs. Weaver, Gordon and Hunt that they have decided
not to stand for re-election upon the expiration of their current terms, the
Nominating Committee has recommended the remaining eight incumbent directors for
re-election at the Annual Meeting. The Nominating Committee will consider
nominees recommended by stockholders for election at the 2000 Annual Meeting of
Stockholders that are submitted prior to the end of 1999 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 1998, the Board of Directors of the Company held six meetings, the
Audit Committee held three meetings, the Management Compensation Committee held
five meetings, and the Nominating Committee held
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<PAGE> 7
two meetings. 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
1998.
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. The Directors Option Plan provides that each
year, on the first Friday following the Company's Annual Meeting of
Stockholders, each individual elected, re-elected or continuing as a director
who is not a current or former employee of the Company automatically receives a
nonqualified stock option for 3,000 shares of Common Stock. The Directors Option
Plan also permits discretionary grants to directors who are not current
employees of, but were previously employed by, the Company. On May 8, 1998, Dr.
Conway and Messrs. Gordon, Hunt, McNiff, Robinson and Weaver each received a
non-qualified stock option for 3,000 shares of Common Stock of the Company under
the Directors Option Plan at an exercise price of $15.0625 per share. In
addition, Dr. Roetter received a non-qualified stock option for 4,000 shares of
Common Stock of the Company at an exercise price of $11.6250 upon his election
to the Board of Directors on July 1, 1998, and Mr. Smith received a
non-qualified stock option for 4,000 shares of Common Stock of the Company at an
exercise price of $5.375 upon his election to the Board of Directors on February
16, 1999. 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. Also, 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.
On February 16, 1999, Mr. Colburn, Chairman of the Board of the Company,
received a nonqualified stock option for 146,000 shares of Common Stock, and Mr.
Lyons, Vice Chairman of the Board of the Company, received a nonqualified stock
option for 37,000 shares of Common Stock, at an exercise price of $5.375 per
share. Each of these options expires on February 16, 2009. One Hundred Seven
Thousand (107,000) of Mr. Colburn's options, and 27,000 of Mr. Lyons's options,
are exercisable 50 percent after February 16, 2001, 75 percent after February
16, 2002 and 100 percent after February 16, 2003. Thirty-Nine Thousand (39,000)
of Mr. Colburn's options, and 10,000 of Mr. Lyons's options, are exercisable
33 1/3 percent after February 16, 2000, 66 2/3 percent after February 16, 2001
and 100 percent after February 16, 2002. 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 1998, 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
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<PAGE> 8
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 primarily through 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 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. No such notice was given by either party in 1998. 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. During 1998, the Company paid
Mr. Colburn $296,125 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 1998. 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.
5
<PAGE> 9
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to the proxy rules promulgated by the Securities and Exchange
Commission designed to enhance disclosure of corporations' policies toward
executive compensation, Dr. Conway (Chair) and Messrs. 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 compensation levels are fair and appropriate to both its executives
and its stockholders. With these goals in mind, the Company's compensation plans
and policies have been designed to ensure that total executive compensation is
linked significantly to the performance of the Company, as measured by both the
operating performance of the Company and the increase in the value of its
shares. Although the Compensation Committee recognizes that improvement in
operating performance and higher stock prices do not necessarily move in tandem
over the short term, we expect that the two measurements will correlate over the
long term. In accordance with this policy, the majority of senior executives
received no bonus for 1998.
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. 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 1998 a number of the key
executives exceeded their ownership guidelines, although the very low stock
price reduced some executives who were previously at or above their suggested
levels below such levels. As a group, the key executives continued to accumulate
shares of the Company's Common Stock, and at a faster rate than in 1997. 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
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<PAGE> 10
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 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 Company reported a loss of $.38 per share in 1998. This loss resulted
in a negative return on equity. The stock price dropped 63.7% from $18.4375 at
year-end 1997 to $6.6875 at year-end 1998, representing a significant drop in
stockholder value.
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. Two thirds of the 1998 maximum incentive bonus for the
corporate executives was based on the Company's 1998 earnings per share, which
were a loss, and thus, earned no bonus. The remaining one third was based on
subjective criteria and was deemed to be unacceptable. The corporate executives'
annual bonuses were negligible in 1998.
