<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 Section 240.14a-11(c) or Section
240.14a-12
OEA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(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 transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
OEA, INC.
P.O. BOX 100488
34501 EAST QUINCY AVENUE
DENVER, COLORADO 80250
To the Stockholders of December 9, 1996
OEA, INC.
Notice is hereby given that the annual meeting of stockholders of OEA, INC.
("Company") will be held in the Management Briefing Center of Wells Fargo Bank
of Denver (formerly First Interstate Bank), 17th and California Streets, Denver,
Colorado, at 2:00 p.m. on Friday the 10th day of January 1997, for the following
purposes:
(a)Electing a Board of Directors for the ensuing year; and
(b)Transacting such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record as shown by the transfer books of the Company at
the close of business on November 29, 1996, are entitled to notice of, and to
vote at, such meeting.
STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON,
ARE REQUESTED TO DATE, SIGN, AND RETURN THE ENCLOSED FORM OF PROXY IN THE
ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES. The proxy is revocable at any time prior to the exercise thereof.
By Order of the Board of Directors:
[LOGO]
PAUL J. MARTIN
SECRETARY
1
<PAGE>
[LOGO]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
OEA, INC.
TO BE HELD ON JANUARY 10, 1997
GENERAL INFORMATION
The solicitation of the proxy enclosed is made by and on behalf of the Board
of Directors ("Board") of OEA, INC. ("Company"), to be used at the annual
meeting of holders of Common Stock, $0.10 par value, of the Company ("Common
Stock") to be held in the Management Briefing Center of Wells Fargo Bank of
Denver (formerly First Interstate Bank), 17th and California Streets, Denver,
Colorado, at the hour of 2:00 p.m. on Friday the 10th day of January 1997, and
at any adjournments thereof. This proxy statement and form of proxy are being
mailed to stockholders on or about December 9, 1996.
The purpose of the meeting is (i) to elect nine (9) directors for the
ensuing year, and (ii) to act upon such other matters as may properly come
before the meeting.
Management does not know of any matters to be brought before the meeting
other than those stated in the Notice of Meeting. If any other matters should,
however, properly be brought before the meeting, or any adjournments thereof,
the enclosed proxy will be voted in accordance with the judgment of the proxies
therein named.
PROXY SOLICITATION
The cost of the solicitation of proxies will be borne by the Company.
Solicitations will be made only by the use of the mails, except that, if
necessary, officers, directors and regular employees of the Company or its
subsidiaries may make solicitations of proxies by telephone, facsimile or by
personal calls; such persons will receive no special compensation for any
solicitation activities. It is contemplated that brokerage houses and nominees
will be requested to forward the proxy soliciting material to the beneficial
owners of the stock held of record by such persons, and the Company may
reimburse them for their charges and expenses in such cases.
VOTING
The presence, in person or by proxy, of the holders of a majority of the
votes represented by the outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting. A properly executed proxy marked
"abstain," although counted for purposes of determining the number of shares
represented and entitled to vote at the Annual Meeting, will not be voted.
Shares represented by "broker non-votes" (i.e. shares held by brokers or
nominees that are represented at a
2
<PAGE>
meeting but with respect to which the broker or nominee is not empowered to vote
on a particular proposal) will be counted for purposes of determining whether
there is a quorum at the Annual Meeting, but will be deemed shares not entitled
to vote and will not be included for purposes of determining the number of
shares represented and entitled to vote at the Annual Meeting. Directors are
elected by plurality vote of shares present at the meeting.
All shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. If no such instructions are
indicated, such shares shall be voted FOR the election of the nine nominees for
director. Any holder of Common Stock has the unconditional right to revoke his
or her proxy at any time prior to the voting thereof at the Annual Meeting by
filing with the secretary of the Company written revocation of his or her proxy
prior to the voting thereof, giving a duly executed proxy bearing a later date
or voting in person at the Annual Meeting. Attendance by a shareholder at the
Annual Meeting will not in itself revoke his or her proxy.
The Board has fixed the close of business on November 29, 1996, as the
record date for determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting. The transfer books of the Company will not be closed.
The mailing address and phone number of the Company's principal executive
offices are P. O. Box 100488, Denver, Colorado, 80250, (303) 693-1248.
The Company has authorized 50,000,000 shares of Common Stock, par value
$0.10. On the record date there were 20,540,694 shares issued, outstanding, and
eligible to vote. Shares represented by properly executed proxies will be voted
at the meeting and at any adjournments thereof. Each share of stock will entitle
the holder thereof to one vote on each matter presented at the meeting.
