<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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:
[_] 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 (S) 240.14a-11(c) or (S) 240.14a-12
OEA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
OEA, INC.
P.O. BOX 100488
34501 East Quincy Avenue
Denver, Colorado 80250
To the Stockholders of December 3, 1999
OEA, Inc.
Notice is hereby given that the annual meeting of stockholders of OEA, INC.
("Company") will be held in the Tabor Auditorium of The Westin at Tabor Center,
1672 Lawrence Street, Denver, Colorado, at 9:00 a.m. on Tuesday, January 11,
2000, 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 19, 1999, 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:
/s/ J. Thompson McConathy
J. Thompson McConathy
Secretary
<PAGE>
PROXY STATEMENT
Annual Meeting of Stockholders of
OEA, INC.
to be held on January 11, 2000
GENERAL INFORMATION
The solicitation of the proxy enclosed is made by and on behalf of the Board
of Directors (the "Board") of OEA, INC. (the "Company"), to be used at the
annual meeting of holders of Common Stock, $0.10 par value, of the Company (the
"Common Stock") to be held in the Tabor Auditorium of The Westin at Tabor
Center, 1672 Lawrence Street, Denver, Colorado, at the hour of 9:00 a.m. on
Tuesday the 11th day of January 2000, and at any adjournments thereof. This
proxy statement and form of proxy are being mailed to stockholders on or about
December 3, 1999.
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 will
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. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be excluded from the vote and will have no effect. 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 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 have no effect on the outcome of the election of directors and will be
deemed shares not entitled to vote. 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.
2
<PAGE>
The Board has fixed the close of business on November 19, 1999 as the record
date for determination of stockholders entitled to notice of, and to vote at,
the annual Meeting. 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.
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.
On the record date there were 20,616,264 shares issued, outstanding, and
eligible to vote.
FINANCIAL STATEMENTS
An annual report to stockholders, including consolidated financial
statements for the fiscal year ended July 31, 1999, 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
Name Position with Company
---- ---------------------
Robert J. Schultz............ Chairman of the Board
Charles B. Kafadar........... President, Chief Executive Officer and Director
George S. Ansell............. Director
Erwin H. Billig.............. Director
James R. Burnett............. Director
Richard L. Corbin ........... Director
Philip E. Johnson............ Director
Donald E. Miller ............ Director
Lewis W. Watson.............. Director
Robert J. Schultz has been a Director of the Company since 1993 and was
elected Chairman of the Board of Directors in January 1998. Mr. Schultz, 69,
was Vice Chairman of General Motors ("GM") from August 1990 until his
retirement in January 1993. Prior to this position, Mr. Schultz was Vice
President and 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 with responsibility for GM Hughes Electronics (defense and
automotive electronics), Electronic Data Systems Corporation (information
technology), General Motors Technical Staffs, and GM's Corporate Information
Services activity. Mr. Schultz is also a Director of Delco Remy International
and a Trustee of the California Institute of Technology.
Charles B. Kafadar has been a Director of the Company since 1977. Dr.
Kafadar, 54, was elected President and Chief Operating Officer of the Company
in 1985, and Chief Executive Officer in 1998.
George S. Ansell has been a Director of the Company since 1993. Dr. Ansell,
65, is President Emeritus of Colorado School of Mines ("CSM"), where he served
as President from 1984 to 1998. He came to CSM after serving as Dean of the
School of Engineering at Rensselaer Polytechnic Institute ("RPI") in Troy, New
York where he was a 24-year member of the RPI faculty.
Erwin H. Billig became a Director of the Company in 1996. Mr. Billig, 72, is
the Chairman and Chief Executive Officer of MSX International (engineering
services company), and has been President and Chief Operating Officer and Vice
Chairman of MascoTech, Inc. (major supplier to Ford, Chrysler, GM and European
auto manufacturers) since 1993, Chairman of Titan International since 1993, and
Vice Chairman of Delco Remy International since 1994.
James R. Burnett has been a Director of the Company since 1977. Dr. Burnett,
74, 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.
Richard L. Corbin became a Director of the Company in October 1998. Mr.
