<PAGE> 1
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 [ ]
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 Section 240.14a-11(c) or Section
240.14a-12
ALPHA INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(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:
<PAGE> 2
[ALPHA INDUSTRIES LOGO]
ALPHA INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 1999
TO THE STOCKHOLDERS OF ALPHA INDUSTRIES, INC.:
The Annual Meeting of Stockholders of Alpha Industries, Inc. ("Alpha") will be
held on Monday, September 13, 1999 at 2:00 p.m. local time, at the Wyndham
Garden Hotel, 30 Wheeler Road, Burlington, Massachusetts for the following
purposes:
1. To elect two Class 1 directors, each to hold office until the 2002 Annual
Meeting of Stockholders and until their respective successors are elected
and qualified;
2. To consider and act upon any other matters that may properly come before
the Meeting or any adjourned session thereof.
The Board of Directors has fixed July 15, 1999, as the record date for
determining the stockholders entitled to notice of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board of Directors
/s/ James C. Nemiah
JAMES C. NEMIAH, Secretary
Boston, Massachusetts
July 30, 1999
YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON. A
POSTAGE-PAID, RETURN-ADDRESSED ENVELOPE IS ENCLOSED.
YOUR PROXY VOTE WILL COUNT ONLY IF YOU
SIGN AND MAIL YOUR PROXY CARD.
<PAGE> 3
ALPHA INDUSTRIES, INC.
PROXY STATEMENT
The enclosed proxy, for use only at the Annual Meeting of Stockholders to be
held September 13, 1999, at 2:00 p.m. local time, and any adjournment thereof,
is solicited on behalf of the Board of Directors of Alpha Industries, Inc. The
approximate date that we are first sending these proxy materials to stockholders
is July 30, 1999. This solicitation is being made by mail and may be made in
person or by fax or telephone by our officers or employees. We will pay all
expenses incurred in this solicitation. We will request banks, brokerage houses
and other institutions, nominees and fiduciaries to forward the soliciting
material to beneficial owners and to obtain authorization for the execution of
proxies. We will, upon request, reimburse these parties for their reasonable
expenses in forwarding proxy material to beneficial owners.
You should use the enclosed proxy if you will not be attending the meeting, or
if you expect to attend but want to register your vote now. You may revoke your
proxy at any time before it is exercised at the meeting, either by filing with
our Corporate Secretary a signed statement that you are revoking it, by signing
and submitting another proxy with a later date, or by voting in person at the
meeting. We will vote your shares as you instruct in your proxy, so long as it
is valid, received before the meeting and not revoked. If you return a signed
proxy without marking it to indicate your votes, your shares will be voted in
favor of electing the two nominees for directors named in this proxy statement
(or their substitutes) for three-year terms expiring in 2002.
As of July 15, 1999, there were 19,373,929 shares of Alpha's common stock
outstanding. In order to hold a valid meeting and conduct business, a quorum of
more than half of all of these shares must be represented at the meeting, either
by valid proxy or in person. All shares that are represented at the meeting on
any matter will count toward the quorum during the entire meeting and any
adjourned session of the meeting. Abstentions and shares which are withheld as
to voting with respect to one or more of the nominees for director will be
counted in determining the existence of a quorum.
PROPOSAL 1 - ELECTION OF DIRECTORS
Alpha's Certificate of Incorporation and By-laws provide for the division of the
Board of Directors into three classes, each having a three-year term of office.
The term of one class expires each year. The terms of two directors, Mr. Sidney
Topol and Mr. James W. Henderson, expire at the Meeting. Mr. Topol and Mr.
Henderson have been renominated as Class 1 directors to hold office until the
2002 Annual Meeting of Stockholders and thereafter until their successors have
been duly elected and qualified.
There have been two changes to the composition of the Board of Directors since
the 1998 Annual Meeting of Stockholders. In June 1999, Mr. Raymond Shamie, a
Director since 1985, passed away. Mr. James W. Henderson was elected to the
Board of Directors in April 1999.
The persons named as proxies intend to vote for the election of each of the two
nominees as a Class 1 director. In the unanticipated event that a nominee should
be unable to serve, the persons named as proxies will vote the proxy for such
substitute, if any, as the present Board of Directors may designate or to reduce
the number of directors. The nominees have not been nominated pursuant to any
arrangement or understanding with any person.
