<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
GIGA-TRONICS INCORPORATED
- - ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- - ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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
<PAGE> 2
previously. Identify the previous filing by registrations 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> 3
[GIGA-TRONICS LOGO]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
(925) 328-4650
July 7, 1998
To Our Shareholders:
I cordially invite you to attend the annual meeting of Giga-tronics
Incorporated shareholders to be held at 10:00a.m. on Tuesday, August 11, 1998,
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> 4
[GIGA-TRONICS LOGO]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
(925) 328-4650
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Giga-tronics Incorporated will be
held at 10:00a.m., local time, on Tuesday, August 11, 1998, 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 15, 1998,
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/ MARK H. COSMEZ, II
Mark H. Cosmez, II
Secretary
San Ramon, California
July 7, 1998
<PAGE> 5
[GIGA-TRONICS LOGO]
Giga-tronics Incorporated
4650 Norris Canyon Road
San Ramon, California 94583
(925) 328-4650
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 11, 1998
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 11,
1998, in accordance with the foregoing notice, and at any adjournment thereof.
The Board of Directors has fixed June 15, 1998 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 4,324,239 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.
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.
1
<PAGE> 6
The Annual Report of the Company for the fiscal year ended March 28, 1998
is being mailed with this mailing of the Notice of Annual Meeting and Proxy
Statement to all shareholders entitled to notice of and to vote at the Annual
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 9, 1998.
The executive offices of Giga-tronics are located at 4650 Norris Canyon
Road, San Ramon, California 94583, and the telephone number is (925) 328-4650.
2
<PAGE> 7
ELECTION OF DIRECTORS
At the annual meeting four (4) directors 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 79
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. and Testronics Inc.
James A. Cole 1994 56
General Partner of Windward Ventures, 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 Semiconductor Corp.,
Spectrian Corp., and several private companies.
Edward D. Sherman 1993 64
President of Microsource, Inc. from May 18, 1998. Assistant to the Chairman
of Giga-tronics Incorporated April 1, 1997 to May 17, 1998. President and
Chief Executive Officer of FET Acquisition Co., Inc. from April, 1995 through
September, 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 78
Chairman of Wilson & Chambers, a private investment firm. Mr. Wilson is
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> 8
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
MEETINGS
There were seven regularly scheduled meetings and one special
teleconference meeting 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 1998, 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 during the past
fiscal year.
During fiscal 1998, the Compensation and Stock Option Committee consisted
of independent non-employee directors James A. Cole and 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 did not hold any meetings 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 regularly
scheduled 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.
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 ended March 28, 1998, all filing
requirements applicable to its officers, directors and greater than 10%
shareholders were complied with.
4
<PAGE> 9
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 15, 1998, 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>
Curt M. Breggren 153,773 3.6
44249 Old Warm Springs Blvd
Fremont, CA 94538
George H. Bruns, Jr 435,053(1) 10.0
4650 Norris Canyon Road
San Ramon, CA 94583
James A. Cole 260,147(2) 6.0
5424 Island Forest Place
Westlake Village, CA 91362
Robert D. Geddes 7,142(3) .2
4650 Norris Canyon Road
San Ramon, CA 94583
Gordon P. Hampton 189,509(4) 4.4
3380 Montgomery Drive
Santa Clara, CA 95054
Jeffrey T. Lum 83,364(5) 1.9
47790 Westinghouse Drive
Fremont, CA 94539
Edward D. Sherman -- --
6507 Leyland Park Drive
San Jose, CA 95120
Robert C. Wilson 12,000(6) 0.3
274 Catalpa Drive
Atherton, CA 94027
All officers and directors as a group 1,217,445 27.6
(12 persons including the above)
The Robertson Stephens Orphan Fund 340,072(7) 7.9
555 California Street
San Francisco, CA 94104
</TABLE>
- ----------
5
<PAGE> 10
(1) Includes 187,500 shares owned by the Bruns Trust, 170,000 registered in
the names of his son and daughter, 22,163 shares owned by The Bruns
Company and 37,500 shares of currently exercisable options.
