<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PIONEER-STANDARD
ELECTRONICS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PIONEER-STANDARD ELECTRONICS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
/ / 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
PIONEER-STANDARD ELECTRONICS, INC.
4800 EAST 131ST STREET / CLEVELAND, OHIO 44105
June 26, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Pioneer-Standard Electronics, Inc., which will be held on Tuesday, July 23,
1996, at the Cleveland South Hilton Inn, 6200 Quarry Lane, Cleveland, Ohio at
11:00 a.m. A map to the Cleveland South Hilton Inn is included on the inside
back cover of the Proxy Statement. Your Board of Directors and management look
forward to greeting personally those shareholders able to attend.
At the meeting, in addition to electing three Directors, your Board is
asking shareholders to approve an amendment to the Company's Amended Articles of
Incorporation to increase the number of authorized Common Shares. These
proposals are fully set forth in the accompanying Proxy Statement for your
information.
For the reasons set forth in the Proxy Statement, your Board of Directors
recommends a vote "FOR" each of the proposals.
It is important that your shares are represented and voted at the meeting
whether or not you plan to attend. Accordingly, please sign, date and mail the
enclosed Proxy in the envelope provided, at your earliest convenience.
Thank you for your cooperation and continued support.
James L. Bayman
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
PIONEER-STANDARD ELECTRONICS, INC.
4800 EAST 131ST STREET / CLEVELAND, OHIO 44105
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of the Shareholders (the "Annual Meeting") of
Pioneer-Standard Electronics, Inc. (the "Company") will be held at the Cleveland
South Hilton Inn, 6200 Quarry Lane, Cleveland, Ohio, on Tuesday, July 23, 1996,
at 11:00 A.M., Eastern Daylight Time, for the following purposes:
1. To elect three (3) Class B members of the Board of Directors of the
Company to hold office for a term of three (3) years and until their
respective successors are elected;
2. To amend the Company's Amended Articles of Incorporation to
increase the number of authorized Common Shares of the Company from
40,000,000 Common Shares to 80,000,000 Common Shares; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on June 3, 1996 are
entitled to notice of the Annual Meeting and to vote thereat.
By Order of the Board of Directors.
William A. Papenbrock
Secretary
June 26, 1996
PLEASE SIGN AND MAIL YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 4
PIONEER-STANDARD ELECTRONICS, INC.
4800 EAST 131ST STREET / CLEVELAND, OHIO 44105
------------------
MAILED TO SHAREHOLDERS ON JUNE 26, 1996
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 23, 1996
The Proxy enclosed with this Proxy Statement is solicited by the Board of
Directors of Pioneer-Standard Electronics, Inc. (the "Company") and is to be
used at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
July 23, 1996, and any adjournments thereof. The time, place and purposes of the
Annual Meeting are stated in the Notice of Annual Meeting of Shareholders which
accompanies this Proxy Statement. Without affecting any vote previously taken, a
shareholder may revoke his Proxy by giving notice to the Company in writing at
any time before its exercise or in open meeting. Unless so revoked, shares
represented by a valid Proxy (in the form enclosed and properly signed) received
in time for the voting will be voted in accordance with the directions contained
therein.
The holders of Common Shares of the Company (the only class of shares
outstanding) will be entitled to vote at the Annual Meeting. At the close of
business on June 3, 1996, the date fixed for the determination of persons
entitled to vote, there were 22,519,692 Common Shares outstanding and entitled
to vote at the Annual Meeting, each share being entitled to one vote. Under Ohio
law and the Company's Amended Code of Regulations, if a quorum is present at the
Annual Meeting, the three (3) nominees for election as Directors who receive the
greatest number of votes cast for the election of Directors at the Annual
Meeting by the Common Shares present in person or represented by proxy and
entitled to vote will be elected Directors. However, the proposal to amend the
Company's Amended Articles of Incorporation ("Proposal 2") must be approved by
the affirmative vote of the holders of record of at least two-thirds of the
Common Shares. Votes that are withheld with respect to the election of Directors
will not be counted in determining the outcome of the election. An abstention
from voting any share with respect to Proposal 2 will have the practical effect
of a vote against Proposal 2. A broker non-vote with respect to any share will
not affect the election of Directors, since the share is not considered present
for voting purposes; however, a broker non-vote with respect to any share will
have the practical effect of a vote against Proposal 2, since the adoption of
Proposal 2 is determined on the basis of outstanding shares, rather than shares
present.
If notice in writing is given by any shareholder to the President, a Vice
President or the Secretary of the Company not less than 48 hours before the time
fixed for holding the Annual Meeting that he desires the voting for the election
of Directors be cumulative, an announcement of the giving of such notice shall
be made upon the convening of the meeting by the Chairman or Secretary or may be
made by or on behalf of the shareholder giving such notice. Cumulative voting
permits each shareholder to cumulate his voting power at such election by giving
one nominee as many votes as equals the product of the number of Directors to be
elected multiplied by the number of his votes, or by distributing his votes on
the same principle among two or more nominees, as the shareholder sees fit.
The Common Share information contained in this Proxy Statement reflects a
three-for-two share split effected in the form of a 50% share dividend declared
on July 25, 1995 and paid on September 6, 1995 to shareholders of record on
August 16, 1995.
1
<PAGE> 5
ELECTION OF DIRECTORS
The Amended Code of Regulations of the Company provides that the Board of
Directors shall be divided into three classes: Class A, Class B and Class C. All
Directors serve for three-year terms and until their respective successors are
elected The authorized number of Directors of the Company is presently fixed at
ten, with a vacancy existing in Class B.
