<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
REMEC, 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
[ ] 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 LOGO)
NOTICE OF ANNUAL MEETING,
PROXY STATEMENT AND PROXY CARD
FOR
ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 1998
<PAGE> 3
(REMEC LOGO)
May 8, 1998
To Our Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of REMEC, Inc. ("Company") to be held at the Company's offices located at 9404
Chesapeake Drive, San Diego, California, on Friday, June 12, 1998 at 4:00 p.m.,
Pacific time. Enclosed are a notice to shareholders, a proxy statement
describing the business to be transacted at the meeting, and a proxy card for
use in voting at the meeting.
At the Annual Meeting, you will be asked to (i) elect nine directors of the
Company, (ii) approve an amendment to the Company's Restated Articles of
Incorporation to increase the number of the Company's authorized shares of
Common Stock and (iii) act on such other business as may properly come before
the meeting or any adjournment thereof.
It is important that you use this opportunity to take part in the affairs
of your Company by voting on the business to come before this meeting. Whether
or not you expect to attend the meeting, please complete, date, sign and
promptly return the accompanying proxy card in the enclosed postage-paid
envelope so that your shares may be represented at the meeting. Returning the
proxy card does not deprive you of your right to attend the meeting and to vote
your shares in person.
We look forward to seeing you at the meeting.
Sincerely,
/s/ RONALD E. RAGLAND
Ronald E. Ragland
Chairman and Chief Executive Officer
================================================================================
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU
ATTEND THE MEETING AND WITH TO WITHDRAW YOUR PROXY, YOU MAY VOTE IN PERSON,
AND YOUR PROXY WILL BE WITHDRAWN.
9404 Chesapeake Drive - San Diego, CA 92123 - Tel 619 560-1301 - Fax 619
560-0291
<PAGE> 4
REMEC, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 1998
------------------------
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
Friday, June 12, 1998 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 nine directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the Company's Restated Articles of
Incorporation to increase the number of the Company's authorized shares
of Common Stock.
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, 1998 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
/s/ RONALD E. RAGLAND
Ronald E. Ragland,
Chairman and Chief Executive Officer
San Diego, California
May 8, 1998
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> 5
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 Friday, June
12, 1998 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 8, 1998 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, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. At
the Record Date, 23,209,956 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.
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.
QUORUM, ABSTENTIONS, AND BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock outstanding on the Record Date.
Abstentions are included in the determination of shares present for quorum
purposes. Because abstentions represent shares entitled to vote, the effect of
an abstention will be the same as a vote against a proposal. If shares are held
in "street name" through a broker or other nominee, the broker or nominee may
not be permitted to exercise voting discretion with respect to certain matters
to be acted upon. If the broker or nominee is not given specific instructions,
shares held in the name of such broker or nominee may not be voted on those
matters and will not be considered as present and entitled to vote with respect
to those matters. Shares represented by such "broker non-votes" will, however,
be counted in determining whether there is a quorum.
<PAGE> 6
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board consisting of not fewer than
seven nor more than eleven directors, with the size of the Board set at nine 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 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 names of and certain other information regarding the nominees are set
forth in the table below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- --------
<S> <C> <C> <C>
Ronald E. Ragland(3)..... 56 Chairman of the Board and Chief Executive Officer 1983
Errol Ekaireb............ 59 President, Chief Operating Officer and Director 1985
Jack A. Giles............ 56 Executive Vice President, President of REMEC Microwave and 1984
Director
Joseph T. Lee............ 43 Executive Vice President, President of Northern California 1996
Operations and Director
Denny Morgan............. 44 Senior Vice President, Chief Engineer and Director 1983
Thomas A. 53 Director 1996
Corcoran(2)(3).........
William H. Gibbs(2)(3)... 54 Director 1996
Andre R. Horn(1)......... 69 Director 1988
Jeffrey M. Nash(1)(2).... 50 Director 1988
</TABLE>
- ---------------
(1) Current member of the Audit Committee.
(2) Current member of the Compensation Committee.
(3) Current member of the Nominating Committee.
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.
2
<PAGE> 7
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.
