<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / 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
MARSHALL INDUSTRIES
- --------------------------------------------------------------------------------
(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), 14a-6(i)(1), 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>
MARSHALL INDUSTRIES
9320 TELSTAR AVENUE
EL MONTE, CALIFORNIA 91731-2895
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of Marshall
Industries (the "Company") will be held at the office of the Company, 9320
Telstar Avenue, El Monte, California, on October 22, 1996 at 9 a.m., local time,
for the following purposes:
1. To elect directors for the year. Gordon S. Marshall, Robert Rodin,
Richard D. Bentley, Richard C. Colyear, Jean Fribourg, Lathrop Hoffman,
Jose Menendez, Raymond G. Rinehart and Howard C. White have been
nominated for election as directors.
2. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year
ending May 31, 1997.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on August 26, 1996 are
entitled to notice of, and to vote at, the Annual Meeting.
If you do not plan to attend personally, please promptly sign and return the
enclosed proxy in the accompanying envelope. Your proxy is solicited on behalf
of the management of the Company. It is necessary to have a majority of all
outstanding shares represented at the Annual Meeting in order to transact
official business. A proxy statement is set forth on the following pages.
By Order of the Board of Directors
GORDON S. MARSHALL
Chairman
September 4, 1996
<PAGE>
MARSHALL INDUSTRIES
9320 TELSTAR AVENUE
EL MONTE, CALIFORNIA 91731-2895
PROXY STATEMENT
MAILED SEPTEMBER 4, 1996
The accompanying proxy is solicited on behalf of the management of Marshall
Industries (the "Company") for use at the Annual Meeting of Shareholders on
October 22, 1996 (the "Annual Meeting") or any adjournment thereof, and the
expense of such solicitation will be borne by the Company. Proxies properly
executed and received by the Company prior to the Annual Meeting, and not
revoked, will be voted.
A shareholder giving a proxy has the power to revoke it at any time prior to
its use by filing with the Secretary of the Company a written revocation or a
proxy bearing a later date, or if personally present at the Annual Meeting, by
electing to vote in person.
The holders of Common Stock of record on the books of the Company at the
close of business on August 26, 1996 are eligible to vote at the Annual Meeting.
On that date, there were 17,064,764 shares outstanding held by approximately
6,000 shareholders. Each shareholder is entitled to one vote for each share
owned. A shareholder is entitled to cumulate votes for the election of directors
(that is, cast for any one or more candidates a number of votes equal to the
number of the shareholder's shares multiplied by the number of directors to be
elected). However, no shareholder may cumulate votes for the election of
directors unless the names of such candidates have been placed in nomination
prior to the voting, and the shareholder has given notice of his intention to
cumulate votes at the Annual Meeting prior to the voting. If any one shareholder
has given such notice, each shareholder may cumulate his votes and give one
candidate all of his votes or distribute his votes among as many candidates as
he sees fit. If any shareholder elects cumulative voting, the proxyholders are
authorized in their discretion to vote their proxies cumulatively.
A majority of the outstanding shares of the Company's Common Stock,
represented in person or by proxy, will constitute a quorum at the Annual
Meeting. In determining the shares present, shares with respect to which
authority to vote is withheld, abstentions and shares held of record by a broker
or its nominee ("broker shares") that are voted on any matter will be included.
Broker shares that are not voted on any matter will not be included in
determining the shares present. The election of each director and the approval
of any other matter submitted to a vote of the shareholders requires the
affirmative vote of a majority of the shares voting. In determining the number
of shares voting on the election of directors or any other matter submitted to a
vote of the shareholders, shares with respect to which authority is withheld,
abstentions and broker shares that are not voted will not be included.
The solicitation of proxies for the Annual Meeting will be made primarily by
mail. However, if necessary to ensure satisfactory representation at the Annual
Meeting, additional solicitation may take place by telephone, telegraph and
personal interview by employees of the Company. No such employee will receive
additional compensation for such services.
1
<PAGE>
ELECTION OF DIRECTORS
At present, the Bylaws of the Company provide that the Board of Directors
will be composed of between seven and thirteen directors, with the exact number
of directors to be set from time to time by the Board or the shareholders. The
Board of Directors in October, 1994, established the present number of directors
at nine. Unless otherwise instructed, the proxyholders will vote the proxies
received by them for the nine nominees shown below for the term of one year and
until their successors are duly elected and qualified. All of the nominees have
consented to being named in this Proxy Statement, and to serve as directors if
elected. Although it is not contemplated that any of the nominees will
subsequently decline or be unable to serve as a director, in either event, the
proxies will be voted by the proxyholders for such other persons as may be
designated by the present Board of Directors.