At this Annual Meeting, three Class B Directors are to be elected for a
three-year term ending at the Annual Meeting in 1999. The nominees for election
are James L. Bayman, Gordon E. Heffern and Karl E. Ware, all of whom currently
serve as Directors of the Company.
The proxyholders named in the accompanying Proxy or their substitutes will
vote such Proxy at the Annual Meeting or any adjournments thereof for the
election as Directors of the three nominees named above unless the shareholder
instructs by marking the appropriate space on the Proxy, that authority to vote
is withheld. If cumulative voting is in effect, the proxyholders shall have full
discretion and authority to vote for any one or more of such nominees. In the
event of cumulative voting, the proxyholders can vote the shares represented by
each Proxy so as to maximize the number of Board of Directors' nominees elected
to the Board. Each of the nominees has indicated his willingness to serve as a
Director, if elected. If any nominee should become unavailable for election
(which contingency is not now contemplated or foreseen), it is intended that the
shares represented by the Proxy will be voted for such substitute nominee as may
be named by the Board of Directors. In no event will the accompanying Proxy be
voted for more than three nominees or for persons other than those named above
and any such substitute nominee for any of them.
The following table sets forth with respect to each of the nominees for
election and the other Directors whose terms will continue after the Annual
Meeting: his principal occupation; the period during which he has served as a
Director of the Company; his age; and the expiration date of his term or the
term for which he is a nominee.
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
FOR PAST FIVE YEARS AND OTHER DIRECTOR PROPOSED
DIRECTORSHIPS OF PUBLICLY-HELD CONTINUOUSLY TERM
NAME CORPORATIONS SINCE AGE EXPIRES
- ---------------------------- --------------------------------------- ---------- --------- -----------
<S> <C> <C> <C> <C>
CLASS B DIRECTORS
James L. Bayman(1).......... President of the Company since 1984, 1984 59 1999
Chief Executive Officer of the Company
since April 1995 and Chairman of the
Board of the Company since April, 1996
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Gordon E. Heffern(3)........ Retired Chairman of the Board and Chief 1989 72 1999
Executive Officer, Society Corporation
and Society National Bank since 1987
and 1985, respectively (Banking);
Director, A. Shulman Inc.
Karl E. Ware(2)............. Chairman and Chief Executive Officer, 1988 69 1999
Ware Industries, Inc. (Metal Wire Forms
and Steel Components); Director, Acme-
Cleveland Corporation, Lesco, Inc., and
Lubrizol Corporation
</TABLE>
2
<PAGE> 6
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
FOR PAST FIVE YEARS AND OTHER DIRECTOR PROPOSED
DIRECTORSHIPS OF PUBLICLY-HELD CONTINUOUSLY TERM
NAME CORPORATIONS SINCE AGE EXPIRES
- ---------------------------- --------------------------------------- ---------- --------- -----------
<S> <C> <C> <C> <C>
CLASS A DIRECTORS
Fredrick A. Downey(1)....... President, F.A. Downey Associates, Inc. 1983 68 1998
(Venture Capital/Consulting); prior
thereto, Executive Vice President --
Finance and Administration and
Director, Parker Hannifin Corporation
(Motion Control Systems and Components)
until retirement on January 1, 1988
Victor Gelb(1)(2)(3)........ President, Victor Gelb, Inc. 1971 69 1998
(Industrial Fibers); Chairman of the
Board, Capitol American Financial Corp.
(Insurance) until January, 1990;
Director, Specialty Chemical Resources,
Inc.
Edwin Z. Singer(1)(2)(3).... Chairman of the Board, Sandusco, Inc. 1974 65 1998
(Wholesale Merchandising, Real Estate);
Director, Star Bank, N.A., Cleveland
CLASS C DIRECTORS
Preston B. Heller, Jr....... Retired Chairman of the Board and 1969 66 1997
Retired Chief Executive Officer of the
Company; Director, National City Bank
(a subsidiary of National City
Corporation), and Sudbury, Inc.
Arthur Rhein................ Senior Vice President 1990 50 1997
Thomas C. Sullivan(1)(3).... Chairman of the Board and Chief 1984 58 1997
Executive Officer, RPM, Inc. (Specialty
Coatings and Membranes); Director,
National City Bank (a subsidiary of
National City Corporation), and Huffy
Corporation
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
3
<PAGE> 7
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS AND
COMPENSATION OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, and
a Compensation Committee. The Executive Committee, which held no meetings during
the last fiscal year, exercises the power and authority of the Board of
Directors in the interim period between Board meetings. The Audit Committee,
which held two meetings during the last fiscal year, reviews with the Company's
independent auditors the proposed scope of the Company's annual audits and audit
results, reviews the adequacy of internal financial controls, reviews internal
audit functions, provides recommendations as to the engagement of independent
auditors, and reviews any problems identified by either the internal or external
audit functions. The Compensation Committee, which held one meeting during the
last fiscal year, reviews and makes recommendations concerning executive
officers' salaries and bonuses and employment agreements and the Company's stock
option plans. The Compensation Committee also reviews and makes recommendations
concerning Director compensation. The Board of Directors serves as the Company's
nominating committee.
The Board of Directors held four meetings during the fiscal year ended
March 31, 1996. During that fiscal year, no Director attended fewer than 75% of
the aggregate of (i) the total number of meetings of the Board of Directors held
during the period he served as a Director and (ii) the total number of meetings
held by Committees of the Board on which he served, during the periods that he
served.