FINANCIAL STATEMENTS
An annual report to stockholders, including consolidated financial
statements for the fiscal year ended July 31, 1996, is enclosed with this proxy
statement.
3
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting nine (9) directors are to be elected, each of whom
shall hold office until the next annual meeting of stockholders or until his
successor is duly elected and qualified. In the event of death or unforeseen
contingencies rendering one or more of said persons unavailable for election,
then such proxies will be voted to fill any vacancies so arising with such
person or persons nominated by the management who has consented to serve if
elected.
INFORMATION CONCERNING NOMINEES AND EXECUTIVE OFFICERS (1)
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY
- -------------------------------------------- -------------------------------------------------------
<S> <C>
Ahmed D. Kafadar............................ Chairman of the Board and Chief Executive Officer
Charles B. Kafadar(5)....................... President, Chief Operating Officer and Director
Ralph A. L. Bogan, Jr.(2)(3)................ Director
James R. Burnett(3)(5)...................... Director
Lewis W. Watson(2).......................... Director
Philip E. Johnson(2)(4)..................... Director
George S. Ansell(4)(5)...................... Director
Robert J. Schultz(4)(5)..................... Director
Erwin H. Billig(3).......................... Director
</TABLE>
- ------------------------
(1) The Company's executive officers serve at the will of the Board of Directors
(see Employment Agreements under Remuneration of Officers and Directors).
The two officers named above and those under Additional Executive Officers
are the only executive officers of the Company and its subsidiaries.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
(4) Member of Corporate Responsibility Committee.
(5) Member of Board Committee.
Ahmed D. Kafadar is Chairman of the Board of Directors and Chief Executive
Officer of the Company, and has held such positions since 1957. Mr. Kafadar, 81,
is the founder of the Company.
Charles B. Kafadar has been a Director of the Company since 1977 and was
elected President and Chief Operating Officer of the Company in 1985. Dr.
Kafadar, 51, is the son of Ahmed D. Kafadar.
Ralph A. L. Bogan, Jr. has been a Director of the Company since 1969. Mr.
Bogan, 74, was Chairman and Chief Executive Officer of National Security Bank,
Chicago from 1982 until his retirement in 1991, and is now a financial
consultant.
James R. Burnett has been a Director of the Company since 1977. Dr. Burnett,
71, was Executive Vice President and Deputy General Manager, Space and Defense
Sector, of TRW, Inc. (manufacturers of military electronics and space hardware)
from 1987 until his retirement in 1991, and is now a consultant.
4
<PAGE>
Lewis W. Watson has been a Director of the Company since 1981. Mr. Watson,
55, has been President and Director of Intermountain Resources, Inc. (working in
mining exploration) since 1981 and formerly was an Audit Partner with Peat,
Marwick, Mitchell & Co., certified public accountants, through 1980.
Philip E. Johnson has been a Director of the Company since 1986. Mr.
Johnson, 49, is currently Chairman of the Board of Katy Industries, Inc. and a
Director of Bennington, Johnson, Ruttum & Reeve, P.C., a Denver law firm.
George S. Ansell has been a Director of the Company since 1993. Dr. Ansell,
62, has been President of Colorado School of Mines (CSM) since 1984. He came to
CSM after serving as Dean of the School of Engineering at Rensselaer Polytechnic
Institute (RPI) in New York where he was a 24-year member of the RPI faculty.
Dr. Ansell is also a Director of Cyprus Amax Minerals Company.
Robert J. Schultz has been a Director of the Company since 1993. Mr.
Schultz, 66, Vice Chairman of General Motors from August 1990 until his
retirement in January 1993, was responsible for GM Hughes Electronics (defense
and automotive electronics), Electronic Data Systems Corporation (information
technology), and GM's Corporate Information Activity. Prior to this position,
Mr. Schultz was Group Executive in charge of GM's former Chevrolet-Pontiac-GM of
Canada group from 1984 through 1989. In 1989, he was elected an Executive Vice
President of GM.
Erwin H. Billig became a Director of the Company in January 1996. Mr.
Billig, 69, has been Vice Chairman of MascoTech, Inc. (major supplier to Ford,
Chrysler, GM and European auto manufacturers) since 1993, Chairman of Titan
Wheel International since 1993, and Vice Chairman of Delco Remy America since
1994. Prior to his current positions, Mr. Billig was Vice President of
International Operations at MascoTech from 1977 to 1984 and President and Chief
Operating Officer from 1984 to 1993.
ADDITIONAL EXECUTIVE OFFICERS
Paul J. Martin, 56, was elected Vice President Administration in October
1996 and Secretary in March 1995. Prior to this recent election, Mr. Martin
served as Vice President/Treasurer of OEA, Inc. since August 1994, and Vice
President/Treasurer of OEA Aerospace, Inc. since 1979, and has been employed by
the Company since 1967.