Corbin, 53, was named Executive Vice President and Chief Financial Officer of
Cordant Technologies, Inc., formerly Thiokol Corporation, (aerospace and
industrial supplier) in 1998 after joining the company as Senior Vice President
and CFO in 1994. Prior to joining Cordant, he was CFO and Vice President of
Administration for the Space Systems division of General Dynamics Corporation
and also held financial positions with LTV and Honeywell. Mr. Corbin is also a
member of the Board of Directors of Howmet International, Inc.
4
<PAGE>
Philip E. Johnson has been a Director of the Company since 1986. Mr.
Johnson, 52, is an Officer and Director of Bennington Johnson & Reeve, P.C., a
Denver law firm.
Donald E. Miller became a Director of the Company in October 1998. Mr.
Miller, 69, spent his 35 year career with The Gates Corporation (automotive and
industrial supplier). He retired as Vice Chairman of that company in 1996. From
1987 until 1994, he held the position of President and Chief Operating Officer
of The Gates Corporation. Mr. Miller is also a Director of Sentry Insurance
Corporation, Lennox Industries, Inc. and Chateau Communities, Inc.
Lewis W. Watson has been a Director of the Company since 1981. Mr. Watson,
58, has been President and Director of Intermountain Resources, Inc. (mining
exploration) since 1981 and formerly was an Audit Partner with Peat, Marwick,
Mitchell & Co., certified public accountants, through 1980.
Additional Executive Officers
William R. Barker, 50, joined OEA and was elected President of Automotive
Safety Products in July 1998. Prior to joining OEA, Mr. Barker spent three
years as President of Bosal North America, manufacturers of automotive exhaust
systems and catalytic converters. Prior to joining Bosal, Mr. Barker was
employed for 23 years at The Gates Corporation where his last position was in
Germany as Chief Operating Officer of the European Power Drive Products
operations, and his preceding position was in Japan as Chief Operating Officer
of Asia Pacific Operations.
J. Thompson McConathy, 52, joined OEA and was elected Vice President of
Finance and CFO in 1996. Prior to joining OEA, Mr. McConathy held several
senior financial positions with the Black & Decker Corporation since 1987 and
served as the Vice President of Finance for the Commercial & Industrial Group
from 1990 to 1996.
Jim M. Flanary, 52, was appointed President of OEA Aerospace, Inc. in March
1999. Prior to joining OEA Aerospace, Mr. Flanary was President and General
Manager of ITT Night Vision, a division of ITT Industries, Inc. from October
1997 to February 1999. From September 1993 to October 1997 he was Vice
President & Director of Manufacturing at ITT Night Vision. Prior to this, he
held positions of increasing responsibility in the semiconductor and
electronics manufacturing industries in Arizona, Oregon and California.
Ben E. Paul, 71, retired as President of OEA Aerospace, Inc. in March 1999
and continues to support the Company as Executive Vice President for a one year
transition period. Mr. Paul was one of the original members of OEA. Prior to
rejoining OEA in 1992, Mr. Paul was Manager, Advanced Technology at Scot, Inc.
(manufacturer of aerospace propellant devices) from 1978 to 1992.
The Company's executive officers serve at the will of the Board of Directors
(see Employment Agreements under Remuneration of Officers and Directors).
5
<PAGE>
COMMITTEES OF THE BOARD: MEETINGS
The Board has appointed standing Audit, Compensation, Corporate
Responsibility and Executive Committees. Members of the Audit Committee are Mr.
Watson, Chairman, Mr. Corbin 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. Members
of the Compensation Committee are Dr. Burnett, Chairman, Mr. Billig and Mr.
Miller. 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, and Mr. Johnson. The Corporate Responsibility Committee's
functions are to promulgate and reaffirm ethical standards for the Company and
to ensure that the Company is compliant with established safety and
environmental policies. Members of the Executive Committee are Mr. Schultz,
Chairman, Dr. Ansell, Dr. Burnett and Dr. Kafadar. The Executive 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 1999 the Board held seven
meetings, the Audit Committee held three meetings, the Compensation Committee
held four meetings, the Corporate Responsibility Committee held four meetings,
and the Executive Committee held four meetings and all directors attended at
least 75% of the meetings of the Board and the Board Committees of which they
were a member.
