SCHEDULE 14A
(Rule 14a-101)
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
STANFORD TELECOMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 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:
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<PAGE>
[STANFORD TELECOM LOGO]
[STANFORD TELECOM LETTERHEAD]
May 29, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Stanford Telecommunications, Inc., which will be held Wednesday, June 25,
1997, at 6:00 p.m. local time, at the Sunnyvale Hilton, 1250 Lakeside Drive,
Sunnyvale, California 94086.
The formal notice of the Annual Meeting and the Proxy Statement have
been made a part of this invitation.
To assure that your shares are represented, please read the Proxy
Statement and promptly mark, date, sign and return the enclosed Proxy in the
prepaid envelope provided.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely,
/s/ Dr. James J. Spilker, Jr.
-----------------------------
Dr. James J. Spilker, Jr.
Chairman of the Board
<PAGE>
STANFORD TELECOMMUNICATIONS, INC.
Notice of Annual Meeting of Stockholders
To Be Held June 25, 1997
The Annual Meeting of the Stockholders of Stanford Telecommunications,
Inc. (the "Company") will be held at the Sunnyvale Hilton, 1250 Lakeside Drive,
Sunnyvale, California 94086, on Wednesday, June 25, 1997, at 6:00 p.m. local
time, for the following purposes:
1. To elect six Directors to serve for the ensuing year as set forth in
the attached Proxy Statement.
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants for the current fiscal year.
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on May 12, 1997
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment thereof. In accordance with
Delaware law, a complete list of stockholders entitled to notice of and to vote
at the meeting will be available at the Company's executive offices, 1221
Crossman Avenue, Sunnyvale, California 94089, for ten days prior to the meeting.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors,
/s/ Jerome F. Klajbor
-----------------------------------
JEROME F. KLAJBOR
Secretary
Sunnyvale, California
May 29, 1997
<PAGE>
STANFORD TELECOMMUNICATIONS, INC.
1221 Crossman Avenue
Sunnyvale, California 94089
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Stanford Telecommunications, Inc., a Delaware
corporation (the "Company"), of proxies in the accompanying form to be used at
the Annual Meeting of Stockholders to be held at the Sunnyvale Hilton, 1250
Lakeside Drive, Sunnyvale, California 94086, on June 25, 1997 at 6:00 p.m. local
time and any adjournment thereof. Proxies may be revoked at any time before they
are voted by filing with the Secretary of the Company a written notice of
revocation or by duly executing a proxy bearing a later date. A proxy may also
be revoked before it is voted by any stockholder present at the meeting who
expresses a desire to vote his or her shares of common stock, par value $.01 per
share, of the Company ("Common Stock") in person. Subject to any such
revocation, all shares of Common Stock represented by properly executed proxies
will be voted in accordance with the specifications on the enclosed proxy. If no
choice is so specified, the shares will be voted FOR the election of the six
nominees for Director listed in this Proxy Statement, and FOR the ratification
of Arthur Andersen LLP as the Company's independent public accountants.
The close of business on May 12, 1997 has been fixed as the record date
for determining the holders of Common Stock entitled to notice of and to vote at
the meeting. On such date, there were 12,838,526 shares of Common Stock
outstanding and entitled to vote. Each outstanding share of Common Stock is
entitled to one vote on all matters including the election of Directors whose
names have been placed in nomination. A majority of the outstanding shares will
constitute a quorum for the transaction of business at the meeting. Abstentions
and broker non-votes will be counted for purposes of determining the presence or
absence of a quorum. The six nominees receiving the highest number of votes will
be elected as the Directors of the Company. Abstentions and broker non-votes
will be counted in tabulations of the votes cast for the ratification of the
selection of Arthur Andersen LLP, as the Company's independent public accountant
and, as a result, will have the same effect as negative votes.
A copy of the Company's 1997 Annual Report to Stockholders containing
financial statements for fiscal year 1997 accompanies this Proxy Statement. The
Company's fiscal year is composed of four 13-week quarters, each of which ends
on the Thursday closest to the corresponding calendar quarter end. Fiscal year
1997 ended on March 28, 1997. This Proxy Statement and the accompanying form of
proxy are first being sent to stockholders on or about May 29, 1997.