The following table sets forth certain information as of July 31, 1996 with
respect to those persons who are nominees for re-election as directors of the
Company, each of whom, if elected, will serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
<S> <C> <C> <C> <C>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AGE POSITION OWNERSHIP OF CLASS
- -------------------------- --------- ----------------------------------- ------------- --------
Gordon S. Marshall 76 Chairman of the Board 771,530(2) 4.5%
Robert Rodin 42 Director, President and Chief 73,500(4) *
Executive Officer
Richard D. Bentley 56 Director and Executive Vice 19,584 *
President
Richard C. Colyear 57 Director 2,000 *
Jean Fribourg 51 Director 500 *
Lathrop Hoffman 71 Director 4,000 *
Jose Menendez 59 Director 500 *
Raymond G. Rinehart 74 Director 5,500(3) *
Howard C. White 55 Director 1,400 *
<FN>
- ------------------------
* Represents less than 1%.
(1) Except as provided under state community property laws and unless otherwise
indicated, each nominee has sole voting and investment power with respect
to the shares shown as beneficially owned by him.
(2) Includes 62,500 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
(3) Includes 3,900 shares held in a revocable trust for which Mr. Rinehart is
the trustee.
(4) Includes 45,000 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
</TABLE>
Mr. Marshall is the founder of the Company and has been its Chairman of the
Board since October 1954 and was Chief Executive Officer of the Company until
April, 1994. Additionally, he served as President of the Company from April 1982
to June 1992. Mr. Marshall is also a member of the Board of Amistar Corporation.
2
<PAGE>
Mr. Rodin became a Vice President in October 1988 and was promoted to Senior
Vice President in August 1989, to President and Chief Operating Officer in June
1992 and to Chief Executive Officer in April 1994. He joined the Company as a
Sales Manager in October 1983. Mr. Rodin has served as a director of the Company
since October, 1992.
Mr. Bentley became a Vice President in October 1986 and was appointed Senior
Vice President in April 1988. He was promoted to Executive Vice President of the
Company in August 1989. Mr. Bentley has served as a director of the Company
since October, 1992.
Mr. Colyear has served as a director of the Company since August 1991. Since
1989 Mr. Colyear has been President of Colyear Development Corporation, a
privately held real estate firm which develops and operates both office and
industrial properties. From 1967 to 1989, Mr. Colyear was employed by Security
Pacific National Bank in various capacities, including First Vice President, in
connection with its commercial lending activities.
Mr. Fribourg has served as a director since October 1994 and has been the
Chief Executive Officer of Sonepar Electronique International (SEI) since 1992
and is a member of the SEI and Sonepar Distribution Executive Boards. During the
last ten years, Mr. Fribourg has held several management and executive positions
with Sonepar and SEI, including SEI Country Manager (Spain) and Sonepar
Distribution Country Manager (Spain and Portugal).
Mr. Hoffman has served as a director since August 1984. For more than the
last 5 years, Mr. Hoffman, through several corporations, owns and operates
Acura, General Motors, Honda, Isuzu and Saturn automobile dealerships in
Southern California. Mr. Hoffman is also Chairman of the Board of Granite State
Bank (formerly The Bank of Monrovia) in Monrovia, California.
Mr. Menendez has served as a director since October 1994 and has been the
Chairman of the Executive Boards of SEI and Sonepar Distribution since 1990 and
1991, respectively. Mr. Menendez also has held the position of Managing Director
and is a member of the Executive Board of Sonepar, S.A. since 1992. Mr. Menendez
has held management and executive positions with the Sonepar companies for over
twenty years.
Mr. Rinehart has been a director of the Company since 1982. Mr. Rinehart
formerly served as Chairman of the Executive Committee of the Board of
Directors, Chairman of the Board, President and Chief Executive Officer of Clow
Corporation. For more than the last 5 years, Mr. Rinehart has been the Chairman
of the Board of RGR Enterprises, and is a director of Goshen Rubber Co.
Mr. White has been a director since January 1992. From 1965 to 1991, Mr.
