<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/x/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
REMEC INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
REMEC, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
REMEC, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 29, 1996
------------------------
TO THE SHAREHOLDERS OF REMEC, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of REMEC,
Inc., a California corporation ("REMEC" or the "Company"), will be held on
Wednesday, May 29, 1996 at 4:00 p.m., Pacific time, at the Company's principal
executive offices located at 9404 Chesapeake Drive, San Diego, California, for
the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the Company's Bylaws to set the size of
the Board of Directors from seven to eleven directors, with the
exact number fixed by the Board of Directors.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 17, 1996 are
entitled to notice of and to vote at the meeting and any adjournments thereof.
All shareholders are cordially invited to attend the meeting in person. Any
shareholder attending the meeting may vote in person even if such shareholder
previously signed and returned a Proxy.
FOR THE BOARD OF DIRECTORS
[SIGNATURE]
RONALD E. RAGLAND,
Chairman and Chief Executive Officer
San Diego, California
May 17, 1996
- - --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
- - --------------------------------------------------------------------------------
<PAGE> 3
REMEC, INC.
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of REMEC, Inc. ("REMEC" or the "Company") for use at the Company's
Annual Meeting of Shareholders (the "Annual Meeting") to be held Wednesday, May
29, 1996 at 4:00 p.m., Pacific time, or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the Company's
principal executive offices located at 9404 Chesapeake Drive, San Diego,
California, 92123. The telephone number at that address is (619) 560-1301.
These proxy solicitation materials were mailed on or about May 17, 1996 to
all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on April 17, 1996 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. At
the Record Date, 7,762,162 shares of the Company's common stock (the "Common
Stock") were issued, outstanding and entitled to vote at the meeting.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting for the election of directors may exercise
cumulative voting rights and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which the
shareholder's shares are entitled, or distribute such shareholder's votes on the
same principle among as many candidates as the shareholder may select. However,
no shareholder shall be entitled to cumulate votes unless the candidate's name
has been placed in nomination prior to the voting and the shareholder, or any
other shareholder, has given notice at the meeting prior to the voting of the
intention to cumulate votes. On all other matters each share is entitled to one
vote on each proposal or item that comes before the Annual Meeting.
The Company intends to include abstentions and broker non-votes as present
or represented for purposes of establishing a quorum for the transaction of
business. However, abstentions are counted as votes against a proposal for
purposes of determining whether or not a proposal has been approved, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
Solicitation of proxies may be made by directors, officers and other
employees of the Company by personal interview, telephone, facsimile or other
method. No additional compensation will be paid for any such services. Costs of
solicitation, including preparation, assembly, printing and mailing of this
proxy statement, the proxy and any other information furnished to the
shareholders, will be borne by the Company. The Company may reimburse the
reasonable charges and expenses of brokerage houses or other nominees or
fiduciaries for forwarding proxy materials to, and obtaining authority to
execute proxies from, beneficial owners for whose account they hold shares of
Common Stock.
1
<PAGE> 4
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The By-Laws of the Company provide for a Board consisting of not fewer than
five nor more than nine directors. The size of the Board is set at nine
effective as of the date of the Annual Meeting. Nine directors are to be elected
at the Annual Meeting. Unless otherwise instructed, the proxy holders will vote
the proxies received by them for the nine nominees named below. All of the
nominees named below except Mr. Corcoran and Mr. Gibbs are presently directors
of the Company. In the event that any nominee is unable or declines to serve as
a director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board to fill the vacancy. In the
event that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will ensure the election of as many of the
nominees listed below as possible. In such event, the specific nominees for whom
such votes will be cumulated will be determined by the proxy holders. The term
of office of each person elected as a director will continue until the next
Annual Meeting of Shareholders or until his successor has been elected and
qualified. It is not expected that any nominee will be unable or will decline to
serve as a director.
The name of and certain other information regarding each nominee is set
forth in the table below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- - ------------------------- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Ronald E. Ragland........ 54 Chairman of the Board and Chief Executive Officer 1983
Errol Ekaireb............ 57 President, Chief Operating Officer and Director 1985
Jack A. Giles............ 54 Executive Vice President, President of REMEC 1984
Microwave and Director
Denny Morgan............. 42 Senior Vice President, Chief Engineer and 1983
Director
Andre R. Horn............ 67 Director 1988
Jeffrey M. Nash.......... 48 Director 1988
Gary L. Luick............ 55 Director 1994
Thomas A. Corcoran....... 51 --
William H. Gibbs......... 52 --
</TABLE>
There is no family relationship between any of the directors or executive
officers of the Company.
MR. RAGLAND was a founder of the Company and has served as Chairman of the
Board and Chief Executive Officer of the Company since January 1983. Prior to
joining the Company, he was General Manager of KW Engineering and held program
management positions with Ford Aerospace Communications Corp., E-Systems, Inc.
and United Telecommunications, Inc. Mr. Ragland was a Captain in the United
States Army and holds a B.S.E.E. degree from Missouri University at Rolla and an
M.S.E.E. degree from St. Louis University.
MR. EKAIREB has served as President and Chief Operating Officer of the
Company since 1990 and a director of the Company since 1985. Mr. Ekaireb served
as Vice President of the Company from 1984 to 1987 and as Executive Vice
President and Chief Operating Officer from 1987 to 1990. Prior to joining the
Company, he spent 23 years with Ford Aerospace Communications Corp. Mr. Ekaireb
holds B.S.E.E. and B.S.M.E. degrees from West Coast University and has completed
the University of California, Los Angeles Executive Program.