On January 29, 1997, the Company's Board of Directors declared a
two-for-one common stock split which was effected in the form of a 100 percent
stock dividend, distributed on February 28, 1997 to shareholders of record on
February 10, 1997. Par value remained at $.01 per share. The stock split
resulted in the issuance of approximately 6.4 million additional shares of
Common Stock. Accordingly, all share and per share data included in this Proxy
Statement have been adjusted to reflect the stock split.
The expense of printing and mailing proxy material will be borne by the
Company. The Company will reimburse brokers and nominees for their reasonable
out-of-pocket expenses in forwarding soliciting material to beneficial owners of
shares held of record by such brokers and nominees. In addition to the
solicitation of proxies by mail, solicitation may be made by certain Directors,
officers and other employees of the Company by personal interview, telephone or
telefax; no additional compensation will be paid for such solicitation.
-1-
<PAGE>
ELECTION OF DIRECTORS
Six directors are to be elected to serve until the next Annual Meeting
of Stockholders and until their respective successors are duly elected. Each of
the nominees named below is presently a Director of the Company. In the event
that any nominee becomes unable or declines to serve for any reason, proxies may
be voted for the election of the balance of those nominees named and for such
other person or persons as the proxy holders or the present Board of Directors
(the "Board") may select, or the size of the Board may be reduced in accordance
with the By-laws of the Company. The Board has no reason to believe that any of
the nominees named will be unable or unwilling to serve.
<TABLE>
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS
Set forth below are the names and ages of the nominees and Directors,
their principal occupations at present and for the past five years, certain
directorships held by certain of the nominees and the year in which each became
a Director of the Company.
<CAPTION>
Name and Principal Occupation at Present Director
and for the Past Five Years; Directorships Since Age
------------------------------------------ ----- ---
<S> <C> <C>
James J. Spilker, Jr........................................................... 1973 63
Dr. Spilker, a founder of the Company, is Chairman of the Board. He
served as President and Chief Executive Officer of the Company from
August 1981 to June 1995.
Val P. Peline.................................................................. 1985 66
Dr. Peline was elected as a Director of the Company in October 1985.
Dr. Peline joined the Company as its President and Chief Executive
Officer effective June 5, 1995. Dr. Peline served as President of the
Electronic Systems Group, a division of Lockheed Corp., from 1987 until
he retired from such position in March 1995. Dr. Peline had been
President of the Lockheed Space Division from 1984 to March 1987.
Michael Berberian.............................................................. 1989 63
Mr. Berberian, a private investor, was appointed to fill a vacancy on
the Board of Directors in December 1989. From 1973 to 1990, he served
on the Board of Directors of Lockheed Corp.
Leonard Schuchman.............................................................. 1985 60
Mr. Schuchman was elected as a Director of the Company in April 1985.
Mr. Schuchman joined the Company in January 1976 and became Vice
President in February 1977. He is responsible for directing the
Company's Communications and Navigation Systems Operation.
-2-
<PAGE>
John W. Brownie................................................................ 1973 63
Mr. Brownie, a founder of the Company, served as Executive Vice
President of the Company from June 1982 and as General Manager from
July 1981 until his retirement in January 1985. He has been a Director
of the Company since the Company's organization in May 1973.
C. Jerome Waylan............................................................... 1994 55
Dr. Waylan was appointed to fill a vacancy on the Board of Directors
in May 1994. Dr. Waylan served as President of GTE Spacenet
Corporation from 1985 to 1993 and as Executive Vice President of GTE
Mobilnet from 1993 until his retirement in April 1996. Since May
1996, Dr. Waylan has served as Executive Vice President of NextWave
Telecom, Inc. Dr. Waylan has been a Director of Globecomm Systems,
Inc. since February 1997.
<FN>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL
NOMINEES NAMED.
</FN>
</TABLE>
-3-
<PAGE>
Board of Directors Meetings and Committees
- ------------------------------------------
The Company's Board held four meetings during fiscal year 1997 and
acted on two matters by unanimous written consent. Each Director attended all of
the meetings of the Board and of the committees of the Board on which he serves.
In May 1997, the Directors voted to reduce the size of the Board from eight
members to six members following the Annual Meeting.
The Board has appointed a Compensation Committee, an Audit Committee
and a Stock Plans Committee. There is no nominating committee.
The Compensation Committee held one meeting in fiscal year 1997 and
took all other actions by unanimous written consent. Its function is to
determine or review and pass upon management's recommendations with respect to
executive compensation and incentive bonuses. The members of the Compensation
Committee during fiscal year 1997 were Drs. P. Marshall Fitzgerald and C. Jerome
Waylan and Messrs. John W. Brownie and Milton W. Holcombe.