MR. LEE has been a director and Executive Vice President of the Company
since September 1996 and was elected President of the Company's Northern
California Operations in December 1997. Prior to the acquisition of Magnum
Microwave Corporation ("Magnum Microwave") by the Company in August 1996, he was
Chairman of the Board, President and Chief Executive Officer of Magnum
Microwave. Mr. Lee holds a B.S.E.E. degree from the University of Michigan and
M.S.E.E. and ENGINEER (Doctor of Engineering) degrees from Stanford University.
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. CORCORAN has been a director of the Company since May 1996. 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 a director of the Company since May 1996. Mr. Gibbs was
the President and Chief Executive Officer of DH Technology, Inc. from November
1985 to January 1998 and Chairman of DH Technology, Inc. from February 1987 to
October 1998 and has been a director of that company since February 1987. From
August 1983 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.
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, and Varco International, Inc., a manufacturer of petroleum
industry equipment.
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 Chairman of the Board of ESSCOR, Inc., a producer of power plant simulators
for the electrical utility industry.
3
<PAGE> 8
BOARD MEETINGS AND COMMITTEES
The Board held a total of eight meetings during the fiscal year ended
January 31, 1998. No director attended fewer than 75% of the total number of
meetings of the Board and the total number of meetings held by all committees of
the Board on which he served. The Company has a standing Audit Committee,
Compensation Committee and Nominating Committee.
The members of the Company's Audit Committee currently are Mr. Horn, Mr.
Luick and Dr. Nash. It is anticipated that Mr. Luick, who has not been nominated
to stand for re-election to the Board, will be replaced on the Audit Committee
at the Board meeting which immediately follows the Annual Meeting. 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 Audit Committee held four meetings during the
fiscal year ended January 31, 1998.
The members of the Compensation Committee currently are Mr. Corcoran, Mr.
Gibbs and Dr. Nash. The Compensation Committee determines compensation and
benefits for the Company's executive officers and administers the Company's
equity incentive plans. The Compensation Committee held one meeting during the
fiscal year ended January 31, 1998.
The members of the Nominating Committee currently are Mr. Corcoran, Mr.
Gibbs and Dr. Nash. The Nominating Committee reviews potential candidates for
service on the Board. The Nominating Committee did not hold any meetings during
the fiscal year ended January 31, 1998. All of the nominees for the election of
directors presently are directors of the Company and they were nominated for
re-election by the Board.
COMPENSATION OF DIRECTORS
The Company's outside directors receive an annual retainer fee of $5,000
for serving on the Board of Directors, a fee of $1,000 for each Board meeting
attended and a fee of $500 for each committee meeting attended plus
reimbursement for their reasonable travel expenses in attending Board and
committee meetings. Also, under the Company's 1996 Nonemployee Director Stock
Option Plan, each outside director receives (i) a one-time grant of an option to
purchase 15,000 shares of the Company's Common Stock upon the election of such
person for the first time to serve as a director and (ii) an annual grant of an
option to purchase 5,250 shares of Common Stock in May of each year in which the
director continues to serve on the Board.
4
<PAGE> 9
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 1, 1998 (i) by each person who is known by the
Company to own beneficially more than 5% 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>
FMR Corp. (3)............................................... 2,255,150 9.7%
Pilgrim Baxter & Associates, Ltd. (4)....................... 2,243,000 9.7%
Ronald E. Ragland (5)....................................... 900,135 3.9%
Errol Ekaireb(6)............................................ 135,026 *
Jack A. Giles(7)............................................ 217,278 *
Joseph T. Lee(8)............................................ 408,797 1.8%
Denny Morgan(9)............................................. 327,558 1.4%
James Mongillo(10).......................................... 192,167 *
Thomas A. Corcoran(11)...................................... 20,197 *
William H. Gibbs(12)........................................ 11,947 *
Andre R. Horn(13)........................................... 15,439 *
Gary L. Luick(14)........................................... 12,933 *
Jeffrey M. Nash(15)......................................... 37,389 *
All directors and executive officers as a group (14
persons)(16).............................................. 3,105,050 13.3%
</TABLE>
- ---------------
* Less than 1% 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
23,199,044 shares of Common Stock outstanding as of April 1, 1998.
(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) The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109.
(4) The address of Pilgrim Baxter & Associates, Ltd. is 825 Duportail Road,
Wayne, Pennsylvania 19087.
(5) Includes 60,400 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998, 20,500 shares held by Mr.