6
<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, 1999, 1998 and 1997, 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, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------- ------------------------------------
Awards Payouts
------------------------ -----------
Other Annual Restricted Securities All Other
Name and Salary Bonus Compensation Stock Underlying LTIP Compensation
Principal Position Year ($)(1) ($)(2) ($)(3) Award(s) ($) Options (#) Payouts ($) ($)(4)
- ------------------ ---- ------- ------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles B. Kafadar...... 1999 400,005 100,000 -- -- 50,000 -- 7,980
President and Chief 1998 376,926 -- -- -- -- -- 7,988
Executive Officer 1997 350,002 48,000 -- -- 2,500 -- 7,474
William R. Barker....... 1999 268,172 54,200 -- -- 40,000 -- 7,490
President, Automotive 1998 124,789 -- -- -- 75,000 -- --
Safety Products 1997 -- -- -- -- -- -- --
Ben E. Paul............. 1999 241,542 -- -- -- -- -- 7,630
Executive Vice
President 1998 206,588 -- -- -- -- -- 7,632
of OEA Aerospace, Inc. 1997 200,013 25,000 -- -- 1,000 -- 7,124
J. Thompson McConathy... 1999 198,094 26,700 -- -- 30,000 -- 7,513
Vice President and 1998 185,771 -- -- -- 5,000 -- 7,520
Chief Financial Officer 1997 123,853 30,000 -- -- -- -- 5,783
Jim M. Flanary.......... 1999 90,392 40,000 -- -- 50,000 -- --
President of OEA 1998 -- -- -- -- -- -- --
Aerospace, Inc. 1997 -- -- -- -- -- -- --
</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 1999, 1998, and 1997 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.
Incentive Compensation
The Board, at its discretion, may authorize 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 executive officers and expensed for financial reporting purposes in
fiscal years 1999, 1998 and 1997.
7
<PAGE>
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
1999. Directors not employed by the Company or its subsidiaries received a base
compensation of $10,000 per annum, committee chairmen received an additional
base compensation of $1,200 per annum, additional compensation of $3,300 for
each board meeting attended, $2,700 for each committee meeting attended on days
the Board of Directors did not meet and $2,500 for each committee meeting on
days that the Board of Directors met. Directors utilized for consulting
purposes received $2,700 compensation per day. Dr. Ansell received $5,400 for
consulting during fiscal year 1999. Robert J. Schultz was elected Chairman of
the Board of Directors in January, 1998. The Company compensates Mr. Schultz
for his services as Chairman on a consulting basis, paying him a retainer of
$200,000 per year. In addition, Mr. Schultz in 1998 received an option grant of
60,000 shares at an exercise price of $19.063 per share and in 1999 received an
option grant of 70,000 shares at an exercise price of $9.563 per share under
the Company's Employee Stock Option Plan, and is reimbursed for his expenses.
Directors' Compensation Plan
All directors of the Company, other than those who are officers or employees
of the Company, are eligible to participate in the Directors' Compensation Plan
and can elect to participate in the "Compensation Choice Program" and the
"Deferred Compensation Program" under the Plan. Eligible directors of the
Company may annually elect to be paid their director fees and other
compensation ("Director's Compensation")either (i) in cash, common stock, non-
statutory stock options ("NSOs"), or a combination thereof ("Compensation
Choice Program"), or (ii) by deferring some or all of their Director's
Compensation for payment at a later date ("Deferred Compensation Program"). Any
election may not thereafter be changed for that Plan Year.
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 the Company determine
the amount of its contribution to its plan up to 10% of the total compensation
of all participants for such fiscal year. This contribution is 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 1999, 1998 and 1997.
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 1999, 1998 and 1997.
8
<PAGE>
Employment Agreements
The Company 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, 1999, termination payments calculated in accordance
with the agreement would have approximated $197,608 per year for Dr. Kafadar,
or $98,804 per year for his surviving spouse.