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<PAGE> 4
THE BOARD OF DIRECTORS
DIRECTOR TERM
NAME AGE SINCE EXPIRES CLASS
---- --- ----- ------- -----
George S. Kariotis....................... 76 1962 2001 Class 3
Timothy R. Furey ........................ 41 1998 2001 Class 3
* James W. Henderson ...................... 56 1999 2002 Class 1
Thomas C. Leonard........................ 64 1996 2000 Class 2
Arthur Pappas............................ 63 1988 2000 Class 2
* Sidney Topol............................. 74 1992 2002 Class 1
* Nominees for Class 1 Directors
GEORGE S. KARIOTIS is Chairman of the Board and a Director of Alpha. He was
Chairman of the Board and Chief Executive Officer of Alpha from 1962 when Alpha
was founded until 1978. From 1979 to 1983, Mr. Kariotis was the Secretary of
Manpower Development and Economic Affairs for the Commonwealth of Massachusetts.
He was again elected Chairman of the Board in 1983 and Chief Executive Officer
in 1985. Mr. Kariotis resigned as Chief Executive Officer in July 1986 while he
campaigned for public office. He was re-elected Chief Executive Officer in
November 1986 and served in that capacity until May 1991.
TIMOTHY R. FUREY founded Oxford Associates, a professional service firm
specializing in sales and marketing performance measurement and improvement, in
1991 and has been its Chairman and Chief Executive Officer since then. Prior to
1991, Mr. Furey worked as a consultant with Boston Consulting Group, Inc.,
Strategic Planning Associates, Inc., Kaiser Associates and the Marketing Science
Institute.
JAMES W. HENDERSON has served as the President of Analytical Systems Engineering
Corporation, a provider of expert systems and communications systems and
services, since 1977. He served as an Executive Vice President of Analytical
Systems Engineering Corporation from 1976 to 1977 and as its Director of Systems
Engineering from 1973 to 1976. Prior to joining Analytical Systems Engineering
Corporation, he was a design engineer for International Business Machines
Corporation and a research and development program manager for the United States
Air Force.
TOM LEONARD was elected President and Chief Executive Officer of Alpha in July
1996 and was elected a Director in August 1996. Mr. Leonard joined Alpha in 1992
as General Manager of its Components and Subsystems Division. In 1994, he became
the General Manager of Operations for the Alpha Microwave Division and was
elected a Vice President. Mr. Leonard has over 30 years experience in the
microwave industry, having held a variety of executive and senior level
management and marketing positions at M/A-COM, Inc., Varian Associates, Inc. and
Sylvania.
ARTHUR PAPPAS is President and Chairman of Astrodyne Corp., a manufacturer of
power supplies. He has founded and sold three technology companies - Datel
Systems, Inc., a manufacturer of data conversion products, Power General
Corporation, a manufacturer of switching power supplies, and Metra-Byte
Corporation, a manufacturer of measurement and control products for personal
computers.
SIDNEY TOPOL is a Director of the Public Broadcasting System and President of
The Topol Group, Inc., a consulting and investment company. He was President of
Scientific-Atlanta, Inc. from 1971 to 1983, its Chief Executive Officer from
1975 to 1987 and Chairman of its Board from 1978 to 1990. Prior to 1971, Mr.
Topol held various executive positions with Raytheon Company.
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<PAGE> 5
MEETINGS OF THE BOARD OF DIRECTORS
All directors attended at least 75% of the Board meetings and assigned committee
meetings during the fiscal year ended March 28, 1999. The Board held six
meetings during the year, the Compensation Committee held two meetings, and the
Audit Committee held two meetings.
The members of the Audit Committee are Mr. Pappas (Chairman) and Mr. Furey,
neither of whom is an employee of Alpha. The functions performed by the Audit
Committee include recommending to the Board of Directors the engagement of
independent auditors, reviewing the scope of the proposed audit, reviewing the
scope of internal controls and reviewing the implementation by management of
recommendations made by the independent auditors.
The members of the Compensation Committee are Mr. Topol (Chairman) and Mr.
Furey, neither of whom is an employee of Alpha. The functions of the
Compensation Committee include making recommendations to the Board of Directors
concerning executive compensation, including incentive compensation.