MR. GILES joined the Company in 1984. He was elected as a director in 1984,
Vice President in 1985, Executive Vice President in 1987 and was elected
President of REMEC Microwave in 1994. Prior to joining the Company he spent
approximately 19 years with Texas Instruments in program management and
marketing. Mr. Giles holds a B.S.M.E. degree from the University of Arkansas and
is a graduate of Defense Systems Management College.
2
<PAGE> 5
MR. MORGAN was a founder of the Company and has served as Senior Vice
President, Chief Engineer and a director of the Company since January 1983.
Prior to joining the Company, he worked with KW Engineering, Micromega, General
Dynamics Corporation and Pacific Aerosystems, Inc. Mr. Morgan holds a B.S.E.E.
degree from the Massachusetts Institute of Technology and was the Four Year
Chancellor's Intern Fellowship Recipient at the University of California, Los
Angeles.
MR. HORN has been a director of the Company since 1988. Mr. Horn is the
retired Chairman of the Board of Joy Manufacturing Company. From 1985 to 1991,
Mr. Horn served as the Chairman of the Board of Needham & Company, Inc. He
currently holds the honorary position of Chairman Emeritus of Needham & Company,
Inc. Mr. Horn is a director of Western Digital Corporation, a computer equipment
manufacturer, Varco International, Inc., a manufacturer of petroleum industry
equipment, and GTI Corporation, a supplier of networking components.
DR. NASH has been a director of the Company since 1988. Since August, 1995,
he has been the President, Chief Executive Officer and a Director of TransTech
Information Management Systems, Inc. From 1994 to 1995, Dr. Nash was Chairman,
Chief Executive Officer and President of Digital Perceptions, Inc., and, from
1989 to 1994, was the Chief Executive Officer and President of Visqus as well as
Conner Technology, Inc., both subsidiaries of Conner Peripherals, Inc. Dr. Nash
is currently a director of Proxima Corporation, a computer equipment
manufacturer, ViaSat, Inc., a manufacturer of satellite communication equipment,
and Esscor, Inc., an electrical utility simulation company.
MR. LUICK has been a director of the Company since 1994. Mr. Luick served
as President and a director of GTI Corporation from 1989 through 1995 and as
Chief Executive Officer of GTI Corporation from 1991 through 1995.
MR. CORCORAN has been the President and Chief Operating Officer of the
Electronic Systems sector of Lockheed Martin Corporation since March 1995. From
1993 to 1995 Mr. Corcoran was President of the Electronics Group of Martin
Marietta Corporation, and from 1983 to 1993 he held various management positions
with the Aerospace segment of General Electric Company. Mr. Corcoran is a member
of the Board of Trustees of Worcester Polytechnic Institute, the Board of
Trustees of Stevens Institute of Technology and the Board of Governors of the
Electronic Industries Association and a Director of the U.S. Navy Submarine
League.
MR. GIBBS has been the President and Chief Executive Officer of DH
Technology, Inc. since November 1985 and Chairman of DH Technology, Inc. since
February 1987. From August 1993 to November 1985 he held various positions,
including those of President and Chief Operating Officer, with Computer and
Communications Technology, a supplier of rigid disc magnetic recording heads to
the peripheral equipment segment of the computer industry.
BOARD MEETINGS AND COMMITTEES
The Board held a total of five meetings during the fiscal year ended
January 31, 1996. No director attended fewer than 75 percent of the aggregate of
all meetings of the Board and of the committees, if any, upon which such
director served.
The Company's Audit Committee was instituted on February 28, 1996 and
currently consists of Mr. Horn and Dr. Nash. Mr. Horn is the Chairman of the
Audit Committee. The principal functions of the Audit Committee are to recommend
engagement of the Company's independent auditors, to consult with the Company's
auditors concerning the scope of the audit and to review with them the results
of their examination, to review and approve any material accounting policy
changes affecting the Company's operating results and to review the Company's
financial control procedures and personnel.
The Compensation Committee currently consists of Mr. Horn, Dr. Nash and Mr.
Luick. Dr. Nash is the Chairman of the Compensation Committee. The Compensation
Committee determines compensation and benefits for the Company's executive
officers and, as of February 28, 1996, administers the Company's equity
incentive plans. The Compensation Committee held one meeting during the fiscal
year ended January 31, 1996.
During the fiscal year ended January 31, 1996, the Board did not have a
nominating committee. On February 28, 1996 the Board formed a Nominating
Committee, which currently consists of Dr. Nash, Mr. Ragland and Mr. Horn. Dr.
Nash is the Chairman of the Nominating Committee. The Nominating Committee will
review potential candidates for service on the Board.
3
<PAGE> 6
COMPENSATION OF DIRECTORS
In the fiscal year ended January 31, 1996, the Company's outside directors
received an annual retainer fee of $4,000 for serving on the Board of Directors
and received a fee of $900 for each Board meeting attended plus reimbursement
for their reasonable travel expenses in attending Board and committee meetings.