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 1998
were larger than those for the corporate executives, but considerably smaller
than in 1997.
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 not
making any major changes to executive compensation.
Basis for Chief Executive Officer's Compensation
Mr. Paul received a salary increase of $20,500 (a 5% increase) on January
1, 1998, which was based on the objective and subjective criteria discussed
above, peer comparisons and cost of living factors. Because of the
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<PAGE> 11
business circumstances, no increases were granted on January 1, 1999 for Mr.
Paul, the remaining corporate officers and the business heads.
Mr. Paul was paid no performance bonus for 1998. His employment agreement
states that his performance bonus can range from 0% to 80% of base salary. Two
thirds of his bonus was to be based on achieving earnings per share above $1.04,
which was not accomplished, and the remaining one third was based on subjective
criteria, which were not met.
In May 1998, Mr. Paul was granted a non-qualified option for 39,000 shares
at $16.06, 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 $1 million cap.
The 1992 incentive restricted stock grants were grandfathered under Section
162(m). Thus, no tax deduction will be lost to the Company as a result of these
restricted stock grants.
Respectfully submitted,
Dr. Jill K. Conway, Chair
Albert H. Gordon
William M. Weaver, Jr.
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by the Company and its subsidiaries to those persons who were (i) the
Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers"), for services rendered by them in all capacities in which they served
the Company and its subsidiaries during 1996, 1997 and 1998.
8
<PAGE> 12
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES
-------------------------------------- RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($)(c) SARS(#) COMPENSATION($)(e)
------------------ ---- --------- -------- --------------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Paul 1998 441,500 -0- (b) -0- 39,000 47,390
President and Chief 1997 421,000 182,000 (b) -0- 30,000 82,977
Executive Officer 1996 405,000 130,000 (b) -0- 32,400 83,049
Robert A. Youdelman 1998 275,000 -0- (b) -0- 22,000 48,118
Executive Vice President, 1997 260,000 91,000 (b) -0- 17,000 71,274
Chief Financial Officer 1996 248,000 60,000 (b) -0- 18,500 57,135
and Assistant Secretary
Peter G. deVilliers(a) 1998 150,000 8,000 (b) -0- -0- 2,460
Vice President 1997 147,000 33,000 (b) 15,000(d) 5,400 2,309
McDara P. Folan, III 1998 164,000 -0- (b) -0- 8,200 17,548
Vice President, 1997 156,000 34,000 (b) -0- 5,700 16,843
Secretary and 1996 142,000 23,000 (b) -0- 5,600 13,466
General Counsel
James L. LePorte, III 1998 183,000 -0- (b) -0- 10,000 9,966
Vice President, Treasurer 1997 174,000 49,000 (b) -0- 7,500 19,037
and Controller 1996 165,000 33,000 (b) -0- 8,300 19,259
</TABLE>
- ---------------
(a) Mr. deVilliers became an executive officer of the Company on March 10, 1997.
Under the Securities and Exchange Commission's rules regarding the
disclosure of executive compensation, no information is required to be
provided for prior years during which Mr. deVilliers was not an executive
officer.
(b) Aggregate amount of such compensation is less than the lesser of $50,000 or
10 percent of the total annual salary and bonus reported for such Named
Executive Officer under "Salary" and "Bonus" for such fiscal year.
(c) At December 31, 1998, the Named Executive Officers held 93,875 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 $6.6875, the closing market price of the Company's Common Stock on
December 31, 1998) of $627,789 as follows: Mr. Paul (29,849 shares with a
value of $199,615), Mr. Youdelman (18,703 shares with a value of $125,076),
Mr. deVilliers (15,000 shares with a value of $100,313), Mr. Folan (18,434
shares with a value of $123,277) and Mr. LePorte (11,889 shares with a value
of $79,508). 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. No dividends were paid on the Company's Common Stock in 1996,
1997 and 1998.
(d) These restricted shares of the Company's Common Stock were awarded under the
1992 Stock Plan, and will vest 25 percent on December 31 in each of the
years 2004, 2005, 2006 and 2007, unless accelerated vesting is achieved.