White was associated with the international accounting and consulting firm of
Arthur Andersen & Co., SC. Until his retirement in 1991, Mr. White was Managing
Director of Finance for Arthur Andersen & Co's worldwide organization and had
also served as Managing Partner, Accounting, Audit and Financial Consulting
Practice, Los Angeles/Southern California, Hawaii and Nevada.
COMMITTEES
Among the committees created by the Board of Directors are an Audit
Committee and a Stock Option and Compensation Committee (the "Compensation
Committee"). The Board has not designated a nominating committee. The members of
the Audit Committee are Richard C. Colyear, Lathrop Hoffman, Raymond G. Rinehart
and Howard C. White. The Audit Committee reviews and makes recommendations to
the Board of Directors with respect to (i) the engagement or re-engagement of an
independent accounting firm to audit the Company's financial statements for the
then current fiscal year, and the terms of such
3
<PAGE>
engagement; (ii) the Company's policies and procedures for maintaining the
Company's books and records and furnishing information to the independent
auditors; (iii) the procedures to encourage access to the Audit Committee and to
facilitate the timely reporting during the year of the Company's independent
auditors' recommendations and advice to the Audit Committee; (iv) the
implementation by management of the independent auditors' recommendations and
advice; (v) the implementation by management of the recommendations made by the
independent auditors in its annual management letter; (vi) the adequacy and
implementation of the Company's internal accounting controls and the adequacy
and competency of the related personnel; and (vii) such other matters relating
to the Company's financial affairs and accounts as the Committee may in its own
discretion deem desirable. One Audit Committee meeting was held during the last
fiscal year.
The Compensation Committee members are Richard C. Colyear, Lathrop Hoffman,
Raymond G. Rinehart and Howard C. White. The Compensation Committee recommends
changes in employees' salaries, incentives, pensions, savings plans and other
fringe benefits to the Board, and administers the Company's stock option plans.
As administrator of the stock option plans, the Committee determines which
employees are eligible for participation in the plans, designates the optionees
and, within the restrictions of each particular plan, determines the terms of
the grant and exercise of options under the plans. The Compensation Committee
also makes recommendations from time to time to the Board of Directors regarding
possible modifications or amendments of the Company's stock options plans. The
Compensation Committee held three meetings during the last fiscal year.
The Board of Directors held a total of five meetings during the last fiscal
year. Each director attended all of the meetings of the Board and the Committees
on which he served, except for Mr. Fribourg who attended four of the five Board
meetings and Mr. Menendez who attended two of the five Board meetings.
SECTION 16 REPORTS
Based on its review of copies of Forms 3, 4 and 5 filed by the officers and
directors of the Company with the Securities and Exchange Commission, the
Company believes that all such Forms required to be filed with respect to the
fiscal year ended May 31, 1996 were timely filed pursuant to Section 16 of the
Securities Exchange Act of 1934 with the exception of a late filing of Form 4 by
Robert Rodin with respect to the granting of 50,000 stock options in October,
1995. The Form 4 was filed within 30 days of the due date.
REMUNERATION OF DIRECTORS
Directors who are employees receive no additional compensation for serving
as directors. All outside directors receive monthly retainers of $1,500, except
for Mr. White, and $1,500 for each meeting attended. Mr. White receives a $2,000
monthly retainer as Chairman of the Compensation Committee. In fiscal year 1996
Mr. White received a bonus of $5,000 for his work on various compensation
projects.
4
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of July 31, 1996,
with respect to each shareholder known by the Company to be the beneficial owner
of more than 5% of its outstanding Common Stock, and share ownership by all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- --------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Strong Capital Management, Inc. 1,777,650(2) 10.4%
The Prudential Insurance 1,436,100(3) 8.4%
Company of America
First Pacific Advisors, Inc. 1,337,400(4) 7.8%
All executive officers and directors as a group 909,514(5) 5.3%
(10 persons)
<FN>
- ------------------------
(1) Except as provided under state community property laws and unless otherwise
indicated, each shareholder has sole voting and investment power with
respect to the shares shown as beneficially owned by that shareholder.
(2) Pursuant to a Schedule 13G dated February 13, 1996 and filed with the
Securities and Exchange Commission, Strong Capital Management, Inc.
reported beneficial ownership of over 5% of the Company's Common Stock.
Based on information subsequently obtained from Strong Capital Management,
Inc., the Company believes that on July 31, 1996, it had sole voting and
dispositive power with respect to 206,050 shares and shared voting and
dispositive power with respect to 1,571,600 shares.
