<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
Only (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Giga-tronics Incorporated
- --------------------------------------------------------------------------------
(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
[GIGA-TRONICS Logo]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
July 15, 1996
To Our Shareholders:
I cordially invite you to attend the annual meeting of Giga-tronics
Incorporated shareholders to be held at 10:00 a.m. on Monday, August 12, 1996,
at the Giga-tronics facility, 4650 Norris Canyon Road, San Ramon, California.
At the meeting, you will be asked to elect four directors and ratify the
appointment of independent certified public accountants. Information about
these matters is set forth in the attached Notice and Proxy Statement.
The Company counts on your continued interest, and I hope you will be able
to attend the meeting. However, regardless of whether you plan to attend in
person, it is important that your vote be counted. I urge you to vote your
shares by signing and returning the accompanying proxy card.
Sincerely,
/s/ George H. Bruns, Jr.
------------------------------------
George H. Bruns, Jr.
Chairman and Chief Executive Officer
<PAGE> 3
[GIGA-TRONICS Logo]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Giga-tronics Incorporated will be
held at 10:00 a.m., local time, on Monday, August 12, 1996, at the Giga-tronics
facility, 4650 Norris Canyon Road, San Ramon, California, for the following
purposes:
1. Elect four directors for the ensuing year;
2. Ratify the appointment of independent certified public accountants;
3. Transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on June 14, 1996,
will be entitled to vote at this meeting, or any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER YOU HOLD. PLEASE DATE, SIGN, VOTE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED, PREPAID ENVELOPE.
By Order of the Board of Directors,
/s/ Gregory L. Overholtzer
-----------------------------------
Gregory L. Overholtzer, Secretary
San Ramon, California
July 15, 1996
<PAGE> 4
[GIGA-TRONICS Logo]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 12, 1996
This Proxy Statement is submitted by the Board of Directors of
Giga-tronics Incorporated ("Giga-tronics" or the "Company"), a California
corporation, in connection with the solicitation of proxies for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on August 12,
1996, in accordance with the foregoing notice, and at any adjournment thereof.
The Board of Directors has fixed June 14, 1996 as the record date for the
meeting. Only shareholders of record on the record date are entitled to notice
of and to vote at the meeting. A majority of the shares of common stock will
constitute a quorum for the transaction of business at the Annual Meeting. On
the record date, there were 2,642,970 shares of Common Stock of the Company
issued and outstanding, each of which is entitled to one vote as to each matter
to be acted on at the meeting. However, each shareholder will be entitled to
cumulate his votes in the election of directors provided that notice of an
intention to cumulate votes is given at the meeting prior to voting for the
election of directors. Under cumulative voting, a shareholder is allowed one
vote per share multiplied by the number of directors to be elected (four at this
meeting) and may use the total number of votes for one nominee or may distribute
such number among as many nominees as such shareholder chooses.
Shares represented by properly executed proxies received by Giga-tronics
will be voted at the meeting in accordance with the instructions thereon. It is
intended that shares represented by proxies received by Giga-tronics which are
not limited to the contrary will be voted FOR all proposals set forth in the
notice of meeting.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. A shareholder giving
a proxy may revoke it before its exercise by filing with the Secretary of
Giga-tronics either an instrument revoking the proxy or a duly executed proxy
bearing a later date. A proxy will be revoked automatically if the shareholder
who executed it is present at the meeting and votes in person. Attendance at the
meeting will not, in and of itself, constitute the revocation of a proxy. The
granting of a proxy shall give the proxy holder authority to cumulate votes if
cumulative voting is elected.
So far as is presently known, there is no business to be transacted at the
meeting other than that referred to in the Notice of Annual Meeting of
Shareholders, and it is not anticipated that other matters will be brought
before the meeting. If, however, other matters should be brought before the
meeting, it is intended that the proxy holders may vote or act in accordance
with their judgment on such matters.
-1-
<PAGE> 5
An affirmative vote of a majority of the shares present or represented and
entitled to vote at the meeting is required for approval of all items being
submitted to the shareholders for their consideration. An automated system
administered by the Company's transfer agent tabulates shareholder votes.
