<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 / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GTI CORPORATION
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1996
------------------------
NOTICE
------------------------
To the Stockholders:
The Annual Meeting of the Stockholders (the "Annual Meeting") of GTI
Corporation, a Delaware corporation (the "Company"), will be held at the
Sheraton Grande Torrey Pines, 10950 North Torrey Pines Road, La Jolla,
California, on Wednesday, May 15, 1996, at 10:00 a.m., local time, for the
following purposes:
(1) To elect a Board of Directors of six members;
(2) To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants
for 1996; and
(3) To transact any and all other business which may properly come before
the Annual Meeting or any adjournment or adjournments thereof.
A Proxy Statement containing information for stockholders is annexed hereto
and a copy of the Annual Report of the Company for the fiscal year ended
December 31, 1995, is enclosed herewith.
Stockholders of record at the close of business on March 22, 1996, will be
entitled to notice of and to vote at the Annual Meeting and any and all
adjournments thereof. A list of stockholders entitled to vote at the Annual
Meeting will be available for inspection by stockholders at the Company's
corporate offices, 9715 Business Park Avenue, San Diego, California 92131.
Stockholders may examine the list during ordinary business hours in the 10-day
period before the Annual Meeting. The list will also be available for inspection
at the Annual Meeting.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING AND DESIRE TO
HAVE THEIR STOCK VOTED AT THE ANNUAL MEETING ARE REQUESTED TO COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
/s/ DOUGLAS J. DOWNS
Douglas J. Downs
Secretary
April 8, 1996
San Diego, California
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... 1
Purposes of the Annual Meeting...................................................... 1
PROPOSAL ONE
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)....................................................... 2
Nominees for Election as Directors.................................................. 2
Information Regarding Nominees...................................................... 2
Vote Required....................................................................... 4
Aggregate Stock Ownership of Directors and Officers................................. 4
Principal Stockholders.............................................................. 5
Board Committees.................................................................... 5
Board and Committee Meeting Attendance.............................................. 6
Compensation Committee Interlocks and Insider Participation......................... 6
Certain Relationships and Related Transactions...................................... 6
COMPENSATION AND OTHER TRANSACTIONS
WITH OFFICERS AND DIRECTORS......................................................... 7
Summary Compensation Table.......................................................... 7
Compensation Committee Report....................................................... 8
Employment Agreements and Severance and Retirement Arrangements..................... 10
Stock Options....................................................................... 12
Directors' Compensation............................................................. 14
Compliance with Section 16 of the Exchange Act...................................... 15
CUMULATIVE TOTAL STOCKHOLDER RETURN................................................... 16
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(Item 2 on the Proxy Card)....................................................... 17
METHODS AND EXPENSES OF SOLICITATION.................................................. 17
STOCKHOLDERS' PROPOSALS............................................................... 17
</TABLE>
i
<PAGE> 4
GTI CORPORATION
9715 BUSINESS PARK AVENUE
SAN DIEGO, CALIFORNIA 92131-1642
(619) 537-2500
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1996
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GTI Corporation, a Delaware corporation
(the "Company"), to be voted at the Annual Meeting of the Stockholders of the
Company (the "Annual Meeting") to be held on Wednesday, May 15, 1996, at 10:00
a.m., local time, at the Sheraton Grande Torrey Pines, 10950 North Torrey Pines
Road, La Jolla, California, and at any and all adjournments thereof.
The only business that the management of the Company intends to present, or
knows that others will present, at the Annual Meeting is specified in the
accompanying notice. If other matters are properly presented at the Annual
Meeting, however, such matters will be considered and acted upon, and the
persons named in the proxies being solicited will vote such proxies in
accordance with their best judgment on such matters.
This Proxy Statement and the accompanying notice and form of proxy will be
mailed to stockholders on or about April 8, 1996.
Stockholders of record at the close of business on March 22, 1996 (the
"Record Date") will be entitled to vote at the Annual Meeting. On the Record
Date, there were outstanding 8,973,475 of the Company's Common Stock, par value
$.04 per share (the "Common Stock"), and 8,110 shares of the Company's $35.00
Cumulative Convertible Preferred Stock, par value $1.00 per share (the
"Preferred Stock"). Holders of Common Stock are entitled to one vote per share,
while holders of Preferred Stock are entitled to 234.314 votes per share. In
electing directors of the Company and approving the other proposals presented,
holders of Common Stock and holders of Preferred Stock will vote together as a
single class. The presence, in person or by proxy, of the holders of shares
representing 5,436,881 votes at the Annual Meeting shall constitute a quorum.
All shares represented by properly executed and unrevoked proxies will be
voted at the Annual Meeting. Shares represented by proxies marked as abstentions
on any matter will not be voted on that matter, although they will be counted
for quorum purposes and to determine voting results. Broker's shares held in
"street name" and not voted by such broker will be counted for quorum purposes
but will not be counted to determine voting results. The proxy accompanying this
Proxy Statement may be revoked at any time prior to voting by providing written
notice to the Secretary of the Company or by appearance at the meeting and
voting in person.
There are no dissenters' rights of appraisal with respect to any matter to
be acted upon at the Annual Meeting.
INTRODUCTION
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to: (1) elect six directors to serve
on the Company's Board of Directors (the "Board of Directors") for a term of one
year and until their successors are duly elected and qualified; (2) ratify the
selection of Arthur Andersen LLP as the Company's independent public accountants
for 1996; and (3) transact any and all other business which may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
NOMINEES FOR ELECTION AS DIRECTORS
At the Annual Meeting, six directors are to be elected to serve on the
Board of Directors for a term of one year and until their successors are duly
elected and qualified. The Board of Directors currently consists of eight
members. Two of such members, Messrs. Henry N. Huta and Jesse Rifkind, have
elected not to seek re-election to the Board of Directors at the Annual Meeting.
The By-laws of the Company provide that the occurrence of a vacancy on the Board
of Directors which is not filled by action of the Board of Directors will
constitute a determination by the Board of Directors that the number of
directors is reduced so as to eliminate such vacancy, unless the Board of
Directors specifies otherwise. Accordingly, the Board of Directors will consist
of six members upon the election of the six nominees listed below. All six of
the nominees are currently serving as directors of the Company. It is intended
that all proxies in the enclosed form will be voted for the nominees listed
below, unless otherwise directed. If any of the nominees listed below is unable
to serve for any reason not presently known, a substitute or substitutes will be
nominated by the Company's Board of Directors and the proxies will be voted for
such substitute or substitutes. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
VOTING "FOR" THE SIX NOMINEES LISTED BELOW.