Ragland's minor children and 3,750 shares held by Mr. Ragland's spouse.
(6) Includes 27,000 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998 and 10,000 shares held by
Mr. Ekaireb's spouse.
(7) Includes 17,500 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998 and 11,625 shares held by
Mr. Giles' spouse.
(8) Includes 13,500 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
(9) Includes 20,700 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998. All shares beneficially
owned by Mr. Morgan are held in the Morgan Trust, of which Mr. Morgan and
his spouse act as co-trustees.
(10) All shares beneficially owned by Mr. Mongillo are held in the Mongillo
Family Trust, of which Mr. Mongillo and his spouse act as co-trustees.
(11) Includes 11,947 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
(12) Consists of 11,947 shares issuable upon exercise of outstanding options
that are exercisable within 60 days of April 1, 1998.
(13) Includes 5,433 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
(14) Includes 12,933 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
(15) Includes 5,433 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
(16) Includes 189,628 shares issuable upon exercise of outstanding options that
are exercisable within 60 days of April 1, 1998.
5
<PAGE> 10
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the total
compensation received by the Chief Executive Officer and the four other most
highly paid executive officers of the Company for the fiscal years ended January
31, 1998, 1997 and 1996 (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............................ 1998 $320,000 $138,980 $35,881(2)
Chairman and Chief Executive Officer 1997 295,000 86,750 16,809(3)
1996 266,667 82,000 11,242(4)
Errol Ekaireb................................ 1998 254,997 138,980 12,300(5)
President and Chief Operating Officer 1997 231,833 86,750 18,904(6)
1996 214,167 82,000 12,099(7)
Jack A. Giles................................ 1998 230,667 138,980 82,283(8)
Executive Vice President 1997 213,333 86,750 14,839(9)
1996 198,333 82,000 10,723(10)
Joseph T. Lee................................ 1998 210,001 138,980 9,400(11)
Executive Vice President 1997 192,308 86,750 11,046(12)
1996 160,000 298,738 2,310(13)
James Mongillo(14)........................... 1998 183,333 30,000 --
Senior Vice President
</TABLE>
- ---------------
(1) Includes amounts deferred at the option of the officer pursuant to REMEC's
deferred compensation plan for employee directors.
(2) Consists of $9,000 in the form of an automobile allowance, a $400
contribution to the REMEC 401(k) plan and $26,481 from the exercise of
stock options (the difference between the fair market value on the date of
exercise and the exercise price multiplied by the option shares exercised).
(3) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $400 contribution to the REMEC 401(k) plan and $7,409
in life insurance premiums.
(4) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $200 contribution to the REMEC 401(k) plan and $2,042
in life insurance premiums.
(5) Consists of $9,000 in the form of an automobile allowance, a $400
contribution to the REMEC 401(k) plan and $2,900 in life insurance
premiums.
(6) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $400 contribution to the REMEC 401(k) plan and $9,504
in life insurance premiums.
(7) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $200 contribution to the REMEC 401(k) plan and $2,899
in life insurance premiums.
(8) Consists of $9,000 in the form of an automobile allowance, a $400
contribution to the REMEC 401(k) plan, $3,410 in life insurance premiums
and $69,473 from the exercise of stock options (the difference between the
fair market value on the date of exercise and the exercise price multiplied
by the number of option shares exercised).
(9) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $400 contribution to the REMEC 401(k) plan and $5,439
in life insurance premiums.
(10) Consists of compensation in the form of an automobile allowance in the
amount of $9,000, a $200 contribution to the REMEC 401(k) plan and $1,523
in life insurance premiums.
(11) Consists of $9,000 in the form of an automobile allowance and a $400
contribution to the REMEC 401(k) plan.
(12) Consists of compensation in the form of an automobile allowance in the
amount of $7,616, $1,965 in contributions to the REMEC and Magnum Microwave
401(k) plans and $1,465 in life insurance premiums.
(13) Consists of compensation in the form of $2,310 in contributions to the
Magnum Microwave 401(k) plan.
(14) Compensation amounts shown are those paid by the Company (or its
subsidiary) after Mr. Mongillo became employed by the Company following its
acquisition of Radian Technology, Inc. in February 1997.