Abstentions are included in determining the number of shares present and voting
at the Annual Meeting and each is tabulated separately. Abstentions are counted
in tabulations of the votes cast on proposals presented to shareholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
The Annual Report of the Company for the fiscal year ended March 30, 1996
was mailed with the mailing of the Notice of Special Meeting and Joint Proxy
Statement to all shareholders entitled to notice of and to vote at the Special
Meeting.
The costs of solicitation of proxies, including the printing, handling and
mailing of the proxy material, will be paid by Giga-tronics. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians to be forwarded to beneficial owners of shares held in their names,
and Giga-tronics will reimburse them for their expenses.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will be sent to Giga-tronics shareholders is July 22, 1996.
The executive offices of Giga-tronics are located at 4650 Norris Canyon
Road, San Ramon, California 94583, and the telephone number is (510) 328-4650.
-2-
<PAGE> 6
ELECTION OF DIRECTORS
At the annual meeting four (4) directors (constituting the entire Board)
are to be elected to serve until the next annual meeting and until their
successors are elected and qualified. The following are the nominees of the
Board of Directors for election as directors. There are no family relationships
among the nominees or between any nominee and any executive officer of the
Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND PRINCIPAL OCCUPATION SINCE: AGE
- ----------------------------- -------- ---
<S> <C> <C>
George H. Bruns, Jr. 1980 78
Chief Executive Officer since January, 1995, Chairman of the Board and
a director of the Company. Founded the Company in 1980 and has been a
Director since inception. Mr. Bruns is General Partner of The Bruns
Company, a private venture investment and management consulting firm.
Mr. Bruns is Director of Peninsula Wireless Communications Inc., Ascor
Inc. and Testronics Inc.
James A. Cole 1994 54
Managing General Partner of Spectra Enterprise Associates and a
Partner of New Enterprise Associates. Founder and President of
Amplica, Inc. and presently a Director of Vitesse Semi-Conductor Corp.,
and Spectrian Corp.
Edward D. Sherman 1993 62
President and Chief Executive Officer of FET Acquisition Co., Inc.
since May, 1996. Served as Product Line Manager for Giga-tronics from
May, 1995 through March, 1996. President and Chief Executive Officer
at 3dbm, Inc. from January, 1994 through March, 1995. Prior to that
time, and from 1990, Mr. Sherman served as President and Chief
Executive Officer of Peninsula Engineering.
Robert C. Wilson 1991 76
Chairman of Wilson & Chambers, a private investment firm. Mr. Wilson
is also currently a director of Storage Technology Corporation, SyQuest
Technology, Inc., Southwall Technologies Inc., ReSound Corp., Andros
Inc., and Carco Electronics.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED.
-3-
<PAGE> 7
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
MEETINGS
There were six regularly scheduled meetings and no special meetings of the
Board of Directors during the last fiscal year.
COMMITTEES
Giga-tronics' Board of Directors has an Audit Committee and a Compensation
and Stock Option Committee.
During fiscal 1996, the Audit Committee consisted of Edward D. Sherman and
James A. Cole. The Audit Committee serves to monitor the effectiveness of the
independent audit as well as the Company's accounting, financial controls and
financial reports. The Audit Committee held one meeting for the past fiscal
year.
During fiscal 1996, the Compensation and Stock Option Committee consisted
of George H. Bruns and independent non-employee director Robert C. Wilson. It
formulates recommendations to the Board of Directors regarding levels of
compensation for management. In addition, in order to recognize the expected
future contributions of key employees and provide an additional incentive for
them to remain with the Company over the long-term, the Committee awards options
to purchase shares of the Company's stock. The Compensation and Stock Option
Committee held one meeting during the past fiscal year.
The Company does not have a nominating committee or any committee
performing such functions. All of the directors attended all the meetings of
the Board and all the committees on which they sat.
COMPENSATION OF DIRECTORS
Each of Giga-tronics' directors who is not employed by the Company
receives an annual director's fee of $6,000 and $750 for attendance at each
Board meeting. Outside directors serving on committees of the Board receive
$500 for attendance at each committee meeting. These amounts were effective
January, 1995.