During the fiscal year ended March 31, 1996, Directors who are not also
employees of the Company received an annual fee of $15,000 and $1,000 for each
Board or Committee meeting attended. In addition, such Directors are to receive
$200 for each Board or Committee telephone conference in which he participates.
As Chairman of the Audit Committee, Mr. Singer received an annual fee of $2,000
in addition to any fees he received as a Committee member, and, as Chairman of
the Compensation Committee, Mr. Gelb received an annual fee of $2,000 in
addition to any fees he received as a Committee member. In the event that more
than one Board or Committee meeting is held on one day, the Directors involved
receive $500 for the second meeting attended.
4
<PAGE> 8
SHARE OWNERSHIP
The following table sets forth the number of Common Shares of the Company
beneficially owned by each of the nominees for Director and the Directors whose
terms will continue after the Annual Meeting; the Chief Executive Officer and
each of the four most highly-compensated executive officers of the Company
during fiscal 1996; all Directors and officers as a group; and the percent of
the class so owned as of June 3, 1996.
<TABLE>
<CAPTION>
NUMBER OF
COMMON
SHARES
BENEFICIALLY PERCENT OF
NAME OWNED(1) CLASS
- ---------------------------------------------------------------- ------------ ----------
<S> <C> <C>
James L. Bayman................................................. 577,395 2.6%
Frederick A. Downey............................................. 5,500(2) *
Victor Gelb..................................................... 30,252(2) .1%
John V. Goodger................................................. 37,800(3) .2%
Gordon E. Heffern............................................... 10,897(2) *
Preston B. Heller, Jr. ......................................... 1,062,147(4) 4.7%
Janice M. Margheret............................................. 166,274(5) .7%
Arthur Rhein.................................................... 179,437(6) .8%
Edwin Z. Singer................................................. 84,579(2)(7) .4%
Thomas C. Sullivan.............................................. 6,375(2) *
Karl E. Ware.................................................... 4,350(2) *
All Directors and officers as a Group (12 persons).............. 2,166,693(8) 9.5%
</TABLE>
- ---------------
* Shares owned are less than one-tenth of one percent of class.
(1) Except where otherwise indicated, beneficial ownership of the Common Shares
held by the persons listed in the table above is comprised of both sole
voting and investment power, or voting and investment power that is shared
with the spouses of such persons.
(2) Includes 3,000 Common Shares which the Director has the right to acquire
within 60 days of June 3, 1996 through the exercise of stock options granted
to the Director under the 1995 Stock Option Plan for Outside Directors.
(3) Includes 36,788 Common Shares which Mr. Goodger has the right to acquire
within 60 days of June 3, 1996 through the exercise of stock options granted
to him under the 1982 Incentive Stock Option Plan and 1991 Stock Option
Plan.
(4) Includes 5,586 Common Shares held in a trust for which Mr. Heller serves as
co-trustee and shares voting and dispositive poser, and 9,000 Common Shares
held in a trust for which Mr. Heller serves as trust advisor and has sole
voting and dispositive power, and 1,500 Common Shares which Mr. Heller has
the right to acquire within 60 days of June 3, 1996 through the exercise of
stock options granted to him under the 1995 Stock Option Plan for Outside
Directors.
(5) Includes 127,937 Common Shares which Ms. Margheret has the right to acquire
within 60 days of June 3, 1996, through the exercise of stock options
granted to her under the 1982 Incentive Stock Option Plan and the 1991 Stock
Option Plan.
(6) Includes 165,937 Common Shares which Mr. Rhein has the right to acquire
within 60 days of June 3, 1996, through the exercise of stock options
granted to him under the 1982 Incentive Stock Option Plan and the 1991 Stock
Option Plan.
5
<PAGE> 9
(7) Includes 67,500 Common Shares beneficially owned by a corporation controlled
by Mr. Singer.
(8) The number of Common Shares shown as beneficially owned by the Company's
Directors and officers as a group includes 350,162 Common Shares which such
persons have the right to acquire within 60 days of June 3, 1996 through the
exercise of stock options granted to them under the 1982 Incentive Stock
Option Plan and the 1991 Stock Option Plan, and the 1995 Stock Option Plan
for Outside Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
years ended March 31, 1996, 1995 and 1994, of all those persons who were at
March 31, 1996, (i) the Chief Executive Officer, and (ii) the other four most
highly compensated executive officers of the Company (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
-------------------------------------------------- ------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ------------------------- ----- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
James L. Bayman (3)...... 1996 $250,000 $386,739 $ -- 5,000 $ 42,662
Chairman of the 1995 250,000 485,559 -- -- 45,296
Board, President 1994 250,000 357,301 -- -- 47,401
and Chief Executive
Officer
Preston B. Heller, 1996 300,000 -- -- -- 1,253,312(4)
Jr.(3).................
1995 210,000 424,864 -- -- 57,849
1994 210,000 312,639 -- -- 62,144
Arthur Rhein............. 1996 200,000 314,225 -- 5,000 10,165
Senior Vice President.. 1995 200,000 394,517 -- 14,400 12,124
1994 200,000 290,307 -- 75,000 15,530
Janice M. Margheret...... 1996 185,000 241,712 5,000 9,224
Senior Vice President.. 1995 185,000 303,475 -- 14,400 12,495
1994 185,000 223,313 -- 75,000 13,520
John V. Goodger.......... 1996 130,000 72,513 -- 5,000 7,392
Vice President, 1995 130,000 91,042 -- 9,000 9,320
Treasurer and 1994 125,000 66,994 -- 22,500 8,643
Assistant Secretary
</TABLE>
- ---------------
(1) Unless otherwise indicated, no executive officer named in the Summary
Compensation Table received personal benefits or perquisites in excess of
the lesser of $50,000 or 10% of his or her aggregate salary and bonus.