6
<PAGE> 11
Option Grant Table. The following table sets forth certain information
relating to options to purchase shares of the Company's Common Stock granted to
the Named Executive Officers granted during the fiscal year ended January 31,
1998.
FISCAL 1998 OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PERCENT OF TOTAL PRICE APPRECIATION FOR
NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE OR OPTION TERM(2)
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE PER EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR SHARE(1) DATE 5% 10%
---- -------------------- ------------------ -------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Ragland.... 120,000 11.7% $22.167 12/06/01 $654,088 $1,429,253
Errol Ekaireb........ 60,000 5.9 22.167 12/06/01 327,044 714,626
Jack A. Giles........ 37,500 3.7 22.167 12/06/01 204,402 446,641
Joseph T. Lee........ 30,000 2.9 22.167 12/06/01 163,522 357,313
James Mongillo....... 10,000 1.0 33.75 02/27/02 82,989 181,340
</TABLE>
- ---------------
(1) Options were granted at 100% of fair market value on the date of grant.
(2) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock appreciation of 5% and 10%,
the two assumed rates of stock price appreciation required under the rules
of the Securities and Exchange Commission. The calculations are for the
period beginning on the date of grant of the fiscal 1997 option awards
(Messrs. Ragland, Ekaireb, Giles and Lee -- June 6, 1997; and Mr.
Mongillo -- August 27, 1997) and ending on the date of expiration of such
options (Messrs. Ragland, Ekaireb, Giles and Morgan -- December 6, 2001; and
Mr. Mongillo -- February 27, 2002). Based on the assumed annual rates of
stock price appreciation of 5% and 10%, the Company's projected stock price
at the dates of expiration of these options are as follows: $27.62 and
$34.08, respectively, on the expiration date of options of Messrs. Ragland,
Ekaireb, Giles and Morgan (December 6, 2001); and $42.05 and $51.88,
respectively, on the expiration date of Mr. Mongillo's options (February 27,
2002). These assumed annual rates of stock price appreciation are not
intended to forecast future appreciation of the Company's stock price.
Indeed, the Company's stock price may increase or decrease in value over the
time period set forth above. The potential realizable value computation also
does not take into account federal or state income tax consequences of
option exercises or sales of appreciated stock.
The 5% and 10% assumed rates of stock price appreciation used to calculate
potential gains to optionees are provided pursuant to the rules of the
Securities and Exchange Commission.
Option Exercise Table. The following table sets forth certain information
relating to options to purchase the Company's Common Stock exercised by the
Named Executive Officers during the fiscal year ended January 31, 1998.
OPTION VALUES AT JANUARY 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#) FISCAL YEAR-END(1)($)
SHARES --------------------------- ---------------------------
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Ragland......... 7,100 $26,481 26,650 198,750 $310,918 $1,348,749
Errol Ekaireb............. -- -- 13,500 91,500 205,875 695,373
Jack A. Giles............. 9,500 69,473 4,000 69,000 61,000 614,749
Joseph T. Lee............. -- -- 13,500 61,500 211,500 601,000
James Mongillo............ -- -- -- -- -- --
</TABLE>
- ---------------
(1) Calculated on the basis of the closing price of the Company's Common Stock
on the Nasdaq National Market on January 30, 1998 ($25.75 per share).
(2) Calculated on the basis of the closing price of the Company's Common Stock
as reported on the Nasdaq National Market on the date of exercise.
7
<PAGE> 12
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 reward opportunities
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, participation in equity-based
incentive plans (stock option and stock purchase plans) 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 approximately 15 companies operating
in our industry are utilized for determining competitive compensation levels.
Also, the Compensation Committee reviewed compensation information presented in
the Executive Compensation Survey for Electronics, Software and Information
Technology Companies dated April 1, 1996, prepared by the American Electronics
Association.
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 individual contributions evaluated against established objectives,
relative marketplace competitiveness levels, length of service, 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 Presidents 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
Presidents determine the bonus amount for the other executive officers and for
all other salaried employees, based on the same criteria. Executive officers of
the Company are eligible to receive awards under the Equity Incentive Plan, and
all executive officers are eligible to participate in the Employee Stock
Purchase Plan.