The Company has entered into indemnification agreements with all of its
officers and directors.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers, and holders of more than
10% of the Company's Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Officers, directors, and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms received by the
Company, or written representations from certain reporting persons, the Company
believes that during the fiscal year ending March 30, 1996, all filing
requirements applicable to its officers, directors and greater than 10%
shareholders were complied with.
-4-
<PAGE> 8
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 14, 1996, information
concerning the beneficial ownership of the Company's Common Stock for (a) each
person known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock; (b) each director; (c) each of the executive officers
named in the Summary Compensation Table below; and (d) all directors and
officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NATURE OF OF TOTAL
BENEFICIAL OUTSTANDING
NAME OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- ------------------------ ---------- ------------
<S> <C> <C>
George H. Bruns, Jr. 357,650 (1) 13.5
P.O. Box 1362
Lafayette, CA 94549
James A. Cole 55,638 (2) 2.1
5424 Island Forest Place
Westlake Village, CA 91362
Gregory L. Overholtzer -0- 0.0
4650 Norris Canyon Road
San Ramon, CA 94583
Bradley C. Stribling -0- 0.0
4650 Norris Canyon Road
San Ramon, CA 94583
Edward D. Sherman -0- 0.0
6507 Leyland Park Drive
San Jose, CA 95120
David L. White 5,250 (3) 0.2
4 Cirrus Court
Redwood City, CA 94462
Robert C. Wilson 25,000 0.9
274 Catalpa Drive
Atherton, CA 94027
All officers and directors as a group
(7 persons including the above) 443,538 16.7
Dimensional Fund Advisors Inc. 157,300 (4) 5.9
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
The Robertson Stephens Orphan Fund 253,672 (5) 9.6
555 California Street
San Francisco, CA 94104
Montgomery Asset Management 137,600 (6) 5.2
600 Montgomery Street
San Francisco, CA 94111
- --------------------
</TABLE>
(1) Includes 187,650 shares owned by the Bruns Trust, 170,000 registered in
the names of his son and daughter.
-5-
<PAGE> 9
(2) James A. Cole is the Managing General Partner of Spectra Enterprise
Associates, which beneficially owns 55,638 shares over which Mr. Cole
has shared voting and dispositive power.
(3) 5,000 shares represent currently exercisable options.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 157,300 shares as of
December 31, 1995, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans, all
of which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(5) As general partners of the Orphan Fund, Bayview Investors, Ltd. and
Robertson, Stephens & Company share voting and dispositive power over
251,672 shares held by the Orphan Fund and Paul Stephens, a partner and
custodian for his sons, has sole voting and dispositive power over
2,000 shares.
(6) Montgomery Asset Management is registered under section 203 of the
Investment Advisors Act of 1940.
-6-
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides information concerning compensation paid or
accrued by the Company, to or on behalf of the Company's Chief Executive Officer
and each of the two other most highly compensated executive officers who earned
more than $100,000 annual compensation during the last fiscal year, for the
fiscal years ended March 30, 1996, March 25, 1995, and March 26, 1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long -Term Compensation
---------------------------
Annual Compensation Awards Payouts
------------------- ---------------------------
NUMBER OF
SECURITIES
OTHER RESTRICTED UNDERLYING ALL OTHER
NAME AND ANNUAL STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL FISCAL COMPEN- AWARDS SARS PAYOUTS SATION
POSITION YEAR SALARY($) BONUS($) SATION($) ($) (#) (1) ($) (2) ($) (3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George H. Bruns 1996 $148,000 -- $7,200 (5) -- -- -- --
Chairman and 1995 $ 37,000 (4) -- $9,050 (6) -- -- -- --
Chief Executive
Officer
Gregory Overholtzer 1996 (7) $104,885 -- -- -- -- -- $3,392
Vice President,
Finance and
Chief Financial Officer
Brad C. Stribling 1996 (7) $111,126 -- -- -- -- -- $2,015
Vice President, 1995 $116,462 $10,000 -- -- 40,000 -- $1,558
Engineering
David L. White 1996 $119,627 -- -- -- -- -- --
Vice President, 1995 $108,696 -- -- -- -- -- $ 742
Marketing & 1994 $102,019 $10,000 -- -- -- -- $ 385
Sales
</TABLE>
(1) Stock options granted under the Company's 1990 Stock Option Plan.
