<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Cincinnati Microwave 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
/X/ No fee required
<PAGE> 2
CINCINNATI MICROWAVE
November 4, 1996
TO THE SHAREHOLDERS OF
CINCINNATI MICROWAVE, INC.
You are cordially invited to attend the Annual Meeting of Shareholders of
Cincinnati Microwave, Inc. to be held:
DATE: December 4, 1996
TIME: 9:30 A.M., E.D.T.
PLACE: Cincinnati Microwave, Inc.
One Microwave Plaza
Cincinnati, Ohio 45249
Information concerning the Company and the matters to be voted upon are
contained in the attached notice of meeting and proxy statement. A current
report on the affairs of the Company will be presented after the close of the
formal part of the meeting, and shareholders will have an opportunity for
questions and comments.
EVEN IF YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU RETURN YOUR PROXY
AT ONCE IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
ERIKA WILLIAMS
Chairman of the Board (Acting),
President and
Chief Executive Officer
<PAGE> 3
CINCINNATI MICROWAVE, INC.
ONE MICROWAVE PLAZA
CINCINNATI, OHIO 45249
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
DECEMBER 4, 1996
The Annual Meeting of Shareholders of Cincinnati Microwave, Inc., an Ohio
corporation, will be held on December 4, 1996, at Cincinnati Microwave, Inc.,
One Microwave Plaza, Cincinnati, Ohio 45249, at 9:30 A.M., E.D.T., for the
following purposes:
1. To fix the number of directors for the ensuing year;
2. To elect directors;
3. To consider and act upon a proposal to amend the Articles of
Incorporation of the Company to increase its authorized number of
common shares, without par value, from 20,000,000 to 40,000,000
common shares;
4. To consider and act upon a proposal to ratify the selection of Price
Waterhouse LLP as the Company's independent accountants for the year
ending December 29, 1996;
and to consider and act upon such other business as may properly come before the
meeting.
The Board of Directors has appointed R. Gregory Blair, Elaine M. Bacon and
Neil Ganulin as members of the proxy committee and has fixed the close of
business on October 28, 1996, as the record date for the determination of
shareholders entitled to notice of the annual meeting and to vote thereat.
By Order of the Board of Directors
KURT H. STUMP, Secretary
Cincinnati, Ohio
November 4, 1996
EVEN IF YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE SIGN THE
ENCLOSED PROXY CARD AND FORWARD IT AT ONCE IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. SHAREHOLDERS WHO ARE PRESENT
AT THE MEETING MAY, IF DESIRED, WITHDRAW THEIR PROXIES AND VOTE IN PERSON.
<PAGE> 4
CINCINNATI MICROWAVE, INC.
ONE MICROWAVE PLAZA
CINCINNATI, OHIO 45249
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Shareholders of Cincinnati Microwave,
Inc. (the "Company") to be held at Cincinnati Microwave, Inc., One Microwave
Plaza, Cincinnati, Ohio 45249, at 9:30 A.M., E.D.T., on December 4, 1996, and at
any adjournment thereof. The principal executive offices of the Company are
located at One Microwave Plaza, Cincinnati, Ohio 45249; its telephone number is
513-489-5400. This Proxy Statement and the form of proxy are being mailed to
shareholders on or about November 4, 1996.
The members of the proxy committee named in the enclosed proxy were
appointed by the Board of Directors, and solicitation of your proxy hereby is
being made by the Board of Directors of the Company. All shares represented by
properly executed proxies will be voted in accordance with the directions on the
proxies, unless such proxies are revoked prior to the vote. If no contrary
instruction is indicated on the proxy card, shares will be voted in favor of the
proposals set forth in the notice of the meeting and this Proxy Statement. (See
"PROPOSAL TO ESTABLISH NUMBER OF DIRECTORS", "ELECTION OF DIRECTORS", "PROPOSAL
TO AMEND THE ARTICLES OF INCORPORATION" AND "PROPOSAL TO RATIFY SELECTION OF
AUDITORS.") Proxies indicating an abstention from voting on any matter will be
tabulated as a vote withheld on such matter and will be included in computing
the number of shares present for purposes of determining the presence of a
quorum for the shareholder meeting. If a broker indicates on the form of proxy
that it does not have discretionary authority as to certain common shares to
vote on a particular matter, those common shares will be considered as present
for purposes of determining the presence of a quorum for the shareholder meeting
but not entitled to vote with respect to that matter. If any other matters are
properly presented for action at the meeting, it is intended that the members of
the proxy committee will vote in accordance with their best judgment on such
matters. This solicitation of proxies is being made by mail and all costs of the
solicitation will be borne by the Company. In addition to solicitation by mail,
directors, officers and regular employees of the Company may solicit proxies in
person or by telephone. The Company also has retained Corporate Investor
Communications, Inc. to assist it in connection with the solicitation, at an
estimated fee of $3,500 plus reimbursement of out-of-pocket expenses. Brokerage
houses and other custodians, nominees, or fiduciaries will be reimbursed for the
expense of forwarding documents to beneficial owners of shares held in their
names.
