[STANFORD TELECOM LETTERHEAD]
May 28, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Stanford Telecommunications, Inc., which will be held Wednesday, June 23,
1999, 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 has
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/James J. Spilker, Jr.
-------------------------------
Dr. James J. Spilker, Jr.
Chairman of the Board
[STANFORD TELECOM FACILITIES ADDRESSES]
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment no. 1)
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
STANFORD TELECOMMUNICATIONS, INC.
------------------------------------------------
(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] 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 transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
STANFORD TELECOMMUNICATIONS, INC.
Notice of Annual Meeting of Stockholders
To Be Held June 23, 1999
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 23, 1999, at 6:00 p.m. local
time, for the following purposes:
1. To elect seven 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 4, 1999
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/s Jerome F. Klajbor
-----------------------------------
JAMES F. KLAJBOR
Secretary
Sunnyvale, California
May 28, 1999
<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 23, 1999 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 seven 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 4, 1999 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 13,136,948 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 seven nominees receiving the highest number of votes
will be elected as the Directors of the Company. Abstentions 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. Broker non-votes will not be deemed
eligible to vote for the ratification of the selection of Arthur Andersen LLP,
as the Company's independent public accountant and, as a result, will have no
effect.
A copy of the Company's 1999 Annual Report to Stockholders containing
financial statements for fiscal year 1999 accompanies this Proxy Statement. The
Company's fiscal year 1999 was composed of one 14-week quarter (quarter ended
June 30, 1998) and three 13-week quarters, each of which ended on the Thursday
closest to the corresponding calendar quarter end. Fiscal year 1999 ended on
April 1, 1999.
This Proxy Statement and the accompanying form of proxy are first
being sent to stockholders on or about May 28, 1999.
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>
PROPOSAL 1
ELECTION OF DIRECTORS
Seven 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 65
Dr. Spilker, a cofounder of the Company, has been Chairman of the Board
since 1973 and Principal Scientist since June 1995. He served as
President and Chief Executive Officer of the Company from August 1981
to June 1995.
Val P. Peline................................................................... 1985 68
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 65
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 62
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 Communication Systems Integration group.
-2-
<PAGE>
John W. Brownie................................................................. 1973 65
Mr. Brownie, a cofounder 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 57
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. From May 1996
to September 1997, Dr. Waylan served as Executive Vice President of
NextWave Telecom, Inc. Dr. Waylan has been a Director of Globecomm
Systems, Inc. since February 1997. Dr. Waylan is currently the Chief
Executive Officer of Constellation Communications Inc.
Robert Calafell................................................................. 1999 58
Mr. Calafell was appointed to the Board of Directors in January 1999.
Mr. Calafell retired as Senior Vice President of GTE after 32 years of
service in December 1998. He held several key management positions in
GTE, including President of GTE's Airfone, Vice President of Video
Services, Vice President and General Manager of GTE South, Vice
President of Business Planning and Development for GTE Sprint, and
Senior Vice President of Planning and Business Development for GTE
Corporation. Mr. Calafell serves as a Director for Pacific Gateway
Exchange Inc.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL
NOMINEES NAMED ABOVE.
-3-
<PAGE>
BOARD OF DIRECTOR'S MEETINGS AND COMMITTEES
The Company's Board held six meetings during fiscal year 1999 and acted
on three matters by unanimous written consent. Each Director attended at least
75% of the meetings of the Board and of the committees of the Board on which he
serves.
The Board has a Compensation Committee, an Audit Committee and a Stock
Plans Committee. There is no nominating committee or any committee performing a
similar function.
The Compensation Committee held three meetings in fiscal year 1999 and
acted on one matter 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 1999 were Dr. C. Jerome Waylan and Messrs. Michael Berberian
and John W. Brownie.
The Audit Committee held three meetings in fiscal year 1999. Its
functions are to monitor the effectiveness of the audit effort, to monitor 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 1999 were Dr. Waylan and Messrs. Berberian and Brownie.
The Stock Plans Committee held two meetings in fiscal year 1999 and
acted on one matter by unanimous written consent. Its functions are to supervise
and manage the Company's Employee Stock Purchase Plan and the 1991 Stock Option
Plan. The members of the Stock Plans Committee during fiscal year 1999 were Dr.
Waylan and Messrs. Berberian and Brownie.