INFORMATION REGARDING NOMINEES
The following table sets forth the name, age, principal occupation for the
periods indicated, and other directorships of each of the current nominees at
the Annual Meeting:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
NAME AGE AND OTHER DIRECTORSHIPS DIRECTOR SINCE
- ------------------------ --- ----------------------------------------------- --------------
<S> <C> <C> <C>
Timothy M. Curtis....... 53 Since February 1992, Mr. Curtis has been the 1994
Chief Executive and a director of Telemetrix
PLC, a United Kingdom corporation, which is
listed on the London Stock Exchange and is
engaged in the manufacture and sale of advanced
electronics products. From 1989 to February
1992, he was the Executive Director of
Metrologie International SA, an added value
distributor of personal computers, peripherals
and software. From 1991 through 1993, he was
also the Non-Executive Director of TVS
Entertainment, a United Kingdom-based
commercial television station. Mr. Curtis is a
director of Bournemouth Water Company PLC and
of its parent company, Bournemouth and West
Hampshire Water PLC.
Edmund B. Fitzgerald.... 70 Mr. Fitzgerald is currently Managing Director 1993
of Woodmont Associates of Nashville, Tennessee,
a business advisory services firm which he
founded in 1990. He is also an Adjunct
Professor of Management at the Owen Graduate
School of Management of Vanderbilt University
in Nashville, Tennessee. From 1985 to 1989, Mr.
Fitzgerald was Chairman and Chief Executive
Officer of Northern Telecom Limited and from
1989 to 1990, he was Chairman of the Board. He
is currently a director of Ashland Oil Company
and Becton Dickinson and Company.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
NAME AGE AND OTHER DIRECTORSHIPS DIRECTOR SINCE
- ------------------------ --- ----------------------------------------------- --------------
<S> <C> <C> <C>
Andre R. Horn........... 67 Mr. Horn is the Retired Chairman of the Board 1991
of Joy Manufacturing Company. From October 1985
to March 31, 1991, Mr. Horn served as the
Chairman of the Board of Needham & Co., Inc.
("Needham"), an investment banking firm.
Needham has performed various advisory services
to the Company, including having served as an
underwriter in a public offering of the
Company's stock and as stock agent. He
currently holds the honorary position of
Chairman Emeritus of Needham & Co., Inc. Mr.
Horn is a director of Western Digital
Corporation, Varco International, Inc. and
Remec Inc.
Albert J. 50 Mr. Hugo-Martinez has served as President, 1996
Hugo-Martinez......... Chief Executive Officer and a director of the
Company since March 13, 1996. From 1988 to
1995, Mr. Hugo-Martinez was President and Chief
Executive Officer of Applied Micro Circuits
Corp. in San Diego, California. Prior thereto,
he held various management positions with TRW,
Burr Brown Corporation and Motorola
Semiconductor. Mr. Hugo-Martinez is a director
of Microchip Corp. and the UCSD Cancer Center.
Kenneth E. Maud......... 51 Mr. Maud has served as a director and as 1995
Chairman of the Board of Directors of the
Company since May 1995. Mr. Maud also served as
interim President and Chief Executive Officer
of the Company from January 2, 1996 to March
12, 1996. Mr. Maud also has served as the
Chairman of Peek plc ("Peek"), a multi-national
group of companies specializing in advanced
electronic traffic management systems and field
data systems, since April 1991. From September
1986 to April 1991, Mr. Maud served as the
Chief Executive of Peek. For the past 19 years,
Mr. Maud has been directly involved in the
development of publicly-owned electronics
groups in different parts of the world. Mr.
Maud is a director and Chairman of Atlantis
Corporation.
Robert E. Venter........ 35 Mr. Venter has been a senior executive with 1993
Allied Electronics Corporation Limited, a South
African corporation, ("Allied") since September
1990, most recently serving as Chief Executive
of and a director of Power Technologies
Limited, a Johannesburg Stock Exchange listed
electrical engineering company, and an
affiliate of Allied. (See Note 1 to "Principal
Stockholders.") Previously, he was a Vice
President of Corporate Finance of Bear Stearns
Co., Inc. from 1988 to 1990. Mr. Venter is also
a director of Ventron Corporation, which is
listed on the Johannesburg Stock Exchange, as
well as a director of Telemetrix PLC.
</TABLE>
3
<PAGE> 7
VOTE REQUIRED
Directors will be elected by a plurality of the votes represented by the
Common Stock and Preferred Stock, voting together as a single class, present in
person or by proxy at the Annual Meeting and entitled to vote. Telemetrix PLC,
which as of the Record Date beneficially owned 47.9% of the outstanding shares
of Common Stock and 100% of the outstanding shares of Preferred Stock, has
indicated its intention to vote for all six of the above nominees.
AGGREGATE STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 1, 1996, by (i) each director of the
Company and each of the executive officers of the Company named below in the
"Summary Compensation Table" (collectively, the "Named Officers"), and (ii) all
directors and executive officers of the Company as a group. One hundred percent
(100%) of the Preferred Stock is held by Telemetrix PLC. (See "Principal
Stockholders.") The table is based upon information supplied by directors and
officers of the Company. Unless otherwise indicated, each of the listed persons
has sole voting and sole investment power with respect to the shares
beneficially owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL CLASS AS OF TOTAL VOTING
OR IDENTITY OF GROUP OWNERSHIP MARCH 1, 1995 POWER
---------------------------------------------- ---------- ------------- ------------
<S> <C> <C> <C>
Richard Barron(8)............................. 0 * *
Timothy M. Curtis(2).......................... 10,000(1) *(2) *(2)
Kirk M. D'Orazio(10).......................... 11,875(3) * *
Douglas J. Downs.............................. 43,750(3) * *
Edmund B. Fitzgerald.......................... 12,000(4) * *
Andre R. Horn................................. 1,000 * *
Albert J. Hugo-Martinez(11)................... 20,000(3) * *
Henry N. Huta................................. 1,500(5) * *
Aurelio Lucci................................. 0 * *
Gary L. Luick................................. 102,950(6) 1.1% 1.0%
R. Bert McClung(9)............................ 32,000(3) * *
Kenneth E. Maud............................... 10,000(1) * *
Jesse Rifkind................................. 11,000(4) * *
Robert E. Venter(2)........................... 12,000(1) *(2) *(2)
All directors and executive officers as a
group
(14 persons)(12)............................ 268,075(7) 3.0% 2.5%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes 10,000 shares that such director has the right to acquire under
the GTI Corporation 1989 Stock Option Plan for Non-Employee Directors, as
amended (the "1989 Directors Plan").
(2) Messrs. Curtis and Venter are members of the Board of Directors of
Telemetrix PLC. Telemetrix PLC beneficially owns 4,294,300 shares of Common
Stock and 8,110 shares of Preferred Stock.
(3) Represents shares that such Named Officer has the right to acquire under
stock options exercisable within 60 days of March 1, 1996.
(4) Includes 10,000 shares that such director has a right to acquire under the
GTI Corporation 1985 Stock Option Plan for Non-Employee Directors, as
amended (the "1985 Directors Plan").
(5) Held jointly with his wife in the Henry N. and Sharon L. Huta Trust.
(6) Includes 99,875 shares that Mr. Luick has the right to acquire under
currently vested stock options which expire April 2, 1996, and 175 shares
held in his wife's name. Mr. Luick's employment with the Company terminated
on January 2, 1996.
4
<PAGE> 8
(7) Includes 257,500 shares that the current directors and officers have the
right to acquire under stock options exercisable within 60 days of March 1,
1996.