The Audit Committee held two meetings in fiscal year 1997. Its
functions are to monitor the effectiveness of the audit effort, to supervise the
Company's financial and accounting organization and financial reporting and to
select a firm of independent public accountants, whose duty it is to audit the
books and accounts of the Company. The members of the Audit Committee during
fiscal year 1997 were Messrs. Brownie, Berberian and Holcombe.
The Stock Plans Committee held two meetings in fiscal year 1997 and
took all other actions by unanimous written consent. Its functions are to
supervise and manage the Company's Employee Stock Purchase Plan, the 1982 Stock
Option Plan and the 1991 Stock Option Plan. The members of the Stock Plans
Committee during fiscal year 1997 were Dr. Fitzgerald and Messrs. Brownie and
Berberian.
DIRECTORS' FEES
Each non-employee Director of the Company receives an annual fee of
$15,000 and is entitled to reimbursement for reasonable travel costs associated
with his attendance at meetings of the Board and committees of the Board on
which he serves.
-4-
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid for fiscal years 1995, 1996 and 1997 to the Company's Chief
Executive Officer and to each of the other five most highly compensated
executive officers (collectively, the "Named Executive Officers").
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------- -----------------
Securities
Name and Fiscal Underlying All Other
Principal Position Year Salary Bonus (1) Options (#) Compensation (2)
- ------------------------------- --------- --------------- --------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
Val P. Peline (3) 1997 $351,931 $103,576 100,000 $10,057
Chief Executive Officer 1996 $235,400 $0 220,000 $2,944
and President 1995 n/a n/a n/a n/a
James J. Spilker, Jr. (4) 1997 $257,309 $66,003 0 $6,000
Chairman of the Board 1996 $240,011 $0 7,900 $4,500
1995 $234,452 $35,000 8,600 $7,208
Leonard Schuchman 1997 $192,523 $40,264 6,000 $10,255
Vice President and Director 1996 $183,019 $0 6,024 $6,770
1995 $181,479 $30,000 57,000 $6,222
Gary S. Wolf 1997 $180,331 $44,279 59,000 $6,264
Executive Vice President 1996 $161,013 $0 5,300 $4,750
1995 $159,440 $20,000 36,160 $4,936
John E. Ohlson 1997 $178,388 $36,960 6,000 $8,004
Vice President 1996 $168,002 $0 5,530 $5,754
1995 $168,002 $0 6,720 $5,776
Ernest L. Dickens, Jr. 1997 $160,396 $32,564 11,000 $7,264
Vice President 1996 $149,372 $11,530 4,458 $4,679
1995 $138,826 $8,790 5,416 $4,554
<FN>
- ----------
(1) Represents incentive bonuses paid during the fiscal year for prior
year's performance pursuant to the Management Incentive Plan.
(2) For fiscal year 1997, includes (i) the Company's contribution to the
Pension and Profit Sharing portions of the Stanford Telecommunications,
Inc. Employee Retirement Program of $6,000 for each of J.J. Spilker,
Jr., L. Schuchman, J.E Ohlson, G.S. Wolf, V.P. Peline, and E.L.
Dickens; (ii) Company-paid life insurance premiums as follows: V.P.
Peline, $4,057; L. Schuchman, $2,755; J.E. Ohlson, $504; G.S. Wolf,
$264, E.L. Dickens, Jr., $514; (iii) patent issue awards of $1500 and
$750 each for L. Schuchman and J.E. Ohlson, respectively, and (iv)
longevity awards of $750 each for E. Dickens and J. E. Ohlson.
(3) Dr. Peline joined the Company as its Chief Executive Officer and
President on June 5, 1995. Compensation reported herein does not
include $15,000 paid to Dr. Peline as a non-employee director during
fiscal year 1995.
(4) Since June 1995, Dr. Spilker has served as Principal Scientist for the
Company.
</FN>
</TABLE>
-5-
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted in fiscal
year 1997 to the Named Executive Officers.