(2) Consists of (i) contributions by the Company on behalf of the Named
Executives to the Pioneer-Standard Electronics, Inc. Employees' Profit
Sharing Retirement Plan, which during fiscal 1996 were as follows: James L.
Bayman $7,434; Preston B. Heller, Jr. $7,434; Arthur Rhein $7,434; Janice M.
Margheret $7,434; and John V. Goodger $7,392 and (ii) premiums paid for
split dollar life insurance by the Company during fiscal 1996 as follows:
James L. Bayman $35,228; Preston B. Heller, Jr. $45,878; Arthur Rhein
$2,731; and Janice M. Margheret $1,790.
6
<PAGE> 10
(3) As of April 3, 1995, Preston B. Heller, Jr. retired as Chief Executive
Officer and as of March 31, 1996, Mr. Heller retired as Chairman of the
Board. James L. Bayman serves as Chairman of the Board, President and Chief
Executive Officer.
(4) Pursuant to a Retirement Agreement dated February 28, 1996, Mr. Heller will
receive $1,200,000 to be paid in 24 monthly installments from April 30, 1996
through March 31, 1998. However, subsequent to April 3, 1996, Mr. Heller
will not receive any salary or bonus. See "Certain Relationships and Related
Transactions."
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
The following table sets forth information regarding grants of stock
options to the Named Executives under the 1991 Stock Option Plan during the
fiscal year ended March 31, 1996. The options were granted at the fair market
value on the date of grant for a term of ten (10) years.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION
- --------------------------------------------------------------------------------- FOR OPTION TERM (10 YEARS)(3)
% OF TOTAL -------------------------------------
NUMBER OF OPTIONS
SECURITIES GRANTED TO 5% 10%
UNDERLYING EMPLOYEES EXERCISE ----------------------- ---------
OPTIONS IN FISCAL PRICE EXPIRATION PRICE PER AGGREGATE PRICE PER
NAME GRANTED YEAR ($/SHARE) DATE SHARE VALUE SHARE
- ------------------------ --------- ---------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
James L. Bayman......... 5,000(1) 2.2% $15.375 3/29/06 $ 25.04 $ 48,325 $ 39.88
Arthur Rhein............ 5,000(1) 2.2 15.375 3/29/06 25.04 48,325 39.88
Janice M. Margheret..... 5,000(1) 2.2 15.375 3/29/06 25.04 48,325 39.88
John V. Goodger......... 5,000(2) 2.2 15.375 3/29/06 25.04 48,325 39.88
<CAPTION>
- ------------------------
AGGREGATE
NAME VALUE
- ------------------------ ---------
<S> <C>
James L. Bayman......... $122,525
Arthur Rhein............ 122,525
Janice M. Margheret..... 122,525
John V. Goodger......... 122,525
</TABLE>
- ---------------
(1) Option shares become exercisable on the anniversary date of the date of
grant as follows: 2,500 shares in 1997 and 2,500 shares in 1998.
(2) Option shares become exercisable on the anniversary date of grant as
follows: 2,277 shares in 1997, 2,277 shares in 1998 and 446 shares in 1999.
(3) Realizable aggregate values are reported net of the option exercise price.
Shown below is information with respect to the exercise of options to
purchase the Company's Common Shares by the Named Executives and unexercised
options to purchase the Company's Common Shares for the Named Executives.
7
<PAGE> 11
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ----------------------------- -------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
James L. Bayman............. -- $ -- -- 5,000 -- $ 0
Arthur Rhein................ 6,750 70,159 149,737 132,800 $ 1,799,816 1,071,235
Janice M. Margheret......... 38,000 408,721 111,737 132,800 1,314,441 1,071,235
John V. Goodger............. -- -- 28,463 35,600 259,541 241,180
</TABLE>
- ---------------
(1) Based on the difference between the exercise price of such options and the
closing price of a share of the Company's Common Shares on the NASDAQ
National Market System on March 29, 1996 ($15.375).
EMPLOYMENT AGREEMENTS
The Company has entered into new Employment Agreements with James L.
Bayman, Arthur Rhein and John V. Goodger, effective April 1, 1996. Ms. Margheret
has been requested to sign, but has not yet sign ed, her new Employment
Agreement, and the Company and Ms. Margheret are discussing the status of her
continued employment with, or in the alternative her separation from, the
Company. The Employment Agreements provide for a one-year period and thereafter
on a year-to-year basis subject to (i) termination by the Company effective as
of any anniversary of the effective date, (ii) death or disability, (iii)
termination by the Company, for cause (as defined) or without cause at any time,
and (iv) the officer's voluntary termination. The Employment Agreements also
provide for an annual base salary of $300,000 for Mr. Bayman, $230,000 for Mr.
Rhein, and $150,000 for Mr. Goodger. Ms. Margheret currently is receiving an
annual base salary at the rate of $212,000. The Employment Agreements for
Messrs. Bayman, Rhein and Goodger provide for annual cash incentive bonuses, in
accordance with a formula based upon the product of the sum of the Company's
actual operating income (as defined) multiplied by a ratio of the Company's
actual return on capital (as defined), compared with a pre-determined standard.