(8) Mr. Barron's employment with the Company terminated on November 6, 1995.
(9) Mr. McClung's employment with the Company terminated on February 16, 1996.
The above referenced options expire May 16, 1996.
(10) Mr. D'Orazio ceased to act as an executive officer of the Company on
January 25, 1996, when he was named as the President and Chief Operating
Officer of Promptus Communications, Inc.
(11) Mr. Hugo-Martinez became the President, Chief Executive Officer and a
director of the Company on March 13, 1996.
(12) Includes the share holdings of Messrs. Barron, D'Orazio, Luick and McClung
whose employment with the Company has terminated.
PRINCIPAL STOCKHOLDERS
To the knowledge of the Company's management, only the following persons
owned of record or beneficially more than five percent of the outstanding shares
of Common Stock and Preferred Stock as of March 1, 1996:
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT OF PERCENT OF
BENEFICIAL OWNER OR BENEFICIAL CLASS AS OF TOTAL VOTING
IDENTITY OF GROUP TITLE OF CLASS OWNERSHIP MARCH 1, 1996 POWER
------------------------------ ---------------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Telemetrix PLC................ Common Stock 4,294,300(1)(2) 47.9% 39.5%
Knaves Beech Estate......... Preferred Stock 8,110(3) 100.0% 17.5%
Loudwater, High Wycombe,
Bucks, HP10 9QZ,
United Kingdom
</TABLE>
- ---------------
(1) The Company has been advised that 47.1% of the capital stock of Telemetrix
PLC is owned by Dr. William P. Venter (a citizen of South Africa), related
family trusts and corporations and Allied Electronics Corporation Limited
("Allied"), a publicly held South African corporation of which Dr. Venter
owns more than a majority of the outstanding shares of capital stock. Dr.
Venter is also a director of Telemetrix PLC as are Messrs. Curtis and R.E.
Venter. (See Note 2 of "Aggregate Stock Ownership of Directors and
Officers.") Allied and Dr. Venter disclaim beneficial ownership of any
outstanding securities of the Company.
(2) Of the above referenced shares, 3,844,000 shares of Common Stock are held by
Telemetrix Investments Limited, a wholly owned subsidiary of Telemetrix PLC,
and 450,000 shares of Common Stock are held by Telemetrix Overseas
Investments BV, another wholly owned subsidiary of Telemetrix PLC.
(3) Each share of Preferred Stock is currently convertible into 234.314 shares
of Common Stock and entitled to 234.314 votes. Of the above referenced
shares, 8,110 shares of Preferred Stock are held by Telemetrix Investments
Limited, a wholly owned subsidiary of Telemetrix PLC.
BOARD COMMITTEES
The Board of Directors has three standing committees: the Audit Committee,
the Nominating Committee and the Executive Compensation and Stock Option
Committee (the "Compensation Committee").
Audit Committee
The members of the Audit Committee are Messrs. Horn (Chairman), Curtis and
Fitzgerald. The Audit Committee primarily oversees and reviews the Company's
financial reporting and accounting practices and consults with the Company's
independent public accountants with respect thereto. The Audit Committee also
5
<PAGE> 9
recommends to the Board of Directors and the stockholders the retention or
replacement of the Company's independent public accountants.
Nominating Committee
The current members of the Nominating Committee are Messrs. Huta and
Venter. The functions of the Nominating Committee are to recommend nominees for
directors to be elected by the stockholders at their annual meeting and to
recommend nominees to fill vacancies on the Board of Directors that may exist
from time to time. The Nominating Committee will consider recommendations for
nominees that are submitted in writing to the Company by stockholders.
Compensation Committee
The current members of the Compensation Committee are Messrs. Maud
(Chairman), Horn, Huta and Venter. The functions of the Compensation Committee
are to review and approve changes in salaries of employees who report directly
to the Chief Executive Officer and to review from time to time the compensation
structure of the Company. The compensation of the Chief Executive Officer is
reviewed by the full Board of Directors.
BOARD AND COMMITTEE MEETING ATTENDANCE
During 1995, the Board of Directors met seven times at five regularly
scheduled meetings and two special telephonic meetings. The Audit Committee met
three times, the Nominating Committee met once, and the Compensation Committee
met three times. Each incumbent director attended at least 75% of all meetings
in 1995 of the Board of Directors and the committees of the Board of Directors
on which he served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Maud, Horn, Huta and Venter served on the Compensation Committee
during 1995. Mr. Walsh served on the Compensation Committee until his
resignation from the Board of Directors in October 1995. Mr. Walsh was Chairman
of the Board of Directors of the Company from January 1, 1995 to May 10, 1995,
and Chairman of the Board of Directors of Telemetrix PLC, on whose Board Messrs.
Timothy M. Curtis and Robert E. Venter also sit. (See Note 2 to the table under
"Aggregate Stock Ownership of Directors and Officers.") Mr. Horn serves on the
Compensation Committee of Remec, Inc., on whose Board Mr. Luick also sits.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1995, Mr. Aurelio Lucci had outstanding indebtedness to
the Company in the amount of $120,000, pursuant to the terms of a Note and
Security Agreement dated January 6, 1995. Such indebtedness is secured by 80,000
shares of Common Stock of Promptus Communications, Inc. ("Promptus") which are
owned by Mr. Lucci. Payments on the outstanding indebtedness shall be made
concurrently with the sale by Mr. Lucci to the Company of certain shares of
Promptus pursuant to the terms of an agreement entered into by the Company and
certain minority shareholders of Promptus in January 1995, which governs the
contingent purchase by the Company of the remaining 29% of the outstanding
capital stock of Promptus.
During 1995, Zetex PLC, a wholly-owned subsidiary of Telemetrix PLC, sold
electronic components with an approximate value of $185,000 to Valor
Electronics, Inc. and its affiliates. The Company believes that the terms and
conditions of such sales transactions were as favorable to the Company as those
it would have received from an unrelated third party. (See "Principal
Stockholders.")
6
<PAGE> 10
COMPENSATION AND OTHER TRANSACTIONS
WITH OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation received
by certain of the Named Officers during the years ended December 31, 1995, 1994
and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
OPTIONS/
-------------------- OTHER ANNUAL SARS ALL OTHER
NAME AND SALARY BONUS COMPENSATION (# OF COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) SHARES) ($)(2)
- ------------------------------------------ ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick(3)(4)....................... 1995 $312,600 -0- $ 13,125 -0- $4,620
President and CEO, 1994 312,600 -0- 11,250 38,500 4,620
GTI Corporation 1993 300,000 $143,340 10,215 38,000 4,497
Douglas J. Downs.......................... 1995 $156,300 -0- $ 8,750 25,000 $4,620
Vice President Finance, 1994 156,300 -0- 8,750 17,000 4,620
Chief Financial Officer, 1993 150,000 $ 57,330 5,181 13,000 4,497
Treasurer and Secretary,
GTI Corporation
Kirk M. D'Orazio(6)....................... 1995 $120,000 $ 48,000 $ 8,813 -0- $4,620
President, Chief Operating Officer, 1994 -- -- -- -- --
Promptus Communications, Inc. 1993 -- -- -- -- --
Aurelio Lucci(7).......................... 1995 $140,000 $ 23,166 $ 8,400 2,000 $2,138
Vice President, GTI Corporation; 1994 -- -- -- -- --
Chief Executive Officer, 1993 -- -- -- -- --
Promptus Communications, Inc.