<CAPTION>
Percent of
Total Potential Realizable Value at
Number of Options Assumed Annual Rates of Stock
Securities Granted to Price Appreciation for Option
Underlying Employees Exercise Term (2)
Options in Fiscal Price Per Expiration ---------------------------------
Name Granted (1) Year Share Date 5% 10%
- ------------------------ -------------- ----------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Val P. Peline 20,000 5.3% $14.500 4/11/06 $182,379 $462,185
20,000 5.3 23.000 5/6/06 289,292 733,122
60,000 16.0 21.000 5/8/06 792,407 2,008,115
James J. Spilker, Jr. 0 0 0 N/A N/A N/A
Leonard Schuchman 6,000 1.6 14.875 4/4/06 56,129 142,242
Gary S. Wolf 9,000 2.4 14.875 4/4/06 84,193 213,362
50,000 13.3 13.625 11/5/06 428,434 1,085,737
John E. Ohlson 6,000 1.6 14.875 4/4/06 56,129 142,242
Ernest L. Dickens, Jr. 6,000 1.6 14.875 4/4/06 56,129 142,242
5,000 1.3 17.250 1/3/07 54,242 137,460
<FN>
- ----------
(1) All options granted in fiscal year 1997 were granted pursuant to the
1991 Stock Option Plan (the "Option Plan"). The Option Plan provides
for granting either incentive or non-qualified stock options. All
options granted in fiscal year 1997 were non-qualified stock options
granted at 100% of the fair market value of the Common Stock on the
date of grant. The options generally expire ten years from date of
grant, unless earlier terminated in certain events related to
termination of employment. The options vest 25% per year on each of the
first four anniversaries of the option grant date, except those granted
to Dr. Peline which vest 100% after one year, but vesting ceases when
the optionee terminates employment. All options granted under the
Option Plan which have been held for at least one year will vest in
full in the event of the sale, dissolution or liquidation of the
Company, a merger or consolidation in which the Company is not the
surviving corporation or becomes the subsidiary of another entity, or
an offer to all stockholders of the Company to purchase more than 50%
of the Company's outstanding shares.
(2) The 5% and the 10% assumed rates of appreciation applied to the option
exercise price over the option term are prescribed by the rules of the
SEC and do not represent the Company's estimate or projection of the
future price of its Common Stock. If the Common Stock does not
appreciate above the exercise price, the Named Executive Officers will
receive no benefit from the options.
</FN>
</TABLE>
-6-
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table shows the number of shares of Common Stock
represented by outstanding stock options held by each of the Named Executive
Officers as of the end of the fiscal year 1997. On such date, the closing price
of the Common Stock on the Nasdaq National Market was $16.50 per share.
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Fiscal
Year-End Year-End
Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise Relalized Unexercisable Unexercisable
- --------------------- ------------------- --------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
Val P. Peline 0 Shares n/a 220,000/100,000 $1,998,750/$40,000
Common Stock Common Stock
James J. Spilker, Jr. 0 shares n/a 12,725/12,375 $131,703/$116,684
Common Stock Common Stock
Leonard Schuchman 40,000 shares $585,700 34,836/40,628 $316,911/$315,908
Common Stock Common Stock
Gary S. Wolf 0 shares n/a 23,605/82,455 $237,593/$386,899
Common Stock Common Stock
John E. Ohlson 0 shares n/a 9,572/15,118 $98,947/$95,699
Common Stock Common Stock
Ernest L. Dickens 2,668 shares $57,297 1,113/18,367 $10,153/$79,236
Common Stock Common Stock
</TABLE>
-7-
<PAGE>
COMPENSATION AND STOCK PLANS COMMITTEES
REPORT ON EXECUTIVE COMPENSATION
Executive Compensation
The Compensation Committee of the Board of Directors is responsible for
developing and recommending to the Board policies on compensation of the
Company's senior executives. The Stock Plans Committee of the Board of Directors
administers the Company's stock option plans and recommends to the Board
policies on stock options and other equity-based incentives. Set forth below, in
accordance with the rules of the Securities and Exchange Commission ("SEC"), is
a joint report of the Compensation and Stock Plans Committees concerning those
policies and how they were applied to the fiscal 1997 compensation to Dr. Val P.
Peline, President and Chief Executive Officer, and to all other executive
officers of the Company.
General Executive Compensation Policies
The Company's compensation program is designed to attract and retain
qualified executives and to ensure that their efforts are directed toward the
long-term interests of the Company and its stockholders. To that end, the
Company strives to pay competitive base salaries and to provide incentives to
its executives by linking individual compensation to Company and business unit
performance through an annual incentive bonus plan, and linking executive and
stockholder interests through a stock option plan.