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth certain information regarding beneficial ownership
of the Common Stock as of April 17, 1996 (i) by each person who is known by the
Company to own beneficially more than 5 percent of the Common Stock, (ii) by
each of the Company's directors and by each nominee to the Board, (iii) by the
Chief Executive Officer and the four other most highly paid executive officers
of the Company at fiscal year end (the "Named Executive Officers") and (iv) by
all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED(1) OWNED(1)(2)
------------- -------------
<S> <C> <C>
Ronald E. Ragland(3).................................................. 1,055,500 13.6
9404 Chesapeake Drive
San Diego, California 92123
Denny Morgan(4)....................................................... 341,500 4.4
Jack A. Giles(5)...................................................... 240,800 3.1
Errol Ekaireb......................................................... 152,500 2.0
Gary L. Luick(6)...................................................... 1,500 *
Andre R. Horn......................................................... 12,500 *
Jeffrey M. Nash....................................................... 42,500 *
Thomas A. Corcoran.................................................... 6,000 *
Thomas A. George...................................................... 4,750 *
William H. Gibbs...................................................... -- *
All directors and executive officers
as a group (8 persons)(6)........................................... 1,851,550 23.9
</TABLE>
- - ---------------
* Less than one percent of the outstanding shares of Common Stock.
(1) This table is based upon information supplied by directors, officers and
principal shareholders. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, each of the
shareholders identified in this table has sole voting and investment power
with respect to the shares shown. Percentage of ownership is based on
7,762,162 shares of Common Stock outstanding as of April 17, 1996.
(2) Shares issuable upon exercise of outstanding options are considered
outstanding for purposes of calculating the percentage of ownership of
Common Stock of the person holding such options, but are not considered
outstanding for computing the percentage of ownership of any other person.
(3) Includes 10,000 shares held by Mr. Ragland's minor children and 2,500 shares
held by Mr. Ragland's spouse.
(4) All shares beneficially owned by Mr. Morgan are held in the Morgan Trust, of
which Mr. Morgan and his spouse act as co-trustees.
(5) Includes 7,750 shares held by Mr. Giles' spouse.
(6) Includes 1,500 shares issuable upon exercise of outstanding options that are
exercisable within 60 days of April 17, 1996.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth the total compensation for the fiscal years
ended January 31, 1995 and January 31, 1996 of the Named Executive Officers.
None of the Named Executive Officers earned any bonuses or compensation for the
fiscal years other than as set forth in the table or received any restricted
stock awards, stock appreciation rights or long-term incentive plan payouts.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FISCAL --------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) COMPENSATION ($)
- - -------------------------------------------- ------ ------------- --------- ----------------
<S> <C> <C> <C> <C>
Ronald E. Ragland........................... 1996 266,667 82,000 11,242(2)
Chairman of the Board and Chief 1995 242,497 78,697 11,635(3)
Executive Officer
Errol Ekaireb............................... 1996 214,167 82,000 12,099(4)
President and Chief Operating 1995 200,000 78,697 9,200(5)
Officer
Jack A. Giles............................... 1996 198,333 82,000 10,723(6)
Executive Vice President 1995 184,833 78,697 9,648(7)
Denny Morgan................................ 1996 135,834 32,000 722(8)
Senior Vice President 1995 127,000 20,000 216(9)
Thomas A. George............................ 1996 125,042 24,000 200(10)
Senior Vice President, Chief 1995 112,000 15,000 200(10)
Financial Officer and Secretary
</TABLE>
- - ---------------
(1) Includes amounts deferred at the option of the officer pursuant to the
Company's deferred compensation plan for employee directors.
(2) Includes compensation in the form of an automobile allowance in the amount
of $9,000, a $200 contribution to the Company 401(k) plan and $2,042 in
life insurance premiums.
(3) Includes compensation in the form of an automobile allowance in the amount
of $9,000, a $200 contribution to the Company 401(k) plan and $2,435 in
life insurance premiums.
(4) Includes compensation in the form of an automobile allowance in the amount
of $9,000, a $200 contribution to the Company 401(k) plan and $2,899 in
life insurance premiums.
(5) Includes compensation in the form of an automobile allowance in the amount
of $9,000 and a $200 contribution to the Company 401(k) plan.
(6) Includes compensation in the form of an automobile allowance in the amount
of $9,000, a $200 contribution to the Company 401(k) plan and $1,523 in
life insurance premiums.
(7) Includes compensation in the form of an automobile allowance in the amount
of $9,000, a $200 contribution to the Company 401(k) plan and $448 in life
insurance premiums.
(8) Includes compensation in the form of a $200 contribution to the Company
401(k) plan and $522 in life insurance premiums.
(9) Includes compensation in the form of a $200 contribution to the Company
401(k) plan and $16 in life insurance premiums.
(10) Consists of compensation in the form of a $200 contribution to the Company
401(k) plan.
5
<PAGE> 8
The Company did not grant any stock options to the Named Executive Officers
in the fiscal year ended January 31, 1996. The following table sets forth
certain information regarding the value of options held by the Named Executive
Officers on January 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS(#) OPTIONS($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - --------------------- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Ronald E. Ragland.... -- -- 0/0 0/0
Errol Ekaireb........ -- -- 0/0 0/0
Jack A. Giles........ -- -- 0/0 0/0
Denny Morgan......... -- -- 0/0 0/0
Thomas A. George..... 1,250 5,000(1) 0/0 0/0
</TABLE>
- - ---------------
(1) Value realized is the difference between the exercise price of $4.00 per
share and the public offering price of $8.00 per share.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee is comprised of three independent nonemployee
directors. As members of the Compensation Committee, it is our responsibility to
determine the most effective total executive compensation strategy, based upon
the business needs of the Company and consistent with shareholders' interests,
to administer the Company's executive compensation plans, programs and policies,
to monitor corporate performance and its relationship to compensation of
executive officers, and to make appropriate recommendations concerning matters
of compensation.