R. Bert McClung(8)........................ 1995 $134,750 -0- $ 8,844 -0- $4,620
Vice President, GTI Corporation; 1994 130,250 -0- 2,275 -0- 4,620
President, Distribution Group 1993 125,000 $ 60,920 2,215 11,000 3,750
Richard C. Barron(4)(5)................... 1995 $191,568 -0- -0- -0- $1,851
Vice President, GTI Corporation; 1994 46,154 -0- -0- 50,000 -0-
President, Valor Electronics, Inc. 1993 -- -- -- -- --
</TABLE>
- ---------------
(1) The amounts shown include reimbursed income taxes owed for the value of
automobiles provided by the Company.
(2) Represents the amount contributed by the Company to the Amended and Restated
Cash or Deferred Profit Sharing Plan for Employees of GTI Corporation and
its affiliates.
(3) Mr. Luick's employment with the Company terminated on January 2, 1996.
(4) Does not include payments made or to be made in 1996 as described below in
"Employment Agreements and Severance and Retirement Arrangements."
(5) Mr. Barron became an officer of the Company on October 12, 1994. The amounts
disclosed for 1994 reflect all compensation that he received from the
Company since he commenced employment with the Company on October 6, 1994
through December 31, 1994. Mr. Barron's employment with the Company
terminated on November 6, 1995.
(6) Mr. D'Orazio became an executive officer of the Company on February 15,
1995. The amounts disclosed for 1995 reflect Mr. D'Orazio's entire
compensation for 1995. On January 25, 1996, Mr. D'Orazio was appointed as
the President and Chief Operating Officer of Promptus Communications, Inc.
and ceased to act as an executive officer of the Company.
(7) Mr. Lucci became an executive officer of the Company on February 15, 1995.
The amounts disclosed for 1995 reflect Mr. Lucci's entire compensation for
1995.
(8) Mr. McClung's employment with the Company terminated on February 16, 1996.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Compensation Committee determines the specific forms and levels of
compensation for executive officers of the Company and administers the Company's
stock incentive and option plans. The Compensation Committee also consults
periodically with the Chief Executive Officer concerning the compensation and
the benefits of the other executive officers of the Company.
The following is the Compensation Committee's report to the stockholders
with respect to the Company's executive compensation policies and with respect
to the compensation of the Chief Executive Officer for 1995. In accordance with
the rules of the Securities and Exchange Commission (the "Commission"), this
report shall not be incorporated by reference into any of the Company's
registration statements, reports or filings under the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
GTI CORPORATION (THE "COMPANY")
1995 COMPENSATION COMMITTEE REPORT
The Company's compensation policies are strongly oriented toward incentives
designed to encourage the Chief Executive Officer and other executive officers
to maximize the potential of the Company and ultimately enhance stockholder
value. Specific corporate-performance objectives are established reflecting the
Company's belief that the contribution of the Chief Executive Officer and the
other executive officers to stockholder value is derived from maximizing
operating performance and earnings on an overall company level and, if
applicable, an individual segment or operating unit level. The Compensation
Committee, while desiring to provide compensation to the Company's executive
officers at competitive levels in order to retain and attract qualified
executive officers, believes that achieving planned operating-profit objectives
is critical to the Company's success. In reviewing the compensation structure
for the Chief Executive Officer and the other executive officers of the Company,
the Compensation Committee has utilized the services of outside independent
compensation consultants.
The compensation of the Chief Executive Officer and other executive
officers of the Company in 1995 principally consisted of three elements: base
salary, a cash-bonus plan, and stock options. The base salary component
represents the basic rate of pay provided to an executive officer for carrying
out the overall responsibilities of the job. The base salary is determined using
comparisons with other companies of similar size revenues, market dynamics, and
organizational complexity. Additional determinants weighed in the consideration
of base salary for the Chief Executive Officer and other executive officers
include employment agreements, scope of responsibilities, experience, and other
factors as may be deemed appropriate. For 1995, Mr. Luick's base salary was
$312,600, unchanged from 1994.
The Company has a cash-bonus incentive plan in which executive officers,
including the Chief Executive Officer, and other key salaried employees
participate. At the beginning of each year, performance goals are established
for the purposes of determining annual bonuses, with the principal emphases
being the achievement of planned operating-profit objectives and certain
financial objectives. In calculating the Chief Executive Officer's bonus,
substantial weight is given to earnings per share goals for the Company's stock.
Under this plan, no bonus based on the categories of operating-profit or on
financial objectives is awarded unless at least 85% of the operating-profit
objective is achieved and no bonus based on financial objectives will be awarded
unless 90% of the financial objective is achieved. If these established goals
are met, the Chief Executive Officer and the other executive officers could
receive target bonuses up to 50% and 40%, respectively, of their base salaries.
If performance goals are exceeded, the Chief Executive Officer and the other
executive officers would be entitled to receive additional bonus amounts,
subject to a maximum bonus of 150% of the target bonus. In the calculation of an
executive officer's bonus, specific weighing is assigned for the categories of
operating profit and financial objectives of the business segment for which such
executive officer has responsibility as well as for individual performance
achievements. At the end of the year, performance against these goals is
determined on an arithmetic scale with the pre-established weighing; and the
results are considered by the Compensation Committee when determining the cash
bonus amounts noted
8
<PAGE> 12
under "Bonus" column in the Summary Compensation Table. The Chief Executive
Officer did not receive a cash bonus for 1995.
The GTI Corporation Stock Incentive Plan (1989), as amended (the "Stock
Incentive Plan"), was the only stock option plan of the Company in which the
Chief Executive Officer and the other executive officers could participate in
1995. (See "Compensation and Other Transactions with Officers and
Directors -- Stock Options.") The Compensation Committee believes that the Stock
Incentive Plan helps recruit, retain, and motivate executive personnel.
Moreover, the Compensation Committee views stock options and stock ownership by
the Chief Executive Officer and other executive officers as an important
component of performance-based compensation, as the value of stock options
directly relates to the price of the Company's stock and provides the Chief
Executive Officer and other executive officers with an incentive to enhance
stockholder value. Stock options are granted on a periodic basis, with interim
rewards being made in the case of new employees, promotions, or a significant
increase in job responsibilities. The number of shares granted under stock
options to participants in the Stock Incentive Plan (including the Chief
Executive Officer and the other executive officers) is calculated using a
formula based on the base salary of the participant, which in turn depends on
the factors enumerated above, including comparisons to other companies, scope of
responsibilities and experience. To determine the number of shares to be granted
under options, a range of dollar values is assigned to each level in the
organization, which equates to a multiple of the individual's base salary that
is then divided by the average price of the Company's Common Stock for the 12
months preceding the date of grant. Such formula was used in determining the
stock options granted in 1995 as shown on the table entitled "Options/SAR Grants
in Last Fiscal Year." The Chief Executive Officer was not granted stock options
in 1995. (See "Compensation and Other Transactions with Officers and Directors
- -- Stock Options.") Options granted in 1995 vest over a period of four years
from the date of grant, at the rate of 25% per year, in order to provide
incentives for the executive officer to perform over the long term and enhance
stockholder value.