Each of the Compensation and Stock Plans Committees annually review
salaries, incentive compensation and stock options, and other aspects of
executive compensation. In general, the purpose of such reviews is to ensure
that the Company's overall executive compensation program remains competitive
with other companies that are similar in revenues, profitability, asset size and
markets served and that executive pay reflects both the individual's performance
and the overall performance of the Company. Salary survey information from
Western Management Group and Radford Associates for companies designated as
"high technology companies," many of which are included in the S&P High
Technology Index (the "Comparable Companies"), as well as other publicly
available sources are used in the evaluation to determine the competitiveness of
the executive compensation program. The Compensation Committee attempts to
establish base salaries for the Company's executive officers in the median range
of the Comparable Companies. The target for incentive compensation is below
average for Comparable Companies. This approach reflects the Compensation
Committee's aim to be competitive in the market for executive talent, without
lowering its performance expectations.
In determining fiscal year 1997 compensation for the executive
officers, the Compensation Committee reviewed the Company's financial results
for fiscal year 1996, together with a comparison against plan and results
achieved during prior fiscal years. The Compensation Committee evaluates company
performance based primarily on profitability, with consideration also given to
revenue growth. For fiscal year 1996, revenues increased by 27% from fiscal year
1995. Net income for fiscal year 1996 increased to $6,173,000 from $131,000 in
fiscal year 1995.
Summary of Fiscal Year 1997 Compensation Programs
For fiscal year 1997, the executive compensation program consisted of
base salary and eligibility for participation in the Management Incentive Plan
and the Management Option Incentive Program.
Base Salary
The Compensation Committee determines the base salaries of the
Company's executive officers based on the Company's revenues and profitability
for the prior year, its assessment of individual performance, and the
comparability considerations described above. The average base salary increase
for executive officers during fiscal year 1997 was 11.2%.
-8-
<PAGE>
Management Incentive Plan
Under the Management Incentive Plan which was adopted during fiscal
year 1996, executive officers as well as other key management and technical
personnel may receive incentive compensation based upon the Company and
participants achieving mutually agreed upon measurable objectives. The
Management Incentive Plan contemplates that, each year, the Board will establish
the Company objectives, and the Company objectives will become the objectives of
the President and the Chairman of the Board. The President then will establish
individual objectives for the executive officers who report directly to him, and
each of such executive officers then will establish objectives for those persons
who participate in the Management Incentive Plan and report to him. The
President will review and approve the objectives for all participants to assure
that the individual objectives collectively will serve the Company in achieving
the objectives set by the Board. At the end of each fiscal year, each
participant will become eligible for an award under the Management Incentive
Plan based on the Company achieving the objectives set forth by the Board and
the participant's performance and accomplishment toward the objectives set forth
for such participant. Awards to executive officers will be determined by the
Compensation Committee after the Company evaluation and bonus pool are
established by the Board. The Board will establish the bonus pool by a formula
based on the performance of the Company and of each of the participants.
Payments in the amount of $354,692 were paid out to executive officers under the
Management Incentive Program during fiscal year 1997 in recognition of
performance during fiscal year 1996. It is anticipated that payments will be
made during fiscal year 1998 based upon objectives and results achieved during
fiscal year 1997.
Stock Options
The Compensation and Stock Plans Committees view stock options as a
means of linking executive and stockholder interests. Each year, the Stock Plans
Committee considers and may approve stock option grants, determining such
aspects as grant size, vesting schedules and plan participants.
Management Option Incentive Program
In May 1993, the Board of Directors adopted an Officers' Option
Incentive Program to establish a uniform policy governing annual options grants
to eligible officers. During fiscal year 1996, the Board of Directors revised
the Officer's Option Incentive Program to expand the number of management
personnel eligible for option grants under the program and renamed the program
the Management Option Incentive Program, to be effective beginning in fiscal
year 1997. Under the Management Option Incentive Program, management personnel
who participate in the Company's Management Incentive Plan will be considered
for a stock option grant under the revised program. The number of options
already held by the eligible participants is not a factor in determining whether
an otherwise eligible officer will receive an option grant. It is anticipated
that annual option grants will be made to certain officers of the Company,
including the Named Executive Officers; however, the Compensation and Stock
Plans Committees may exclude certain officers from receiving options as they
deem appropriate. Options proposed under this program are subject to the Stock
Plans Committee's discretion under the provisions of the Company's 1991 Stock
Option Plan. During fiscal year 1997, a total of 182,310 options were granted
pursuant to the Management Option Incentive Program for 1996 performance, of
which the Executive Officers received an aggregate of 33,000 options. See
"Executive Compensation--Option Grants in Last Fiscal Year." The number of
shares of Common Stock underlying each option granted was based primarily on a
formula tied to the optionee's base salary.