The giving of the proxy does not affect your right to attend and vote in
person at the meeting. Your presence at the meeting, however, will not itself
revoke your proxy; it may be revoked at any time prior to its exercise by the
execution of a later proxy, by giving written notice of revocation to the
Secretary of the Company, or by making a statement of revocation in person at
the meeting. A revocation made during the meeting shall not affect any vote
previously taken.
OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on October 28, 1996
(the "Record Date") are entitled to vote on matters to come before the meeting.
On the Record Date, the Company had outstanding 15,783,446 common shares,
without par value ("Common Shares"). Each Common Share carries one vote. The
Common Shares are the only voting securities the Company has outstanding. Of the
outstanding Common Shares, 114,469 shares are currently owned by the present
officers and directors of the Company. (See "SECURITY OWNERSHIP OF MANAGEMENT.")
<PAGE> 5
CUMULATIVE VOTING
If notice in writing is given by a shareholder to the Chairman of the
Board, the President, a Vice President, or the Secretary of the Company, not
less than 48 hours before the time fixed for the holding of the Annual Meeting
that such shareholder desires that the voting with respect to the election of
directors shall be cumulative, and if announcement of the giving of such notice
is made upon the convening of the Annual Meeting by the Chairman or Secretary or
by or on behalf of the shareholder giving such notice, each shareholder (or the
proxy therefor) shall have the right to cumulate such voting power as the
shareholder possesses for the election of directors.
Under cumulative voting, a shareholder may cast as many votes as shall
equal the number of directors to be elected multiplied by the number of such
shareholder's shares. Such votes may be cast all for one nominee or distributed
among two or more nominees as the shareholder may select or, in the case of
proxies, as the proxy holder may select. If cumulative voting is invoked in
connection with the election of directors at the Annual Meeting, the proxy
committee designated by the Board of Directors intends to distribute the votes
of shares represented by proxies it holds so as to elect the three nominees for
director nominated by the Board of Directors. (See "PROPOSAL TO ESTABLISH NUMBER
OF DIRECTORS" and "ELECTION OF DIRECTORS.")
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
As of the Record Date, Kopp Investment Advisors, Inc., a Minnesota
corporation ("KIA"), and James L. Jaeger were the only persons known by the
Company to be beneficial owners of more than 5% of its outstanding Common
Shares. The following table provides information as to ownership of Common
Shares by KIA and Mr. Jaeger.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------------------------------------------ ---------- ----------
<S> <C> <C>
Kopp Investment Advisors, Inc............................... 4,018,903 (2) 23.7%
6600 France Avenue South
Edina, MN 55435
James L. Jaeger............................................. 2,707,179 (3) 16.0%
One Microwave Plaza
Cincinnati, Ohio 45249
</TABLE>
- ---------------
(1) The Securities and Exchange Commission has defined "beneficial owner" of a
security to include any person who has or shares voting power or investment
power with respect to any such security or who has the right to acquire
beneficial ownership of any such security within 60 days. The percentages
shown in the tables are calculated on the basis that outstanding shares
include 738,500 Common Shares subject to outstanding options under the
Company's stock option plan which are exercisable within 60 days and 444,197
warrants to purchase 444,197 Common Shares, in addition to the number of
shares actually outstanding.
(2) KIA serves as a financial advisor for its clients. As such, KIA holds no
voting power for the shares owned by its clients. KIA does, however,
exercise limited investment power over the Common Shares owned by its
clients. KIA reported (in a Schedule 13G dated February 5, 1996) that it
possesses shared dispositive power with respect to 2,807,403 Common Shares.
The remaining 1,211,500 Common Shares, which includes 400,000 outstanding
warrants to purchase 400,000 Common Shares, are controlled by LeRoy C. Kopp,
President and 100% owner of KIA.
(3) Mr. Jaeger reported (in a Schedule 13G dated February 12, 1996) that he
possesses shared voting and investment power with regard to 23,629 of the
Common Shares shown opposite his name and exercises sole voting and
investment power over the remainder of such shares. All but 23,629 of such
Common Shares are owned of record by Mr. Jaeger. Mr. Jaeger's beneficial
shares include 30,000 outstanding warrants to purchase 30,000 Common Shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
2
<PAGE> 6
Exchange Commission and the National Association of Securities Dealers.
Directors, executive officers and greater-than-ten-percent shareholders are
required by the Commission's regulations to furnish the Company with copies of
all forms which they file under Section 16(a). Based solely on its review of the
copies of such forms received by it, the Company believes that all such filing
requirements applicable to its directors and executive officers during 1995 were
complied with, except for Form 4s related to the sale of Common Shares by Mr.