In October 1993, after consultation with an independent compensation
consultant, the GTI Corporation Key Executive Long Term Incentive Plan (the
"Executive Plan") was established, effective as of January 1, 1994. (See
discussion below under "Employment Agreements and Severance and Retirement
Arrangements -- Executive Plan.") The Compensation Committee views the Executive
Plan as a means of providing retirement benefits to supplement benefits provided
under the Amended and Restated Cash or Deferred Profit Sharing Plan.
As and to the extent compensation of the Chief Executive Officer and other
executive officers increase, the Company intends to comply with Rule 162(m) of
the Internal Revenue Code and the regulations promulgated thereunder to fully
preserve the Company's compensation deduction.
The Compensation Committee will continue to review and evaluate the
Company's executive compensation structure at least annually. When appropriate,
the Compensation Committee will also continue to consult with independent
compensation consultants, law firms and accounting firms with respect to its
executive-compensation structure and its effectiveness in attaining the
objectives set by the Committee.
Compensation Committee
By: Kenneth E. Maud
Andre R. Horn
Henry N. Huta
Robert E. Venter
9
<PAGE> 13
EMPLOYMENT AGREEMENTS AND SEVERANCE AND RETIREMENT ARRANGEMENTS
Gary L. Luick. In April 1989, the Company and Mr. Luick entered into an
employment agreement (the "Luick Employment Agreement"), which provided for,
among other things, an annual base salary of $150,000 and a bonus arrangement
based upon achievement of certain goals of the Company. Mr. Luick's base salary
remained at $312,600 for 1995 (unchanged from 1994) consistent with the factors
set forth in the 1995 Compensation Committee Report. Pursuant to the Luick
Employment Agreement, Mr. Luick was granted nonstatutory stock options under the
Company's 1980 Employees Stock Option Plan to purchase an aggregate of 50,000
shares of Common Stock at $3.50 per share (all of which have been exercised as
of March 1, 1996), and nonstatutory stock options under the Company's 1982
Employees Stock Option Plan to purchase an aggregate of 50,000 shares of Common
Stock at $3.50 per share (all of which have been exercised as of March 1, 1996).
All of the above options are fully vested at this time. The Luick Employment
Agreement further provided that, upon termination of Mr. Luick's employment for
any reason other than a change of control after more than five years of
employment, Mr. Luick would be entitled to severance pay equal to his annual
base salary at the time of termination.
In March 1995, the Company and Mr. Luick entered into an amendment to the
Luick Employment Agreement (the "Luick Amendment"), which provided that, under
certain conditions, Mr. Luick would be entitled to receive on a monthly basis
certain payments and benefits for a period of 18 months from the date of
termination of his employment with the Company (the "Termination Date"),
including payment of his annual base salary as of the date of the Luick
Amendment ($312,600), adjusted for Federal and state tax withholdings, and
certain medical and insurance benefits. In addition, under the Luick Amendment,
Mr. Luick was granted the right to receive certain out-placement services and
continued vesting on a pro-rata basis in the Executive Plan (described below)
until the Termination Date.
Mr. Luick's employment with the Company terminated on January 2, 1996. By
virtue of this termination, Mr. Luick became entitled to receive (i) the above
referenced benefits under the Luick Amendment and (ii) certain benefits under
the Executive Plan as described below under "Employment Agreements and Severance
and Retirement Arrangements -- Executive Plan."
R. Bert McClung. By letter dated March 2, 1992, the Company and Mr. McClung
entered into an employment agreement, pursuant to which Mr. McClung became
President of Esco Sales, Inc. and Electronic Supply Corporation. Such employment
agreement provided for an annual base salary of $125,000 and a bonus arrangement
that had as a target 40% of his base salary. Mr. McClung's annual base salary
was increased to $130,250 for 1994 and remained unchanged for 1995. Mr.
McClung's employment as an executive officer of the Company terminated on
February 16, 1996, upon the sale of the Company's subsidiary, Electronic Supply
Corporation.
Richard C. Barron. Effective November 6, 1995, Mr. Barron, the Company and
Valor Electronics, Inc., a California corporation and subsidiary of the Company
("Valor"), entered into a separation agreement, pursuant to which Mr. Barron's
employment as President and Chief Executive Officer of Valor and as Vice
President of the Company terminated. Such separation agreement provides that,
among other things, Mr. Barron is entitled to receive (i) payments in the
aggregate amount of $153,840 payable in equal installments from November 1995
though and including August 1996, and (ii) certain placement services with a
value of up to $12,000 (or the cash equivalent).
Douglas J. Downs. Pursuant to an agreement entered into in January 11,
1996, Mr. Downs is entitled to receive a payment equal to six months of his base
salary ($85,000) if Mr. Downs remains in the employ of the Company through June
30, 1996.
Albert J. Hugo-Martinez. In March 1996, the Company and Mr. Hugo-Martinez
entered into an at-will employment agreement, pursuant to which Mr.
Hugo-Martinez became the President and Chief Executive Officer of the Company on
March 13, 1996. Such employment agreement provides that Mr. Hugo-Martinez will
receive a hiring bonus of $15,000 (net of taxes) and an annual base salary of
$300,000. In addition, Mr. Hugo-Martinez is entitled to receive bonus
compensation consisting of 50% of his base salary (pro-rated for 1996) if the
specified annual bonus target is achieved and up to a maximum of 75% of his base
salary if the
10
<PAGE> 14
bonus target is exceeded by 20%. Mr. Hugo-Martinez was also granted options to
purchase 100,000 shares of Common Stock at fair market value ($8.75) on March
13, 1996 under the Stock Incentive Plan. (See "Stock Options -- Stock Incentive
Plan.") Twenty percent of such options vested upon the commencement of his
employment. The remaining options will vest 20% per year on the four respective
anniversaries of the date of grant. Mr. Hugo-Martinez is also entitled to
receive certain fringe benefits including a monthly automobile allowance in the
amount of $800. In the event that his employment is terminated for reasons other
than gross misconduct, death or disability, Mr. Hugo-Martinez is eligible to
receive severance payments in an aggregate amount equal to 12 months of base pay
which will be paid over a 12-month period.