J. Thompson McConathy, 49, joined OEA and was elected Vice President Finance
and CFO in October 1996. Prior to joining OEA, Mr. McConathy held several senior
financial positions with the Black & Decker Corporation over the past eight
years and since 1990 served as the Vice President of Finance for the Commercial
& Industrial Group.
Nuri Y. Olcer, 64, was elected Vice President Engineering Mechanics of the
Company in 1985. Prior to this election, Dr. Olcer served as Manager,
Engineering Mechanics, for twelve years and has been employed by the Company
since 1968.
Ben E. Paul, 68, was elected President of OEA Aerospace, Inc. in May 1995.
Prior to this election, Mr. Paul was Vice President of OEA Aerospace, Inc. since
June 1994 and Director, Technical Operations since July 1992. Mr. Paul was one
of the original members of OEA. Prior to rejoining OEA, Mr. Paul was Manager,
Advanced Technology at Scot, Inc. (manufacturer of aerospace propellant devices)
from 1978 to 1992.
5
<PAGE>
REMUNERATION OF OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth a summary of the
compensation paid by the Company during the last three fiscal years ended July
31, 1994, 1995 and 1996, to its Chief Executive Officer and the four other most
highly compensated executive officers (the "named executive officers") during
the fiscal year ended July 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ---------------------------- -----------
OTHER ANNUAL RESTRICTED LTIP
SALARY BONUS COMPENSATION STOCK OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) AWARD(S)($) (#) ($)
- --------------------------------- --------- --------- --------- ----------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ahmed D. Kafadar................. 1996 442,000 53,000 -- -- 2,500 --
Chairman of the Board and 1995 442,000 72,000 -- -- -- --
Chief Executive Officer 1994 410,463 69,000 -- -- 3,334 --
Charles B. Kafadar............... 1996 350,002 49,000 -- -- 2,500 --
President and Chief 1995 350,002 63,000 -- -- -- --
Operating Officer 1994 324,778 57,000 -- -- 3,000 --
Paul J. Martin................... 1996 175,011 24,000 -- -- 2,000 --
Vice President 1995 155,779 30,000 -- -- -- --
Administration 1994 127,273 25,000 -- -- 1,000 --
Nuri Y. Olcer.................... 1996 138,008 4,000 -- -- 400 --
Vice President 1995 138,008 5,000 -- -- -- --
Engineering Mechanics 1994 130,906 5,000 -- -- 500 --
Ben E. Paul...................... 1996 190,781 3,000 -- -- 1,000 --
President of OEA 1995 163,982 30,000 -- -- -- --
Aerospace, Inc. 1994 132,710 10,000 -- -- 1,000 --
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(4)
- --------------------------------- -------------
<S> <C>
Ahmed D. Kafadar................. 8,413
Chairman of the Board and 9,223
Chief Executive Officer 14,423
Charles B. Kafadar............... 7,940
President and Chief 8,703
Operating Officer 13,869
Paul J. Martin................... 8,189
Vice President 8,977
Administration 7,945
Nuri Y. Olcer.................... 7,552
Vice President 8,397
Engineering Mechanics 8,445
Ben E. Paul...................... 7,567
President of OEA 8,293
Aerospace, Inc. 7,798
</TABLE>
- --------------------------
(1) Amounts shown include compensation earned and received by executive officers
as well as amounts earned but deferred at the election of those officers.
(2) Represents amounts accrued for executive officers pursuant to the Company's
Incentive Compensation Plan.
(3) Other annual compensation provided during 1996, 1995, and 1994 did not
exceed disclosure thresholds established by the Securities and Exchange
Commission.
(4) Amounts include the Company's contribution to the Company's Profit Sharing
Plan and Pension Plan.
6
<PAGE>
INCENTIVE COMPENSATION
The Board has, in each of the past several years, authorized payments of
incentive compensation (bonus) to employees of the Company, in an aggregate
amount to be allocated and distributed at the discretion of the Chairman and
President. Sums shown above under "Bonus" include the incentive compensation
accrued to the named officers and expensed for financial reporting purposes in
fiscal years 1996, 1995 and 1994.
DIRECTORS' COMPENSATION
The Directors of the Company who are employed by it or its subsidiaries were
not additionally compensated for their services as Directors during fiscal year
1996. Directors not employed by the Company or its subsidiaries received a base
compensation of $9,000 per annum, committee chairmen received an additional base
compensation of $1,000 per annum, additional compensation of $2,900 for each
board meeting attended, $2,500 for each committee meeting attended on days the
Board of Directors did not meet and $2,300 for each committee meeting on days
that the Board of Directors met. Directors utilized for consulting purposes
received $2,500 per day for their services.