Messrs. Bayman, Rhein and Goodger will receive annual cash incentive bonuses in
an amount equal to 8/10 of 1%, 65/100 of 1% and 15/100 of 1%, respectively, of
the Company's adjusted income as computed in accordance with such formula. It
has been proposed that Ms. Margheret receive an annual cash incentive bonus in
an amount equal to 5/10 of 1% of the Company's adjusted income as computed in
accordance with such formula pursuant to her new proposed Employment Agreement.
Upon termination of Messrs. Bayman, Rhein and Goodger's employment by the
Company without cause, and subject to compliance by Messrs. Bayman, Rhein and
Goodger with certain provisions relating to competition, confidential
information and noninterference, each officer will be entitled to receive his
base salary for the month in which termination occurs. Messrs. Bayman, Rhein and
Goodger also will be entitled to receive an amount per month (the "Payment
Amount") consisting of 1/24 of the total of an amount equal to his previous 24
months of base salary and the incentive cash bonuses for the two previously
completed fiscal years. Mr. Bayman would be entitled to the Payment Amount for a
period of 24 months, Mr. Rhein would be entitled to the Payment Amount for 12
months, and Mr. Goodger would be entitled to the Payment Amount for six months.
In addition to such monthly payments, Messrs. Bayman, Rhein and Goodger also
will be
8
<PAGE> 12
entitled to receive his vested bonus payable in accordance with certain
provisions of the Employment Agreements.
In the event of termination in connection with a change in control, Messrs.
Bayman, Rhein and Goodger have the right to terminate their employment with the
Company and are entitled to receive an amount equal to one month of their then
base salary, an amount equal to his previous 24 months of base salary, and an
amount equal to his bonus for the two previously completed fiscal years, if any,
payable in one payment immediately upon such termination. Messrs. Bayman, Rhein
and Goodger also will be entitled to receive his vested bonus payable in
accordance with certain provisions of the Employment Agreements. For two years
following such termination, Messrs. Bayman, Rhein and Goodger will also be
entitled to all benefits and service credits for benefits under all employee
benefit plans, programs or arrangements of the Company. The Employment
Agreements also provide for the payment by the Company of legal fees incurred by
the officers in the event that, following a change in control, such officers may
be caused to institute or defend legal proceedings to enforce their rights under
the Employment Agreements. A "change in control" is defined as (i) the
acquisition by any person of beneficial ownership, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities or (ii) during any period of 12
consecutive months, individuals who were Directors of the Company at the
beginning of the period, and for whom such officers voted as a shareholder,
cease for any reason to constitute at least a majority of the Board of Directors
of the Company.
Termination for disability will result in payment of Messrs. Bayman, Rhein
and Goodger's then base salary and their respective bonus for a maximum period
of six months in the case of Mr. Bayman, or three months in the case of Mr.
Rhein and Mr. Goodger, following which they will receive disability benefits
under the Company's long term disability program. Messrs. Bayman, Goodger and
Rhein would also receive his or her vested bonus payable in accordance with
certain provisions of the Employment Agreements. Upon the voluntary termination
or termination for cause (as defined) of any officer, no further remuneration
payments will be due him.
If Ms. Margheret signs her new Employment Agreement, which she has
indicated she will not do, it will contain terms similar to those contained in
the other Executive Officers' Employment Agreements. On June 21, 1996, Ms.
Margheret, through her attorneys, advised the Company that she has claims
against the Company and certain of its officers and Directors based upon sex
discrimination, retaliation for asserting claims of sex discrimination,
violations of the American With Disabilities Act, breach of contract, tortious
interference with advantageous business relationships and defamation.
Discussions with her attorneys are being conducted, and if a mutually
satisfactory resolution is not arrived at, litigation may result.
CERTAIN TRANSACTIONS
On February 28, 1996, the Company and Preston B. Heller, Jr., the former
Chief Executive Officer and Chairman of the Board of the Company, entered into a
Retirement Agreement. Mr. Heller retired as Chief Executive Officer as of April
3, 1995 and as Chairman of the Board and as a member of the Executive Committee
of the Board of Directors as of March 31, 1996. Under the Agreement, Mr. Heller
will receive a payment totalling $1,200,000 to be paid in 24 monthly
installments from April 30, 1996 through March 31, 1998, together with certain
other benefits. Since Mr. Heller no longer is an employee of the Company, he is
a participant in the 1995 Stock Option Plan for Outside Directors, but he has
waived the payment of director fees through March 31, 1998.
9
<PAGE> 13
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
GENERAL
The Company's Compensation Committee is comprised of four (4) non-employee
Directors of the Company. The Compensation Committee is responsible for
reviewing and implementing the Company's existing and proposed executive and
director compensation and employment arrangements and plans and to administer
the 1982 Incentive Stock Option Plan, as amended, the 1991 Stock Option Plan, as
amended, and the 1995 Stock Option Plan for Outside Directors, as amended.
Set forth below is a report submitted by Messrs. Gelb, Heffern, Singer, and
Sullivan in their capacity as members of the Compensation Committee addressing
the Company's compensation objectives and philosophies, together with a
discussion of the factors considered in determining the compensation for the
Company's 1996 fiscal year of Mr. James L. Bayman, the Chief Executive Officer
and President of the Company, and Messrs. Preston B. Heller, Arthur Rhein and
John V. Goodger and Ms. Janice M. Margheret, the four executive officers other
than Mr. Bayman who, for fiscal 1996, were the Company's most highly compensated
officers (collectively, with Mr. Bayman, the "Named Executives"). As further
discussed below, Mr. Heller resigned as Chief Executive Officer effective April
3, 1995 and as Chairman of the Board effective March 31, 1996.