(2) Long Term Incentive Payment (LTIP): none were made.
(3) Represents contributions made by the Company to the Company's 401 (k) Plan
which match in part the pre-tax elective deferral contributions (included
under Salary) made to such plan by the executive officers.
-7-
<PAGE> 11
(4) In January 1995, Mr. George H. Bruns, Jr., assumed the role of Chief
Executive Officer. Annualized fiscal 1995 salary was $148,000.
(5) Other compensation for Mr. George H. Bruns, Jr. represents a car allowance
in 1996.
(6) Other compensation for Mr. George H. Bruns, Jr. includes a car allowance
of $1,800 for three months and board compensation of $7,250. The Board
compensation was earned prior to the assumption of the Chief Executive
Officer position in January, 1995.
(7) Pursuant to regulations issued by the Commission, no data is reportable
for prior fiscal years because annual compensation was below the $100,000
requirement.
STOCK OPTIONS
The following table sets forth stock options granted in fiscal 1996 to
each of the Company's executive officers named in the Summary Compensation
Table. No stock appreciation rights were granted during the 1996 fiscal year.
All option exercise prices would have been based on market price on the date of
grant. The table also sets forth the hypothetical gains that would exist for the
options at the end of their five year terms, assuming compound annual rates of
stock appreciation of 5% and 10%. These numbers are calculations based on the
requirements promulgated by the Commission and do not reflect the Company's
estimate of future stock price growth. The actual future value of all options
will depend on the market value of the Company's Common Stock.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
Potential Realizable
Percent of Value at Assumed
No. of Total Options Annual Rates of Stock
Securities Granted To Price Appreciation
Underlying Employees for Option Term
Date of Options In Fiscal Exp. Exercise ---------------------
Name Grant Granted (#) 1996 Date Price ($/sh) 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
None
</TABLE>
-8-
<PAGE> 12
OPTIONS EXERCISES AND FISCAL YEAR END VALUE TABLE
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during fiscal 1996 and
unexercised options held as of the end of the fiscal year. No stock
appreciation rights were exercised by such individuals during fiscal 1996. No
stock appreciation rights were outstanding at the end of such fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE MONEY OPTIONS
SHARES AT MARCH 30, 1996(#) AT MARCH 30, 1996($)(1)
ACQUIRED
ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George H. Bruns -- -- -- -- -- --
Chairman and
Chief Executive Officer
Gregory Overholtzer 7,500 20,937 (2) -- 22,500 -- $67,500
Vice President,
Finance and
Chief Financial Officer
Bradley C. Stribling -- -- 10,000 30,000 $30,000 $90,000
Vice President,
Engineering
David L. White -- -- 30,000 10,000 $90,000 $30,000
Vice President,
Marketing & Sales
</TABLE>
(1) Equal to the fair market value of the option shares on March 30, 1996
($7.00 per share), less the aggregate option price payable for such
shares. Options are in-the-money if the market value of the shares is
greater than the option exercise price.
(2) Equal to the proceeds realized on sale of shares less the aggregate option
price paid for such shares.
LONG-TERM INCENTIVE PLAN (LTIP) AWARDS TABLE
There were no long-term incentive plan awards made during fiscal 1996 to
the Company's executive officers.
-9-
<PAGE> 13
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
CHANGE-IN-CONTROL ARRANGEMENTS
All outstanding options held by the Chief Executive Officer and the
Company's other executive officers under the Company's 1990 Stock Option Plan
will automatically accelerate and become exercisable for fully vested shares
upon a change in control of the Company, whether effected through merger, sale
of substantially all of the Company's assets, the successful completion of a
hostile tender offer for 30% or more of the Company's outstanding Common Stock,
or a change in the majority of the Board as a result of one or more contested
elections for Board membership.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the 1996 fiscal year, the Compensation and Stock Option Committee of
the Board was comprised of Messrs. Bruns and Wilson. During all of fiscal year
1996, Mr. Bruns has had the position of Chief Executive Officer. Mr. Bruns will
not be eligible to receive any stock options during his period of service on the
Compensation and Stock Option Committee.