(2) James A. Cole is the Managing General Partner of Spectra Enterprise
Associates (a Venture Partnership), which beneficially owns 260,147
shares over which Mr. Cole has shared voting and dispositive power.
(3) Includes 6,250 shares of currently exercisable options.
(4) Includes 18,790 shares of currently exercisable options.
(5) Includes 5,000 shares of currently exercisable options.
(6) All 12,000 shares represent currently exercisable options.
(7) As general partners of the Orphan Fund, Bayview Investors, Ltd. and
Robertson, Stephens & Company share voting and dispositive power over
340,072 shares held by the Orphan Fund.
6
<PAGE> 11
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 four other most highly compensated executive officers during the
last fiscal year, for the fiscal years ended March 28, 1998, March 29, 1997, and
March 30, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAY-OUTS
------------------- ------------------------------
NUMBER OF
SECURITIES
OTHER UNDERLYING ALL OTHER
NAME AND ANNUAL OPTIONS/ COMPEN-
PRINCIPAL FISCAL COMPEN- SARS SATION
POSITION YEAR SALARY ($) BONUS SATION (#)(1) ($)(2)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Curt M. Berggren 1998 (3) $ 89,135 $ 20,000 -- -- $3,366
President
Viking Semiconductor
Equipment Inc.
George H. Bruns 1998 $148,000 $ 17,664 $7,200 (4) -- --
Chairman and 1997 $146,862 -- $7,145 (4) 75,000 --
Chief Executive Officer 1996 $148,000 -- $7,200 (4) --
Robert D. Geddes 1998 $105,000 $ 8,503 -- -- $ 707
Vice President- 1997 $ 74,712 $ 10,000 -- 25,000 --
Sales & Marketing
Gordon P. Hampton 1998 (5) $116,392 $ 38,031 -- 18,790 $1,465
President
Ultracision Inc.
Jeffrey T. Lum 1998 $104,262 -- $522 (6) -- $1,918
President 1997 (7) $ 97,409 $ 29,015 -- 20,000 $1,164
ASCOR, Inc.
- ----------
</TABLE>
(1) Stock options granted under the Company's 1990 Stock Option Plan.
(2) Represents contributions made by the Company to the Company's 401(k) Plan
which match in part the pre-tax elective deferral contributions (included
under Salary) made to such plan by the executive officers.
(3) Viking merged with Giga-tronics in fiscal 1998.
7
<PAGE> 12
(4) Other compensation for Mr. George H. Bruns, Jr. represents a car
allowance in 1998, 1997 and 1996.
(5) Ultracision merged with Giga-tronics in fiscal 1998.
(6) Other compensation for Mr. Jeffrey T. Lum represents the use of a company
automobile.
(7) ASCOR merged with Giga-tronics in fiscal 1997.
8
<PAGE> 13
STOCK OPTIONS
The following table sets forth stock options granted in fiscal 1998 to
each of the Company's executive officers named in the Summary Compensation
Table. No stock appreciation rights were granted during the 1998 fiscal year.
All option exercise prices would have been based on market price on the date of
grant. The table also sets forth the hypothetical gains that would exist for the
options at the end of their five year terms, assuming compound annual rates of
stock appreciation of 5% and 10%. These numbers are calculations based on the
requirements promulgated by the Commission and do not reflect the Company's
estimate of future stock price growth. The actual future value of all options
will depend on the market value of the Company's Common Stock.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
NO. OF TOTAL OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES PRICE APPRECIATION
DATE OF OPTIONS IN FISCAL EXERCISE EXP. FOR OPTION TERM
NAME GRANT GRANTED (#) 1998 PRICE ($/SH) DATE 5% $ 10% ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
None -- -- -- -- -- -- --
</TABLE>
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 1998 and
unexercised options held as of the end of the fiscal year. No stock appreciation
rights were exercised by such individuals during fiscal 1998. No stock
appreciation rights were outstanding at the end of such fiscal year.
9
<PAGE> 14
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 28, 1998 (#) AT MARCH 28, 1998 (1)
---------------------- ---------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Curt M. Breggren -- -- -- -- -- $--
President, Viking
Semiconductor Equipment, Inc.