OBJECTIVES AND PHILOSOPHY
The Company's compensation programs are intended to provide its executives
with a mix of salary, benefits, and incentive compensation arrangements that:
- are at levels that will attract and retain qualified executives;
- are closely linked to the accomplishments of the Company and each
executive's individual performance; and
- encourage stock ownership by aligning executive compensation with
shareholder value.
The compensation of executives is intended to assist the Company in
obtaining the objectives set forth above. The Company seeks to provide its
executives with compensation that is both comparable to similarly situated
companies, specifically, Arrow Electronics, Inc., Avnet, Inc., Bell Industries,
Inc., Jaco Electronics, Inc., Kent Electronics Corporation, Marshall Industries,
Milgray Electronics, Inc., Sterling Electronics Corporation, and Wyle
Electronics, and commensurate with the performance, experience, and
responsibilities of each executive. Cash incentive bonuses are awarded to
certain executives pursuant to a formula linked to the Company's financial
performance. Long-term incentive opportunities in the form of stock options are
granted to executives to provide them with an opportunity to acquire or to
increase their proprietary interest in the Company, thereby providing them with
an incentive to promote the long-term interests of the Company's shareholders.
In addition, the general business outlook of the Company and the electronics
distribution industry in general is considered when determining the compensation
of the Company's executives.
The Company's compensation arrangements and plans are currently structured
in such a manner that it is unlikely (other than in the case of a "change in
control") that the compensation which may be paid to any Named Executive in
fiscal 1997 will exceed $1 million. The Compensation Committee believes that it
is in the best interests of shareholders to retain as much flexibility as
possible, presently and in the future, with respect to the Company's
compensation arrangements and plans. However, the Compensation Committee
recognizes
10
<PAGE> 14
that Section 162(m) of the Internal Revenue Code of 1986, as amended, provides
that no tax deduction is allowed for remuneration paid by the Company to any
Named Executive to the extent the remuneration paid exceeds $1 million. In the
future, if the Compensation Committee determines that the compensation which may
be paid to any Named Executive in any year could exceed $1 million, the
Compensation Committee may reexamine its policy.
FISCAL 1996 COMPENSATION DECISIONS
Salaries. On March 15, 1995, Mr. Heller, the Company's then Chief
Executive Officer, and Mr. Bayman, the Company's current Chief Executive
Officer, recommended to the Compensation Committee that there be no change in
the salaries of $250,000, $200,000, $185,000 and $130,000 for Mr. Bayman, Mr.
Rhein, Ms. Margheret, and Mr. Goodger. In determining whether to make any salary
adjustments for fiscal 1996, consideration was given to the payment of
anticipated bonuses, the performance and responsibilities of each executive,
prior years' salary increases, and the levels of compensation of similarly
situated companies, specifically, Arrow Electronics, Inc., Avnet, Inc., Bell
Industries, Inc., Jaco Electronics, Inc., Kent Electronics Corporation, Marshall
Industries, Milgray Electronics, Inc., Sterling Electronics Corporation and Wyle
Electronics. The Compensation Committee strives to provide its executives with
salaries competitive with similarly situated companies. The Compensation
Committee's decisions with respect to fiscal year 1996 salaries primarily were
based on Mr. Heller's and Mr. Bayman's recommendations, which were accepted.
Annual Incentive Compensation. Annual incentive compensation was awarded
to the Named Executives in the form of cash bonuses paid pursuant to a formula
contained in their employment agreements. The formula was based upon the product
of the sum of the Company's actual operating income (as defined) plus equity in
profits or losses attributable to the Company's affiliate, Pioneer Technologies
Group, Inc., as multiplied by a ratio of the Company's actual return on capital
(as defined) compared with a pre-determined standard. As discussed in the
section titled "Employment Agreements" of this Proxy Statement, the formula has
been modified. On March 15, 1995, the Compensation Committee approved the future
payment of cash incentive bonuses for the fiscal year ending March 31, 1996, to
Mr. Bayman, Mr. Rhein, Ms. Margheret and Mr. Goodger in an amount equal to 4/5
of 1%, 65/100 of 1%, 5/10 of 1% and 15/100, of 1%, respectively, of the
Company's adjusted 1996 fiscal year income as computed in accordance with the
formula contained in the Named Executives' employment agreements. Based upon the
results of operations for the Company's March 31, 1996 fiscal year, Mr. Bayman
received a cash incentive bonus of $386,739, Mr. Rhein received a cash incentive
bonus of $314,225, Ms. Margheret received a cash incentive bonus of $241,712 and
Mr. Goodger received a cash incentive bonus of $72,513.
Stock Options. On March 15, 1995, Mr. Heller and Mr. Bayman recommended to
the Compensation Committee that no options to acquire Common Shares be granted
to the Named Executive Officers, but options to acquire Common Shares be granted
to certain key management employees. The Compensation Committee accepted the
recommendations of Messrs. Heller and Bayman. In making its decision, the
Compensation Committee reviewed the proprietary interest in the Company held by
Messrs. Rhein and Goodger and Ms. Margheret, the desirability of increasing such
proprietary interest, and the performance of Messrs. Rhein and Goodger and Ms.