Jaeger which were subsequently filed.
PROPOSAL TO ESTABLISH NUMBER OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Article 6 of the Regulations of the Company provides that the Board of
Directors shall consist of not less than three or not more than nine members, as
determined by the shareholders at each annual meeting or any special meeting
called for the election of directors. At this time, the officers of the Company
are actively seeking additional experienced individuals to become directors of
the Company because such individuals' insights would assist the Board in
charting the Company's direction. Therefore, the Board of Directors has proposed
that the size of the Company's Board for the next year be set at five, with
three of the directors to be elected at the Annual Meeting and the other two
positions to be left vacant to be filled by the Board when the appropriate
individuals are found. If this proposal is adopted, only three of the five
positions for directors would be filled by a vote of the shareholders at the
Annual Meeting. Hence, only the persons receiving the three highest total votes
will be elected as directors at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Adoption of
this proposal requires the affirmative vote of a majority of the Common Shares
represented at the meeting.
ELECTION OF DIRECTORS
(ITEM 2 ON PROXY CARD)
Each of the three persons named below is a nominee for election as a
director, to hold office until the next annual meeting and until his or her
successor has been duly elected and qualified. It is intended that the proxies
solicited hereby, unless authority is withheld by the shareholder giving the
proxy, will be voted for the election of the three nominees named herein. Each
nominee has indicated that he or she is willing to serve, and the Board has no
reason to believe that any nominee will be unavailable or unable to serve. If,
however, any nominee should decline or become unable to serve, proxies solicited
hereby will be voted for the election of such person or persons as the Board of
Directors may recommend. All nominees are U.S. citizens. The following
information is supplied as to each nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
BELOW. The persons receiving the three highest total votes will be elected as
directors at the Annual Meeting.
ERIKA WILLIAMS
Age -- 49
Principal Occupation -- Ms. Williams has been President and Chief Executive
Officer of the Company since June 1996 and Chairman of the Board (Acting) since
October 1996. Ms. Williams was Chief Operating Officer of System Integrators,
Inc. (a company that designs, manufactures, markets and services publishing
systems to the newspaper publishing industry) from July 1995 to June 1996 and
served as Chief Executive Officer from March 1996 to June 1996. From March 1995
to June 1995, Ms. Williams was President of the Erika Williams Group, a
consulting firm. From 1993 to March 1995, Ms. Williams was Senior Vice President
and General Manager of Enterprise Storage Systems of Amdahl Corporation (a
developer and manufacturer of main frame computers) of Sunnyvale California.
Since 1978, Ms. Williams held various positions with Amdahl Corporation
including the Corporate Officer responsible for product management of the main
frame business, Vice President of Processor Technology and Development and
Director of Product Software and Diagnostics. She has been a Director of the
Company since 1994.
3
<PAGE> 7
JOSEPH M. O'DONNELL
Age -- 49
Principal Occupation -- Mr. O'Donnell has served as President, Chief
Executive Officer and Director of Computer Products, Inc. (a manufacturer of
electronic products and subsystems) since July 1994. Mr. O'Donnell served as
Managing Director of O'Donnell Associates (a consulting firm) from March 1994 to
June 1994 and from October 1992 to September 1993; as Chief Executive Officer of
Savin Corporation (an office products distributor) from October 1993 to February
1994; and as President and Chief Executive Officer of GO/DAN Industries (a
manufacturer of automotive parts) from June 1990 to September 1992. He is a
director of V-Band Corporation (a manufacturer of computer systems). He has been
a Director of the Company since 1991.
GILBERT L. WACHSMAN
Age -- 48
Principal Occupation -- Mr. Wachsman has been Vice Chairman of the Board of
The Musicland Group Inc. since July 1996, and, prior to that, was Senior Vice
President of Kmart Corporation from August 1995 to July 1996. He has been
President of Wachsman Management Consulting, Inc., which provides consulting
services to retailers and consumer oriented manufacturers, since 1990. Pursuant
to his consulting practice, Mr. Wachsman served as Vice Chairman of Universal
International, Inc. (a wholesaler/retailer of close-out merchandise) from
October 1992 to February 1995. From December 1988 to July 1990, Mr. Wachsman was
President of Lieberman Enterprises (a distributor of pre-recorded music, video
and personal computer software). He has been a Director of the Company since
1991.
MATTERS RELATING TO THE BOARD
The Board of Directors has established an Audit Committee and a
Compensation Committee to assist it in the discharge of its responsibilities.
The Board does not have a Nominating Committee or Executive Committee. The
Committees meet separately from the regular Board meetings whenever required. A
brief statement of the principal responsibilities of the Committees of the Board
and the identification of their members are given below.