Executive Plan
Effective January 1, 1994, the Company implemented the GTI Corporation Key
Executive Long Term Incentive Plan (the "Executive Plan") pursuant to which one
executive officer, Mr. Douglas J. Downs, is presently entitled to receive a
deferred compensation award funded by life insurance policies assigned to a
rabbi trust. Pursuant to the Executive Plan, Mr. Downs is entitled to receive an
annual retirement floor benefit of $125,000 for 15 years after attaining the age
of 65 (with early retirement possible at age 60) and to a death benefit. The
Executive Plan benefits generally vest in accordance with the following
schedule: years 1 to
4 -- 10% per year; and years 5 through 7 -- 20% per year. Funding of the
Executive Plan occurs through policies purchased on the life of the participant,
which are assigned to a rabbi trust, the trustee of which is Union Bank.
If the participant dies prior to normal retirement age, whether or not
employed at death, his beneficiary will be paid one lump sum equal to the death
benefits under the policy in the trust purchased on behalf of the participant
less the amount of premiums paid for such policy. In addition, the Company will
pay to the participant's beneficiary the full value of any tax savings that the
Company receives as a result of the payment. If the participant dies after
normal retirement, the participant's beneficiary will receive the lump sum
actuarial equivalent of his remaining retirement payments under the Executive
Plan. Upon termination by the Company except for "cause," the participant is
entitled to receive payment of a termination benefit under the Executive Plan
and the Company will pay the participant an amount sufficient to pay any taxes
incurred by the participant resulting from his receipt of such termination
benefit. If the participant's employment is terminated for "cause," all benefits
under the Executive Plan will be forfeited; and the trustee will distribute all
trust assets attributable to the terminated participant to the Company, unless
instructed to hold the assets for the benefit of the Company.
Mr. Gary L. Luick, the former Chief Executive Officer of the Company whose
employment with the Company terminated on January 2, 1996, was a participant
under the Executive Plan. Pursuant to the Executive Plan and in connection with
such termination of employment, Mr. Luick received on February 28, 1996 a lump
sum payment in the amount of $921,059. Mr. Luick continues to be entitled to
certain death benefits under the Executive Plan for the 18 months following the
date on which his employment with the Company terminated.
Aurelio Lucci. Effective January 1, 1993, Promptus adopted a Supplemental
Executive Retirement and Severance Plan (the "Promptus SERP"), for the purpose
of providing supplemental retirement benefits to Mr. Lucci in consideration for
his performance as a key executive of Promptus. The Promptus SERP provides that
Mr. Lucci will be entitled to an annual benefit equal to 70% of his "final
average annual compensation" (i.e., the average of Mr. Lucci's annual
compensation for the three years during which such compensation was highest over
the five consecutive year period ending upon the earlier to occur of Mr. Lucci's
retirement or death). The meaning of "retirement" under the Promptus SERP
includes (i) the termination of employment (whether voluntary or involuntary) on
or after the attainment of age 64 or (ii) the termination of employment prior to
age 64 on account of (x) involuntary termination or (y) voluntary termination
for "good cause" (i.e., the occurrence of certain circumstances after a "change
in control" as set forth in the Promptus SERP). Payments under the Promptus SERP
will be made on a monthly basis for ten years (120 payments) upon retirement or
death. The obligations of Promptus under the Promptus SERP are secured at all
times pursuant to a rabbi trust to be established and maintained by Promptus.
11
<PAGE> 15
STOCK OPTIONS
The Company has three stock option plans for its officers and other
management employees: (i) the 1980 Employees Stock Option Plan, as amended (the
"1980 Plan"); (ii) the 1982 Employees Stock Option Plan, as amended (the "1982
Plan"); and (iii) the GTI Corporation Stock Incentive Plan (1989), as amended
(the "Stock Incentive Plan"). The Company also has two stock option plans for
non-employee directors. (See "Compensation and Other Transactions with Officers
and Directors - Directors Compensation.")
1980 Plan
The 1980 Plan provided for the granting through December 3, 1989, of
nonstatutory stock options covering an aggregate of 100,000 shares of Common
Stock to officers and other management employees of the Company. No options are
presently available for grant. Under the 1980 Plan, officers and other
management employees of the Company or a subsidiary were eligible for grants,
subject to certain limitations based on the number of shares of Common Stock
owned by such individuals. Grants under the 1980 Plan were determined at the
discretion of the Compensation Committee. The 1980 Plan provided that the
exercise price for each nonstatutory stock option could not be less than the
fair-market value of the Common Stock on the date of grant. Effective May 3,
1990, the 1980 Plan had been amended to expand the period in which stock options
could be exercised following the termination of employment, retirement with the
consent of the Company or the death or disability of a participant. As of March
1, 1996, there were no options available for grant and no options outstanding
under the 1980 Plan.
1982 Plan
The 1982 Plan provided for the granting of incentive stock options,
nonstatutory stock options, and stock appreciation rights covering an aggregate
of 200,000 shares of Common Stock to executive or other key management employees
of the Company, subject to certain limitations based on the number of shares of
Common Stock owned by such individuals. Since December 11, 1991, no more options
may be granted under the 1982 Plan. Stock appreciation rights also could have
been granted in tandem with stock options previously granted under the 1980
Plan. Effective May 11, 1987, the 1982 Plan had been amended to permit the
granting of nonstatutory stock options; and effective May 3, 1990, the 1982 Plan
had been amended to expand the period of time in which stock options could be
exercised following the termination of employment, retirement with the consent
of the Company or the death or disability of a participant. Under the 1982 Plan,
the exercise price of each stock option granted could not be less than the
fair-market value of the Common Stock on the date of grant, and stock options
could have been granted for any term not in excess of ten years from date of
grant. Grants under the 1982 Plan were determined at the discretion of the
Compensation Committee. As of the March 1, 1996, there were no options available
for grant and no options outstanding under the 1982 Plan.
Stock Incentive Plan
The Stock Incentive Plan currently provides that a maximum of 1,200,000
shares of Common Stock from the Company's authorized but unissued shares of
Common Stock or from shares acquired by the Company, including shares purchased
in the open market, are available for issuance by the Company in connection with
awards of stock options, reload options, stock appreciation rights, performance
shares and shares of restricted stock, subject to adjustment. Whenever an award
under the Stock Incentive Plan is terminated or forfeited for any reason, the
shares of Common Stock covered by such award will again become available for
award under the Stock Incentive Plan. Also, whenever the exercise price of a
stock option is paid for, in whole or in part, with shares of Common Stock, the
number of shares available for award will only be decreased by the excess of the
number of shares issued to the participant over the number of shares the
participant surrendered. Shares may be awarded to any key employee of the
Company or any subsidiary of the Company who, in the opinion of the committee
administering the Stock Incentive Plan (currently the Compensation Committee),
has the capacity to contribute in a substantial measure to the successful
performance of the Company. The Stock Incentive Plan became effective on
December 13, 1989, and no awards may be granted under the Stock Incentive Plan
after December 13, 1999. Approximately 60 persons are currently eligible to
participate in the
12
<PAGE> 16
Stock Incentive Plan. As of March 1, 1996, awards covering 224,050 shares were
available for grant under the Stock Incentive Plan.