Other Options
In addition to options granted pursuant to the Management Incentive
Option Plan, the Stock Plans Committee approved separate grants for Messrs.
Wolf, Klajbor, Knarr, and Dickens amounting to 50,000, 20,000, 5,000, and 5,000
option shares, respectively. These grants were issued to recognize Messrs. Wolf
and Klajbor for their promotions to Executive Vice President and Chief Financial
Officer, respectively, and for Messrs. Dickens and Knarr for their promotions to
Corporate Vice President.
-9-
<PAGE>
Dr. Peline's Fiscal Year 1997 Compensation
The Compensation and Stock Plans Committees annually review Dr.
Peline's performance to determine his base salary, incentive compensation and
stock option grants. The purpose of this review is to ensure that Dr. Peline's
compensation package remains competitive with chief executives of other
companies similar to the Company in revenues, profitability, asset size and
markets served. Salary survey information from Western Management Group and
Radford Associates as well as other publicly available sources are used in the
evaluation to determine the competitiveness of Dr. Peline's overall
compensation. The Compensation Committee has determined that the President's
base salary should be competitive with those companies contained in the salary
surveys but also be tied to the Company's financial performance. Given the
Company's increased revenues and profitability in fiscal year 1996 and the
Compensation Committee's assessment of Dr. Peline's contribution to those
performance measures during fiscal year 1996, Dr. Peline received a salary
increase from $300,000 to $360,000. In addition, Dr. Peline was evaluated as a
"Top" contributor under the Company's Management Incentive Program which
resulted in additional incentive compensation of $103,576. Finally, the Stock
Plan Committee approved an option grant of 60,000 shares to Dr. Peline based
upon his fiscal year 1996 performance and as a incentive for future performance.
In addition, as part of Dr. Peline's overall compensation package, he had the
opportunity to earn additional option shares if the market price of the
Company's Common Stock reached predetermined levels over a specified period of
time. During fiscal years 1996 and 1997, Dr. Peline received 20,000 and 40,000
option shares, respectively, as a result of the Common Stock reaching those
predetermined levels.
Policy with Respect to Deductibility of Compensation
Section 162(m) of the Internal Revenue Code, as amended, generally
disallows tax deductions by a company for compensation paid to certain of such
company's executive officers in excess of $1,000,000 per person during the
fiscal year. Final regulations under Section 162(m) (the "Final Rules") were
issued by the Internal Revenue Service in December 1995 and include an exemption
from the deduction limitation for compensation that is "performance-based"
within the meaning of Section 162(m) and the Final Rules.
The Compensation and Stock Plans Committees intend to include
performance-based compensation in the executive compensation program to the
extent reasonably necessary in order to minimize the effects of Section 162(m).
For example, at the 1995 Annual Meeting, the Committee submitted to the vote of
the stockholders certain amendments to the Company's 1991 Stock Option Plan
that, among other things, limit the number of options that can be granted to an
individual over the life of the Option Plan in order to maximize the
deductibility of option grants under the Option Plan. However, in light of the
Company's intent to remain competitive in its compensation of executives and
other employees, the Company reserves the right to pay compensation that may not
be tax deductible.
COMPENSATION COMMITTEE
Milton Holcombe, Chairman
John Brownie
P. Marshall Fitzgerald
C. Jerome Waylan
STOCK PLANS COMMITTEE
Michael Berberian, Chairman
John Brownie
P. Marshall Fitzgerald
-10-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The SEC requires disclosure where an executive officer of a company
served or serves as a director or on the compensation committee of another
entity and an executive officer of such other entity served or serves as a
director or on the compensation committee of the Company. The Company does not
have any such interlocks. Decisions as to executive compensation are made by the
Compensation Committee and the Stock Plans Committee. During fiscal year 1997,
the Compensation and Stock Plans Committees were comprised entirely of
non-employee Directors. Dr. Fitzgerald and Mr. Brownie, who serve as members of
both such committees, were former officers of the Company. Dr. Fitzgerald
retired from the Company in 1981 and Mr. Brownie retired in 1985.