Audit Committee -- The Audit Committee of the Board in 1995 consisted of
Mr. O'Donnell (Chairman), Mr. Charles M. Fullgraf, Mr. Wachsman and Ms.
Williams. The Committee is charged with the responsibility of recommending the
independent accountants to be retained by the Company to audit its financial
statements, overseeing the audits of the Company and reviewing the Company's
accounting controls and reporting practices. The Audit Committee held two
meetings during 1995.
Compensation Committee -- The Compensation Committee of the Board in 1995
consisted of Messrs. Wachsman (Chairman), Fullgraf and O'Donnell and Ms.
Williams. The Compensation Committee of the Board is responsible for reviewing
and making recommendations to the full Board with regard to the salary and other
compensation arrangements for the senior management of the Company. The
Committee is also responsible for administering the Company's 1991 Stock Option
Plan for employees and granting options under such plan to eligible employees of
the Company or its subsidiaries. Members of the Committee are not eligible to
receive stock options under the plan. The Compensation Committee held five
meetings during 1995.
Meetings -- The Board of Directors held ten meetings during 1995. Each
director attended at least 75% of the meetings of the Board and the Committees
on which he or she served during 1995.
Compensation -- Directors who are not employees of the Company receive a
monthly fee of $1,000 and receive $1,000 for each Board meeting attended and for
each Committee meeting attended which is held on a separate day, plus expenses.
Directors who are employees of the Company receive no compensation for serving
as directors but are reimbursed for their expenses. Pursuant to the Directors'
Restricted Share Plan, a portion (70%) of the directors' fees is deferred and
paid in Company restricted shares and 30% is paid in cash. In addition, pursuant
to the 1992 Stock Option Plan for Non-Employee Directors, each non-employee
director
4
<PAGE> 8
receives an option to purchase 5,000 Common Shares on the date of each annual
meeting of shareholders provided that such non-employee director continues in
office subsequent to such annual meeting.
SECURITY OWNERSHIP OF MANAGEMENT
The following table discloses information concerning the beneficial
ownership of Common Shares by each director, by certain of the Executive
Officers named in the Summary Compensation Table elsewhere in this Proxy
Statement and by all directors and officers of the Company as a group as of the
Record Date unless otherwise noted.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Erika Williams................................................. 14,436(1) 0.1%
R. Gregory Blair............................................... 127,580(2) 0.8%
Thomas H. Perszyk.............................................. 50,500(3) 0.3%
Charles M. Fullgraf............................................ 49,595(4) 0.3%
Joseph M. O'Donnell............................................ 34,842(5) 0.2%
Jacques A. Robinson............................................ 547,500(6) 3.2%
Gilbert L. Wachsman............................................ 42,713(7) 0.3%
All Directors and Officers as a group (9 persons).............. 867,166(8) 5.1%
</TABLE>
- ---------------
(1) Includes 10,000 shares related to outstanding options.
(2) Includes 91,000 shares related to outstanding options.
(3) Includes 40,000 shares related to outstanding options and 3,500 shares
related to outstanding warrants.
(4) Includes 20,000 shares related to outstanding options.
(5) Includes 20,000 shares related to outstanding options and 697 shares related
to outstanding warrants.
(6) Includes 537,500 shares related to outstanding options and 10,000 shares
related to outstanding warrants held by The Scotcrest Group, Inc. Mr.
Robinson has voting and investment power over all Common Shares held by The
Scotcrest Group, Inc.
(7) Includes 20,000 shares related to outstanding options.
(8) Includes 738,500 shares related to outstanding options and 14,197 shares
related to outstanding warrants.
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES
(ITEM 3 ON PROXY CARD)
The Board of Directors has proposed the adoption of an amendment to the
Articles of Incorporation, as amended, that would increase the authorized number
of Common Shares, without par value, of the Company from 20,000,000 shares to
40,000,000 shares. The Board proposes that the first paragraph of Article Fourth
of the Company's Articles of Incorporation be amended to read as follows:
FOURTH: The total number of shares which the corporation is
authorized to issue is Forty Million One Hundred Thousand (40,100,000), of
which Forty Million (40,000,000) are common shares, without par value, and
One Hundred Thousand (100,000) are to be of a class designated "Preferred
Shares" which shall have the rights, qualifications, limitations,
designations and preferences as described herein.
On the Record Date, of the 20,000,000 authorized Common Shares, 15,783,446
Common Shares were issued and outstanding, 2,419,674 Common Shares were treasury
shares and 3,957,087 Common Shares were available for issuance pursuant to the
Company's employee benefit plans and to satisfy outstanding Warrants to purchase
Common Shares.