Margheret. The Compensation Committee's decision with respect to the grant of
stock options primarily was based on Mr. Heller's and Mr. Bayman's
recommendations, and the balance of the Committee's decision was based on the
other factors discussed above.
11
<PAGE> 15
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Heller, the former Chief Executive Officer, was paid an increased
salary of $300,000, but was not entitled to receive any incentive compensation
bonus for fiscal 1996. Pursuant to the terms of his Retirement Agreement, Mr.
Heller will not receive a salary or participate in any incentive compensation in
the future. Included in Mr. Heller's and Mr. Bayman's March 15, 1995 executive
salary recommendations was a proposal not to increase Mr. Bayman's current
salary of $250,000, which was adopted by the Compensation Committee. Mr. Bayman
received the $386,739 cash incentive bonus for fiscal year 1996 as described
above.
ADDITIONAL MATTERS
At a February 27, 1996 Compensation Committee meeting, the Compensation
Committee authorized the terms contained in Mr. Heller's Retirement Agreement,
and on February 28, 1996, the Board of Directors ratified the Retirement
Agreement. Pursuant to the Retirement Agreement, effective March 31, 1996, Mr.
Heller retired as the Chairman of the Board of the Company and his employment
with the Company and his employment agreement were terminated. Additionally, Mr.
Heller will receive a payment totalling $1.2 million to be paid in twenty-four
(24) equal monthly installments commencing April 30, 1996 and terminating March
31, 1998. On April 23, 1996, the Compensation Committee authorized an increase
in the fiscal 1997 base salaries of Messrs. Bayman, Rhein, Goodger and Ms.
Margheret of $300,000, $230,000, $150,000 and $212,000, respectively. At this
same meeting, the Compensation Committee approved the future payment of cash
incentive bonuses for the fiscal year ending March 31, 1997, to Mr. Bayman, Mr.
Rhein, Ms. Margheret and Mr. Goodger in an amount equal to 8/10 of 1%, 65/100 of
1%, 5/10 of 1% and 15/100 of 1%, respectively, of the Company's adjusted 1997
fiscal year income as computed in accordance with the formula contained in the
Named Executives' new employment agreements. As noted earlier, as of the date
hereof, Ms. Margheret has not yet entered into her proposed new Employment
Agreement, and the status of her continued employment with the Company is
uncertain. On March 29, 1996, the Compensation Committee authorized the grant of
options to purchase a total of 229,000 Common Shares under the 1991 Stock Option
Plan to the Named Executives and other non-officer employees, at an option price
of $15.375, which is the last sales price of a Common Share on March 29, 1996.
Messrs. Bayman, Rhein and Goodger and Ms. Margheret were each granted options to
acquire 5,000 Common Shares.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Victor Gelb (Chairman)
Gordon E. Heffern
Edwin Z. Singer
Thomas C. Sullivan
12
<PAGE> 16
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following chart compares the value of $100 invested in the Company's
Common Shares with a similar investment in the S&P 500 Stock Index ("S&P 500")
and the companies listed in the SIC Code 5065 -- Electronic Parts and Equipment
N.E.C. Index ("Peer Group") for the period March 31, 1991 through March 31,
1996.
<TABLE>
<CAPTION>
Measurement Period Pioneer-Stan- S&P 500 In-
(Fiscal Year Covered) dard dex Peer Group
<S> <C> <C> <C>
1991 100 100 100
1992 84 111 117
1993 193 128 161
1994 261 130 164
1995 316 150 184
1996 402 198 236
</TABLE>
13
<PAGE> 17
PROPOSAL NO. 2
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
The total authorized capital of the Company, as set forth in Article Fourth
of the Company's Amended Articles of Incorporation, consists of 40,000,000
shares, all of which are Common Shares, without par value. Under the proposed
amendment to the Amended Articles of Incorporation, the total authorized capital
will be increased to 80,000,000 shares, all of which shall be Common Shares,
without par value. The Board of Directors approved the proposal on May 7, 1996.
The Board of Directors does not presently contemplate proposing any other
changes to the Company's Amended Articles of Incorporation (the "Articles") or
Amended Code of Regulations (the "Code"). In addition to the 22,519,692 Common
Shares which were issued and outstanding as of June 3, 1996, the Company has
reserved 1,561,892 Common Shares for issuance pursuant to its stock option
plans.
The principal purpose for the proposal is to make available additional
Common Shares for possible stock splits or dividends, employee benefit plans,
acquisitions, public or private stock offerings and other corporate purposes.
The Company does not presently have any agreements or understandings with
respect to transactions which would call for the issuance of any of the
additional 40,000,000 Common Shares. Shareholders have no pre-emptive rights
with respect to the issuance of additional Common Shares, and the issuance of
additional Common Shares would not require any further shareholder approval,
except as otherwise expressly required under Ohio Corporation Law.
The Company's purpose in increasing the number of authorized Common Shares
available for issuance is described above. Nevertheless, the authorization of
additional Common Shares might be considered as having the effect of
discouraging an attempt by another person or entity, through the acquisition of
a substantial number of Common Shares, to acquire control of the Company with a
view to effecting a merger, sale of the Company's assets or similar transaction,
since the issuance of additional Common Shares could be used to dilute the share
ownership or voting rights of such person or entity. Moreover, any of the
authorized but unissued Common Shares could be privately placed with purchasers
supportive of incumbent management, making a change in control of the Company
more difficult.