Incentive Stock Option Plans
The stockholders approved an Employees' Stock Option Plan and an Amendment
to the Employees' Stock Option Plan (the "Employees' Plan") on January 13, 1995
and January 14, 1999, respectively, and a Nonemployee Directors' Stock Option
Plan (the "1995 Directors' Plan") on January 12, 1996. These plans provide for
stock options to be granted for a maximum of 1,350,000 shares of Common Stock
under the Employees' Plan and a maximum of 50,000 shares of Common Stock under
the 1995 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 such times after the grant date as specified by the Board, except
for options granted to executive officers which may not be exercised for at
least six months, and options issued under the 1995 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 incentive
stock 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 (the "Prior Plan"), for
grants prior to July 28, 1994, which provided 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 at the time
of grant, were of special importance in the management, operation and
development of the Company. Options granted under the Prior Plan 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 under the Prior Plan 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.
9
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information on option grants made during
fiscal year 1999 to the named executive officers. (None of the named executive
officers has ever received stock appreciation rights).
Individual Grants
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Number of Option Term
Securities Underlying % of Total Options (2)(3)
Options Granted Granted to Employees Exercise Price Expiration -----------------
Name (#)(1)(2) in Fiscal 1999(2)(4) ($/Share)(1)(2) Date(2) 5%($) 10%($)
---- --------------------- -------------------- --------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Charles B. Kafadar...... 50,000 12.29 9.56 10/22/98 300,612 761,809
William R. Barker....... 40,000 9.83 9.56 10/22/98 240,489 609,447
Ben E. Paul............. -- -- -- -- -- --
J. Thompson McConathy... 30,000 7.37 9.56 10/22/98 180,367 457,085
Jim M. Flanary.......... 50,000 12.29 10.75 3/1/99 338,031 856,637
</TABLE>
- --------
(1) On October 22, 1998, the Board of Directors granted Mr. Kafadar, Mr.
Barker and Mr. McConathy options to purchase 50,000, 40,000 and 30,000
shares, respectively, of the Company's Common Stock at an exercise price
of $9.56 per share. These options have a 5 year vesting period (1/5
vesting each year) and expire on October 22, 2008. On March 1, 1999, the
Board of Directors granted Mr. Flanary options to purchase 50,000 shares
of the Company's Common Stock at an exercise price of $10.75 per share.
These options have a five year vesting period (1/5 vesting each year) and
expire on March 1, 2009. No consideration was or is to be received by the
Company for the granting of any option.
(2) On October 22, 1998, the Board of Directors granted Mr. Schultz options to
purchase 70,000 shares of the Company's Common Stock at an exercise price
of $9.56 per share. These options have a 5 year vesting period (1/5
vesting each year) and expire on October 22, 2008. This option grant
represents 17.20% of the total options granted to employees in fiscal
1999. Potential realizable value over the option term is $420,856 assuming
a 5% annual rate of return and is $1,066,532 assuming a 10% annual rate of
return.
(3) Potential realizable value is calculated based on an assumption that the
price of the Company's Common Stock appreciates at the annual rates shown
(5% or 10%), compounded annually, from the date of grant of the option
until the end of the option term. The 5% and 10% assumed rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not in any way represent the Company's estimate or
projection of future stock prices. Actual gains, if any, upon future
exercise of any of these options will depend on the actual performance of
the Company's Common Stock and the continued employment of the executive
officer holding the option through its vesting period.
(4) Based on options to purchase an aggregate of 407,000 shares granted to
employees during fiscal year 1999.
10
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information on option exercises in fiscal
year 1999 by the named executive officers and the value of such officers'
unexercised options at July 31, 1999.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised In-
Underlying the-Money
Unexercised Options at
Number of Options at Fiscal Year-
Shares Fiscal Year-End End($)(1)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(2) Realized($)(2) Unexercisable(2) Unexercisable(2)
---- ----------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Charles B. Kafadar...... -- -- 17,500/50,000 -- / --
William R. Barker....... -- -- 15,000/100,000 -- / --
Ben E. Paul............. -- -- 4,000 / -- -- / --
J. Thompson McConathy... -- -- 5,000/30,000 -- / --
Jim M. Flanary.......... -- -- -- / 50,000 -- / --
</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 $8.5625 per share and (ii) multiplying by the
number of shares subject to the option.
(2) Robert J. Schultz had 14,500 exercisable and 118,000 unexercisable
securities underlying unexercised options at fiscal year end. He exercised
no options in fiscal 1999 and had no in-the-money options at fiscal year
end.