Accelerated vesting based on achieving certain stock price and earnings per
share targets cannot begin until the year 2000, and such shares will then
vest only when the following targets have been reached:
<TABLE>
<CAPTION>
90-DAY AVERAGE THREE-YEAR
STOCK PRICE AVERAGE EARNINGS PER SHARE
- -------------------------------- --------------------------------
VESTING PERCENT VESTING TARGET VESTING PERCENT VESTING TARGET
- --------------- -------------- --------------- --------------
<S> <C> <C> <C>
12 1/2% $36.09 12 1/2% $1.57
12 1/2 40.09 12 1/2 1.82
12 1/2 44.09 12 1/2 2.07
12 1/2 49.09 12 1/2 2.32
</TABLE>
(e) All Other Compensation includes $1,200 made as matching Company
contributions for each of the Named Executive Officers under the Company's
Employee Before-Tax Savings Plan for each of 1998, 1997 and 1996, as
applicable. In addition, All Other Compensation includes (i) insurance
premiums in the following amounts paid by the Company with respect to term
life insurance for the benefit of each of the Named Executive Officers
during each of 1998, 1997 and 1996, respectively, as applicable: Mr. Paul
($84, $84 and
9
<PAGE> 13
$156), Mr. Youdelman ($84, $84 and $156), Mr. deVilliers ($1,260 and
$1,109), Mr. Folan ($84, $84 and $156) and Mr. LePorte ($84, $84 and $156),
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 1998,
1997 and 1996, respectively: Mr. Paul ($46,106, $81,693 and $81,693), Mr.
Youdelman ($46,834, $69,990 and $55,779), Mr. Folan ($16,264, $15,559 and
$12,110) and Mr. LePorte ($8,682, $17,753 and $17,903). The premiums paid by
the Company in connection with the life insurance policies issued pursuant
to such Split Dollar Insurance Agreements set forth in the preceding
sentence generally will be recovered in full by the Company upon the
cancellation or purchase by a Named Executive Officer of any such life
insurance policy or the payment of any death benefits under any such life
insurance policy.
OPTIONS GRANTED IN 1998
The following table sets forth information with respect to grants of
options to purchase shares of the Company's Common Stock to the Named Executive
Officers during 1998 pursuant to the Company's 1992 Stock Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(b)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------
NAME GRANTED (#) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
---- ------------ -------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Paul 39,000(a) 7.0 16.0625 5/03/08 393,963 998,380
Robert A. Youdelman 22,000(a) 3.9 16.0625 5/03/08 222,236 563,189
Peter G. deVilliers -0- -- -- -- -- --
McDara P. Folan, III 8,200(a) 1.5 16.0625 5/03/08 82,833 209,916
James L. LePorte, III 10,000(a) 1.8 16.0625 5/03/08 101,016 255,995
</TABLE>
- ---------------
(a) Each of these options was granted on May 1, 1998. 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 determined as of the date of
grant of such options and 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.
10
<PAGE> 14
OPTION EXERCISES AND 1998 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 1998, 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, 1998.
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 (a) -- 301,691 89,378 248,107 0
Robert A. Youdelman (a) -- 108,406 50,478 61,412 0
Peter G. deVilliers (a) -- 11,950 8,992 0 0
McDara P. Folan, III (a) -- 6,979 18,092 0 0
James L. LePorte, III 9,804 117,428 38,465 23,878 46,521 0
</TABLE>
- ---------------
(a) Named Executive Officer did not exercise any options to purchase shares of
the Company's Common Stock during 1998.