PROFIT SHARING PLAN
The Company and its wholly owned subsidiary (OEA Aerospace, Inc.) maintain a
profit sharing plan with salary reduction provisions permitted by Section 401(k)
of the Internal Revenue Code of 1986, as amended, covering all of their
employees. Each fiscal year, the Board of Directors of each Company determine
the amount of its contribution to its plan up to 10% of the total compensation
of all participants for such fiscal year. These contributions are allocated to
the accounts of the participants based on a formula which takes into account the
compensation and length of service of each participant. Vesting occurs at the
rate of 20% at the end of two years of service, as defined in the plan, and 20%
for each year of service thereafter, with full vesting at the end of six years
of service. Upon normal retirement, death, disability or termination of
employment, a participant's account balance is payable, at the administrative
committee's option, either in a lump sum or in periodic payments over a period
not to exceed ten years. The compensation column headed "All Other Compensation"
includes the listed officers' benefits under the applicable profit sharing plan
which were accrued during fiscal years 1996, 1995 and 1994.
PENSION PLAN
The Company and its wholly owned subsidiary (OEA Aerospace, Inc.) maintain a
pension plan covering all of their employees. Each fiscal year the Company and
its subsidiary contribute an amount equal to 5% of the aggregate compensation of
all participants in the plan for such fiscal year. Vesting occurs at the rate of
20% at the end of two years of service, as defined in the plan, and 20% for each
year of service thereafter, with full vesting at the end of six years of
service. Upon normal retirement, death, disability or termination of employment,
a participant's account balance is payable in the form of a joint and survivor
amount if the participant is married, provided, however, if the participant is
not married, or if the participant and his or her spouse so elect, the account
balance may be paid in a lump sum or, with the administrative committee's
permission, in periodic payments over a period not to exceed ten years. The
Compensation column headed "All Other Compensation" includes the listed
officers' benefits under the applicable pension plan which were accrued during
fiscal years 1996, 1995 and 1994.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Ahmed D. Kafadar
dated May 5, 1989, providing for his full time, active service as Chairman of
the Board of Directors and Chief
7
<PAGE>
Executive Officer for an indefinite term. Mr. Kafadar's employment is terminable
at any time at his election, or by the Company for any reason. The agreement
provides for payments upon termination, pursuant to a formula based on his
compensation for the three years prior to his termination, to Mr. Kafadar during
his lifetime and to his surviving spouse for up to 15 years following his death.
If Mr. Kafadar had terminated his employment as of July 31, 1996, payments
calculated in accordance with the agreement would have approximated $170,600 per
year for Mr. Kafadar, or $102,400 per year for his surviving spouse.
The Company has entered into an employment agreement with Charles B. Kafadar
dated March 15, 1990, providing for his full time, active service as President
and Chief Operating Officer for an indefinite term. Dr. Kafadar's employment is
terminable at his election after age 65 and 33 years of continuous service, or
by the Company at any time for any reason. Upon termination or retirement, the
agreement provides for payments, pursuant to a formula based on his compensation
for the three years prior to his termination, to Dr. Kafadar during his lifetime
and, in the event of his death, his surviving spouse for up to 10 years. Dr.
Kafadar will not be eligible to elect under the agreement to terminate his
employment until 2010. If Dr. Kafadar had terminated his employment as of July
31, 1996, termination payments calculated in accordance with the agreement would
have approximated $193,300 per year for Dr. Kafadar, or $96,700 per year for his
surviving spouse.
INCENTIVE STOCK OPTION PLANS
The stockholders approved an Employees' Stock Option Plan (the "Employees'
Plan") on January 13, 1995, and a Nonemployee Directors' Stock Option Plan (the
"Directors' Plan") on January 12, 1996. These plans provide for stock options to
be granted for a maximum of 600,000 shares of Common Stock under the Employees'
Plan and a maximum of 50,000 shares of Common Stock under the Directors' Plan.
Options may be granted to employees and nonemployee directors at prices not less
than fair market value of the Company's Common Stock on the date of grant.
Options granted under the Employees' Plan may be exercised at any time after the
grant date, except for executive officers which may be exercised after six
months, and options issued under the Directors' Plan may be exercised after the
first six months following the grant date. All options must be exercised within
10 years of the grant date, except for those options granted to recipients who
own more than 10% of the total combined voting power of the stock of the Company
which must be exercised within 5 years of the grant date. Shares may be granted
from either authorized but unissued Common Stock or issued shares reacquired and
held as treasury stock.