11
<PAGE>
COMPENSATION COMMITTEE; INTERLOCKS AND INSIDER PARTICIPATION
Dr. James R. Burnett, Mr. Erwin H. Billig and Mr. Donald E. Miller, all non-
employee directors, constituted the Compensation Committee of the Board during
fiscal 1999. None of these individuals was in 1999, or has been in prior years,
an officer or employee of the Company or any of its subsidiaries. During 1999,
these directors had no interlocking relationships as defined by the Securities
and Exchange Commission.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Background
The Compensation Committee (the "Committee") is pleased to present its
report on executive compensation. The Committee consists of three outside
members of the Board of Directors, Dr. Burnett as Chairman, Mr. Billig and Mr.
Miller, each of whom were members of the Compensation Committee throughout
fiscal 1999. This Committee report documents the components of the Company's
executive officer compensation programs and describes the basis on which fiscal
year 1999 compensation determinations were made by the Committee with respect
to the Chief Executive Officer and other executive officers of the Company. The
report of the Compensation Committee describes the policies and rationale with
respect to compensation paid to executive officers and other employees for the
year ended July 31, 1999. The information contained in the report shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission nor shall the information be incorporated by reference into
any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference into such filing.
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Company and the Committee to ensure that
executive compensation is primarily linked to long-term corporate performance
and increases in stockholder value. The following objectives have been utilized
by the Committee as guidelines for compensation decisions:
. Provide a competitive total compensation package that enables the
Company to attract and retain key executives who are capable of leading
the Company in achieving our business objectives.
. 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 and "at risk" compensation opportunities that are
directly linked with the performance of the Company and that align
executive remuneration with the interests of stockholders and provide a
performance-based vehicle for capital accumulation and retirement
planning.
. Inspire executive officers to work together as a team to pursue the
Company's goals.
. Establish a general corporate atmosphere that promotes an
entrepreneurial style of leadership.
. Recognize individual initiative and achievement.
. Ensure compensation levels that are externally competitive and
internally equitable.
Compensation Program Components
One of our highest priorities is to attract and retain the most skilled and
experienced employees in key positions. Compensation is important in this
regard, and the Company's incentive compensation plan is designed to allow us
to be competitive in the market for key personnel while at the same time
aligning the employee's interest with corporate value creation. The incentive
compensation plan has a number of very important features that are discussed
below. As in the past, we believe that the cash and other types of compensation
of executive officers and other key employees, while being competitive with
other companies, should also be fair and discriminating with the Company on the
basis of personal performance.
12
<PAGE>
There are three major components of our executive compensation program: base
salary, annual incentive bonus, and long-term incentives through stock options.
Executives, like all qualified employees, are eligible to participate in our
401(k) and profit sharing plans, as well as in certain other benefit plans,
such as health and life insurance pans.
Base Salary--We believe it is essential to pay a competitive salary in order
to attract qualified individuals and to support the continuity of management,
consistent with the long-term nature of our industry. A variety of resources,
including published compensation surveys, are used as general guidance in
determining base salary levels. Although the Committee performs comparisons
with companies of similar revenue size and industry groups, it does not
specifically target compensation of the executive officers to compensation
levels at other companies. Also, because compensation survey data generally is
imprecise as to responsibilities, and transparent as to talent and experience,
we may adjust the range after subjectively considering the impact of these
factors. We may also consider Company and industry performance and internal
parity. Of critical importance to the setting of salary are the particular
individual's skill level and performance, and the value of his or her skills to
the Company. These factors are subjective, and no predetermined weighting of
factors is applied. Base pay levels for the executive officers are competitive
within a range that the Committee considers reasonable and appropriate. Please
refer to the Summary Compensation Table for details regarding executive officer
base salaries.
Annual Incentive Compensation--The Company's officers, senior management
personnel and all other personnel are eligible to participate in an annual
incentive compensation (bonus) plan with awards based primarily on short-term
business success and individual contributions to that success. 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 return on capital employed targets and tailored
individual objectives. 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 performance and at the
discretion of the Committee. Please refer to the Summary Compensation Table for
details regarding executive officer incentive compensation.