The Board of Directors does not have a nominating committee. Changes in
directors are considered by the Board of Directors.
SECURITIES BENEFICIALLY OWNED BY CERTAIN PERSONS
The following table sets forth information concerning the beneficial ownership
of common stock as of July 15, 1999 by: (i) each person known by us to own
beneficially five percent or more of our outstanding shares of common stock,
(ii) each Director, (iii) each Executive Officer, and (iv) all our Directors and
Executive Officers as a group. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission. Each stockholder named
in the table has sole voting and investment power with respect to their shares,
except as noted below and except to the extent such power may be shared by a
spouse.
<TABLE>
<CAPTION>
BENEFICIAL
NAME OF BENEFICIAL OWNERS OWNERSHIP PERCENT OF CLASS
-------------------------
<S> <C> <C>
David J. Aldrich ................................................................ 100,586 ( * )
Timothy R. Furey ................................................................ 4,500 ( * )
Jean-Pierre Gillard ............................................................. 34,041 ( * )
James W. Henderson .............................................................. 5,000 ( * )
George S. Kariotis .............................................................. 11,838 ( * )
Richard Langman ................................................................. 61,504 ( * )
Thomas C. Leonard ............................................................... 229,915 1.19%
James C. Nemiah ................................................................. 8,965 ( * )
Arthur Pappas ................................................................... 12,000 ( * )
Sidney Topol .................................................................... 49,000 ( * )
Paul E. Vincent ................................................................. 43,245 ( * )
Executive Officers and Directors as a group (11 persons)......................... 560,593 2.89%
Harvey Kaylie and Gloria W. Kaylie................................................ 1,855,580 9.58%
13 Neptune Avenue, Brooklyn, NY 11235
FMR Corp.......................................................................... 1,460,100 7.54%
82 Devonshire Street, Boston, MA 02109
Westport Asset Management, Inc.................................................... 1,346,925 6.95%
253 Riverside Avenue, Westport, CT 06880
</TABLE>
(*) - Less than one percent.
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<PAGE> 6
Includes certain shares for Directors and Executive Officers as follows: Aldrich
- - 2,106 shares under our Savings and Retirement Plan (the "401(k) Plan") and
88,500 under stock options that can be exercised within 60 days after the Record
Date ("current options"); Furey - 4,500 under current options; Gillard - 2,636
shares in the 401(k) Plan and 19,750 shares under current options; Kariotis -
5,556 shares in the 401(k) Plan and 4,500 shares under current options; Langman
- - 325 shares in the 401(k) Plan and 60,000 shares under current options; Leonard
- - 3,266 shares in the 401(k) Plan and 172,500 under current options; Nemiah -
1,268 shares in the 401(k) Plan and 5,850 under current options; Pappas - 1,500
shares under current options; Topol - 6,000 under current options; Vincent -
4,506 shares in the 401(k) Plan and 17,400 shares under current options;
Executive Officers and Directors as a Group - 19,662 shares in the 401(k) Plan
and 380,500 under current options. Officers have voting power over the shares in
their accounts under the 401(k) Plan.
As reported in a Schedule 13D, as amended, dated July 7, 1999, Scientific
Components Corporation was the record and beneficial owner of 1,855,580 shares
of our common stock as of June 30, 1999. Mr. and Mrs. Kaylie are each directors,
officers and principal stockholders of Scientific Components Corporation, and
may be deemed to be the beneficial owners of the shares held of record by
Scientific Components Corporation. Scientific Components Corporation and Mr. and
Mrs. Kaylie have shared power to vote and dispose of all of the aforementioned
shares.
As reported in a Schedule 13G dated February 1, 1999, Fidelity Management &
Research Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp and a
registered investment advisor, was, as of December 31, 1998, the beneficial
owner of 1,460,100 shares (adjusted for stock split effective February 18, 1999)
of Alpha as a result of acting as investment advisor to various registered
investment companies. Edward C. Johnson 3d, FMR Corp., through its control of
Fidelity, and the funds each has sole power to dispose of the 1,460,100 shares
owned by the Funds. Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR
Corp., has the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds, which power resides with the Funds' Boards of
Trustees. Fidelity Management Trust Company, a wholly-owned bank subsidiary of
FMR Corp., is the beneficial owner of 11,100 shares of the common stock of Alpha
as a result of its serving as investment manager of institutional accounts.
Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management
Trust Company, each has sole dispositive power over 7,400 shares and sole power
to vote or to direct the voting of 11,100 shares of common stock owned by the
institutional accounts. Through their ownership of voting common stock and the
execution of a stockholders' voting agreement, members of the Johnson family may
be deemed, under the Investment Company Act of 1940, to form a controlling group
with respect to FMR Corp.
As reported in a Schedule 13G dated February 16, 1999, in which Westport Asset
Management, Inc. claimed sole voting and dispositive power with respect to 1,350
shares (adjusted for stock split effective February 18, 1999) and shared voting
and dispositive power with respect to 1,345,575 shares. Westport Asset
Management, Inc. is a registered investment advisor. The 1,345,575 shares
reported are held in certain discretionary managed accounts of Westport Asset
Management, Inc., and the 1,350 shares reported are owned by officers and
stockholders of Westport Asset Management, Inc. Westport Asset Management, Inc.
disclaims beneficial ownership with respect to the shares reported in the filing
and disclaims the existence of a group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, our Directors, Officers and
beneficial owners of more than 10% of the common stock are required to report
their beneficial ownership of common stock and any changes in that ownership to
the SEC. Specific dates for such reporting have been established and we are
required to report in this proxy statement any failure to file by the
established dates during the last fiscal year. In the last fiscal year, to our
knowledge, all of these filing requirements were satisfied by our directors,
officers and principal stockholders.
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<PAGE> 7
EXECUTIVE COMPENSATION
The following table presents information about total compensation during the
fiscal years ended March 28, 1999, March 29, 1998 and March 30, 1997, of the
Chief Executive Officer and our four next most highly compensated Executive
Officers (the "Named Executives").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- ----------------------------
NAME AND FISCAL RESTRICTED SECURITIES ALL OTHER
PRINCIPAL YEAR SALARY BONUS STOCK UNDERLYING COMPENSATION
POSITION ENDED ($) ($) AWARDS(#) OPTIONS (#) ($)
- --------------------------------- ---------- ----------- ------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard.............. 3/28/99 $296,538 $200,000 1,760 67,500 $17,293
President, 3/29/98 $260,768 $165,000 -- 75,000 $15,892
Chief Executive Officer 3/30/97 $216,923 -- -- 75,000 $6,347
David J. Aldrich............... 3/28/99 $216,538 $125,000 1,179 37,500 $5,372
Executive Vice President 3/29/98 $187,693 $100,000 -- 37,500 $4,791
3/30/97 $166,538 -- -- 67,500 --
Richard Langman ............... 3/28/99 $208,846 $105,000 1,179 -- $48,590
Vice President, 3/29/98 $200,000 $100,000 -- -- $32,214
President of Trans-Tech, Inc. 3/30/97 $ 30,769 -- -- 150,000 $33,333
Paul E. Vincent ............... 3/28/99 $156,538 $95,000 974 30,000 $8,247
Vice President, 3/29/98 $130,000 $80,000 -- -- $6,462
Treasurer, 3/30/97 $107,530 -- -- 36,000 $ 260
Chief Financial officer
Jean-Pierre Gillard ........... 3/28/99 $168,846 $85,000 974 15,000 $8,790
Vice President 3/29/98 $158,847 $80,000 -- -- $6,114
3/30/97 $148,293 -- -- 30,000 --
</TABLE>
Bonuses are paid under the Alpha Senior Executive Incentive Plan and are based
on a system of incentive compensation for superior performance as determined by
the Compensation Committee. Bonuses for fiscal 1999 were accrued and included
above, but were not distributed until fiscal 2000.
All Other Compensation represents: premiums paid by Alpha for various term life
and whole life insurance policies for the Named Executives, certain relocation
expenses and Alpha's contributions to the employee's account under the 401(k)
Plan, including the contribution for fourth quarter of fiscal 1999, which was
accrued and included above, but was not distributed until fiscal 2000.
Mr. Langman joined Alpha and became an executive officer of Alpha on January 28,
1997. All Other Compensation for Mr. Langman includes $42,384, $28,291 and
$33,333 for relocation expenses paid by Alpha to Mr. Langman during fiscal 1999,
1998 and fiscal 1997, respectively.