(3) Pursuant to a Schedule 13G dated February 12, 1996 and filed with the
Securities and Exchange Commission, The Prudential Insurance Company of
America reported beneficial ownership of over 5% of the Company's Common
Stock. Based on information subsequently obtained from The Prudential
Insurance Company of America, the Company believes that on July 31, 1996,
it had sole voting and dispositive power with respect to 919,900 shares and
shared voting and dispositive power with respect to 516,200 shares.
(4) Pursuant to a Schedule 13G dated February 13, 1996 and filed with the
Securities and Exchange Commission, First Pacific Advisors, Inc. reported
beneficial ownership of over 5% of the Company's Common Stock. Based on
information subsequently obtained from First Pacific Advisors, Inc. the
Company believes that on July 31, 1996, it had shared voting and
dispositive power with respect to 1,337,400 shares.
(5) Includes 132,500 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
</TABLE>
5
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to those
persons who are executive officers of the Company as of July 31, 1996.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AGE POSITION OWNERSHIP CLASS
- ------------------------ --------- ------------------------------------------------------ ------------ -----------
<S> <C> <C> <C> <C>
Gordon S. Marshall 76 Chairman of the Board 771,530(2) 4.5%
Robert Rodin 42 President and Chief Executive Officer 73,500(3) *
Richard D. Bentley 56 Executive Vice President 19,584 *
Henry W. Chin 49 Vice President, Finance, Chief Financial Officer and
Secretary 31,000(4) *
<FN>
- ------------------------
* Represents less than 1%.
(1) Except as provided under state community property laws and unless otherwise
indicated, each nominee has sole voting and investment power with respect
to the shares shown as beneficially owned by him.
(2) Includes 62,500 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
(3) Includes 45,000 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
(4) Includes 25,000 shares which are subject to options that are presently
exercisable or become exercisable on or before September 30, 1996.
</TABLE>
Mr. Marshall is the founder of the Company and has been its Chairman of the
Board since October 1954. He served as President of the Company from April 1982
to June 1992 and was Chief Executive Officer of the Company from October 1954 to
April 1994.
Mr. Rodin became a Vice President in October 1988 and was promoted to Senior
Vice President in August 1989, to President and Chief Operating Officer in June
1992 and to Chief Executive Officer in April, 1994. He joined the Company as a
Sales Manager in October 1983 and has held various management positions with the
Company, including Division Manager-Boston, and Regional Vice
President-Northeast.
Mr. Bentley became a Vice President in October 1986 and was appointed Senior
Vice President in April 1988. He was promoted to Executive Vice President of the
Company in August 1989. He joined Marshall in June 1978 as Northeast Regional
Manager. Prior to joining the Company, Mr. Bentley was associated with Cramer
Electronics for fifteen years.
Mr. Chin joined the Company as Corporate Controller in November 1984 and was
promoted to Vice President in August 1989 and to Chief Financial Officer in
October 1991. Mr. Chin is a Certified Public Accountant.
Each officer serves at the pleasure of the Board and, unless earlier
removed, is elected annually for a one year term.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation for the last three fiscal years of the Chief Executive Officer and
each of the other executive officers of the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION(1)
----------------------------------------- ------------------
INCENTIVE STOCK OPTIONS
NAME AND PAYMENTS OTHER ANNUAL (NO. OF ALL OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY (2) COMPENSATION(3) OPTIONS)(4) COMPENSATION(5)(6)
- -------------------------------- ----------- ---------- ---------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Gordon S. Marshall (7) 1996 $ 525,000 $ 240,698 $ -- -- $ 3,731
Chairman of the Board 1995 510,417 197,845 -- -- 4,501
1994 500,000 211,796 -- -- 4,497
Robert Rodin 1996 645,833 279,747 -- 50,000 5,642
President and 1995 458,333 225,283 -- -- 4,620
Chief Executive Officer 1994 358,333 149,637 -- 50,000 5,612
Richard D. Bentley 1996 361,000 165,504 -- -- 9,058
Executive Vice President 1995 340,000 131,354 -- -- 4,858
1994 304,167 126,080 -- -- 5,326
Henry W. Chin 1996 225,000 101,625 -- -- 5,756
Vice President, Finance, 1995 197,500 76,098 -- 20,000 4,802
Chief Financial Officer 1994 172,500 72,959 -- -- 5,314
and Secretary
<FN>
- ------------------------
(1) The Company did not make any payments or awards that would be classifiable
under the "Restricted Stock Award" and "LTIP Payout" columns otherwise
required to be included in the table by the applicable Securities and
Exchange Commission ("SEC") disclosure rules.