The following table sets forth information concerning stock options granted
during the fiscal year ended December 31, 1995, to each of the Named Officers,
all current executive officers as a group, and all employees, including all
current officers who are not executive officers, as a group:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED RATES
- --------------------------------------------------------------------------------------- OF
% OF TOTAL STOCK PRICE
OPTIONS/SARS OPTIONS/SARS APPRECIATION
GRANTED GRANTED TO EXERCISE OR FOR OPTION TERM
(# OF EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME SHARES) FISCAL YEAR ($/$H) DATE 5%($) 10%($)
- ------------------------------- ------------ ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Luick(2)............... 0 0.00% -- -- -0- -0-
Douglas J. Downs............... 25,000 9.73 15.25 12/13/05 240,000 608,000
Kirk M. D'Orazio............... 0 0.00 -- -- -0- -0-
Aurelio Lucci.................. 2,000 0.78 14.50 5/10/05 18,200 46,260
R. Bert McClung................ 0 0.00 -- -- -0- -0-
Richard C. Barron.............. 0 0.00 -- -- -0- -0-
All current executive.......... 25,000 9.73 15.25 12/13/05 (3) (3)
officers as a group 2,000 0.78 14.50 5/10/05 (3) (3)
All employees, including....... 138,000 53.70 15.25 12/13/05 (3) (3)
all current officers 50,000 19.46 14.50 5/10/05 (3) (3)
who are not executive 35,000 13.62 17.63 8/08/05 (3) (3)
officers, as a group 2,000 0.78 21.25 8/17/05 (3) (3)
3,000 1.17 22.25 8/21/05 (3) (3)
2,000 0.78 21.13 9/11/05 (3) (3)
</TABLE>
- ---------------
(1) The stock options granted during the fiscal year ended December 31, 1995
(all of which were nonstatutory stock options) were granted under the Stock
Incentive Plan and become exercisable in whole or in part, from time to
time, with respect to the shares underlying the stock options as follows:
during year one, 0%; during year two, 25%; during year three, 50%; during
year four, 75%; and during year five and until expiration, 100%. The stock
options were granted for a term of 10 years, subject to earlier termination
in certain events as provided in the Stock Incentive Plan. No Stock
appreciation rights were granted during 1995.
(2) Mr. Luick's employment with the Company terminated on January 2, 1996.
(3) Such disclosure is not required.
13
<PAGE> 17
The following table sets forth information concerning stock options
exercised during the fiscal year ended December 31, 1995 by each of the Named
Officers, the aggregate number of options held by each Named Officer and the
value realized from exercised options and inherent in unexercised options at
December 31, 1995:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF
OPTIONS/SARS UNEXERCISED
AT IN-THE-MONEY
FY-END OPTIONS/SARS AT
(# OF SHARES) FY-END ($)
SHARES ACQUIRED -------------- ----------------
ON EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (# OF SHARES) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- ---------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
Gary L. Luick(1).................. 40,000 270,000 99,875/71,625 281,156/228,469
Douglas J. Downs.................. 5,000 78,125 36,250/55,250 99,188/167,875
Kirk M. D'Orazio.................. -0- -0- 11,875/15,625 9,844/29,531
Aurelio Lucci..................... -0- -0- 0/2,000 0/6,500
R. Bert McClung................... -0- -0- 18,750/24,250 52,500/52,500
Richard C. Barron(2).............. 12,500 34,375 0/0 0/0
</TABLE>
- ---------------
(1) Mr. Luick's employment with the Company terminated on January 2, 1996.
(2) Mr. Barron employment with the Company terminated on November 6, 1995.
DIRECTORS' COMPENSATION
Director Remuneration
Each director of the Company, except Mr. Maud and Mr. Luick (prior to the
termination of his employment with the Company), is paid an annual retainer of
$18,000, plus $600 for each time that he attends a meeting of the Board of
Directors. Each member of the Audit Committee and the Compensation Committee is
paid $500 for each time that he attends a meeting of each such committee. Mr.
Maud is paid an annual stipend of $50,000, payable quarterly, for his service as
Chairman of the Board of Directors. Mr. Maud also received a one-time payment in
the amount of $11,000 upon his appointment as Chairman of the Board of
Directors.
Non-Employee Director Stock Options
The GTI Corporation 1985 Stock Option Plan for Non-Employee Directors, as
amended (the "1985 Directors Plan"), provides for the automatic grant of
nonstatutory stock options covering an aggregate of 100,000 shares of Common
Stock to members of the Board of Directors who have been elected by the
Company's stockholders and who are not full-time employees of the Company or any
of its subsidiaries, subject to the limitation that no eligible director may be
granted nonstatutory stock options for more than 10,000 shares. The 1985
Directors Plan provides that the exercise price of each nonstatutory stock
option must not be less than the fair-market value of the Common Stock on the
date of grant. As of March 1, 1996, stock options covering all available 100,000
shares of Common Stock have been granted under the 1985 Directors Plan. No stock
options could be granted under the 1985 Directors Plan after December 13, 1995.
The GTI Corporation 1989 Stock Option Plan for Non-Employee Directors, as
amended (the "1989 Directors Plan"), provides for the automatic grant of
nonstatutory stock options with respect to 10,000 shares of Common Stock to
directors of the Company who first become directors after the effective date of
the 1989 Directors Plan (December 13, 1989), who are not otherwise full-time
employees of the Company or any subsidiary of the Company, who have not been
full-time employees of the Company or any subsidiary of the Company for any part
of the preceding fiscal year, and who never received stock options under the
1985
14
<PAGE> 18
Directors Plan. A maximum of 100,000 shares of Common Stock of the Company's
authorized but unissued shares of Common Stock or treasury stock are available
for issuance under the 1989 Directors Plan, subject to adjustment. Mr. Maud
received a grant of 10,000 shares upon appointment as director in May 1995. As
of March 1, 1996, stock options covering 50,000 shares of Common Stock have been
granted under the 1989 Directors Plan, and stock options covering 50,000 shares
were available for grant under such plan. No stock options under the 1989
Directors Plan may be granted on or after December 13, 1999.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the NASDAQ National Market System. Officers,
directors, and holders of more than 10% of the Common Stock are required by
regulations promulgated by the Commission pursuant to the Exchange Act to
furnish the Company with copies of all Section 16(a) forms they file. The
Secretary of the Company will assist beneficial owners of more than 10% of the
Common Stock in complying with the reporting requirements of Section 16(a) of
the Exchange Act.
Based solely on its review of the copies of such forms received by it, the
Company believes that, since January 1, 1995, its directors, officers and
greater than 10% beneficial owners complied with all applicable Section 16(a)
reporting requirements, except for one Form 4 transaction which the Company is
aware was filed late by Mr. Barron.
15
<PAGE> 19
CUMULATIVE TOTAL STOCKHOLDER RETURN
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Russell 2000 Index and the NASDAQ Electronic
Components Index (measured in accordance with the rules of the Commission), for
the period of five calendar years commencing December 31, 1990 and ending
December 31, 1995. In accordance with the rules of the Commission, this
presentation shall not be incorporated by reference into any of the Company's
registration statements, reports, or filings under the Securities Act or the
Exchange Act.