Compensation Philosophy
The major goals of the compensation program are to align compensation with
the attainment of key business objectives and to enable the Company to attract,
retain and reward capable executives who can contribute to the continued success
of the Company. Three key goals form the basis of compensation decisions for all
employees of the Company:
1. To attract and retain the most highly qualified management and employee
team;
2. To pay competitively compared to similar technology and defense
electronics companies and to provide appropriate incentive for achieving
high levels of performance compared to similar organizations in the
marketplace; and
3. To motivate executives and employees to achieve the Company's annual and
long-term business goals and encourage behavior toward the fulfillment
of those objectives.
As a result of this philosophy, the Company's executive compensation
program consists of base salary, bonuses and standard benefits.
Base Salary. The Compensation Committee recognizes the importance of
maintaining compensation practices and levels of compensation competitive with
technology and defense electronics companies in comparable stages of development
and other comparable technology companies in the San Diego area. For external
marketplace comparison purposes, a group of 17 comparable companies are utilized
for determining competitive compensation levels.
Base salary represents the fixed component of the executive compensation
program. Determination of base salary levels is established on an annual review
of marketplace competitiveness with similar technology and defense electronics
companies, and on individual performance. Periodic increases in base salary
relate to
6
<PAGE> 9
individual contributions evaluated against established objectives, relative
marketplace competitiveness levels, and the industry's annual competitive pay
practice movement.
Bonuses and Stock Plans. The Company's bonus program is an integral part of
the compensation program and is designed to reward executives for long-term
strategic management and for attaining specific annual performance goals. Each
year a portion of the Company's pre-tax profits comprise the bonus "pool," and
the Compensation Committee determines the bonus amount for the Chief Executive
Officer, the President and the Executive Vice President of the Company, based on
both attainment by those officers of specific goals, and on overall corporate
performance. The Chief Executive Officer, President and Executive Vice President
determine the bonus amount for the other executive officers and for all other
salaried employees, based on similar criteria. Because of the substantial stock
ownership of the Company's senior management, the interests of the Company's
shareholders and management are closely aligned, and the Compensation Committee
therefore historically has placed less emphasis on equity grants than other
comparable companies. Executive officers of the Company are eligible to receive
awards under the Equity Incentive Plan, and all executive officers other than
Mr. Ragland (who is a holder of more than five percent of the stock of the
Company) are eligible to participate in the Employee Stock Purchase Plan (each
as described below).
Compensation for the Chief Executive Officer
In the fiscal year ended January 31, 1996, Ronald Ragland was paid a salary
of $266,667 and a bonus of $82,000. Mr. Ragland also received an automobile
allowance of $9,000, a $200 contribution to the Company 401(k) plan and $2,042
in life insurance premiums. The total compensation paid to Mr. Ragland in the
fiscal year ended January 31, 1996 is approximately the industry median for
chief executive officers of the competitive industry comparative group.
Summary
The Compensation Committee believes that the compensation of executives by
the Company is appropriate and competitive with the compensation provided by
other technology and defense electronics companies with which the Company
competes for executives and employees. The Committee believes its compensation
strategy, principles, and practices result in a compensation program tied to
shareholder returns and linked to the achievement of annual and longer-term
financial and operational results of the Company on behalf of the Company's
shareholders.
The Compensation Committee of the Board of Directors
-- Andre R. Horn
-- Jeffrey M. Nash
-- Gary L. Luick
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 1996, no executive officer of the
Company served on the board of directors or compensation committee of another
company that had an executive officer serve on the Company's Board of Directors
or Compensation Committee.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission and the National Association of Securities
Dealers. Such officers, directors and ten percent shareholders are also required
by Securities and Exchange Commission rules to furnish the Company with copies
of all Section 16(a) forms that they file. The Company did not become subject to
these requirements until February 1996, and accordingly no such reports were due
during the fiscal year ended January 31, 1996.
7
<PAGE> 10
STOCK PRICE PERFORMANCE GRAPH
Because there was no public market for the Common Stock until after the end
of the fiscal year ended January 31, 1996, a graph of the performance of the
price of the Common Stock is not being provided.
DESCRIPTION OF CERTAIN EMPLOYEE BENEFIT PLANS
DESCRIPTION OF THE EQUITY INCENTIVE PLAN
In November 1995, the Board adopted the Equity Incentive Plan (the
"Incentive Plan"), and in January 1996 the shareholders of the Company approved
the Incentive Plan. The Incentive Plan is intended to strengthen the Company by
providing selected employees, consultants and directors of the Company and its
subsidiaries and affiliates an opportunity to participate in the Company's
future by offering them an opportunity to acquire stock in the Company so as to
retain, attract and motivate them. Administration of the Incentive Plan may be
either by the Board or a committee of the Board (in either case, the
"Committee"). The Committee may select key employees, including executive
officers, consultants and directors to receive awards under the Incentive Plan
and has broad discretion to determine the amount and type of awards and terms
and conditions of the awards. Individual grants will generally be based on a
person's present and potential contribution to the Company. As of April 17, 1996
the Company had a total of 749 employees and directors. A total of 750,000
shares of Common Stock is authorized for issuance under the Incentive Plan.