(2) The Company has an incentive plan in which all full-time employees are
participants and is based on the Company's pre-tax profits. Under this
incentive plan, the Company's officers can earn up to 80% of their base
salaries as incentive compensation.
(3) The amounts included in this column for each of the named executive
officers do not include the value of certain perquisites which in the
aggregate did not exceed the lower of $50,000 or 10% of each named
executive's aggregate fiscal 1994, 1995 or 1996 salary and bonus
compensation.
(4) Represents shares of stock underlying options granted under the 1992 Stock
Option Plan. There were no individual grants of stock options in tandem
with stock appreciation rights ("SAR's") or freestanding SAR's made during
the fiscal years ended May 31, 1994, 1995 or 1996 to the above-named
executive officers.
(5) Amounts contributed by the Company under the Marshall Industries Tax
Deferred Profit Sharing Plan which provides for participation by any
employee of Marshall who has completed six months of employment. Each
participant may defer from 2% to 12% of his earnings each payroll period,
the amount of which is placed by the Company in a nonforfeitable, fully
vested account on the employee's behalf. Under the tax laws, the maximum
amount which can be deferred for calendar years 1994, 1995 and 1996 were
$9,240, $9,240 and $9,500, respectively. The Company contributes quarterly
an amount
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
equal to 50% of the employee's contributions in the quarter up to a maximum
amount equal to 3% of the employee's earnings in the quarter. The vesting
for the Company's contributions is at 20% for each year of service with the
Company.
(6) In 1992, the Board authorized increased amounts of life insurance for
Messrs. Rodin, Bentley and Chin at a total annual premium cost of
approximately $7,000. In addition, because the annual premium for a
$1,000,000 insurance policy on Mr. Marshall's life would be $70,000 to
$80,000, it was deemed preferable to provide a widow's benefit of $200,000
per year to Mrs. Marshall if she survives Mr. Marshall. The present value
of that benefit on an actuarial basis is less than $400,000.
(7) See Certain Relationships and Related Transactions.
</TABLE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to the stock option
grants made during the 1996 fiscal year under the Company's Stock Option Plans
to the named executive officer:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSIGNED RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN OR BASE EXPIRATION --------------------------
GRANTED(1) FISCAL YEAR PRICE(2) DATE 5%(3) 10%(3)
----------- ------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert Rodin 50,000 100% $ 35.875 10/24/05 $ 1,128,300 $ 2,859,200
<FN>
- ------------------------
(1) The option will become exercisable in four equal and successive annual
installments, with the first such installment to become exercisable one
year after the grant date. The grant date is October 24, 1995.
(2) At fair market value at date of grant.
(3) Represents gain that would be realized assuming the options were held for
the entire ten-year option period and the stock price increased at annual
compounded rates of 5% and 10%. Actual gains, if any, on stock option
exercises and Common Stock holdings will be dependent on overall market
conditions and on the future performance of the Company and its Common
Stock. There can be no assurance that the amounts reflected in this table
will be achieved.
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides information concerning the exercise of stock
options during the 1996 fiscal year by each of the named executive officers and
the year-end value of their unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES AGGREGATE OPTIONS AT FISCAL YEAR END FISCAL YEAR END(2)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Gordon S. Marshall 0 $ 0 62,500 0 $ 1,367,563 $ 0
Robert Rodin 0 0 45,000 195,000 633,875 2,269,375
Richard D. Bentley 10,000 187,250 0 120,000 0 2,085,000
Henry W. Chin 0 0 25,000 15,000 378,125 91,875
<FN>
- ------------------------
(1) Based on the fair market value of the shares on the exercise date less the
exercise price paid for the shares.
(2) Based on the fair market value of the shares or $31.375 per share on the
last day of the fiscal year less the exercise price payable for such
shares.