Mr. Vincent became an executive officer of Alpha on January 28, 1997.
The following tables provide information about stock options granted and
exercised by each of the Named Executives in fiscal 1999 and the value of
options held by each at March 28, 1999.
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<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS EXERCISE ANNUAL RATES OF STOCK
OPTIONS GRANTED TO OR BASE EXPIR- PRICE APPRECIATION FOR
GRANTED EMPLOYEES IN PRICE ATION OPTION TERM
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- -------------------------- ------------ -------------- ---------- -------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard 67,500 14.00% $7.583 9/14/08 $321,901 $815,761
David J. Aldrich 37,500 7.78% $7.583 9/14/08 $178,834 $453,201
Richard Langman -- -- -- -- -- --
Paul E. Vincent 30,000 6.22% $7.583 9/14/08 $143,067 $362,560
Jean-Pierre Gillard 15,000 3.11% $7.583 9/14/08 $71,534 $181,280
</TABLE>
The options were granted under the 1996 Plan and vest, in general at a rate of
20% per year commencing one year after the date of grant, provided the holder of
the option remains employed by Alpha. Options may not be exercised beyond 90
days after the holder ceases to be employed by Alpha, except in the event of
termination by reason of death, retirement or permanent disability, in which
event the option may be exercised for up to one year following termination. The
assumed annual rates of stock price appreciation are compounded annually for the
full term of the options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
NAME SHARES UNEXERCISED OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE MARCH 28, 1999 (#) MARCH 28, 1999 ($)
EXERCISE REALIZED ---------------------------------------------------------------
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard........ 15,000 $145,005 142,500 172,500 $2,175,270 $1,861,530
David J. Aldrich......... - - 67,500 120,000 $827,367 $1,446,325
Richard Langman.......... - - 60,000 90,000 $813,780 $1,220,670
Paul E. Vincent.......... 4,000 $41,332 16,250 52,500 $218,336 $632,912
Jean-Pierre Gillard...... 6,752 $149,313 11,250 35,500 $138,521 $426,284
</TABLE>
Values of unexercised options are based on the $18.56 closing price of Alpha's
Common stock on March 26, 1999 on the NASDAQ National Market, minus the
respective option exercise price.
LONG-TERM COMPENSATION PLAN
Alpha's Long-Term Compensation Plan (the "Long-Term Compensation Plan") is a
non-qualified supplemental executive retirement plan (SERP) providing deferred
compensation for senior executives designated by the Compensation Committee. The
following table illustrates the approximate level of benefits payable to a
participant under the Long-Term Compensation Plan who retires at age 65 and
receives his or her benefit in the form of a single life annuity. The amounts
shown do not reflect any reduction for Offset Amounts, as defined below.
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<PAGE> 9
PENSION PLAN TABLE
HIGHEST 12 MONTHS YEARS OF SERVICE
BASE PAY DURING ------------------------------------------------
FINAL 36 MONTHS 1 5 10 15+
--------------- ------- ------- -------- --------
$100,000 $ 3,333 $16,667 $ 33,333 $ 50,000
$150,000 $ 5,000 $25,000 $ 50,000 $ 75,000
$200,000 $ 6,667 $33,333 $ 66,667 $100,000
$250,000 $ 8,333 $41,667 $ 83,333 $125,000
$300,000 $10,000 $50,000 $100,000 $150,000
The benefit payable under the Long-Term Compensation Plan is based upon a
straight life annuity beginning at age 65 equal to 50% of a participant's
regular base pay during the highest 12 consecutive months within the 36 month
period immediately preceding the participant's retirement. The benefit is
ratably reduced if the participant retires with less than 15 Years of Service as
a full time employee following October 1, 1990 or retires prior to age 65. The
cash benefit payable to a participant is offset by the sum of (i) certain
matching Alpha contributions to the 401(k) Plan and (ii) 50% of the value of an
annuity which could be purchased using the gain from exercised stock options or,
in certain cases, stock options which are then exercisable, which have been
designated by the Compensation Committee as options to be offset (the "Offset
Amounts"). The cash benefit is not subject to offset for social security
benefits.