Since the grant of awards under the Incentive Plan is based upon a
determination made by the Committee after a consideration of various factors,
the Company currently cannot determine the nature and amount of any awards that
will be granted in the future to any eligible individual or group of
individuals. No shares of Common Stock were granted pursuant to awards under the
Incentive Plan in the fiscal year ended January 31, 1996.
Awards may be granted in the form of stock options ("Options"), restricted
stock ("Restricted Stock"), stock purchase rights ("Stock Purchase Rights") or
performance shares ("Performance Shares"). Any award may be granted either alone
or in addition to other awards granted under the Incentive Plan. The Committee
may condition the grant of the award upon the attainment of specified Company,
group or division performance goals or other criteria, which need not be the
same for all participants. No award may be granted under the Incentive Plan on
or after November 28, 2005, but outstanding awards may extend beyond that date.
Options. Options granted under the Incentive Plan may be Incentive Stock
Options ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), or nonqualified stock options ("NQOs"). The
exercise price of ISOs may not be less than the fair market value of the shares
subject to the option on the date of grant. The exercise price of NQOs must be
at least 85 percent of the fair market value of the shares subject to the option
on the date of grant. The term of any ISO granted under the plan may not exceed
10 years and the term of any NQO may not exceed 15 years. Certain other
limitations are also applicable to ISOs in order to take advantage of the
favorable tax treatment that may be available for ISOs.
Restricted Stock. Restricted Stock awards consist of non-transferable
shares of Common Stock of the Company. The Committee may provide for the lapse
of the transfer restrictions over a period of not more than ten years, or may
accelerate or waive such restrictions, in whole or in part, based on service,
performance or other criteria determined by the Committee.
Stock Purchase Rights. Stock Purchase Rights consist of a grant to purchase
Common Stock of the Company at a purchase price of not less than 85 percent of
the fair market value of the Common Stock on the grant date. Stock Purchase
Rights are generally exercisable for a period of up to 30 days after the grant
date.
Performance Shares. Performance Shares are shares of Common Stock issuable
upon the attainment of performance criteria. At the time of a grant the
Committee will determine the number of shares of Common Stock to be awarded at
the end of the performance period if and to the extent that the specified
performance targets are met. The consideration payable by a participant with
respect to a Performance Share award will be
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<PAGE> 11
determined by the Committee but may not exceed 50 percent of the fair market
value of the Common Stock on the date of grant. The Committee will determine the
performance period, which must be at least one year and not more than six years,
the performance objectives to be used in granting the awards and the extent to
which awards have been earned. Performance periods may overlap, and participants
may be awarded Performance Shares having different performance criteria.
Performance Share awards may be payable in cash or stock, at the discretion of
the Committee, and may bear interest or earn dividends.
The consideration payable for, upon exercise of, or for tax payable in
connection with, an award may be paid in cash, by promissory note of the
participant, or by delivery of other property, including securities of the
Company, as authorized by the Committee. The Company will not receive any
consideration upon the grant of any awards. Awards generally may be exercised at
any time within three months after a participant's employment by, or consulting
relationship with, the Company terminates (but only to the extent exercisable or
payable at the time of termination). If termination is due to the participant's
death, retirement or disability, the award may be exercised for two years
thereafter. Shares issued under an award may be subject to a right of repurchase
by the Company. No award shall be assignable or otherwise transferable by a
participant other than by will or by the laws of descent and distribution.
The Committee may adjust the performance goals and measurements applicable
to awards. The Committee also may waive in whole or in part any or all
restrictions, conditions, vesting or forfeiture with respect to any award
granted under the Incentive Plan.
The Board may amend, alter or discontinue the Incentive Plan or any award
at any time, except that the consent of a participant is required if the
participant's rights under an outstanding award would be impaired. In addition,
to the extent required for the Incentive Plan to satisfy the conditions of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or, with respect to provisions solely as they relate to ISOs, to the
extent required for the Incentive Plan to comply with Section 422 of the Code,
the shareholders of the Company must approve any amendment, alteration or
discontinuance of the Incentive Plan that would (i) increase the total number of
shares reserved under the Incentive Plan, (ii) change the minimum price terms
for Option exercise, (iii) change the class of employees and consultants
eligible to participate in the Incentive Plan, (iv) extend the maximum option
exercise period or (v) materially increase the benefits accruing to participants
under the Incentive Plan.
The Incentive Plan will constitute an unfunded plan for incentive and
deferred compensation. The Committee may authorize the creation of trusts or
arrangements to meet the obligations under the Incentive Plan to deliver stock
or make payments.
Federal Income Tax Consequences
See "Certain Federal Income Tax Consequences" below for a discussion of
federal income tax consequences relating to participation in the Incentive Plan.
DESCRIPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
In November 1995, the Board adopted the Employee Stock Purchase Plan (the
"Purchase Plan"), and in January 1996 the shareholders of the Company approved
the Purchase Plan. The Purchase Plan permits employees to purchase the Company's
Common Stock at a discounted price. The Purchase Plan is designed to encourage
and assist a broad spectrum of employees of the Company to acquire an equity
interest in the Company through the purchase of Common Stock. It is also
intended to provide to employees participating in the Purchase Plan the tax
benefits available under Section 421 of the Code. The Purchase Plan covers an
aggregate of 250,000 shares. Management currently believes these shares to be
sufficient for all stock purchases under the Purchase Plan for approximately two
years.
All employees, including executive officers and directors who are
employees, customarily employed more than 20 hours per week and more than five
months per year by the Company are eligible to participate in the Purchase Plan
on the first enrollment date following employment. However, employees who hold,
directly or through options, five percent or more of the stock of the Company
are not eligible to participate. Participants
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<PAGE> 12
may elect to participate in the Purchase Plan by contributing up to a maximum of
15 percent of their compensation, or such lesser percentage as the Board may
establish from time to time. Enrollment dates are the first trading day of
February, May, August and November, or such other dates as may be established by
the Board from time to time. The first enrollment date was February 1, 1996. On
the last trading day of each January, April, July and October, beginning in
April 1996, or such other dates as may be established by the Board from time to
time, the Company will apply the funds then in each participant's account to the
purchase of shares. The cost of each share purchased is 85 percent of the lower
of the fair market value of Common Stock on (i) the enrollment date or (ii) the
purchase date. The length of the enrollment period may not exceed a maximum of
24 months. No participant's right to acquire shares may accrue at a rate
exceeding $25,000 of fair market value of Common Stock (determined as of the
first trading day in an enrollment period) in any calendar year.
The Board may administer the Purchase Plan or the Board may delegate its
authority to a committee composed of not fewer than two outside directors and
may delegate routine matters to management. The Board may amend or terminate the
Purchase Plan at any time and may provide for an adjustment in the purchase
price and the number and kind of securities available under the Plan in the
event of a reorganization, recapitalization, stock split, or other similar
event. However, amendments that would increase the number of shares reserved for
purchase, or would otherwise require shareholder approval in order to comply
with federal securities regulations, require shareholder approval. Shares
available under the Purchase Plan may be either outstanding shares repurchased
by the Company or newly issued shares.
As of April 17, 1996 approximately 745 employees of the Company were
eligible to participate in the Purchase Plan, and 350 employees were enrolled in
the Purchase Plan. Since the number of shares purchased under the Plan by any
employee and the purchase price thereof are determined by the level of voluntary
contribution by such employee and the market price of the shares in effect from
time to time, the Company currently cannot determine the number of shares that
may be purchased in the future by any eligible individual or group of
individuals or the purchase price thereof.
Federal Income Tax Consequences
See "Certain Federal Income Tax Consequences" below for a discussion of
federal income tax consequences relating to participation in the Purchase Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS BASED UPON
EXISTING STATUTES, REGULATIONS AND INTERPRETATIONS THEREOF. THE APPLICABLE RULES
ARE COMPLEX, AND INCOME TAX CONSEQUENCES MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH PLAN PARTICIPANT. THIS PROXY STATEMENT DESCRIBES FEDERAL
INCOME TAX CONSEQUENCES OF GENERAL APPLICABILITY BUT DOES NOT PURPORT TO
DESCRIBE PARTICULAR CONSEQUENCES TO EACH INDIVIDUAL PLAN PARTICIPANT OR FOREIGN,
STATE OR LOCAL INCOME TAX CONSEQUENCES, WHICH MAY DIFFER FROM UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES.
INCENTIVE STOCK OPTIONS
Award; Exercise. ISOs are intended to constitute "incentive stock options"
within the meaning of Section 422 of the Code. ISOs may be granted only to
employees of the Company (including directors who are also employees). An
optionee does not recognize taxable income upon either the grant or exercise of
an ISO. However, the excess of the fair market value of the shares purchased
upon exercise over the option exercise price (the "Option Spread") is includable
in the optionee's "alternative minimum taxable income" ("AMTI") for purposes of
the alternative minimum tax ("AMT"). The Option Spread is generally measured on
the date of exercise and is includable in AMTI in the year of exercise. Special
rules regarding the time of AMTI inclusion may apply for shares subject to a
repurchase right or other "substantial risk of forfeiture"
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<PAGE> 13
(including, in the case of each person subject to the reporting requirements of
Section 16 of the Exchange Act, limitations on resale of shares imposed under
Section 16(b) of the Exchange Act).
Sale of Option Shares. If an optionee holds the shares purchased under an
ISO for at least two years from the date the ISO was granted and for at least
one year from the date the ISO was exercised, any gain from a sale of the shares
other than to the Company is taxable as long-term capital gain. Under these
circumstances, the Company would not be entitled to a tax deduction at the time
the ISO is exercised or at the time the stock is sold. If an optionee were to
dispose of stock acquired pursuant to an ISO before the end of the required
holding periods (a "Disqualifying Disposition"), the amount by which the market
value of the stock at the time the ISO is exercised exceeds the exercise price
(or, if less, the amount of gain realized on the sale) is taxable as ordinary
income, and the Company is entitled to a corresponding tax deduction. Such
income is subject to information reporting requirements and may become subject
to income and employment tax withholding. Gain from a Disqualifying Disposition
in excess of the amount required to be recognized as ordinary income is capital
gain. Optionees are required to notify the Company immediately prior to making a
Disqualifying Disposition. If stock is sold to the Company rather than to a
third party, the sale may not produce capital gain or loss. A sale of shares to
the Company will constitute a redemption of such shares which could be taxable
as a dividend unless the redemption is "not essentially equivalent to a
dividend" within the meaning of the Code. The timing and amount of income from a
Disqualifying Disposition and the beginning of the optionee's holding period for
determining whether capital gain or loss is long- or short-term may be affected
if option stock is acquired subject to a repurchase right or other "substantial
risk of forfeiture" (including in the case of each person subject to the
reporting requirements of Section 16 of the Exchange Act, limitations on resale
of shares imposed under Section 16(b) of the Exchange Act).