</TABLE>
8
<PAGE>
EMPLOYEE AGREEMENTS
In February, 1996, the Company entered into Change In Control Agreements
with Mr. Marshall and Mr. Rodin. Each of these agreements provides that should
there be a "change in control" (as defined), and the officer's employment is
terminated either (i) involuntarily, without just cause, or (ii) voluntarily, if
the officer has determined in good faith that his duties have been altered in a
material respect or there has been a material reduction in his compensation or
the officer is required to be based at any office or location more than thirty
miles from the Company's current corporate headquarters, then upon termination,
Mr. Marshall and Mr. Rodin would be entitled to receive cash compensation
subject to a non-compete provision. Mr. Marshall's agreement provides for a
one-time cash payment equal to the product of five times the greater of the
compensation for the last full calendar year or $750,000. Mr. Rodin's agreement
provides for a one-time cash payment equal to the product of 36 times the
highest monthly base salary paid or payable to Mr. Rodin during the 12-month
period immediately preceding the month of termination. In addition Mr. Rodin
will receive a one-time cash payment equal to the product of three times the
average annual bonus for the last three full fiscal years before the change in
control date. For the three years following such termination, Messrs. Marshall
and Rodin and their immediate families will be entitled to all benefits under
any welfare benefit plans, arrangements, or programs provided by the Company
that are generally applicable to an executive of the Company. Upon a change in
control the Company shall cause the vesting of any stock options held to be
accelerated to the change in control date. The total payments payable under
these agreements could be reduced, under certain circumstances, so that no
portion of such payments will be subject to the "parachute" excise tax
provisions of Section 4999 of the Internal Revenue Code. A "change of control"
of the Company is generally defined as (i) any consolidation or merger of the
Company, other than a merger of the Company in which the holders of the
Company's common stock immediately prior to the merger have at least seventy
percent (70%) ownership of the voting capital stock of the surviving corporation
immediately after the merger, (ii) any reorganization, sale or other disposition
of all or substantially all of the assets of the Company, (iii) the shareholders
of the Company approve any plan or proposal for the liquidation or dissolution
of the Company, (iv) any person shall become the beneficial owner of thirty
percent (30%) or more of the Company's outstanding common stock or voting
securities, or (v) individuals who, as of the date of the agreement, constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of at least
a majority of the directors who were on the Board as of the date of the
agreement. Under the severance agreements, an officer may be terminated for
"cause"; defined generally as (i) the willful and continued failure to perform
his or her duties, or (ii) the willful engagement in misconduct which is
materially injurious to the Company.
With shareholders' approval, the Company amended its Articles of
Incorporation in 1988 to limit the liability of the Company's directors,
officers, and other agents to the extent permitted under California law.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to the distribution of component parts, the Company provides a
variety of value added services to its customers. Through the use of third party
contractors, the Company provides cable assembling and manufacturing
capabilities. One of the third party contract manufacturing arrangements is with
Amistar, a company of which Mr. Marshall is a director and a substantial
shareholder. Under this arrangement, Marshall accepts orders from its customers
and provides the necessary components, which Amistar then "mounts" on circuit
boards. Marshall pays Amistar for its services and invoices the customers for
the completed product. The Company believes that the amounts paid to Amistar are
not in excess of the
9
<PAGE>
amounts that would be charged by unaffiliated manufacturers for the same
services. During the fiscal years ended May 31, 1994, 1995 and 1996, the Company
paid Amistar approximately $1,857,000, $1,043,000 and $655,000, respectively,
under this arrangement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS HAS FURNISHED THE
FOLLOWING REPORT ON EMPLOYEE COMPENSATION. SUCH REPORT WILL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING THIS PROXY
STATEMENT INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR
UNDER THE SECURITIES ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE AND SHALL NOT OTHERWISE
BE DEEMED SOLICITING MATERIAL OR BE DEEMED FILED UNDER SUCH ACTS.
The Compensation Committee consists entirely of independent outside
directors and has responsibility for administering the Company's stock option
plans and setting the senior executives' annual salaries.
The Company's executive compensation programs are intended to enable it to
attract and retain talented executives and to reward them appropriately. The
Compensation Committee attempts to determine the appropriate total levels of
compensation, as well as the appropriate mix of basic salary, short-term
incentives and long-term incentives.
All of the Company's executive officers, as well as all of its full-time
employees, participate in the Company's incentive plan. The plan is based on
pre-tax profits of the Company. The Company's officers can earn up to 80% of
their base salaries as incentive compensation.