(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, 1998, 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, Lyons and McNiff 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 1999, 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 1999,
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
11
<PAGE> 15
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 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,
1999 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 $ 7,611 $15,222 $ 22,833 $ 30,444 $ 38,055 $ 45,666
150,000 9,299 18,597 27,896 37,194 46,493 55,791
175,000 10,986 21,972 32,958 43,944 54,930 65,916
200,000 12,674 25,347 38,021 50,694 63,368 76,041
225,000 14,361 28,722 43,083 57,444 71,805 86,166
250,000 16,049 32,097 48,146 64,194 80,243 96,291
300,000 19,424 38,847 58,271 77,694 97,118 116,541
350,000 22,799 45,597 68,396 91,194 113,993 136,791
400,000 26,174 52,347 78,521 104,694 130,868 157,041
450,000 29,549 59,097 88,646 118,194 147,743 177,291
500,000 32,924 65,847 98,771 131,694 164,618 197,541
600,000 39,674 79,347 119,021 158,694 198,368 238,041
700,000 46,424 92,847 139,271 185,694 232,118 278,541
</TABLE>
- ---------------
(a) The current final average earnings for the Named Executive Officers during
1998 are $651,500 for Mr. Paul, $373,240 for Mr. Youdelman, $155,929 for Mr.
deVilliers, $182,300 for Mr. Folan and $229,800 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, 1999 under the Retirement Plan
for the Named Executive Officers are 28.9 for Mr. Paul, 21.9 for Mr.
Youdelman, 7.8 for Mr. deVilliers, 6.3 for Mr. Folan and 17.8 for Mr.
LePorte.
Target Benefit Agreements
The Company has entered into separate Supplemental Target Pension Benefit
Agreements (each, a "Target Agreement") with seven executives of the Company,
including the Named Executive Officers (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
12
<PAGE> 16
if warranted by the formula under the Target Agreement. Generally, 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. 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 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, 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 page 15 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. 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, 1999.
<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 $ -- $ -- $ -- $ -- $ -- $ 358
150,000 294 278 366 1,322 2,277 3,233
175,000 773 1,236 1,804 3,239 4,673 6,108
200,000 1,252 2,194 3,241 5,155 7,069 8,983
225,000 1,732 3,153 4,679 7,072 9,465 11,858
250,000 2,211 4,111 6,116 8,989 11,861 14,733
300,000 3,169 6,028 8,991 12,822 16,652 20,483
350,000 4,127 7,944 11,866 16,655 21,444 26,233
400,000 5,086 9,861 14,741 20,489 26,236 31,983
450,000 6,044 11,778 17,616 24,322 31,027 37,733
500,000 7,002 13,694 20,491 28,155 35,819 43,483
600,000 8,919 17,528 26,241 35,822 45,402 54,983
700,000 10,836 21,361 31,991 43,489 54,986 66,483
</TABLE>
13
<PAGE> 17
- ---------------
(a) For benefit calculation purposes under the Target Agreements, the current
final average earnings for the Named Executive Officers are the same as
those listed in footnote (a) to the Pension Benefits Table on page 12 of
this proxy statement.
(b) For benefit calculation purposes under the Target Agreements, years of
credited service as of January 1, 1999 for the Named Executive Officers are
the same as those listed in footnote (b) to the Pension Benefits Table on
page 12 of this proxy statement.
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 15 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 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.
14
<PAGE> 18
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 Company or Mr. Paul gives at least three months' notice to the contrary. No
such notice was given by either party in 1998. 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, and two other executives, 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. Prior to a "Change in
Control," 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. After a "Change in
Control," the Company will pay the employee a lump sum severance payment equal
to the sum of (i) one year of his base salary as in effect as of the date of
termination or immediately prior to the "Change in
15
<PAGE> 19
Control," whichever is greater, (ii) an amount equal to the highest annual
incentive compensation paid to him in the three years prior to the date of
termination, and (iii) one tenth of the amounts set forth in clauses (i) and
(ii), multiplied by the number of his completed years of full-time employment
with the Company as of the date of termination (capped at two times the sum of
the amounts set forth in clauses (i) and (ii)), plus all awards under the
Company's KMDB Plan and an amount equal to the excess of the "Fair Market Value"
(as defined in such severance agreements), on the date of termination, over the
option price of the shares subject to each stock option held by him, except
previously issued incentive stock options, whether or not exercisable at the
time, in exchange for surrender of the option. Life, disability, accident and
health insurance benefits will continue during the period of severance payments.