The Board of Directors believes that it is desirable and in the best
interests of the Company and its shareholders that there be a substantial number
of authorized but unissued Common Shares in order to assure flexibility in the
future. The Board also believes that an increase in the number of Common Shares
is necessary in order that a sufficient number of shares is available for
issuance from time to time if needed for such corporate purposes as may be
deemed appropriate by the Board. These purposes may include, for
5
<PAGE> 9
example, the raising of additional capital funds, the formation of strategic
alliances or joint ventures with other companies, the issuance of shares under
the Company's employee benefit plans or general corporate purposes. The issuance
of any additional Common Shares could have the effect of diluting the ownership
of existing shareholders.
Such additional authorized Common Shares could be issued as a defensive
measure, in connection with a takeover attempt for the Company opposed by the
incumbent Board of Directors, and could be utilized in a manner which might have
the effect of making the acquisition of control of the Company more difficult.
For example, issuing additional Common Shares could have the effect of diluting
the ownership of persons seeking to obtain control of the Company.
The Company's Articles of Incorporation also contains a provision
authorizing the issuance of up to 100,000 preferred shares, none of which
currently are issued. Such preferred shares could be issued in one or more
transactions with terms that might make the acquisition of a controlling
interest in the Company more difficult or costly.
The proposed amendment to the Articles of Incorporation is not being
recommended in response to any specific effort of which the Company is aware to
obtain control of the Company, nor does the Board of Directors have any present
intent to use the preferred shares or the additional Common Shares to impede a
takeover attempt.
The Company has no present intent to issue any of the additional Common
Shares which will be authorized by the adoption of the amendment to Article
Fourth. Moreover, there are no pending negotiations, discussions, obligations,
agreements or understandings which would involve the issuance of any Common
Shares. The additional Common Shares for which authorization is sought will have
the same rights and privileges as the Common Shares now authorized.
If the amendment is approved by the requisite vote, the Board will have the
authority to issue the additional authorized shares or any part thereof from
time to time to such persons and for such consideration as the Board of
Directors may determine, without necessarily requiring further action by the
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Adoption of
this proposal requires the affirmative vote of two-thirds of the outstanding
voting power of the Company. Accordingly, abstentions and broker non-votes will
have the effect of a vote against the proposed amendment.
PROPOSAL TO RATIFY SELECTION OF AUDITORS
(ITEM 4 ON PROXY CARD)
In accordance with the recommendation of the Audit Committee of the Board
of Directors, the firm of Price Waterhouse LLP has been selected by the Board,
subject to the approval by the shareholders, as independent accountants to audit
the financial statements of the Company and its subsidiaries for the year ending
December 29, 1996. Price Waterhouse LLP is an international firm of accountants
which the Board of Directors considers to be well qualified to serve as the
Company's independent accountants. Price Waterhouse LLP has served as the
Company's independent accountants since 1984. A representative of Price
Waterhouse LLP will be present at the Company's Annual Meeting of Shareholders
on December 4, 1996. The representative will have the opportunity to make a
statement at the meeting, if he desires to do so, and will be available to
respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL, APPROVAL OF
WHICH REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON SHARES
REPRESENTED AT THE MEETING. If the shareholders do not ratify the selection of
Price Waterhouse LLP, the selection of other independent accountants will be
considered by the Board.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and each of the Company's other five most highly compensated executive
officers (collectively the "Named Executives") during each of the last three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------- PAYOUTS
------------------------------ RESTRICTED SECURITIES -------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------------------ ---- -------- ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jacques A. Robinson(1)........ 1995 443,800 0 0 0 150,000 0 0
Former President and Chief 1994 390,000 0 0 0 0 0 0
Executive Officer 1993 313,500 0 0 0 0 0 0
John W. Noland(2)............. 1995 202,692 0 0 0 75,000 0 1,152
Former Executive Vice 1994 200,000 0 0 0 0 0 11,152
President and Chief 1993 200,000 0 0 0 25,000 0 7,500
Operating Officer
Thomas H. Perszyk(3).......... 1995 150,000 0 0 0 30,000 0 99,001
Vice President 1994 8,654 0 0 0 50,000 0 32,600
1993 0 0 0 0 0 0 0
R. Gregory Blair(4)........... 1995 143,000 0 0 0 30,000 0 11,421
Vice President 1994 142,875 0 0 0 5,000 0 11,412
1993 136,500 0 0 0 10,000 0 10,933
James L. Jaeger(5)............ 1995 125,000 0 0 0 0 0 10,071
Former Chairman 1994 125,000 0 0 0 0 0 10,071
of the Board 1993 125,000 0 0 0 0 0 10,071
Robert J. Brockman(6)......... 1995 95,000 0 0 0 30,000 0 6,743
Former Vice President 1994 49,327 0 0 0 20,000 0 47,103
1993 0 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Mr. Robinson's compensation was paid to The Scotcrest Group, Inc., a company
beneficially owned by Mr. Robinson. Mr. Robinson did not participate in any
of the Company's stock option or other employee benefit plans. Mr. Robinson
received $78,000 of his compensation in the form of Common Shares in 1993.