The Company maintains an incentive stock option plan, for grants prior to
July 28, 1994, which provides for the grant, by the Board of Directors, of
options to purchase shares of the Company's Common Stock to those officers and
key employees of the Company and its subsidiaries who have performed services,
which in the opinion of the Board of Directors, were of special importance in
the management, operation and development of the Company. Options granted are
exercisable during the period commencing one year after the date of grant and
ending ten years after the date of grant, except that any option granted to a
recipient who owns more than 10% of the total combined voting power of the stock
of the Company is exercisable only until five years after the date of grant. The
exercise price of the options granted is to be equal to 100% of the fair market
value of the Company's Common Stock on the date of the grant, except that the
exercise price of any option granted to a recipient who owns more than 10% of
the total voting power of the stock of the Company is to be equal to 110% of the
fair market value of the Company's Common Stock on the date of the grant.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information on option grants made during
fiscal year 1996 to the named executive officers. (None of the named executive
officers have ever received stock appreciation rights.)
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED OPTION TERM(2)
GRANTED TO EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------
NAME (#)(1)(4) FISCAL 1996(3) ($/SHARE)(1) DATE 5%($) 10%($)
- -------------------------------------- ----------- --------------- --------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ahmed D. Kafadar...................... 3,334 12.14 30.80 11/03/00 28,371 62,692
Charles B. Kafadar.................... 3,000 10.92 28.00 11/03/05 52,827 133,874
Paul J. Martin........................ 2,000 7.28 28.00 11/03/05 35,218 89,250
Nuri Y. Olcer......................... 400 1.46 28.00 11/03/05 7,044 17,850
Ben E. Paul........................... 2,000 7.28 28.00 11/03/05 35,218 89,250
</TABLE>
- --------------------------
(1) On November 3, 1995, the Board of Directors granted options to purchase an
aggregate of 27,472 shares of the Company's $0.10 par value Common Stock at
an exercise price equal to $28.00 per share, except that the exercise price
of the options granted to any recipient who owns more than 10% of the total
voting power of the Company was equal to $30.80 per share. The options
granted will expire on November 3, 2005, except that the options granted to
any recipient who owns more than 10% of the total voting power of the
Company will expire on November 3, 2000. No consideration was or is to be
received by the Company for the granting of any option. Under present law
and interpretations thereof, the federal income tax treatment of the stock
options, in general, is that the optionee is not subject to federal income
tax upon the grant of an option or upon the exercise of an option unless the
alternative minimum tax requirements of the Internal Revenue Code apply.
(2) Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rate shown (5%
and 10%), compounded annually, from the date of grant of the option until
the end of the option term. The 5% and 10% assumed rates of appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
in any way represent the Company's estimate or projection of future stock
prices. Actual gains, if any, upon future exercise of any of these options
will depend on the actual performance of the Company's Common Stock and the
continued employment of the executive officer holding the option through its
vesting period.
(3) Based on options to purchase an aggregate of 27,472 shares granted during
fiscal year 1996.
(4) All options vest May 3, 1996.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information on option exercises in fiscal
year 1996 by the named executive officers and the value of such officers'
unexercised options at July 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
FISCAL OPTIONS AT FISCAL
NUMBER OF YEAR-END YEAR-END($)(1)
SHARES -------------- -------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------- ------------- ----------- -------------- -------------------
<S> <C> <C> <C> <C>
Ahmed D. Kafadar.................................. -- -- 16,668/ -- 130,005/ --
Charles B. Kafadar................................ -- -- 69,000/ -- 1,819,873/ --
Paul J. Martin.................................... 3,750 30,000 4,250/ -- 30,125/ --
Nuri Y. Olcer..................................... -- -- 5,900/ -- 76,012/ --
Ben E. Paul....................................... -- -- 3,000/ -- 18,250/ --
</TABLE>
- --------------------------
(1) Only the value of unexercised, in-the-money options are reported. Value is
calculated by (i) subtracting the total exercise price per share from the
year-end market value of $34.75 per share and (ii) multiplying by the number
of shares subject to the option.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is pleased to present its
report on executive compensation. This Committee report documents the components
of the Company's executive officer compensation programs and describes the basis
on which fiscal year 1996 compensation determinations were made by the Committee
with respect to the Chief Executive Officer and other executive officers of the
Company.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION
PROGRAMS
It is the philosophy of the Company and Committee to ensure that executive
compensation be primarily linked to corporate performance and increases in
shareholder value. The following objectives have been adopted by the Committee
as guidelines for compensation decisions:
-Provide a competitive total compensation package that enables the Company
to attract and retain key executives.