Severance payments in excess of the base amount of six months' salary will be
reduced by any compensation received by the employee from other employment
(other than self employment) prior to a "Change in Control," and all severance
payments 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 each of the Named Executive Officers, 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, 1998. 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
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
S&P COMMUNICATIONS
ALLEN TELECOM INC. S&P SMALLCAP 600 INDEX EQUIPMENT INDEX
------------------ ---------------------- ------------------
<S> <C> <C> <C>
1993 100 100 100
1994 133 95 114
1995 142 124 171
1996 141 150 200
1997 117 189 261
1998 42 194 459
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on December 31, 1993 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
1998 and 1999, 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 1998 and 1999, to perform legal services for the
Company and its subsidiaries. The Company paid $536,121.21 in fees and expenses
to Benesch, Friedlander, Coplan & Aronoff in 1998 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, 1998 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................................. 3,111,490(a) 11.3
30 Rockefeller Plaza
New York, New York 10020
State of Wisconsin Investment Board..................... 4,485,500(b) 16.3
P.O. Box 7842
Madison, Wisconsin 53707
Wellington Management Company, LLP...................... 1,712,000(c) 6.2
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(a) Lazard Freres & Co. LLC held sole dispositive power over all of such shares,
and sole voting power over 2,618,060 of such shares, as of December 31,
1998, based on its Schedule 13G filed under the Securities Exchange Act of
1934 on February 10, 1999.
(b) State of Wisconsin Investment Board held sole dispositive power and sole
voting power over all of such shares as of December 31, 1998, based on its
Schedule 13G, as amended, filed under the Securities Exchange Act of 1934 on
January 16, 1999.
(c) Wellington Management Company, LLP held shared dispositive power over all of
such shares, and shared voting power over 917,000 of such shares, as of
December 31, 1998 based on the Schedule 13G filed under the Securities
Exchange Act of 1934 on January 24, 1997.
18
<PAGE> 22
DIRECTORS AND OFFICERS
The following table sets forth information as of March 3, 1999 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................................... 445,645(a) 1.6%
Dr. Jill K. Conway................................... 11,494(b) *
Peter G. deVilliers.................................. 33,933(c) *
McDara P. Folan, III................................. 39,672(d) *
Albert H. Gordon..................................... 25,582(e) *
William O. Hunt...................................... 43,478(f) *
James L. LePorte, III................................ 105,908(g) *
J. Chisholm Lyons.................................... 89,306(h) *
John F. McNiff....................................... 7,654(i) *
Robert G. Paul....................................... 570,904(j) 2.1%
Roger L. Schroeder................................... 16,465(k) *
Charles W. Robinson.................................. 16,462(l) *
Dr. Martyn F. Roetter................................ 0 --
Gary B. Smith........................................ 900(m) *
William M. Weaver, Jr................................ 14,616(n) *
Robert A. Youdelman.................................. 230,978(o) *
All directors and executive officers as a group
(16 persons)....................................... 1,652,997(p) 5.8%
</TABLE>
- ---------------
<TABLE>
<S> <C>
* Less than 1%.
(a) Includes 101,502 shares owned directly and 344,143 shares issuable upon exercise of stock options that
are exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
(b) Includes 440 shares owned directly and 11,054 shares issuable upon exercise of stock options that are
exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
(c) Includes 662 shares owned directly; 1,129 shares held by the Trustee under the Company's Employee
Before-Tax Savings Plan; 15,000 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 17,142 shares issuable upon exercise of stock options that are exercisable as of March 3, 1999
or become exercisable within 60 days thereafter.
(d) Includes 4,694 shares owned directly; 3,923 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 18,434 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 12,621 shares issuable upon exercise of stock options that are exercisable as of March 3, 1999
or become exercisable within 60 days thereafter.
(e) Includes 12,300 shares owned directly and 13,282 shares issuable upon exercise of stock options that are
exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
(f) 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 3,478 shares issuable upon exercise of stock options that
are exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
(g) Includes 36,096 shares owned directly; 11,405 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 11,889 restricted shares of Common Stock awarded under the 1992 Stock Plan; and
46,518 shares issuable upon exercise of stock options that are exercisable as of March 3, 1999 or become
exercisable within 60 days thereafter.
(h) Includes 30,054 shares owned directly; 55,898 shares issuable upon exercise of stock options that are
exercisable as of March 3, 1999 or become exercisable within 60 days thereafter; and 3,354 shares owned
by Mr. Lyons' spouse, of which Mr. Lyons disclaims beneficial ownership.