GTI CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE SHAREHOLDER TOTAL RETURN*
AMONG GTI CORPORATION, THE RUSSELL 2000 INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
<TABLE>
<CAPTION>
NASDAQ
GTI ELECTRONIC
COPORATION RUSSELL 2000 COMPONENTS
---------- ------------ ----------
<S> <C> <C> <C>
December 1991............ $ 482 $142 $146
December 1992............ 1,271 173 222
December 1993............ 1,300 206 306
December 1994............ 788 202 337
December 1995............ 835 260 560
</TABLE>
- --------------
* $100 INVESTED ON 12/31/90 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
16
<PAGE> 20
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2 ON THE PROXY CARD)
Arthur Andersen LLP served as the Company's independent public accountants
in 1994 and 1995 and, upon recommendation of the Audit Committee, has been
selected by the Board of Directors to serve in the same capacity for 1996,
subject to the ratification of such selection at the Annual Meeting. If the
stockholders do not ratify the selection of Arthur Andersen LLP, the appointment
of the independent public accountants will be reconsidered by the Board of
Directors. Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, may make a statement at the Annual Meeting if they so desire, and will
be available to respond to appropriate questions at the Annual Meeting.
Ratification of the selection of Arthur Andersen LLP as the Company's
independent public accountants for 1996 requires the affirmative vote of the
holders of a majority of the votes represented by the outstanding shares of
Common Stock and Preferred Stock, voting together as a single class, present in
person or by proxy at the Annual Meeting and entitled to vote thereon.
Telemetrix PLC, which as of the record date beneficially owned 47.9% of the
outstanding shares of Common Stock and 100% of the outstanding shares of
Preferred Stock, has indicated its intention to ratify such selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
METHODS AND EXPENSES OF SOLICITATION
The cost of solicitation of the enclosed form of proxy will be borne by the
Company. Solicitation will be made primarily through the use of the mails, but
directors, officers and regular employees of the Company may solicit proxies
personally, by mail, or by telephone and telegraph. The Company has retained
Corporate Investors Communication Co. at a cost of approximately $4,000 to
solicit proxies from brokers. The Company will reimburse banks, brokers and
other custodians, nominees and fiduciaries for their reasonable expenses
incurred in sending proxy material to beneficial owners and obtaining their
proxies.
STOCKHOLDERS' PROPOSALS
Any stockholder who intends to submit a proposal for action at the 1997
Annual Meeting of Stockholders must provide notice to the Company, which must be
received on or before December 10, 1996, in order for the proposal to be
included in management's proxy statement and form of proxy relating to the 1997
Annual Meeting of Stockholders.
By Order of the Board of Directors,
/s/ DOUGLAS J. DOWNS
Douglas J. Downs
Secretary
April 8, 1996
San Diego, California
17
<PAGE> 21
COMMON STOCK
PROXY
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 15, 1996
The undersigned hereby appoints Edmund B. Fitzgerald, Andre R. Horn, and
Robert E. Venter, and each of them, with power of substitution in each, as
proxies or proxy to represent the undersigned at the Annual Meeting of the
Stockholders of GTI Corporation (the "Company") to be held at the Sheraton
Grande Torrey Pines, 10950 North Torrey Pines Road, La Jolla, California, on
Wednesday, May 15, 1996, at 10:00 a.m. local time, and at any adjournment or
adjournments thereof, and to vote the number of shares of Common Stock, which
the undersigned would be entitled to vote if personally present, (a) in the
manner designated on the reverse side hereof with respect to the election of
directors and the other identified proposals and (b) in their discretion on such
other matters as may properly come before the meeting or any adjournments
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted "FOR" all nominees and
proposals listed on the reverse side hereof.
(Continued and to be marked, dated, and signed on the other side.)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
GTI CORPORATION ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 15, 1996
10:00 A.M.
THE SHERATON GRANDE TORREY PINES
10950 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND DESIRE TO HAVE THEIR
STOCK VOTED AT THE MEETING ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ABOVE
PROXY ON THE REVERSE SIDE AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 22
Please mark
your votes as /x/
indicated in
this example
(1) ELECTION OF DIRECTORS:
Timothy M. Curtis, Edmund B. Fitzgerald, Andre R. Horn, Albert J. Hugo-Martinez,
Kenneth E. Maud, and Robert E. Venter
FOR ALL
NOMINEES
listed except as WITHHOLD
otherwise indicated AUTHORITY
with respect to to vote for all I PLAN TO ATTEND
individual nominees. nominees listed. THIS MEETING
/ / / / / /
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THIS NAME ON
THE FOLLOWING LINE.)
---------------------------------------------------------
(2) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:
Ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants for 1996.
FOR AGAINST ABSTAIN
/ / / / / /
DATED:
---------------------------------
---------------------------------
---------------------------------
Signature(s)
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, guardian, etc., or as officer of a
corporation, give full title. For joint accounts obtain both signatures.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 23
PREFERRED STOCK
PROXY
GTI CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 15, 1996
The undersigned hereby appoints Edmund B. Fitzgerald, Andre R. Horn, and
Robert E. Venter, and each of them, with power of substitution in each, as
proxies or proxy to represent the undersigned at the Annual Meeting of the
Stockholders of GTI Corporation (the "Company") to be held at the Sheraton
Grande Torrey Pines, 10950 North Torrey Pines Road, La Jolla, California, on
Wednesday, May 15, 1996, at 10:00 a.m. local time, and at any adjournment or
adjournments thereof, and to vote the number of shares of $35.00 Cumulative
Convertible Preferred Stock, which the undersigned would be entitled to vote if
personally present, (a) in the manner designated on the reverse side hereof with
respect to the election of directors and the other identified proposals and (b)
in their discretion on such other matters as may properly come before the
meeting or any adjournments thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted "FOR" all nominees and
proposals listed on the reverse side hereof.
(Continued and to be marked, dated, and signed on the other side.)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
GTI CORPORATION ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, MAY 15, 1996
10:00 A.M.
THE SHERATON GRANDE TORREY PINES
10950 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND DESIRE TO HAVE THEIR
STOCK VOTED AT THE MEETING ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ABOVE
PROXY ON THE REVERSE SIDE AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 24
Please mark
your votes as /x/
indicated in
this example
(1) ELECTION OF DIRECTORS:
Timothy M. Curtis, Edmund B. Fitzgerald, Andre R. Horn, Albert J. Hugo-Martinez,
Kenneth E. Maud, and Robert E. Venter
FOR ALL
NOMINEES
listed except as WITHHOLD
otherwise indicated AUTHORITY
with respect to to vote for all I PLAN TO ATTEND
individual nominees. nominees listed. THIS MEETING
/ / / / / /
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THIS NAME ON
THE FOLLOWING LINE.)
---------------------------------------------------------
(2) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:
Ratification of the selection of Arthur Andersen LLP as the
Company's independent public accountants for 1996.
FOR AGAINST ABSTAIN
/ / / / / /
DATED:
---------------------------------
---------------------------------
---------------------------------
Signature(s)
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, guardian, etc., or as officer of a
corporation, give full title. For joint accounts obtain both signatures.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