-Integrate all pay programs with the Company's annual and long-term business
objectives and strategy, and focus executive performance on the fulfillment
of those objectives.
-Provide variable compensation opportunities that are directly linked with
the performance of the Company and that align executive remuneration with
the interests of stockholders.
COMPENSATION PROGRAM COMPONENTS
The Committee annually reviews the Company's compensation program to ensure
that pay levels and incentive opportunities are competitive and reflect the
performance of the Company. The particular elements of the compensation program
for executive officers are as follows:
BASE SALARY -- Base salary levels are determined largely through comparisons
with companies of similar revenue size and industry groups. Base pay levels for
the executive officers are competitive
10
<PAGE>
within a range that the Committee considers reasonable and appropriate. Actual
salaries reflect overall Company performance and contributions of the individual
within a competitive salary range which is established through job evaluations
and market comparisons.
Management performance goals were met for the fiscal years ended July 31,
1994, July 31, 1995, and July 31, 1996. The Committee recommended that executive
salaries be increased effective May 1, 1993, consistent with a 1993 Executive
Compensation Review of five (5) published surveys of base salary and total cash
compensation comparisons. The 1993 review, adjusted for period differences, and
a company survey of automotive safety products and aerospace companies of
similar revenue size was utilized for executive salary increases during the
fiscal years 1994 and 1995. The Crystal Report of middle market-cap firms was
also utilized for the fiscal year 1995 and 1996 determinations.
ANNUAL INCENTIVE COMPENSATION -- The Company's officers, senior management
personnel and all other personnel are eligible to participate in an annual
incentive compensation plan with awards based primarily on the achievement of
certain corporate net earnings goals and related stock price appreciation. These
goals are normally considerably higher than those being attained by other
companies of similar or larger revenue size within its primary industry
segments. The objective of this plan is to pay competitive levels of total
compensation for the attainment of financial objectives that the Committee
believes are primary determinants of share price over time. Specifically, the
plan intends to focus corporate and individual performance on consistent and
steady earnings growth. Targeted awards and base compensation for executive
officers under this plan are consistent with targeted awards of companies of
similar size and complexity to the Company. Actual awards are subject to
increase or decrease on the basis of the Company's earnings performance and at
the discretion of the Committee.
STOCK OPTION PLAN -- The Committee believes that the best interests of
stockholders will be served by providing executive officers and other key
personnel who have substantial responsibility for the continued success and
profitability of the Company with an opportunity to increase their ownership of
Company Stock. Therefore, from time to time as recommended by the Committee,
executive officers and key personnel are granted stock options in accordance
with the Company's Incentive Stock Option Plan. These personnel have the right
to purchase shares of Common Stock of the Company in the future, at the market
value price of the stock on the date of the grant. The value of the options
granted relates to personal performance and corporate goals achieved.
CHIEF EXECUTIVE OFFICER COMPENSATION -- In determining Mr. Ahmed D.
Kafadar's fiscal year 1996 pay and the structure of his total compensation
package, the Committee considered OEA's technical and financial performance
during 1996, the magnitude and effectiveness of the Company's continued
expansion into the automotive products industry, the relationship of Mr.
Kafadar's compensation with the 75th Percentile Market Consensus for Executive
Compensation established in the "1993 Executive Compensation Review"
commissioned by the Committee, comparisons with executives of automotive safety
products and aerospace companies of similar revenue size, and the 1996 Crystal
Report on the total direct compensation of CEO's in 500 middle market-cap firms.
During fiscal year 1996, OEA had another record year and continued its
successful growth in its automotive safety products segment. In 1996, the
Company increased automotive sales by 28% and operating profit by 19% which were
derived from airbag initiators, inflators, gas generators and igniter cord.
Automotive product sales increased to 76% of total sales compared to 70% in the
prior
11
<PAGE>
year and 62% in 1994. Production of the "smokeless" hybrid inflators was
successfully launched in Denver during the year for delivery to module
manufacturers. OEA's continued expansion in the automotive air bag market should
provide continued growth and profitability.
The Committee recognizes Mr. Kafadar's significant contribution to the
above; however, his base salary was not increased during 1996 and a modest
decrease in incentive compensation was granted pending completion of a study
regarding near-term and long-term incentives.
SUMMARY -- Based upon the 1996 Crystal Reports and its review of base salary
and total cash executive compensation comparisons for companies of similar
revenue and industry groups, the Committee believes that the total compensation
program for certain executive personnel of the Company may not be competitive.
This matter is being thoroughly reviewed at this time. The Committee also
believes that the stock option program provides opportunities to participants
that are consistent with the returns generated for the Company's Stockholders.