No executive officer of the Company serves as a member of the Board of
Directors or Compensation Committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
GENERAL COMPENSATION POLICY
Giga-tronics' executive compensation philosophy rests on two fundamental
principles. First, the program is intended to provide fully competitive levels
of compensation - at expected levels of performance - in order to attract,
motivate and retain talented executives. Secondly, the program is intended to
create an alignment of interest between the Company's executives and its
shareholders such that a significant portion of each executive's compensation is
linked directly to the creation of shareholder value.
The Executive Compensation Program is intended to place heavy emphasis on
the variable pay (pay that varies with performance) and less focus on fixed base
salary. The incentive pay programs are intended to reward performance that is
directly relevant to the Company's short term and long term success. The three
primary components of the program include base salary, annual incentive
(performance based bonus), and long term incentives (stock options).
-10-
<PAGE> 14
FACTORS
The process involved and the factors considered in the executive
compensation determination for fiscal year 1996 are summarized below. It is
expected that this process will remain the same in fiscal year 1997. However,
the Committee may, at its discretion, apply a different set of factors in
setting executive compensation in the future in order to further enhance the
basic concept of "pay-for-performance."
BASE SALARY
Base salaries are based primarily on individual performance, and each
individuals role in the Company. Employees with higher levels of sustained
performance over time and/or those assuming greater responsibilities will be
paid correspondingly higher salaries.
On the basis of its knowledge of the industry, this Committee believes
that the base salary levels in effect for the Company's executive officers are
competitive with the companies within and without the industry which the Company
competes for executive talent. However, the Committee did not, through one or
more external salary surveys for the industry, independently confirm the
specific percentiles at which the base salary levels in effect for the Company's
executive officers stood in relation to other companies in the industry.
Salaries are reviewed annually based on individual performance, overall
financial results and the general level of increases in the market place. Salary
increases are granted within a pay-for-performance frame work.
ANNUAL PERFORMANCE (NON-STOCK) BASED INCENTIVE COMPENSATION
Giga-tronics' annual incentive bonus plan is intended to (1) reward key
employees based upon company and individual performance, (2) motivate, (3)
provide competitive cash compensation opportunities. Incentive awards are paid
annually based upon achievement of individual performance objectives for the
most recently completed fiscal year.
Bonus payments of approximately $66,000 were earned in fiscal 1996.
LONG-TERM (STOCK BASED) INCENTIVE COMPENSATION
Giga-tronics has always believed that stock ownership or stock option
participation was the most effective way of aligning management and shareholder
interests. Options issued have been at 100% of market value, for 5 year terms,
exercisable 25% per year after the first year. The right to exercise options
expires 60 days after termination of employment, except in case of death when
optionee's estate would have six months to exercise.
Total options outstanding had reached a level of 13.7% of total shares
outstanding in FY1994. Options outstanding in FY1995 were 8.3% of total shares
outstanding, and options outstanding at the end of FY 1996 were 6.0% of total
shares then outstanding.
-11-
<PAGE> 15
CEO COMPENSATION
The CEO compensation is based on the same considerations as any other
senior executive. Base rates are determined by market factors. Other
compensation factors (salary increases, incentive bonus, option participation)
are performance-based.
Mr. Bruns' compensation for 1996 was $148,000 plus $7,200 transportation
allowance.
Mr. Bruns holds no options but does own, directly and through family,
357,650 shares comprising 13.5% of the Company's stock.
DEDUCTION LIMIT FOR EXECUTIVE COMPENSATION
Effective January 1, 1994, Section 162(m) of the IRS Code limits federal
income tax deductions for compensation paid to the Chief Executive Officer and
the four other most highly compensated officers of a public company to $1
million per individual per year, but contains an exception for performance-based
compensation that satisfies certain conditions.