If a participant elects to retire before age 65 and to begin receiving benefits
immediately, or if a participant elects a joint and survivor benefit, the amount
of the benefit is actuarially adjusted. Alternatively, the participant may elect
to take a lump sum distribution of an actuarially equivalent amount. If a
participant dies prior to retirement, his or her beneficiary is entitled to a
ten year annuity at a rate equal to 25% of the participant's base pay, less the
value of the Offset Amounts.
During the fiscal year ended March 28, 1999, only Mr. Leonard participated in
the Long-Term Compensation Plan. The compensation amount that would have been
included in base compensation for purposes of calculating the benefit under the
Long-Term Compensation Plan for Mr. Leonard was $296,538. At year end, Mr.
Leonard had four Years of Service under the Long-Term Compensation Plan.
EXECUTIVE COMPENSATION PLAN
Alpha's Executive Compensation Plan (the "Executive Compensation Plan") is an
unfunded, non-qualified deferred compensation plan for the purpose of providing
deferred compensation for selected management employees. Participants may elect
to defer a portion of their compensation, and Alpha, in its sole discretion, may
make additional contributions to the account of a participant on such terms as
Alpha specifies. All deferred amounts are held in a trust. Participants defer
recognizing taxable income on the amount held for their benefit until the
amounts are paid.
Participants normally receive the deferrals upon retirement. Special rules are
provided for distributions in the case of a participant's death or disability, a
change in control of Alpha, early retirement, or in the event of unforeseen
emergencies, all as defined in the Executive Compensation Plan. During the
fiscal year ended March 28, 1999, Mr. Langman, Mr. Aldrich and Mr. Gillard
participated in the Executive Compensation Plan. Alpha did not make any
discretionary contributions to their accounts for fiscal 1999.
EMPLOYMENT AGREEMENTS
Alpha has severance agreements with the Named Executives, under which they are
entitled to receive various benefits in the event that they are terminated under
specified circumstances, as described below.
If Mr. Leonard is terminated or quits within two years after a change in control
of Alpha, he will receive a lump sum payment equal to two times his annual
salary. If he is terminated without cause or quits for good reason at any other
time, he will receive two years of salary continuation. In all such cases, all
of his stock
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<PAGE> 10
options will vest immediately. If Mr. Leonard retires within twelve months after
September 30, 1999, Alpha will enter into a two year consulting arrangement with
him at a consulting fee equal to his salary and all of his stock options will
vest immediately. The term of Mr. Leonard's severance agreement is indefinite.
With respect to each of the other Named Executives, if the officer is terminated
or quits within two years after a change in control of Alpha, or if the officer
is terminated at any time without good cause, the officer will receive two years
of salary continuation. In all such cases, all of the officer's stock options
will vest immediately. The term of these agreements is indefinite.
COMPENSATION OF DIRECTORS
Directors who are not employees of Alpha are paid a quarterly retainer of $3,375
plus an additional $1,000 for each full-day meeting (including separate
committee meetings) attended. Directors who serve as Chairman of a committee of
the Board of Directors receive an additional quarterly retainer of $250. In
addition, each new non-employee director receives an option to purchase 22,500
shares of Common stock immediately following the earlier of Alpha's Annual
Meeting of Stockholders at which said director is first elected by the
stockholders or following his appointment by the Board of Directors. In
addition, following each Annual Meeting of Stockholders each director who is
continuing in office receives an option to purchase 7,500 shares of common
stock. The exercise price of stock options granted to Directors is the fair
market value on the day of grant.
In August 1992, Alpha entered into a consulting arrangement with Mr. Topol
pursuant to which Mr. Topol will provide consulting services to Alpha in return
for a fee of $7,000 per quarter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Mr. Topol and
Mr. Furey. No member of the Compensation Committee is a former or current
officer or employee of Alpha or any of its subsidiaries. See "Compensation
Committee Report on Executive Compensation."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations with respect to policies for executive
officer compensation. The Compensation Committee determines the compensation to
be paid to the Chief Executive Officer and each of the other executive officers
of Alpha.
Alpha, based on the recommendations of the Compensation Committee, has entered
into severance agreements with each of Mr. Leonard, Mr. Aldrich, Mr. Gillard,
Mr. Langman and Mr. Vincent. Such agreements do not guarantee salary, position
or benefits, but provide salary continuation in the event of a termination after
a change in control or certain other terminations, as described under the
heading "Employment Agreements" in this Proxy Statement.