Dr. J. Robert Burnett, Chairman
Ralph A. L. Bogan, Jr.
Erwin H. Billig
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
As of November 29, 1996, the following persons, exclusive of management,
were known to the Company to own beneficially more than 5% of the only class of
voting securities of the Company (i.e. Common Stock, $0.10 par value):
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP* OF CLASS*
- --------------------------------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Raymond Shaheen, Esq., Trustee .................................................. 1,376,616(1) 6.7
20 North Wacker Drive
Chicago, Illinois 60606
T. Rowe Price Associates, Inc. .................................................. 1,491,000(2) 7.3
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
- --------------------------
* This information is taken from statements filed by beneficial owners with
the SEC and by reference to the transfer agent's records as of November 29,
1996.
(1) Mr. Shaheen holds record title and voting rights to such shares under the
terms of four separate trusts established by Ahmed D. Kafadar in 1960 for
the benefit of his children.
(2) T. Rowe Price Associates, Inc. is a Registered Investment Advisor and the
shares are owned on behalf of their clients. T. Rowe Price has sole
investment authority over all shares and sole voting authority for 136,500
shares and no voting authority over 1,354,500 shares.
12
<PAGE>
MANAGEMENT
As of November 29, 1996, the following Directors and Officers, individually,
and all Directors and Officers as a group, beneficially owned shares of the only
class of voting securities of the Company (i.e. Common Stock, $0.10 par value)
as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP** OF CLASS**
- ------------------------------------------------------------------------------- --------------------- -------------
<S> <C> <C>
Ahmed D. Kafadar............................................................... 2,640,861(1)(4) 12.9
Charles B. Kafadar............................................................. 134,421(2)(4) --
Ralph A. L. Bogan, Jr. ........................................................ 119,225 --
James R. Burnett............................................................... 18,625(3) --
Lewis W. Watson................................................................ 2,125 --
Philip E. Johnson.............................................................. 12,625 --
George S. Ansell............................................................... 825 --
Robert J. Schultz.............................................................. 4,625 --
Erwin H. Billig................................................................ 625 --
Paul J. Martin................................................................. 28,534(4) --
J. Thompson McConathy.......................................................... 100 --
Nuri Y. Olcer.................................................................. 40,956(4) --
Ben E. Paul.................................................................... 47,568(4) --
All Directors and Executive Officers
as a group(the 13 persons named above)........................................ 3,051,115 14.9
</TABLE>
- --------------------------
** This information is taken from statements filed by beneficial owners with
the SEC and by reference to the transfer agent's records as of November 29,
1996. A line indicates ownership of less than 1%.
(1) Includes 21,768 shares held by Mr. Kafadar of record, 66,012 shares held in
joint tenancy with his wife, 1,167,597 shares held as trustee of the Ahmed
D. Kafadar Family Trust, 568,838 shares held as trustee of the Maryanna B.
Kafadar Family Trust and 803,478 shares held as trustee of the Ahmed D.
Kafadar Marital Trust. Does not include 41,266 shares held by his wife in
her own name, of which he disclaims beneficial ownership.
(2) Includes 48,445 shares held by Dr. Kafadar of record and 32,476 shares held
in joint tenancy with his wife, in which voting power is shared. Does not
include 10,250 shares held by his wife in her own name or 38,584 shares held
by his wife as custodian for their children, of which he disclaims
beneficial ownership.
(3) Dr. Burnett holds these shares in a living trust with his wife, and in which
voting power is shared.
(4) Includes unexercised stock options under the Company's Incentive Stock
Option Plan: Mr. A. D. Kafadar, 13,168 shares; Dr. C. B. Kafadar, 53,500
shares; Mr. R. A. L. Bogan, Jr., 625 shares; Dr. J. R. Burnett, 625 shares;
Mr. L. W. Watson, 625 shares; Mr. P. E. Johnson, 625 shares; Dr. G. S.