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
based on corporate and personal performance, executive officers and key
personnel are granted stock options in accordance with the Company's Employees'
Stock Option Plans. 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. Options may also include vesting conditions related to
time or other factors. The ultimate value of the options granted relates to
stock price performance. Please refer to the Summary Compensation Table for
details regarding executive officer stock options.
Management's Performance in Fiscal 1999--During fiscal year 1999, OEA
continued its growth in its automotive safety products segment. In 1999, the
Company increased automotive sales by 4% and operating profit by 60%, which
were derived from air bag inflators and initiators. Automotive product sales
increased to 82% of total consolidated sales compared to 80% in the prior year
and 80% in 1997. The Company produced 7.6 million "smokeless" hybrid inflators
in its third year of production for delivery to air bag module manufacturers.
Chief Executive Officer Compensation--In determining both Dr. Charles B.
Kafadar's fiscal year 1999 pay and the structure of his total compensation
packages, the Committee considered OEA's technical and financial performance
during 1999, the magnitude and effectiveness of the Company's continued
expansion into the automotive products industry, comparisons with executives of
automotive safety products and aerospace companies of similar revenue size, and
a variety of published compensation surveys. Dr. Kafadar has also
13
<PAGE>
spearheaded the Company's technology-driven development of new generation
products for traditional markets and emerging applications. In general, Dr.
Kafadar's compensation is determined in the same manner as the compensation for
our other executive officers as described above.
Internal Revenue Code Section 162(m) Implications for Executive
Compensation--The Committee is responsible for addressing the issues raised by
Internal Revenue Code Section 162(m) ("Section 162(m)"). This Section limits to
$1 million the Company's deduction for compensation paid to certain executive
officers of the Company that does not qualify as "performance-based". To
qualify as performance-based under Section 162(m), compensation payments must
be made pursuant to a plan that is administered by a committee of outside
directors and must be based on achieving objective performance goals. In
addition, the material terms of the plan must be disclosed to and approved by
stockholders, and the Committee must certify that the performance goals were
achieved before payments can be awarded. It is not expected that the
compensation to be paid to the Company's executive officers for fiscal 2000
will exceed the $1 million limit per officer. Accordingly, the Compensation
Committee has not at this time instituted any changes to its compensation
policies to take into account the $1 million limitation.
The Committee continues to carefully consider the impact of this tax code
provision and will monitor the level of compensation paid to the executive
officers in order to take any steps which may be appropriate in response to the
provisions of Section 162(m).
Dr. James R. Burnett, Chairman
Erwin H. Billig
Donald E. Miller
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
As of November 19, 1999, the following persons, exclusive of management,
were known to the Company to own beneficially more than 5% of the Company's
Common Stock (the only class of voting securities of the Company):
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of Beneficial Owner of Beneficial Ownership* of Class*
------------------------------------ ------------------------ ---------
<S> <C> <C>
Reich & Tang Asset Management................ 2,592,800(1) 12.6
600 Fifth Avenue
New York, NY 10020
T. Rowe Price Associates, Inc................ 1,303,700(2) 6.3
100 East Pratt Street
Baltimore, MD 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 19,
1999.
(1) Reich & Tang Asset Management is a Registered Investment Advisor and the
shares are owned on behalf of their clients. Reich & Tang has sole
investment and voting authority over all shares.
(2) T. Rowe Price Associates, Inc. is a Registered Investment Advisor and the
shares are owned on behalf of their clients. T. Rowe Price Associates,
Inc. has sole dispositive power for the entire holding of 1,303,700 shares
and has sole voting authority for 335,300 shares.