<TABLE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P 500 Composite Index and the S&P High
Technology Composite Index for a period of five fiscal years ended March 31,
1997. "Total return," for the purpose of this graph, assumes reinvestment of all
dividends.
<CAPTION>
Comparison of Cumulative Total Return
Stanford Communications, Inc. Common Stock
S & P 500 Composite Index and S & P High Technology Composite Index
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
1992 1993 1994 1995 1996 1997
-------------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanford Telecom 100.00 154.17 268.73 258.33 500.00 558.33
-------------------------- ------------- ------------- ------------- ------------- ------------- -------------
S & P High Technology 100.00 109.88 129.24 163.55 220.81 298.51
-------------------------- ------------- ------------- ------------- ------------- ------------- -------------
S & P 500 100.00 115.23 116.93 135.13 178.51 213.89
-------------------------- ------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
-11-
<PAGE>
<TABLE>
STOCK OWNERSHIP
The following table sets forth, as of March 31, 1997, the names and
addresses of all persons who beneficially owned, to the knowledge of the
Company, more than 5% of the outstanding shares of Common Stock, and the number
of shares beneficially owned by each Director and nominee, each Named Executive
Officer and all Directors and executive officers as a group. Except as otherwise
indicated and subject to community property laws where applicable, each person
has sole investment and voting power with respect to the shares shown. Ownership
information is based upon information furnished by the respective persons.
<CAPTION>
Beneficial Ownership of
Common Stock
--------------------------------------
Number of Shares Percent of Class
----------------- -----------------
<S> <C> <C>
Directors and Executive Officers:
James J. Spilker, Jr. (1) .................................................... 1,269,939 9.9%
1221 Crossman Avenue
Sunnyvale, California 94089
Michael Berberian ........................................................... 912,850 7.1%
5200 North Palm, Suite 203
Fresno, California 93704
Leonard Schuchman (2)......................................................... 278,946 2.2%
John W. Brownie (3)........................................................... 49,950 *
P. Marshall Fitzgerald (4) ................................................... 11,104 *
Val P. Peline (5)............................................................. 322,500 2.5%
Milton W. Holcombe............................................................ 1,000 *
C. Jerome Waylan (6) ......................................................... 1,000 *
Ernest L. Dickens (7)......................................................... 5,282 *
John E. Ohlson (8)............................................................ 161,981 1.3%
Gary S. Wolf (9).............................................................. 82,085 *
All Directors and executive officers as a group
(15 persons) (10)............................................................. 3,123,940 24.3%
5% Stockholder:
Kopp Investment Advisors, Inc. (11)........................................... 4,197,686 32.7%
6600 France Avenue South, Suite 672
Edina, Minnesota 55435
<FN>
*Less than 1%
Footnotes appear on the following page.
-12-
<PAGE>
- ----------
(1) Includes 17,025 shares subject to options exercisable within 60 days
after March 31, 1997 and 20,000 shares held by Dr. Spilker's wife.
(2) Includes 52,196 shares subject to options exercisable within 60 days
after March 31, 1997.
(3) Consists of shares held in trust for John W. and Alice Brownie.
(4) Consists of 6,140 shares held in Joint Tenancy by P. Marshall
Fitzgerald and Claire Fitzgerald.
(5) Includes 320,000 shares subject to options exercisable within 60 days
after March 31, 1997.
(6) Consists of shares held by Dr. Waylan and his wife in Joint Tenancy.
(7) Consists of shares subject to options exercisable within 60 days after
March 31, 1997.
(8) Includes 14,362 shares subject to options exercisable within 60 days
after March 31, 1997.
(9) Includes 28,795 shares subject to options exercisable within 60 days
after March 31, 1997 and 3,000 shares held by Mr. Wolf's minor
daughter.
(10) Includes an aggregate of 459,181 shares subject to options exercisable
within 60 days after March 31, 1997.
(11) As disclosed in Amendment No. 6 to Schedule 13G (the "Schedule 13G")
filed with the SEC by Kopp Investment Advisors, Inc., a Minnesota
corporation and a registered investment adviser ("KIA"), on behalf of
itself and certain related persons, LeRoy C. Kopp, an individual
("Kopp"), controls each of KIA, Kopp Family Foundation (the
"Foundation") and the LeRoy C. Kopp Individual Retirement Account (the
"IRA") and is trustee of the KIA Profit Sharing Plan (the "PSP" and,
together with KIA, Kopp, the Foundation and the IRA, the "reporting
persons"). All of the reporting persons have the same address as KIA.