Exercise With Stock. If an optionee pays for ISO shares with shares of the
Company acquired under an ISO or a qualified employee stock purchase plan
("statutory option stock"), the tender of shares is a Disqualifying Disposition
of the statutory option stock if the above described (or other applicable)
holding periods respecting those shares have not been satisfied. If the holding
periods with respect to the statutory option stock are satisfied, or the shares
were not acquired under a statutory stock option of the Company, then any
appreciation in value of the surrendered shares is not taxable upon surrender.
Special basis and holding period rules apply where previously owned
non-statutory option stock is used to exercise an ISO.
NONQUALIFIED STOCK OPTIONS
Award; Exercise. An optionee is not taxable upon the award of a NQO.
Federal income tax consequences upon exercise will depend upon whether the
shares thereby acquired are subject to a "substantial risk of forfeiture." If
the shares are not subject to a substantial risk of forfeiture, or if they are
so restricted and the optionee files an election under Section 83(b) of the Code
(a "Section 83(b) Election") with respect to the shares, the optionee will have
ordinary income at the time of exercise measured by the Option Spread on the
exercise date. The optionee's tax basis in the shares will be the fair market
value of the shares on the date of exercise, and the holding period for purposes
of determining whether capital gain or loss upon sale is long- or short-term
also will begin on or immediately after that date. If the shares are subject to
a substantial risk of forfeiture and no Section 83(b) Election is filed, the
optionee will not be taxable upon exercise, but instead will have ordinary
income on the date the restrictions lapse, in an amount equal to the difference
between the amount paid for the shares under the NQO and their fair market value
as of the date of lapse; in addition, the optionee's holding period will begin
on the date of the lapse.
Whether or not the shares are subject to a substantial risk of forfeiture,
the amount of ordinary income taxable to an optionee who is an employee at the
time of grant constitutes "supplemental wages" subject to withholding of income
and employment taxes by the Company, and the Company receives a corresponding
income tax deduction.
Sale of Option Shares. Upon sale, other than to the Company, of shares
acquired under a NQO, an optionee generally will recognize capital gain or loss
to the extent of the difference between the sale price and the optionee's tax
basis in the shares, which will be long-term gain or loss if the employee's
holding period in the shares is more than one year. If stock is sold to the
Company, rather than to a third party, the sale may not
11
<PAGE> 14
produce capital gain or loss. A sale of shares to the Company will constitute a
redemption of such shares, which could be taxable as a dividend unless the
redemption is "not essentially equivalent to a dividend" within the meaning of
the Code.
Exercise with Stock. If an optionee tenders Common Stock to pay all or part
of the exercise price of a NQO, the optionee will not have a taxable gain or
deductible loss on the surrendered shares. Instead, shares acquired upon
exercise that are equal in value to the fair market value of the shares
surrendered in payment are treated as if they had been substituted for the
surrendered shares, taking as their basis and holding period the basis and
holding period that the optionee had in the surrendered shares. The additional
shares are treated as newly acquired with a zero basis.
If the surrendered shares are statutory option stock as described above
under "Incentive Stock Options", with respect to which the applicable holding
period requirements for favorable income tax treatment have not expired, then
the newly acquired shares substituted for the statutory option shares should
remain subject to the federal income tax rules governing the surrendered shares,
but the surrender should not constitute a Disqualifying Disposition of the
surrendered stock.
RESTRICTED STOCK
Upon receipt of Restricted Stock, a recipient generally has taxable income
in the amount of the excess of the then fair market value of the Common Stock
over any consideration paid for the Common Stock (the "spread"). However, if the
Common Stock is subject to a "substantial risk of forfeiture" (described under
"Incentive Stock Options," above) and the recipient does not make a Section
83(b) Election, the recipient will have taxable income upon lapse of the risk of
forfeiture, rather than at receipt, in an amount equal to the spread on the date
of lapse. The taxable income constitutes supplemental wages subject to income
and employment tax withholding, and the Company receives a corresponding income
tax deduction. The consequences upon sale or disposition of Restricted Stock
generally are the same as for Common Stock acquired under a NQO (see above).
PERFORMANCE SHARES
Receipt of an award of Performance Shares will generally be treated for tax
purposes in the same manner as an award of Restricted Stock, i.e., as receipt of
property subject to restrictions.
STOCK PURCHASE RIGHTS
The tax treatment of Stock Purchase Rights is identical to that of NQOs, as
described above.