Compensation for the Chief Executive Officer. In the fiscal year ended
January 31, 1998, Ronald Ragland was paid a salary of $320,000 and a bonus of
$138,980. Mr. Ragland also received an automobile allowance of $9,000, a $400
contribution to the Company 401(k) plan and $26,481 from the exercise of stock
options (the difference between the closing price of the Company's Common Stock
as reported on the Nasdaq National Market on the date of exercise and the
exercise price multiplied by the number of option shares
8
<PAGE> 13
exercised). The total compensation paid to Mr. Ragland in the fiscal year ended
January 31, 1998 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
- Thomas A. Corcoran
- William H. Gibbs
- Jeffrey M. Nash
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 1998, 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
10% 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 10% 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. To the Company's knowledge, based solely upon review
of the copies of such reports and certain representations furnished to it, the
Company's executive officers and directors complied with all applicable Section
16(a) filing requirements during the fiscal year ended January 31, 1998, except
that Mr. Michael D. McDonald (Senior Vice President and Chief Financial
Officer), Mr. Justin Miller (Vice President), Mr. Keith Butler (President of the
Company's subsidiary, Verified Technical Corporation) and Mr. Gary Calloway
(President of the Company's subsidiary, Q-bit Corporation) filed one report late
and Mr. Harold Kries (President of the Company's subsidiary, Humphrey, Inc.)
reported one transaction late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tao Chow, Senior Vice President of the Company and President and director
of the Company's wholly owned subsidiary, C&S Hybrid, (i) owns approximately 30%
of the outstanding shares of Excelics Semiconductor, Inc., a supplier to C&S
Hybrid, (ii) owns approximately 45% of the outstanding shares and is a director
and the President and the Chief Financial Officer of Custom Micro Machining,
Inc., a supplier of machine parts to C&S Hybrid, and (iii) owns approximately
33% of the outstanding shares and is a director of Applied Thin-Film Products, a
supplier of circuits of circuits to C&S Hybrid. The Company paid approximately
$2.7 million to these suppliers in fiscal 1998 for certain components on terms
the Company believes are no less favorable than could be obtained with suppliers
that did not have a relationship with the Company or its management.
9
<PAGE> 14
PERFORMANCE GRAPH
The graph set forth below compares the cumulative total shareholder return
on the Company's Common Stock with the cumulative total return on the Nasdaq
Stock Market U.S. Index and the Nasdaq Electronic Components Index since the
Company's initial public offering through January 31, 1998, assuming $100
invested in the Company's Common Stock at its closing price of $8.50 per share
on February 2, 1996 (the date trading in the Company's stock began) and the
reinvestment of all dividends, if any.
<TABLE>
<CAPTION>
Measurement Period Nasdaq Stock Nasdaq Electronic
(Fiscal Year Covered) REMEC, Inc. Market U.S. Index Components Index
<S> <C> <C> <C>
2/2/96 $100 $100 $100
8/2/96 171 106 113
1/31/97 306 130 199
8/1/97 551 150 230
1/30/98 454 153 195
</TABLE>
10
<PAGE> 15
PROPOSAL TWO
APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
DESCRIPTION OF THE AMENDMENT
At the Annual Meeting, the shareholders are being asked to approve an
amendment to, and restatement of, the Company's Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock by
30,000,000 shares (the "Amendment"). The Company's Restated Articles of
Incorporation currently authorize the issuance of 40,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock. In April 1998, the Board of
Directors adopted a resolution approving an amendment to the Restated Articles
of Incorporation to increase the authorized number of shares of Common Stock to
70,000,000 shares, with a par value of one cent ($.01) per share, subject to
shareholder approval. Since the Company's Restated Articles of Incorporation
also authorizes 5,000,000 shares of Preferred Stock, the Amendment will have the
effect of increasing the total number of shares of capital stock authorized for
issuance from 45,000,000 to 75,000,000 shares.
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT
As of April 1, 1998, the Company had approximately 23,199,044 shares of
Common Stock outstanding and no shares of Preferred Stock outstanding, and as of
that date, the Company had approximately 3,831,220 shares of Common Stock
reserved for issuance under options granted pursuant to the Company's stock
option plans.
In addition to the foregoing, the Board considers it advisable to have
additional authorized, but unissued shares of Common Stock available to allow
the Company to act promptly with respect to possible future financings, possible
stock dividends, possible acquisitions, additional issuances under the Company's
employee benefit plans and for other corporate purposes approved by the Board.