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
SUMMARY COMPENSATION TABLE
<TABLE>
The following table provides certain summary information concerning
compensation paid for fiscal years 1997, 1998 and 1999 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 (1) Bonus (2) Options Compensation (3)
- -------------------------------- --------- --------------- --------------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
Val P. Peline 1999 $400,180 $0 29,000 $ 9,350
Chief Executive Officer 1998 $381,642 $105,579 10,000 $10,110
and President 1997 $351,931 $103,576 100,000 $10,057
James J. Spilker, Jr.(4) 1999 $282,463 $0 4,000 $5,550
Chairman of the Board 1998 $270,386 $64,327 5,000 $6,750
1997 $257,309 $66,003 0 $6,000
Gary S. Wolf 1999 $221,654 $0 21,500 $6,081
Executive Vice President 1998 $207,996 $45,083 5,000 $6,281
1997 $180,331 $44,279 59,000 $6,264
Leonard Schuchman 1999 $218,069 $0 9,500 $7,206
Vice President and 1998 $203,752 $28,878 3,500 $13,936
Director 1997 $192,523 $40,264 6,000 $10,255
John E. Ohlson 1999 $202,478 $0 9,500 $7,025
Vice President 1998 $190,389 $35,678 3,500 $8,136
1997 $178,388 $36,960 6,000 $5,004
Ernest L. Dickens, Jr. 1999 $193,278 $0 15,000 $4,800
Vice President 1998 $173,261 $40,099 3,500 $6,291
1997 $160,396 $32,564 11,000 $7,264
<FN>
(1) Fiscal year 1999 consisted of 27 pay periods; fiscal years 1998 and
1997 each consisted of 26 pay periods.
(2) Represents incentive bonuses paid during the fiscal year for prior
year's performance pursuant to the Management Incentive Plan. See
"Compensation and Stock Plans Committees' Report on Executive
Compensation".
(3) Fiscal year 1999, other compensation consists of (i) the Company's
contribution to the Pension and Profit Sharing portions of the Stanford
Telecommunications, Inc. Employee Retirement Program of $4,800 for each
officer; (ii) Company-paid life insurance premiums as follows: Val P.
Peline, $4,550; Gary S. Wolf, $281; Leonard Schuchman, $906; John E.
Ohlson, $725; (iii) patent awards of $1,500 each for Leonard Schuchman
and John E. Ohlson, and $750 for James J. Spilker, Jr. and (iv)
longevity award of $1,000 for Gary S. Wolf.
(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 1999 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> <C>
Val P. Peline 4,000 0.7% $16.00 4/9/08 $40,249 $101,100
25,000 4.5 14.25 3/30/09 224,044 567,771
James J. Spilker, Jr. 4,000 0.7 16.00 4/9/08 40,249 101,100
Gary S. Wolf 4,000 0.7 16.00 4/9/08 40,249 101,100
17,500 3.1 14.25 3/30/09 156,831 397,440
Leonard Schuchman 3,500 0.6 16.00 4/9/08 35,218 89,250
6,000 1.1 14.25 3/30/09 53,770 136,265
John E. Ohlson 3,500 0.6 16.00 4/9/08 35,218 89,250
6,000 1.1 14.25 3/30/09 53,770 136,265
Ernest L. Dickens, Jr. 5,000 0.9 16.00 4/9/08 50,312 127,499
10,000 1.8 14.25 3/30/09 89,617 227,108
<FN>
(1) All options granted in fiscal year 1999 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 1999 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>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
The following table shows the options exercised by the Named Executive
Officers during fiscal year 1999 and the number of shares of Common Stock
underlying outstanding stock options held by each of the Named Executive
Officers as of the end of fiscal year 1999. On such date, the closing price of
the Common Stock on the Nasdaq National Market was $15.125 per share.
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year-End Year-End
Shares Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized (1) Unexercisable Unexercisable
---- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Val P. Peline 0 Shares n/a 330,000/29,000 $1,708,750/$21,875
Common Stock Common Stock
James J. Spilker, Jr. 0 shares n/a 24,375/9,725 $198,569/$15,306
Common Stock Common Stock
Gary S. Wolf 0 shares n/a 76,485/56,075 $429,766/$64,206
Common Stock Common Stock
Leonard Schuchman 4,900 shares $45,319 67,808/15,756 $481,110/$17,672
Common Stock Common Stock
John E. Ohlson 6,720 shares $49,560 15,337/15,633 $100,509/$16,718
Common Stock Common Stock
Ernest L. Dickens 0 shares n/a 11,073/23,365 $29,024/$18,141
Common Stock Common Stock
<FN>
(1) Based on the market price of the purchased shares on the exercise date
less the option exercise price paid for such shares.