(i) Includes 3,062 shares owned directly and 4,592 shares issuable upon exercise of stock options that are
exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
</TABLE>
19
<PAGE> 23
<TABLE>
<S> <C>
(j) Includes 192,344 shares owned directly; 13,542 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 29,849 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; 328,969 shares issuable upon exercise of stock options that are exercisable as of March 3, 1999 or
become exercisable within 60 days thereafter; and 6,400 shares owned by Mr. Paul's spouse, of which Mr.
Paul disclaims beneficial ownership.
(k) Includes 1,000 shares owned directly; 2,073 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; and 13,392 shares issuable upon exercise of stock options that are exercisable
as of March 3, 1999 or become exercisable within 60 days thereafter.
(l) Includes 3,180 shares owned directly and 13,282 shares issuable upon exercise of stock options that are
exercisable as of March 4, 1998 or become exercisable within 60 days thereafter.
(m) All 900 shares are owned directly.
(n) Includes 11,138 shares owned directly and 3,478 shares issuable upon exercise of stock options that are
exercisable as of March 3, 1999 or become exercisable within 60 days thereafter.
(o) Includes 79,268 shares owned directly; 9,248 shares held by the trustee under the Company's Employee
Before-Tax Savings Plan; 18,703 restricted shares of Common Stock awarded under the Company's 1992 Stock
Plan; and 123,759 shares issuable upon exercise of stock options that are exercisable as of March 3,
1999 or become exercisable within 60 days thereafter.
(p) Includes 526,394 shares owned by directors and executive officers; 41,120 shares held for executive
officers by the trustee under the Company's Employee Before-Tax Savings Plan; 93,875 restricted shares
of Common Stock awarded under the Company's 1992 Stock Plan; and 991,608 shares issuable to directors
and executive officers upon exercise of stock options that are exercisable as of March 3, 1999 or become
exercisable within 60 days thereafter.
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of PricewaterhouseCoopers LLP
as the independent auditors to audit the books and accounts of the Company for
the year ending December 31, 1999, and is requesting ratification of such
appointment by the stockholders at the Annual Meeting. PricewaterhouseCoopers
LLP 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
PricewaterhouseCoopers LLP 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
20
<PAGE> 24
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 1998 is enclosed herewith but is not a part of the proxy soliciting
material.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 2000 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, 1999. Such
proposals should be directed to the Secretary of the Company at the Company's
offices, 25101 Chagrin Boulevard, Beachwood, Ohio 44122.
In accordance with recent amendments to Rule 14a-4(c)(1) under the
Securities Exchange Act of 1934, as amended, if a stockholder intends to present
a proposal at the 2000 Annual Meeting of Stockholders, and does not notify the
Company of such proposal on or before February 2, 2000, then management proxies
will be permitted to use their discretionary voting authority to vote on the
proposal if the proposal is raised at the 2000 Annual Meeting of Stockholders.
By order of the Board of Directors
MCDARA P. FOLAN, III
Secretary
Dated: March 19, 1999
21
<PAGE> 25
<TABLE>
<CAPTION>
ALLEN TELECOM INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. //
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS -- // // //
Nominees:
--------
P. Wm. Colburn, J.K. Conway, J.C. Lyons, J.F.
McNiff, R.G. Paul, C.W. Robinson, M.F. Roetter and
G. B. Smith.
- ---------------------------------------------
Nominee Exception(s)
FOR AGAINST ABSTAIN
2. Ratification of appointment of PricewaterhouseCoopers // // //
LLP as auditors for the year ending December 31, 1999.
Please place an "X" in the box if you noted an address //
change on the reverse side.
This proxy, when properly
executed, will be voted in the
manner directed herein by the
undersigned stockholder. If no
direction is made, this proxy will
be voted FOR proposals 1 and 2.
---
Date: , 1999
---------------------
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.
</TABLE>
<PAGE> 26
PROXY PROXY
ALLEN TELECOM INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD ON APRIL 30, 1999.
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 April 30,
1999 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.
Please note below any address change and place an "X" in the corresponding box
on the reverse side of this proxy.
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.