Having additional authorized shares of Common Stock available for issuance in
the future would give the Company greater flexibility and allow shares of Common
Stock to be issued without the expense or delay of a shareholders' meeting,
except as may be required by applicable laws or regulations. Other than for
issuance under the Company's employee benefit plans, the Company has no specific
plans for the issuance of additional shares of Common Stock.
Under the Company's Restated Articles of Incorporation, the Company's
shareholders do not have preemptive rights with respect to the Common Stock.
Thus, should the Board of Directors elect to issue additional shares of Common
Stock, existing shareholders would not have any preferential rights to purchase
such shares. In addition, if the Board of Directors elects to issue additional
shares of Common Stock, such issuance could have a dilutive effect on the
earnings per share, voting power and shareholdings of current shareholders.
The proposed amendment to increase the authorized number of shares of
Common Stock could, under certain circumstances, have an anti-takeover effect,
although this is not the intention of this proposal. In the event of a hostile
takeover attempt to take over control of the Company, it may be possible for the
Company to endeavor to impede the attempt by issuing shares of the Common Stock,
thereby diluting the voting power of the other outstanding shares and increasing
the potential cost to acquire control of the Company. The proposed Amendment,
therefore, may have the effect of discouraging unsolicited takeover attempts. By
potentially discouraging initiation of any such unsolicited takeover attempt,
the proposed Amendment may limit the opportunity for the Company's shareholders
to dispose of their shares at the higher price generally available in takeover
attempts or that may be available under a merger proposal. The proposed
amendment may have the effect of permitting the Company's current management,
including the current Board of Directors, to retain its position, and place it
in a better position to resist changes that shareholders may wish to make if
they are dissatisfied with the conduct of the Company's business. However, the
Board of Directors is not aware of any attempt to take control of the Company
and the Board of Directors has not presented this proposal with the intent that
it be utilized as a type of anti-takeover device.
11
<PAGE> 16
REQUIRED VOTE
Approval of the Amendment to the Restated Articles of Incorporation will
require the affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE FOR THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
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, 1999. 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 1999 meeting of shareholders must be received by the Secretary
of the Company no later than January 3, 1999 in order to be included in the
proxy soliciting material relating to that meeting.
1998 ANNUAL REPORTS
The Company's 1998 Annual Report, including audited financial statements
for the fiscal years ending January 31, 1997 and 1998, are being forwarded to
each person who is a shareholder of record as of April 17, 1998, together with
this Proxy Statement.
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K IS AVAILABLE
WITHOUT CHARGE TO THOSE SHAREHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION
CONCERNING THE COMPANY. IF YOU DESIRE A COPY OF THAT DOCUMENT, PLEASE SEND A
WRITTEN REQUEST TO INVESTOR RELATIONS, REMEC, INC., 9404 CHESAPEAKE DRIVE, SAN
DIEGO, CALIFORNIA 92123 (TELEPHONE: 619-560-1301).
12
<PAGE> 17
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
San Diego, California
May 8, 1998
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 POSTAGE PAID ENVELOPE.
13
<PAGE> 18
PROXY
REMEC, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Ronald E. Ragland, Errol Ekaireb and
Michael D. McDonald, or any 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 June 12,
1998, and at any adjournments or postponements thereof.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE TO ASSURE REPRESENTATION OF YOUR SHARES.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 19
FOR WITHHOLD
All nominees AUTHORITY
listed (except as to vote (as to
indicated above) all nominees)
Proposal 1. ELECTION OF DIRECTORS. [ ] [ ]
To elect as directors:
Ronald E. Ragland, Errol Ekaireb, Jack A. Giles,
Joseph T. Lee, Denny Morgan, Thomas A. Corcoran,
William H. Gibbs, Andre R. Horn and Jeffrey Nash.
To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.
Proposal 2. APPROVAL OF AMENDMENT TO FOR AGAINST ABSTAIN
RESTATED ARTICLES OF [ ] [ ] [ ]
INCORPORATION
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 AND OTHER PROPOSALS LISTED ABOVE. The proxy holders in
their discretion may emulate 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.
Signature(s) Dated: , 1998
--------------------------- ------------
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