Mr. Robinson resigned as President and Chief Executive Officer of the
Company in June 1996.
(2) All Other Compensation includes: (a) non-cash compensation pertaining to
life insurance premiums in the amounts of $1,152, $1,152 and $2,016 for the
years 1995, 1994 and 1993, respectively; (b) $10,000, and $5,484
representing matching contributions made pursuant to the Company's
retirement savings plan for the years 1994 and 1993, respectively. In
December 1995, Mr. Noland left the Company.
(3) All Other Compensation includes: (a) non-cash compensation pertaining to
life insurance premiums in the amount of $870 for the year 1995; (b) $3,777
representing 1995 contributions made pursuant to the Company's profit
sharing plan; and (c) $94,354 and $32,600 in relocation expenses in 1995 and
1994 respectively. Mr. Perszyk joined the Company in 1994.
(4) All Other Compensation includes: (a) non-cash compensation pertaining to
life insurance premiums in the amounts of $696, $696 and $696 for the years
1995, 1994 and 1993, respectively; (b) $3,575, $3,572, and $3,412
representing matching contributions made pursuant to the Company's
retirement savings plan for the years 1995, 1994, and 1993, respectively;
and (c) $7,150, $7,144 and $6,825 representing 1995, 1994 and 1993
contributions made pursuant to the Company's profit sharing plan,
respectively.
(5) All Other Compensation includes: (a) non-cash compensation pertaining to
life insurance premiums in the amounts of $696, $696 and $696 for the years
1995, 1994 and 1993, respectively; (b) $3,125, $3,125 and $3,125
representing matching contributions made pursuant to the Company's
retirement savings plan for the years 1995, 1994 and 1993, respectively; and
(c) $6,250, $6,250 and $6,250 representing 1995, 1994 and 1993 contributions
made pursuant to the Company's profit sharing plan, respectively. Mr. Jaeger
received $27,000 of his compensation in the form of Common Shares in 1993.
Mr. Jaeger resigned as Chairman of the Board in October 1996.
(6) All Other Compensation includes: (a) non-cash compensation pertaining to
life insurance premiums in the amounts of $806 and $243 for the years 1995
and 1994, respectively; (b) $1,187 representing matching contributions made
pursuant to the Company's retirement savings plan for the year 1995 (c)
$4,750 representing 1995 contributions made pursuant to the Company's profit
sharing plan; and (d) $46,860 in relocation expenses in 1994. Mr. Brockman
joined the Company in 1994 and left the Company in January 1996.
7
<PAGE> 11
STOCK OPTIONS
The following table sets forth information concerning individual grants of
options to purchase the Company's Common Shares made to the Named Executives in
1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
NUMBER TOTAL VALUE AT ASSUMED
OF SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (# SHS)(1) YEAR ($/SHARE) DATE 5% 10%
- ------------------------------- ------------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jacques A. Robinson............ 150,000 31.0% $ 12.25 5/15/05 $1,155,594 $2,928,502
John W. Noland................. 75,000 15.5% $ 9.25 5/5/05 $ 436,296 $1,105,659
Thomas H. Perszyk.............. 30,000 6.2% $ 9.25 5/5/05 $ 174,518 $ 442,264
R. Gregory Blair............... 30,000 6.2% $ 9.25 5/5/05 $ 174,518 $ 442,264
James L. Jaeger................ 0 -- -- -- -- --
Robert J. Brockman............. 30,000 6.2% $ 9.25 5/5/05 $ 174,518 $ 442,264
</TABLE>
- ---------------
(1) All options are granted at 100% of fair market value on the date of grant.
The options are exercisable during a period commencing six months and one
day after the date of grant and ending on the date specified in the option
agreement which, in no event, is later than ten years after the date of
grant.
The following table sets forth certain information regarding individual
exercises of stock options during 1995 and stock options unexercised at the end
of 1995 with respect to the Named Executives.