Kopp has sole voting power as to 236,000 shares and dispositive power
as to 138,000 shares. In addition, Kopp has shared dispositive power as
to 4,059,686 shares, of which he also has shared voting power as to
40,000 shares. The Foundation has sole voting and dispositive power
with respect to 40,000 shares; KIA has shared dispositive power as to
4,019,686 shares, and sole voting power as to 98,000 shares; the IRA
has sole voting and dispositive power as to 126,000 shares; and the PSP
has sole voting and dispositive power as to 12,000 shares. Of these
shares, 4,071,686 are held by the respective reporting persons in a
fiduciary or representative capacity, and the reporting persons
disclaim beneficial ownership of such shares.
</FN>
</TABLE>
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Directors and executive officers and holders of more than
10% of the outstanding Common Stock ("insiders") to file with the SEC reports of
ownership and changes in ownership of Common Stock and other equity securities
of the Company. Insiders also are required to furnish the Company with a copy of
all reports that they file with the SEC pursuant to Section 16(a).
Based solely on its review of such reports or written representations
with respect to Section 16(a) reports by insiders, the Company believes that
during fiscal year 1997, each of the insiders complied with all applicable
filing requirements under Section 16(a), except that P. Marshall Fitzgerald
failed to timely file three Forms 4 in connection with three purchases of Common
Stock. All of such reports have subsequently been filed and provided to the
Company, in accordance with Section 16(a).
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Arthur Andersen LLP to serve as the Company's
independent public accountants for fiscal year 1998. While it is not required to
do so, the Board is submitting to the stockholders the selection of that firm
for ratification in order to ascertain the stockholders' views. If such
selection is not ratified by the affirmative vote of a majority of the shares of
Common Stock present or represented at the meeting and entitled to vote, the
Board will reconsider its selection.
-13-
<PAGE>
Representatives of Arthur Andersen LLP are expected to be present at
the meeting and available to respond to appropriate questions. Such
representatives will have the opportunity to make a statement if they desire to
do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
STOCKHOLDER PROPOSALS
To be considered for presentation at the 1998 Annual Meeting of
Stockholders, a stockholder proposal must be received at the offices of the
Company not later than January 30, 1998.
OTHER MATTERS
Management knows of no other business which will be presented for
consideration at the meeting. If any other business is properly brought before
the meeting, it is intended that proxies in the enclosed form will be voted in
respect thereof in accordance with the judgment of the persons voting the
proxies.
Whether or not you intend to be present at this meeting, you are urged
to return your proxy promptly.
By order of the Board of Directors
/s/ Jerome F. Klajbor
-----------------------------------------
JEROME F. KLAJBOR
Secretary
<PAGE>
APPENDIX A
STANFORD TELECOMMUNICATIONS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 25, 1997
P
R
O
X
Y
James J. Spilker, Jr. and Jerome F. Klajbor, or either of them each
with the power of substitution, are hereby authorized to represent and vote as
designated on the reverse side the shares of the undersigned at the Annual
Meeting of Stockholders of Stanford Telecommunications, Inc. to be held on
Wednesday, June 25, 1997, or at any adjournment of the Annual Meeting.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL
MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote such shares, and acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement relating to the June 25, 1997 Annual Meeting of Stockholders.
Shares represented by this proxy will be voted as directed by the
stockholder. If no such directions are indicated, the proxies will have the
authority to vote "FOR" the election of directors and "FOR" Item 2.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE.
CONTINUE AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[X] Please mark
votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" ITEM 2.
FOR AGAINST ABSTAIN
1. Election of Directors 2. Ratification of the appointment of
Nominees: Michael Berberian, John W. Brownie, Arthur Andersen LLP as the [ ] [ ] [ ]
Val P. Peline, Leonard Schuchman, James J. Spilker, Jr., Company's independent auditors for
C. Jerome Waylan the current fiscal year.
FOR WITHHELD 3. Upon any other matters which might properly come before the
[ ] ALL [ ] FROM ALL meeting.
NOMINEES NOMINEES
[ ] _________________________________________ MARK HERE
For all nominees except as shown above FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Please sign exactly as your name appears on this proxy. If signing for
estates, trusts or corporations, title and capacity should be stated. If
shares are held jointly, each holder should sign.
Signature:____________________________ Date: __________________ Signature:____________________________ Date: __________________
</TABLE>