The 1990 Stock Option Plan was amended in 1994 to restrict the maximum
number of shares of Common Stock for which any one participant may be granted
stock options and stock appreciation rights to 200,000 shares, and the
stockholders approved this amendment at the 1994 Annual Meeting. As a result,
stock options granted to the Company's executive officers with an exercise price
not less than the fair market value of the underlying shares on the grant date
will qualify as performance-based compensation which is not subject to the $1
million limitation.
-12-
<PAGE> 16
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has re-appointed the firm of KPMG Peat Marwick as
the Company's independent accountants for the fiscal year ending March 29, 1997
and to perform other appropriate services. Ratification by the shareholders
will be sought for this appointment.
Representatives of KPMG Peat Marwick are expected to be present at the
Company's Annual Meeting with the opportunity to make a statement, if they
desire to do so, and they are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK.
SHAREHOLDERS' PROPOSALS
To be considered for presentation to the Annual Meeting of Shareholders to
be held in 1997, a shareholder proposal must be received by the Company no later
than February 28, 1997. Proposals should be addressed to the Corporate
Secretary, Giga-tronics Incorporated, 4650 Norris Canyon Road, San Ramon, CA
94583.
The Annual Report of the Company for the fiscal year ended March 30, 1996 was
mailed previously with the mailing of the Notice of Special Meeting and Joint
Proxy Statement to all shareholders entitled to notice of and to vote at the
Special Meeting. The Company will mail Annual Report on Form 10K to any
shareholder who so requests. Requests should be sent to the Corporate Secretary
as noted above for proposals.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof in accordance with the judgments of the persons voting the
proxies. Regardless of whether you intend to be present at the Annual Meeting,
you are urged to complete, date, sign and return your proxy promptly.
By order of the Board of Directors,
/s/ Gregory L. Overholtzer
-----------------------------------
Gregory L. Overholtzer, Secretary
San Ramon, California
July 15, 1996
-13-
<PAGE> 17
FOR all nominees WITHHOLD
listed (except as AUTHORITY
withheld in the to vote for all
space below). nominees listed.
/ / / /
1. Elect four Directors for the ensuing year.
Nominees: George H. Bruns, Jr., James A. Cole,
Edward D. Sherman, Robert C. Wilson.
(INSTRUCTION: To withhold authority to vote for one or more individual nominees,
write such name or names in the space provided below.)
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Please mark
your votes as /X/
indicated in
this example.
2. Ratify the appointment of independent certified FOR AGAINST ABSTAIN
public accountants. / / / / / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Signature(s)_________________________________________Dated:_______________, 1996
Please sign exactly as the name appears printed hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in full partnership name by authorized
person. Receipt is acknowledged of the Proxy Statement for the meeting.
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<PAGE> 18
PROXY
GIGA-TRONICS INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
George H. Bruns, Jr. and Greg Overholtzer, or either of them, are hereby
constituted and appointed the lawful attorneys and proxies of the undersigned,
each with full power of substitution, to vote and act as proxy with respect to
all shares of Common Stock of Giga-tronics Incorporated ("Giga-tronics")
standing in the name of the undersigned on the books of Giga-tronics at the
close of business on June 14, 1996, at the Annual Meeting of Shareholders to be
held at 10:00 A.M., on August 12, 1996, at Giga-tronics' Facilities at 4650
Norris Canyon Road, San Ramon, CA 94583, or at any adjournment or postponement
thereof.
THE POWERS HEREBY GRANTED MAY BE EXERCISED BY BOTH OF SAID ATTORNEYS OR PROXIES
OR THEIR SUBSTITUTES PRESENT AND ACTING AT THE ANNUAL MEETING OF SHAREHOLDERS OR
ANY ADJOURNMENT OR POSTPONEMENT THEREOF OR, IF ONLY ONE BE PRESENT AND ACTING,
THEN BY THAT ONE. THE UNDERSIGNED HEREBY REVOKES ANY AND ALL PROXIES HERETOFORE
GIVEN BY THE UNDERSIGNED TO VOTE AT SAID MEETING.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
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