AGGREGATED OPTION/SAR EXERCISES IN 1995
AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR-END OPTIONS AT YEAR-END
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) ($)
- ------------------------------ --------------- -------- ------------------- -------------------
<S> <C> <C> <C> <C>
Jacques A. Robinson........... 0 0 500,000/150,000 $1,625,000/$ 0
John W. Noland................ 0 0 162,500/ 87,500 $ 168,750/$56,250
Thomas H. Perszyk............. 0 0 27,500/ 52,500 $ 4,688/$14,063
R. Gregory Blair.............. 0 0 84,750/ 26,250 $ 151,250/$ 3,750
James L. Jaeger............... 0 0 0/ 0 $ 0/$ 0
Robert J. Brockman............ 0 0 20,000/ 30,000 $ 0/$ 0
</TABLE>
8
<PAGE> 12
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Of the persons named in the Executive Compensation table, Mr. Blair has an
employment agreement with the Company. Mr. Blair's agreement provides that, if
his employment is terminated by the Company without cause, he shall continue to
be paid his monthly base salary and receive certain benefits for a period of
twelve months after termination less any compensation he receives from any
subsequent employment held during such period. The agreement also provides that,
if such termination occurs after a change in control of the Company (as defined
in the agreement), he will continue to be paid his monthly base salary for a
period of twenty-four months after the termination less any compensation he
receives from any subsequent employment held during such period. Monthly base
salary for Mr. Blair is currently $11,917. The employment agreement of Mr. Blair
can be terminated only by mutual agreement with the Company or by termination of
employment.
The Company retained The Scotcrest Group, Inc. ("Scotcrest") in February
1991 on a consulting basis to assist it in reviewing and examining its
operations. On April 23, 1991, the Board of Directors approved a contract with
Scotcrest wherein Scotcrest assisted the Company in implementing its operating
plan by providing general management services to the Company and appointed
Jacques A. Robinson, President of Scotcrest, as President of the Company. The
contract was amended in May 1995. The terms of the contract with Scotcrest
provided, among other provisions, that: (i) Scotcrest was to be paid at a per
diem rate of $1,800 for the services of Mr. Robinson; (ii) Scotcrest was granted
an option to purchase 150,000 Common Shares at $12.25 per share vesting at a
rate of 37,500 shares per year on each of May 15, 1996, 1997, 1998 and 1999;
(iii) Scotcrest was to receive a cash bonus of $100,000 for achievement of a
1995 net income goal determined by the Compensation Committee of the Board of
Directors and an amount equal to 4% of net income reported in excess of such
goal; and (iv) either the Company or Scotcrest could terminate the contract at
any time without cause. In June 1996, Mr. Robinson resigned as President and
Chief Executive Officer of the Company and a portion of the options granted
pursuant to the above referenced contract were terminated as a result of the
resignation.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board is responsible for reviewing and
making recommendations to the full Board with regard to the salary and other
compensation arrangements for the senior management of the Company. The
Committee is also responsible for administering the Company's 1991 Stock Option
Plan for employees and granting options under such plan to eligible employees of
the Company. Members of this Committee are not eligible to receive stock options
under the plan.
In general, salaries are set by the Committee at a level sufficient to
attract and retain qualified executives. The Committee grants stock options to
provide incentive compensation to the Named Executives. The stock options
granted in 1995 were tied to the enhancement of shareholder value as reflected
by performance of the Company's Common Shares. In determining the salary and
stock options for the Named Executives (other than the Chief Executive Officer),
the Compensation Committee receives from the Chief Executive Officer oral
performance appraisals regarding the other Named Executives, which in each case
are based on the Chief Executive Officer's subjective evaluation of such
officer's performance. Based on the Chief Executive Officer's report and the
Compensation Committee's subjective evaluation of that officer's performance,
historical compensation data for such Named Executives and its subjective
evaluation of the general financial condition of the Company, the Compensation
Committee set the 1995 salary and stock option grant levels for the Named
Executives.
As to the compensation of the Chief Executive Officer, in May 1995 the
Company amended its contract with Scotcrest for the services of Mr. Robinson.
Prior to that amendment, Mr. Robinson's compensation was $1,500 per diem. As a
result of the amendment, Mr. Robinson's compensation was $1,800 per diem. The
Committee also granted Scotcrest an option to purchase 150,000 Common Shares,
such option to vest over four years, and a cash bonus if the reported net income
of the Company exceeded the level set forth in the 1995 Annual Operating Plan.
The Company did not achieve the reported net income set forth in the plan and,
as a result, no cash bonus was paid to Scotcrest in 1995. Mr. Robinson did not
participate in any of the Company's stock option or other employee benefit
plans.
The Compensation Committee is aware of Section 162(m) of the Internal
Revenue Code but believes that it has no application to the Company at the
present time based on the present levels of qualifying compensation paid to its
executive officers.
<TABLE>
<S> <C>
CHARLES M. FULLGRAF GILBERT L. WACHSMAN
JOSEPH M. O'DONNELL ERIKA WILLIAMS
</TABLE>
10
<PAGE> 14
CORPORATE PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its Common Shares with the CRSP (Center
for Research in Security Prices) Total Return Index for the Nasdaq Stock Market
(US Companies) and the CRSP Total Return Index for Nasdaq Stocks (SIC 3600
through 3699 -- Electronics and Electrical Equipment and Components except
Computer Equipment) over the preceding five year period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
CINCINNATI MICROWAVE, INC. VS. MARKET INDICES
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 24, 1990.