Ansell, 625 shares; Mr. R. J. Schultz, 625 shares; Mr. E. H. Billig, 625
shares; Mr. P. J. Martin, 6,250 shares; Dr. N. Y. Olcer, 6,300 shares; and
Mr. B. E. Paul, 4,000 shares.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than 10% shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the Company,
or written representations that no Forms 5 were required, the Company believes
that during the fiscal year ended July 31,
13
<PAGE>
1996, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than 10% beneficial owners were complied with; except
that one report covering the grant of options pursuant to the 1994 Employee
Stock Option Plan was filed late by each of Messrs. A. D. Kafadar, Martin, and
Olcer; a Form 3 report and a report covering the grant of options pursuant to
the 1994 Employee Stock Option Plan was filed late by Mr. Paul, and two reports
covering the grant of options pursuant to the 1994 Employee Stock Option Plan
and one other transaction was filed late by Dr. C. B. Kafadar.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total stockholder return on the Company's Common Stock during the five years
ended July 31, 1996, with the cumulative total return on the S&P 500 Index and
the S&P Automobiles Index. The comparison assumes $100 was invested on July 31,
1991, in the Company's Common Stock and in each of such indices and assumes
reinvestment of dividends, if any.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OEA, INC S&P 500 S&P AUTOMOBILES
<S> <C> <C> <C>
1991 100 100 100
1992 169 113 127
1993 184 123 164
1994 219 129 186
1995 219 163 182
1996 256 190 204
</TABLE>
14
<PAGE>
MEETINGS
The Board has appointed standing Audit, Compensation, Corporate
Responsibility and Board Committees. Members of the Audit Committee are Mr.
Watson, Chairman, Mr. Bogan and Mr. Johnson. The Audit Committee's functions are
to investigate and review accounting and audit procedures of the Company and to
report its findings and recommendations to the Board for action. Dr. Burnett as
Chairman, Mr. Bogan and Mr. Billig comprise the Compensation Committee. Its
functions are to review officers' and certain key employees' compensation and to
make recommendations to the Board of Directors in connection therewith. Members
of the Corporate Responsibility Committee are Dr. Ansell, Chairman, Mr. Johnson
and Mr. Schultz. The Corporate Responsibility Committee's functions are to
promulgate and reaffirm ethical standards for the Company and to ensure that
safety and environmental policies established are in effect. Members of the
Board Committee are Dr. Burnett, Chairman, Dr. Ansell, Dr. Kafadar and Mr.
Schultz. The Board Committee's functions are to advise the Board on various
matters relating to, but not limited to, the search and employment of senior OEA
personnel and directors and term limits for directors. During fiscal year 1996
the Board held four meetings, the Audit Committee held two meetings, the
Compensation Committee held one meeting, the Corporate Responsibility Committee
held three meetings, and the Board Committee held four meetings.
PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals must be received at the corporate offices of the
Company, 34501 East Quincy Avenue (if by mail, addressed to P.O. Box 100488),
Denver, Colorado, 80250, no later than August 8, 1997, for inclusion in the
proxy statement for the next annual meeting of stockholders.
AUDITORS
Ernst & Young LLP, who have been auditors for the Company and its
subsidiaries since fiscal year 1991, have been selected by the Board of
Directors as auditors for the Company and its subsidiaries for the fiscal year
ending July 31, 1997.
Representatives of Ernst & Young LLP are expected to be present at the
annual meeting of stockholders. They shall be given the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
15
<PAGE>
OEA, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
FRIDAY, JANUARY 10, 1997 AT 2:00 P.M.
The undersigned hereby constitutes and appoints AHMED D. KAFADAR, CHARLES B.
KAFADAR and PAUL J. MARTIN, and each of them, his true and lawful agents and
proxies with full power of substitutions in each, to vote on behalf of the
undersigned at the Annual Meeting of Stockholders of OEA, INC. to be held in
the Management Briefing Center of Wells Fargo Bank of Denver, (formerly First
Interstate Bank) 17th & California Streets, Denver, Colorado, on Friday,
January 10, 1997 at 2:00 p.m., and at any adjournments thereof, on all
matters coming before said meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED AND IN THE DISCRETION OF THE PERSONS NAMED, UPON OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
(Continued and to be signed on the other side.)
- ------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE>
Please mark
MANAGEMENT RECOMMENDS A VOTE FOR THE your votes /X/
NOMINEES FOR DIRECTOR LISTED BELOW as indicated in
this example
1. To elect directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
FOR all nominees Nominees: Ahmed D. Kafadar, Charles B. Kafadar,
listed (except as marked Ralph A. L. Bogan, Jr., James R. Burnett, Lewis W.
to the contrary). Watson, Philip E. Johnson, George S. Ansell,
Robert J. Schultz, and Erwin H. Billig
/ /
To withhold authority to vote for any nominee(s),
write such nominee(s), name(s) below.
WITHHOLD --------------------------------------------------
AUTHORITY
to vote for all --------------------------------------------------
nominees named.
/ /
Please sign exactly as your name appears hereon. If the stock is registered
in the name of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have
a duly authorized officer sign, stating title. If signer is a partnership,
please sign in partnership name by authorized person.
Dated
----------------------------------------
- ---------------------------------------------
- ---------------------------------------------
SIGNATURE(S)
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
- ------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