</FN>
</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 year 1999 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 mid-range
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 1999 compensation for the executive
officers, the Compensation Committee reviewed the Company's financial results
for fiscal year 1998, 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 as well as individual performance. For fiscal year 1998, revenues
decreased by 8% from fiscal year 1997. Net income for fiscal year 1998 decreased
to $5,216,000 from $8,011,000 in fiscal year 1997.
Summary of Fiscal Year 1999 Compensation Programs
For fiscal year 1999, 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, as well as its assessment of individual performance, and the
comparability considerations described above. The average base salary for
executive officers during fiscal year 1999 increased 2.6% from fiscal 1998.
-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 are determined by the
Compensation Committee after the Company evaluation and bonus pools are
established by the Board. The Board establishes the bonus pool by a formula
based on the performance of the Company and of each of the participants. In
March 1999, the Board of Directors evaluated the Company's performance against
stated objectives and established a bonus pool. In April of 1999, in accordance
with the Management Incentive Plan the Compensation Committee determined
individual bonuses for the Executive Officers based on the achievements of the
stated objectives.
Stock Options; Management Option Incentive Program
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. In May 1993, the
Board of Directors adopted an Officers' Option Incentive Program to establish a
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. On April 9, 1998 a total of
215,750 options were granted pursuant to the Management Option Incentive Program
for fiscal year 1998 and on March 30, 1999 a total of 342,600 options were
granted for fiscal year 1999 of which the Named Executive Officers received an
aggregate of 33,000 and 84,000 options for fiscal years 1998 and 1999,
respectively.
-9-
<PAGE>
Dr. Peline's Fiscal Year 1999 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 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 and tied to the
Company's financial performance. Given the Company's financial performance in
fiscal year 1998, Dr. Peline's salary was not increased from the prior year
salary of $385,000. The Stock Plan Committee approved an option grant of 4,000
shares to Dr. Peline for fiscal year 1998 and an option grant of 25,000 shares
for fiscal year 1999.
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).
However, in light of the Company's intent to remain competitive in its
compensation of executives and other employees, the Company might pay
compensation that is not performance-based and that would not be tax deductible.
COMPENSATION COMMITTEE
C. Jerome Waylan
Michael Berberian
John Brownie
STOCK PLANS COMMITTEE
Michael Berberian
John Brownie
C. Jerome Waylan
-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 1999,
the Compensation and Stock Plans Committees were comprised entirely of
non-employee Directors. Mr. Brownie, who serves as a member of both such
committees, was a former officer of the Company. Mr. Brownie retired from the
Company in 1985.
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 High Technology Composite Index and the S&P
500 Composite Index for a period of five fiscal years ended March 31, 1999.
"Total return," for the purpose of this graph, assumes reinvestment of all
dividends.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T.]
<TABLE>
Comparison of Cumulative Total Return
Stanford Telecommunications, Inc. Common Stock
S & P High Technology Composite Index and S & P 500 Composite Index
<CAPTION>
1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stanford Telecom 100.00 96.13 186.06 207.76 209.32 192.26
- -------------------------------------------------------------------------------------------------------------------
S & P High Technology 100.00 126.54 170.85 230.96 349.06 559.93
- -------------------------------------------------------------------------------------------------------------------
S & P 500 100.00 115.57 152.67 182.93 270.74 320.72
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
STOCK OWNERSHIP
<TABLE>
The following table sets forth, as of March 31, 1999, 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 Percent
Shares of Class
---------------- ----------------
<S> <C> <C>
Directors and Executive Officers:
James J. Spilker, Jr. (1) .................................................... 1,279,539 9.8%
1221 Crossman Avenue
Sunnyvale, California 94089
Michael Berberian ........................................................... 822,850 6.3%
5200 North Palm, Suite 203
Fresno, California 93704
Val P. Peline (2)............................................................. 336,500 2.6%
Leonard Schuchman (3)......................................................... 296,558 2.3%
John E. Ohlson (4)............................................................ 168,781 1.3%
Gary S. Wolf (5).............................................................. 142,617 1.1%
John W. Brownie (6)........................................................... 44,950 *
Ernest L. Dickens (7)......................................................... 13,823 *
C. Jerome Waylan ............................................................. 1,000 *
All Directors and executive officers as a group
(12 persons) (8).............................................................. 3,169,599 24.3%
5% Stockholder:
Kopp Investment Advisors, Inc.; Leroy C. Kopp (9)............................. 2,404,665 18.4%
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
<FN>
*Less than 1%
Footnotes appear on the following page.