The objective of the Compensation Committee in determining the type and amount
of executive compensation is to provide a level of compensation that allows
Alpha to attract and retain superior talent, to achieve its business objectives,
and to align the financial interests of the executive officers with the
stockholders of Alpha. The elements of compensation for the executives are base
salary, short-term cash incentives, long-term stock-based incentives and
retirement plans.
Compensation for Alpha's Chief Executive Officer and the other executives,
including salary and short and long-term incentives, is established at levels
that are competitive with the compensation of comparable executives in similar
companies. The Compensation Committee periodically utilizes studies from
independent compensation experts on executive compensation in comparable high
technology and
8
<PAGE> 11
manufacturing companies, especially those located in the Greater Boston area and
the east coast of the United States. Based on these studies, the Compensation
Committee establishes base salaries, and expected short-term and long-term
incentive compensation, so as to set the combined value near the median of the
range indicated by the studies. In establishing individual compensation, the
Compensation Committee considers the individual experience and performance of
the executive, as well as the performance of Alpha. The Compensation Committee
also relies on the recommendations of the Chief Executive Officer for
determining the salaries for the other executives.
Short-term incentive compensation for each executive is established annually by
the Compensation Committee, by tying a percentage of each executive's total cash
compensation to the accomplishment of specific financial objectives for Alpha
and for each division.
Long-term, stock-based incentive compensation has been provided under the 1986
Plan and the 1996 Plan (collectively, the "Option Plans"). The 1986 Plan expired
in December 1996, and the 1996 Plan was approved by Alpha's stockholders in
September 1996. Under the Option Plans, the Committee has, in the past, awarded
nonqualified stock options, incentive stock options and restricted stock awards.
Restricted stock awards involve the issuance of shares of common stock which may
not be transferred or otherwise encumbered, subject to certain exceptions, for
varying amounts of time, and which will be forfeited, in whole or in part, if
the employee leaves Alpha. Options and restricted share awards provide a method
of tying the value of the executive's compensation to the value of Alpha's
common stock.
Alpha also permits executives and other employees to purchase Company common
stock through the Employee Stock Purchase Plan at a discount. Under the 401(k)
Plan, Alpha can also match a portion of the contributions of executives and
other employees by issuing Company common stock.
The stock ownership afforded under the Option Plans, the Stock Purchase Plan and
the 401(k) Plan allows executives to acquire a significant, long-term stock
ownership position in Alpha, which serves to align the executives' interests
with stockholders' interests.
The final component of executive compensation provides executives with deferred
income. Executives designated by the Compensation Committee participate in the
Long-Term Compensation Plan and the Executive Compensation Plan, which are
discussed under "Long-Term Compensation Plan" and "Executive Compensation Plan"
above. Executives may also participate in the 401(k) Plan.
During fiscal 1999, the Compensation Committee established the compensation of
Thomas C. Leonard, the President and Chief Executive Officer of Alpha, using the
same criteria that were used to determine the compensation of the other
executive officers, as described above. Mr. Leonard received a salary of
$296,538 and received 67,000 options to purchase shares of common stock at an
exercise price of $7.583 per share under the 1996 Plan. Based on studies
prepared by independent compensation consultants, Mr. Leonard's total
compensation for fiscal 1999 was in the middle range of executives of similar
companies.
Report Submitted
By: Compensation Committee
-----------------------
Sidney Topol and
Timothy R. Furey
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Performance Graph
The following graph shows the yearly change in Alpha's cumulative total
stockholder return for fiscal years ended April 2, 1995, March 31, 1996, March
30, 1997, March 29, 1998 and March 28, 1999, based upon the market price of
Alpha's common stock, compared with: (i) the cumulative total return on the
Standard & Poor's 500 Index and (ii) the Standard & Poor's Technology 500 Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH OMITTED]
------------------------------------------------------
FY94 FY95 FY96 FY97 FY98 FY99
---------------------------------------------------------------------
AHAA 100 $360 $278 $196 $488 $882
Tech 500 100 $127 $171 $231 $349 $560
S&P 500 100 $116 $153 $183 $271 $321
---------------------------------------------------------------------
The above graph assumes a total initial investment of $100 as of April 3, 1994,
and shows a "Total Return" that assumes reinvestment of dividends and is based
on market capitalization at the beginning of each period.