PURCHASE PLAN
In general, participants will not have taxable income or loss under the
Purchase Plan until they sell or otherwise dispose of shares acquired under the
Purchase Plan (or die holding such shares). If the shares are held, as of the
date of sale or disposition, for longer than both: (i) two years after the
beginning of the enrollment period during which the shares were purchased and
(ii) one year following purchase, a participant will have taxable ordinary
income equal to 15% of the fair market value of the shares on the first day of
the enrollment period (but not in excess of the gain on the sale). Any
additional gain from the sale will be long-term capital gain. The Company is not
entitled to an income tax deduction if the holding periods are satisfied.
If the shares are disposed of before the expiration of both of the
foregoing holding periods (a "disqualifying disposition"), a participant will
have taxable ordinary income equal to the excess of the fair market value of the
shares on the purchase date over the purchase price. Such ordinary income is
subject to information reporting requirements and may become subject to income
and employment tax withholding. In addition, the participant will have taxable
capital gain (or loss) measured by the difference between the sale price and the
participant's purchase price plus the amount of ordinary income recognized,
which gain (or loss) will be long-term if the shares have been held as of the
date of sale for more than one year. The Company is
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<PAGE> 15
entitled to an income tax deduction equal to the amount of ordinary income
recognized by a participant in a disqualifying disposition.
Special rules apply to participants who are directors or officers.
SPECIAL FEDERAL INCOME TAX CONSIDERATION DUE TO SHORT SWING PROFIT RULE
The potential liability of a person subject to Section 16 of the Exchange
Act to repay short-swing profits from the resale of shares acquired under a
Company plan constitutes a "substantial risk of forfeiture" within the meaning
of the above-described rules, which is generally treated as lapsing at such time
as the potential liability under Section 16 lapses. Persons subject to Section
16 who would be required by Section 16 to repay profits from the immediate
resale of stock acquired under a Company plan should consider whether to file a
Section 83(b) Election at the time they acquire stock under a Company plan in
order to avoid deferral of the date that they are deemed to acquire shares for
federal income tax purposes.
PROPOSAL TWO
AMENDMENT OF BYLAWS
The shareholders are being asked to approve an amendment to the Bylaws of
the Company to set the size of the Board of Directors from seven to eleven
directors, with the exact number to be fixed by the Board.
AMENDMENT TO BYLAWS
The Company's Bylaws currently provide that the Board shall have from five
to nine members with the exact number to be fixed by the Board. The proposed
amendment to the Bylaws would provide that the Company shall have from seven to
eleven directors, with the exact number to be fixed by the Board. The purpose of
this amendment is to give the Board flexibility to increase the size of the
Board in order to bring additional experience to the Board in the area of
commercial wireless telecommunications or to include on the Board
representatives of collaborative partners or entities acquired by the Company.
PROPOSAL; BOARD RECOMMENDATION
Shareholders are being asked to approve the proposed amendment to the
Bylaws. The affirmative vote of the holders of a majority of the outstanding
shares of the Company is required for approval. The Board recommends a vote "FOR
APPROVAL" of the proposal.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Ernst & Young LLP as independent public accountants
to audit the financial statements of the Company for the fiscal year to end
January 31, 1997. Ernst & Young LLP has been engaged as the Company's auditors
since 1985. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so. The representatives of Ernst & Young LLP also will be available
to respond to questions raised during the meeting.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
at the Company's 1997 meeting of shareholders must be received by the Secretary
of the Company no later than January 17, 1997 in order to be included in the
proxy soliciting material relating to that meeting.
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<PAGE> 16
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board may recommend.
THE BOARD OF DIRECTORS
[SIGNATURE]
San Diego, California
May 17, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTPAID ENVELOPE.
14
<PAGE> 17
PROXY PROXY
REMEC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald E. Ragland and Thomas A. George, or
either of them, each with full power of substitution, the lawful attorneys and
proxies of the undersigned to vote as designated below, and, in their
discretion, upon such other business as may properly be presented to the
meeting, all of the shares of REMEC, INC. which the undersigned shall be
entitled to vote at the Annual Meeting of Shareholders to be held on May 29,
1996, and at any adjournments or postponements thereof.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder. WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ABOVE. The proxy holders in their discretion may
cumulate votes for the election of directors. This proxy may be revoked at any
time prior to the time it is voted by any means described in the accompanying
Proxy Statement.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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*FOLD AND DETACH HERE*
<PAGE> 18
<TABLE>
<CAPTION>
Please mark
your votes as [X]
indicated in
this example.
<S> <C> <C> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To approve the proposed
FOR WITHHOLD amendment to the [ ] [ ] [ ]
all nominees AUTHORITY Company's Bylaws.
noted (except to vote (as
as indicated to all
below) nominees)
1. To elect as directors PLEASE COMPLETE, DATE AND SIGN
Ronald E. Ragland, [ ] [ ] THIS PROXY AND MAIL IT PROMPTLY
Errol Ekaireb, Jack A. Giles, IN THE ENCLOSED ENVELOPE TO
Denny Morgan, Andre R. Horn, ASSURE REPRESENTATION OF YOUR SHARES.
Jeffrey M. Nash, Gary L. Luick,
Thomas A. Corcoran and
William H. Gibbs.
To withhold authority to vote for any individual nominee, write that
nominee's name on the line provided below:
____________________________________________________________________
Signature(s)________________________________________________________________________________ Dated: ________________, 1996
(Please date and sign exactly as name(s) appear(s) hereon. If shares are held jointly, each holder should sign.
Please give full title and capacity in which signing if not signing as an individual.
</TABLE>
- - --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