-12-
<PAGE>
- ----------
(1) Includes 26,625 shares subject to options exercisable within 60 days after March 31, 1999 and 20,000
shares held by Dr. Spilker's wife.
(2) Includes 334,000 shares subject to options exercisable within 60 days after March 31, 1999.
(3) Includes 70,183 shares subject to options exercisable within 60 days after March 31, 1999.
(4) Includes 17,712 shares subject to options exercisable within 60 days after March 31, 1999.
(5) Includes 80,985 shares subject to options exercisable within 60 days after March 31, 1999 and 3,000 shares
held by Mr. Wolf's minor daughter.
(6) Consists of shares held in trust for John W. and Alice Brownie.
(7) Consists of shares subject to options exercisable within 60 days after March 31, 1999.
(8) Includes an aggregate of 596,107 shares subject to options exercisable within 60 days after March 31,
1999.
(9) According to Schedule 13G filed March 4, 1999 (the "Schedule 13G") filed with the SEC by (i) Kopp
Investment Advisors, Inc., a Minnesota corporation ("KIA") and a registered investment advisor, (ii) Kopp
Holding Company, a Minnesota corporation and the parent corporation of KIA ("KHC"), and (iii) LeRoy C.
Kopp, the sole stockholder of KHC ("Kopp" and collectively with KIA and KHC, the "reporting persons"), KIA
beneficially owns 2,226,665 shares of Common Stock and Kopp beneficially owns 2,404,665 shares of Common
Stock (including the shares beneficially owned by KIA). KHC, as the parent corporation of KIA reports
indirect ownership of the Common Stock beneficially owned by KIA. KIA reports shared investment power with
respect to all of the shares of Common Stock it beneficially owns (by virtue of limited powers of attorney
and/or investment advisory agreements) and reports sole voting power with respect to 36,000 shares. Kopp
reports sole voting and sole investment power with respect to 178,000 shares of Common Stock he
beneficially owns. All of the reporting persons have the same business address.
</FN>
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1998, each of the insiders complied with all applicable
filing requirements under Section 16(a).
-13-
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Arthur Andersen LLP to serve as the Company's
independent public accountants for fiscal year 2000. 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.
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 2000 Annual Meeting of
Stockholders, a stockholder proposal must be received at the offices of the
Company not later than January 28, 2000.
In addition, the proxy solicited by management of the Company for the
2000 Annual Meeting of Stockholders will confer discretionary authority to vote
on any shareholder proposal presented at that meeting, unless the Company is
provided with notice of such proposal on or prior to April 13, 2000.
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
-14-
<PAGE>
Appendix A
- --------------------------------------------------------------------------------
PROXY STANFORD TELECOMMUNICATIONS, INC. PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 23, 1999
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 23, 1999, 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 23, 1999 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 each of the nominees for director and
"FOR" Item 2 ratification of the appointment of the Company's independent
auditors.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
ATTENTION: PLEASE NOTE THAT THIS BOX WILL NOT BE PRINTED. IT IS TO SHOW THE TEXT
POSITION ON THE FRONT OF THIS PROXY CARD
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark
votes as in
this example
1. Election of Directors.
WITHHOLD
Nominees: Michael Berberian, FOR AUTHORITY
John W. Brownie, Val P. Peline,
Leonard Schuchman, [ ] [ ]
James J. Spilker, Jr.,
C. Jerome Waylan,
Robert Calafell.
[ ] _________________________________________
For all nominees except as noted above
2. Ratification of the appointment of Arthur FOR AGAINST ABSTAIN
Andersen LLP as the Company's independent [ ] [ ] [ ]
auditors for the current fiscal year.
3. Upon any other matters which might
properly come before this meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ELECTION OF EACH OF THE NOMINEES
FOR DIRECTOR AND "FOR" ITEM 2.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [ ]
Signature(s) ___________________________________________________________________
Dated ____________________________________,1999
Please sign exactly as your name appears on this proxy. If signing for
executor, trust, or corporation, title and capacity should be stated. If shares
are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
ATTENTION: PLEASE NOTE THAT THIS BOX WILL NOT BE PRINTED. IT IS TO SHOW THE TEXT
POSITION ON THE BACK OF THIS PROXY CARD
<PAGE>
1920-PS-99