On June 2, 1998, Alpha ceased trading on the American Stock Exchange and began
trading on the Nasdaq National Market under the symbol "AHAA."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scientific Components Corporation, currently the record holder of 9.58% of
Alpha's common stock, is a customer of Alpha. During the fiscal year ended March
28, 1999, Scientific Components Corporation purchased approximately $7.4 million
of Alpha's products in the ordinary course of business. See "Securities
Beneficially Owned by Certain Persons".
OTHER PROPOSED ACTION
As of the date hereof, the management of Alpha knows of no business to come
before the Meeting other than the election of directors. However, if any other
business should properly be presented to the Meeting, the proxies will be voted
in respect thereof in accordance with the judgment of the person or persons
holding the proxies.
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<PAGE> 13
OTHER MATTERS
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by Alpha. The
representation in person or by proxy of at least a majority of the shares of
common stock outstanding on the record date is necessary to constitute a quorum
at the Meeting. Abstentions and broker "non-votes" are each counted as present
in determining whether a quorum is present. The two nominees for director of
Alpha who receive the greatest number of votes cast by stockholders present in
person or represented by proxy at the Meeting and entitled to vote thereon will
be elected directors of Alpha.
Abstentions and broker "non-votes" will have no effect on the outcome of the
vote for the election of directors. Shares of common stock held of record by
brokers who do not return a signed and dated proxy will not be considered
present at the Meeting, will not be counted towards a quorum and will not be
voted in the election of directors.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG LLP as the independent certified
public accountants to audit the consolidated financial statements of Alpha for
the fiscal year ending April 2, 2000. Such firm and its predecessors have served
continuously in that capacity since 1974. A representative of KPMG LLP will be
present at the Meeting, will be afforded the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by Alpha under the Securities Act of
1933, as amended, or the Exchange Act, the sections of the Proxy Statement
entitled "Compensation Committee Report on Executive Compensation" and
"Performance Graph" shall not be deemed to be so incorporated, unless
specifically otherwise provided in any such filing.
ANNUAL REPORT ON FORM 10-K
Copies of Alpha's Annual Report on Form 10-K for the fiscal year ended March 28,
1999 as filed with the Securities and Exchange Commission are available to
stockholders without charge upon written request addressed to Investor
Relations, Alpha Industries, Inc., 20 Sylvan Road, Woburn, Massachusetts 01801.
STOCKHOLDER PROPOSALS
Under SEC regulations, any stockholder desiring to make a proposal to be acted
upon at the 2000 Annual Meeting of Stockholders must present such proposal Alpha
by April 1, 2000 for the proposal to be considered for inclusion in our proxy
statement. If a proponent fails to notify Alpha by June 14, 2000 of a non-Rule
14a-8 stockholder proposal which it intends to submit at Alpha's 2000 Annual
Meeting of Stockholders, the proxy solicited by the Board of Directors with
respect to such meeting may grant discretionary authority to the proxies named
therein to vote with respect to such matter.
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<PAGE> 14
ALPHA INDUSTRIES, INC.
PROXY
The undersigned hereby appoint(s) George S. Kariotis and James C. Nemiah, and
each of them, with full power of substitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of Alpha
Industries, Inc. to be held on September 13, 1999, and at any adjournment or
adjournments thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock which the undersigned may be
entitled to vote at the meeting upon the election of directors, in accordance
with the following instructions and with discretionary authority upon such other
matters as may come before the meeting. All previous proxies are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
------
Continued, and to be Signed, on reverse side SEE REVERSE
(Please fill in the reverse side and mail in enclosed envelope) SIDE
------
- --------------------------------------------------------------------------------
[REVERSE SIDE]
[ X ] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS.
WITHHOLD AUTHORITY
FOR FROM BOTH Nominees:
BOTH NOMINEES NOMINEES Sidney Topol
1. Election of [ ] [ ] James W. Henderson
Directors.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND [ ] TO ATTEND [ ]
NOTE AT LEFT THE MEETING
Signature: ______________ Date ______ Signature ______________ Date _______
(Signature should be the same as the name printed on this Proxy. Executors,
administrators, trustees, guardians, attorneys and officers of corporations
should add their names when signing.)