15
<PAGE>
MANAGEMENT
As of November 19, 1999, the following Directors and named executive
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 Percent
Name of Beneficial Owner of Beneficial Ownership** of Class**
------------------------ ------------------------- ----------
<S> <C> <C>
Robert J. Schultz......................... 55,600 (1)(2) --
Charles B. Kafadar........................ 570,258 (1)(3) 2.8
George S. Ansell.......................... 2,500 (1)(4) --
Erwin H. Billig........................... 4,147 (1) --
James R. Burnett.......................... 26,788 (1)(5) --
Richard L. Corbin......................... 1,625 (1) --
Philip E. Johnson......................... 18,063 (1) --
Donald E. Miller.......................... 6,044 (1) --
Lewis W. Watson........................... 5,991 (1)(6) --
William R. Barker......................... 31,200 (1) --
J. Thompson McConathy..................... 13,600 (1) --
Jim M. Flanary............................ 10,000 (1) --
Ben E. Paul............................... 52,850 (1) --
All Directors and Executive Officers
as a group (the 13 persons named above).. 798,666 3.9
</TABLE>
- --------
** This information is taken from statements filed by beneficial owners with
the SEC, by reference to the transfer agent's records as of November 19,
1999 and the Company's stock option plan record. A line indicates ownership
of less than 1%.
(1) Includes unexercised stock options, which are either vested or will vest
within six months of this Proxy Statement, under the Company's stock option
plans: Mr. Schultz, 40,500 shares; Dr. Kafadar, 27,500 shares; Dr. Ansell,
2,500 shares; Mr. Billig, 2,500 shares; Dr. Burnett, 2,500 shares; Mr.
Corbin, 625 shares; Mr. Johnson, 2,500 shares; Mr. Miller, 625 shares; Mr.
Watson, 2,500 shares; Mr. Barker, 23,000 shares; Mr. McConathy, 11,000
shares; Mr. Flanary, 10,000; and Mr. Paul, 4,000 shares.
(2) Does not include 1,000 shares held by his wife in her own name.
(3) Includes 75,795 shares held by Dr. Kafadar of record and 466,963 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 36,299 shares
held by his wife as custodian for their children, of which he disclaims
beneficial ownership.
(4) Does not include 1,000 shares held by his wife in her own name.
(5) Includes 18,000 shares held by Dr. Burnett in a living trust with his wife,
in which voting power is shared, and 6,288 shares of deferred compensation
under the Company's Directors Compensation Plan, which have not been issued
and cannot be voted.
(6) Includes 1,491 unexercised stock options under the Company's Directors'
Compensation Plan.
Compliance with Section 16(a) of the Securities and Exchange Act of 1934
The Company's directors and executive officers and persons who are
beneficial owners of more than 10% of the Company's Common Stock ("10%
Beneficial Owners") are required to file reports of their holdings and
transactions in the Common Stock with the Securities and Exchange Commission
(the "Commission") and to furnish the Company with such reports. Based solely
upon its review of the copies of such reports the Company has received or upon
written representations it has obtained from certain of these persons, the
Company believes that, with respect to fiscal 1999, all of the Company's
directors, executive officers and 10% Beneficial Owners have complied with all
applicable Section 16(a) filing requirements.
16
<PAGE>
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, 1999, 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,
1994, in the Company's Common Stock and in each of such indices and assumes
reinvestment of dividends, if any.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
OBA, INC. 100 100 117 130 46 30
S&P 500 100 126 147 224 267 321
S&P AUTOMOBILES 100 98 110 145 167 152
</TABLE>
17
<PAGE>
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 10, 2000, 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, 2000.
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.
18
<PAGE>
PROXY PROXY
OEA, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
TUESDAY, JANUARY 11, 2000 AT 9:00 A.M.
The undersigned hereby constitutes and appoints ROBERT J. SCHULTZ,
CHARLES B. KAFADAR and J. THOMPSON McCONATHY, 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 Tabor Auditorium of The Westin at Tabor Center, 1672 Lawrence
Street, Denver, Colorado, on Tuesday, January 11, 2000 at 9:00 a.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.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
OEA, INC
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
<TABLE>
<S> <C>
MANAGEMENT RECOMMENDS A VOTE FOR THE
NOMINEES FOR DIRECTOR LISTED BELOW. For Withhold For All
All All (Except Nominee(s) written below)
1. To elect directors to hold office [ ] [ ] [ ] ____________________________________________________
until the next Annual Meeting of Stockholders
and until their successors are elected.
Nominees: Robert J. Schultz, Charles B. Kafadar, George S. Ansell, Erwin H. Billig, James R. Burnett,
Richard L. Corbin, Philip E. Johnson, Donald E. Miller, and Lewis W. Watson.
Dated:___________________________________________
Signature(s) ____________________________________
_________________________________________________
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.
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