George H. Bruns, Jr -- -- 37,500 37,500 $--(2) $--(2)
Chairman and
Chief Executive Officer
Robert D. Geddes -- -- 6,250 18,750 $--(2) $--(2)
Vice President,
Sales & Marketing
Gordon P. Hampton -- -- 18,790 -- $68,264 $--
President, Ultracision,Inc
Jeffrey T. Lum -- -- 5,000 15,000 $--(2) $--(2)
President
ASCOR, Inc.
</TABLE>
(1) Equal to the fair market value of the option shares on March 28, 1998
($6.5625 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) Options are out of the money.
LONG-TERM INCENTIVE PLAN (LTIP) AWARDS TABLE
There were no long-term incentive plan awards made during fiscal 1998 to
the Company's executive officers.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
CHANGE-IN-CONTROL ARRANGEMENTS
All outstanding options 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.
10
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the 1998 fiscal year, the Compensation and Stock Option Committee of
the Board was comprised of Messrs. Cole and Wilson.
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).
FACTORS
The process involved and the factors considered in the executive
compensation determination for fiscal year 1998 are summarized below. It is
expected that this process will remain the same in fiscal year 1998. 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
individual's 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 with 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 marketplace. Salary
increases are granted within a pay-for-performance framework.
11
<PAGE> 16
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, and (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 $70,000 in the aggregate were earned in
fiscal 1998.
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. With one exception, 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. The exception
is 75,000 options issued to Mr. George Bruns at 110% of market value, for a term
of 2-1/2 years, exercisable 50% per year after the first year.
Options outstanding in FY 1996 were 6.0% of total shares outstanding,
options outstanding at the end of FY 1997 were 7.8% of total shares outstanding,
and options outstanding at the end of FY 1998 were 9.0% of total shares then
outstanding.
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 1998 was $148,000 plus $7,200 transportation
allowance.
Mr. Bruns holds 75,000 options and owns, directly and through family,
397,553 shares comprising of 9.2% of the Company's stock.
The Compensation committee reviewed the CEO's compensation with Mr.
Bruns, who elected to pass on any salary increase. Mr. Brun's base salary is
lower than the median paid to others in comparable positions in the electronics
industry.
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.
BY THE COMPENSATION COMMITTEE:
Robert C. Wilson
James A. Cole.
12
<PAGE> 17
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG GIGA-TRONICS INC., THE S&P 500 INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S & P 500 S & P High
Date Giga-tronics Inc. Index Tech Index
---- ----------------- ----- ----------
<S> <C> <C> <C> <C>
3/27/1993 100.00 100.00 100.00
3/26/1994 114.29 102.86 119.88
3/25/1995 81.63 111.88 148.51
3/30/1996 114.29 144.16 195.80
3/29/1997 130.61 172.83 261.45
3/28/1998 107.15 244.64 389.95
</TABLE>
*$100 INVESTED ON 3/27/93 OR INDEX, INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING 3/28/98.
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 28, 1998
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 1999, a shareholder proposal must be received by the Company no
later than February 28, 1999. 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 28, 1998
is being mailed with this mailing of the Notice of Annual Meeting and Proxy
Statement to all shareholders entitled to notice of and to vote at the Annual
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.
13
<PAGE> 18
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/ GEORGE H. BRUNS, JR.
George H. Bruns, Jr.
Chairman and Chief Executive
Officer
San Ramon, California
July 7, 1998
14
<PAGE> 19
GIGA-TRONICS INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
George H. Bruns, Jr. and Mark H. Cosmez II, 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 15, 1998, at
the Annual Meeting of Shareholders to be held at 10:00 A.M., on August
11, 1998, 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)
- FOLD AND DETACH HERE -
FOR ALL NOMINEES LISTED (EXCEPT AS WITHHELD IN ONE SPACE BELOW).
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED.
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.)
- --------------------------------------------------------------------------------
2. Ratify the appointment of independent certified public accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Signature(s) Dated: , 1998
------------------------------------------- ------------
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.
- FOLD AND DETACH HERE -