In making its salary and stock option decisions, the Compensation Committee
considers a number of factors. However, its ultimate determination is a
subjective one and is based on the total mix of information. The Compensation
Committee reviews the compensation practices of five of the Company's
competitors as reported in their public filings. Those competitors are Arrow
Electronics, Inc., Avnet, Inc., Bell Industries, Pioneer-Standard Electronics,
Inc. and Wyle Electronics. These companies are included in the peer group
comparisons elsewhere in this Proxy Statement. The Compensation Committee also
compares the Company's short and long-term results with the performance of those
same competitors, the industry in general and various other related data, to
ensure a pay-for-performance linkage. The primary performance measures examined
are earnings results, total shareholder return and the strength of the Company's
strategic position. By these measures, the Compensation Committee believes that
the Company achieves above average to superior results.
The Committee meets without the CEO to evaluate his performance, and with
the CEO to evaluate the performance of other executive officers. The 1996
salaries for the Company's CEO and executive officers were reviewed and approved
during two meetings of the Compensation Committee which were held on October 24,
1995 and January 23, 1996. The Committee believes that the total compensation of
its executives is competitive and appropriately rewards their achievements.
Howard C. White, Chairman
Richard C. Colyear
Lathrop Hoffman
Raymond G. Rinehart
10
<PAGE>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG
MARSHALL INDUSTRIES, S&P 500 INDEX AND PEER GROUP INDEX
The following graph compares cumulative total shareholder return on the
Company's Common Stock for the periods indicated with the cumulative total
return of companies on the Standard & Poor's 500 Stock Index and a group
consisting of the Company's peer corporations. The corporations making up the
peer companies group are the 34 electronic component distributor companies
included in SIC Code 5065 -- Electronic Parts & Equipment, N.E.C. The
information for the graph was provided by Media General Financial Services. This
graph assumes that $100 was invested on June 1, 1991 in the Company and each of
the two indices, and that dividends were reinvested. It should be noted that the
Company has not paid dividends on its Common Stock, and no dividends are
included in the representation of the Company's performance.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG
MARSHALL INDUSTRIES, S&P 500 INDEX AND SIC CODE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MARSHALL INDUSTRIES INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 143.48 141.38 109.86
1993 181.52 160.70 122.64
1994 213.04 156.45 127.87
1995 234.78 193.32 153.68
1996 272.83 245.13 197.39
</TABLE>
ASSUMES $100 INVESTED ON JUNE 1, 1991
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING MAY 31, 1996
11
<PAGE>
PROPOSAL -- SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent accountants for the Company for the fiscal year ending May 31, 1997.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT THE SHAREHOLDERS VOTE
FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Copies of resolutions proposed by shareholders to be presented at the 1997
Annual Meeting of Shareholders must be received by the Company at its corporate
headquarters, 9320 Telstar Avenue, El Monte, California 91731-2895 on or before
May 31, 1997 to have such resolutions included in the proxy statement and form
of proxy for such Annual Meeting.
OTHER MATTERS
The management does not know of any other matters to be acted upon at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, or an adjournment thereof, the proxies will be voted with respect
thereto in accordance with the discretion of the proxyholders.
GORDON S. MARSHALL
Chairman
FORM 10-K
The Company's Annual Report to Shareholders for the fiscal year
ended May 31, 1996 includes a copy of its Annual Report on Form 10-K,
including the financial statements and schedules thereto, filed with the
Securities and Exchange Commission.
12
<PAGE>
MARSHALL INDUSTRIES/PROXY 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby appoint Gordon S. Marshall and Henry W. Chin, and each of them or
either of them with full power to act without the other and with full power of
substitution, my true and lawful attorneys and proxies, to vote all the shares
of stock of Marshall Industries held of record by me on August 26, 1996 and to
act for me and in my name, place and stead at the Annual Meeting of Shareholders
to be held on Tuesday, October 22, 1996 or any adjournment thereof, for the
purpose of considering and voting upon the following:
1. ELECTION OF DIRECTORS.
/ / For ALL Nominees listed below
/ / Withhold authority to vote ALL Nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
<TABLE>
<S> <C> <C> <C> <C>
Gordon S. Marshall Richard D. Bentley Jean Fribourg Jose Menendez Howard C. White
Robert Rodin Richard C. Colyear Lathrop Hoffman Raymond G. Rinehart
</TABLE>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MAY 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and to vote the proxies
cumulatively in their discretion if cumulative voting is in effect at the
meeting.
(Please sign and date the reverse side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears
below. This Proxy should be dated,
signed by the shareholder as name
appears hereon, and returned promptly
in the enclosed envelope. Persons
signing in a fiduciary capacity
should so indicate.
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
DATED: ________________________, 1996