[Insert performance graph here]
<TABLE>
<CAPTION>
Cincinnati Nasdaq Stock
Measurement Period Microwave, Market (U.S. NASDAQ Stock
(Fiscal Year Covered) Inc. Companies) s
<S> <C> <C> <C>
12/90 100.0 100.0 100.0
12/91 133.3 150.9 141.8
12/92 288.9 184.4 223.1
12/93 744.4 209.7 309.0
12/94 337.6 207.5 320.7
12/95 419.1 297.4 516.5
</TABLE>
OTHER BUSINESS
The Company's Board of Directors does not know of any other business which
will be presented for action by the shareholders at the meeting. However, if any
business other than that set forth in the Notice of the meeting should be
properly presented at the meeting, it is the intention of the members of the
proxy committee to vote according to their judgment of what is in the best
interests of the Company.
11
<PAGE> 15
PROPOSALS FOR 1997 ANNUAL MEETING
Security holders desiring to submit any proposal for action at the Annual
Meeting of Shareholders to be held in 1997 must submit a complete copy of the
proposal in writing prior to February 12, 1997, in order that the proposal can
be considered for inclusion in the Company's proxy statement and form of proxy
relating to such annual meeting. Any such proposal should be addressed to:
Corporate Secretary, Cincinnati Microwave, Inc., One Microwave Plaza,
Cincinnati, Ohio 45249. In order to eliminate any uncertainty as to the date on
which a proposal is received by the Company, shareholders should submit their
proposals by certified mail, return receipt requested.
By Order of the Board of Directors
KURT H. STUMP, Secretary
Cincinnati, Ohio
November 4, 1996
12
<PAGE> 16
CINCINNATI MICROWAVE, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints R. Gregory Blair, Elaine M.
Bacon and Neil Ganulin, and each of them, acting by a majority if more than one
be present, as proxies of the undersigned, each with full power of substitution,
to vote all the Common Shares of Cincinnati Microwave, Inc. that the undersigned
is entitled to vote at the Annual Meeting of Shareholders of Cincinnati
Microwave, Inc. to be held at Cincinnati Microwave, Inc., One Microwave Plaza,
Cincinnati, Ohio 45249, on Wednesday, December 4, 1996, at 9:30 A.M., E.D.T.,
and at any adjournment thereof, upon the matters listed below and in accordance
with their best judgment on such other matters properly coming before the
meeting. If the voting for directors is on a cumulative basis, such proxies are
directed to split the votes which the undersigned has given them authority to
vote among the nominees authorized hereby in accordance with their best
judgment.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED FOR FIXING THE NUMBER OF DIRECTORS AT FIVE, FOR THE ELECTION OF
DIRECTORS, FOR THE INCREASE IN THE AUTHORIZED NUMBER OF SHARES AND FOR THE
CONFIRMATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS. IF ITEM NUMBER 2 IS
MARKED "WITHHOLD", THE PROXY HOLDERS WILL NOT VOTE THE PROXY FOR THE
ELECTION OF DIRECTORS.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please date and sign as name appears on the reverse side. If shares are
held jointly, each shareholder named should sign. Executors,
administrators, trustees, etc., should so indicate when signing. If the
signer is a corporation, please sign full corporate name by duly
authorized officer.
HAS YOUR ADDRESS CHANGED?
_______________________________________________________
_______________________________________________________
_______________________________________________________
<PAGE> 17
PLEASE MARK VOTES AS IN THIS EXAMPLE / X /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3 AND 4.
1. Fixing the number of directors to serve for the ensuing year at five:
/ / FOR / / AGAINST / / ABSTAIN
2. Election of Directors:
JOSEPH M. O'DONNELL, GILBERT L. WACHSMAN, ERIKA WILLIAMS
/ / FOR / / WITHHOLD / / FOR ALL EXCEPT
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY NOMINEE, MARK THE "FOR ALL
EXCEPT" BOX AND STRIKE THAT NOMINEE'S NAME FROM THE LIST ABOVE.
3. To act upon the proposal to increase the number of authorized common
shares.
/ / FOR / / AGAINST / / ABSTAIN
4. Ratification of the selection of Price Waterhouse LLP as independent
auditors for 1996.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, to act upon such other matters as may properly come
before the meeting.
MARK BOX AT RIGHT IT YOU PLAN TO ATTEND THE MEETING / /
MARK BOX AT RIGHT IF ADDRESS CHANGE HAS BEEN NOTED ON
THE REVERSE SIDE OF THIS CARD / /
Please be sure to sign and date this Proxy.
Date __________________________________________
_______________________________________________________
Shareholder sign here
_______________________________________________________
Co-owner sign here