The Company's Articles contain provisions relating to shareholder approval
of certain business combinations. The Articles provide that certain business
combinations involving the Company and any person beneficially owning 10% or
more of the Common Shares must be approved by the affirmative vote of 80% of the
outstanding shares entitled to vote generally in the election of Directors.
However, the 80% voting requirement does not apply if (1) not less than a
majority of continuing Directors, has approved, in advance, the acquisition of
those outstanding shares of the Company purchased by the 10% shareholder or has
approved the business combination, or (2) the business combination is a merger
or consolidation and the consideration to be received by holders of Common
Shares as a result of the business combination is not less than (a) the greater
of (i) the highest price per share, including commissions, paid by such person
in obtaining 10% or more of the Company's Common Shares during the two-year
period ending on the date of the most recent purchase of any such shares, or
(ii) the highest sales price reported for the Common Shares during the two-year
period preceding the first public announcement of the proposed business
combination, (b) plus interest and less cash dividends.
In addition, the Company's Code provides that the Board of Directors shall
be divided into three classes and requires that any proposal to increase or
decrease the number of Directors be approved by the vote of the holders of a
majority of shares entitled to vote on the proposal; provided, however, that the
number of Directors of any class shall not consist of less than three Directors.
Moreover, the Code provides that the
14
<PAGE> 18
Directors may be removed from office by the vote of the holders of two-thirds of
the voting power entitled to elect Directors in place of those removed;
provided, however, that unless all the Directors of a particular class are
removed, no individual Director may be removed without cause if a sufficient
number of shares are cast against such removal which, if cumulatively voted at
an election for all the Directors, or all the Directors of a particular class,
as the case may be, would be sufficient to elect at least one Director. The
purpose of these provisions is to prevent Directors from being removed from
office prior to the expiration of their respective terms, thus protecting the
safeguards inherent in the classified Board structure unless dissatisfaction
with the performance of one or more Directors is widely shared by the Company's
shareholders. These provisions could also have the effect of increasing the
amount of time required for an acquiror to obtain control of the Company by
electing a majority of the Board of Directors and may also make the removal of
incumbent management more difficult and discourage or render more difficult
certain mergers, tender offers, proxy contests, or other potential takeover
proposals. To the extent that these provisions have the effect of giving
management more bargaining power in negotiations with a potential acquiror, they
could result in management using the bargaining power not only to try to
negotiate a favorable price for an acquisition, but also to negotiate favorable
terms for management.
Some shareholders might consider any increase in anti-takeover protection
undesirable because to the extent that any anti-takeover protection discourages
speculation or short-term trading in the Company's Common Shares, the market
impact of such protection could be reduced trading and a lower price. In
addition, shareholders may favor a proposed change in management or control.
However, it is not the intent of the Company to use the additional authorized
Common Shares to block any takeover attempt or change in management or control,
without consideration of the benefits to the Company and its shareholders. There
presently is no takeover proposal before the Company, nor is the Company aware
that any person contemplates such a proposal.
RECOMMENDATION; REQUIRED VOTE
The Board of Directors recommends a vote FOR the proposal. The persons
named in the accompanying proxy or their substitutes will vote such proxy for
this proposal unless it is marked to the contrary. A favorable vote of
two-thirds of the outstanding Common Shares on the record date is required for
the adoption of the proposed amendment.
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP to audit the accounts
of the Company for the fiscal year ending March 31, 1997, and to perform such
other accounting services as may be appropriate. Ernst & Young LLP and its
predecessors have audited the accounts of the Company annually since 1964.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, and they will have the opportunity to make a statement if they
desire to do so. They will also be available to respond to appropriate questions
from shareholders.
OTHER MATTERS
Reports will be laid before the Annual Meeting, including a letter from the
Chairman of the Board, President and Chief Executive Officer which accompanies
the financial statements of the Company and the Auditor's Report prepared by
independent auditors. The Board of Directors does not contemplate and does not
intend to present for consideration the taking of action by shareholders with
respect to any reports to be laid
15
<PAGE> 19
before the Annual Meeting or with respect to the minutes of the Annual Meeting
of Shareholders held on July 25, 1995, which will be read at the Annual Meeting
on July 23, 1996, unless a motion to dispense with a reading is adopted.
The Board of Directors of the Company is not aware of any matter to come
before the Annual Meeting other than those mentioned in the accompanying Notice.
However, if other matters shall properly come before the Annual Meeting, it is
the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment on such matters.
The cost of solicitation of Proxies, including the cost of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. In addition to solicitation by mail, arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxy
materials to their principals, and the Company may reimburse them for their
expenses in so doing. To the extent necessary to assure sufficient
representation, officers and employees of the Company may in person or by
telephone or telegram request the return of Proxies. The Company has also
retained D. F. King & Co. Inc., a professional proxy solicitation firm, to aid
in the solicitation of proxies for whose services the Company will pay a fee of
$5,000, plus reimbursement of out-of-pocket expenses.
Any shareholder proposal intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company's Secretary at the
Company's principal executive offices not later than March 24, 1997, for
inclusion in the Board of Directors' Proxy Statement and form of Proxy relating
to that Annual Meeting. Each proposal submitted should be accompanied by the
name and address of the shareholder submitting the proposal and the number of
Common Shares owned. If the proponent is not a shareholder of record, proof of
beneficial ownership should also be submitted. All proposals must be a proper
subject for action and comply with the proxy rules of the Securities and
Exchange Commission.
UPON THE RECEIPT OF A WRITTEN REQUEST FROM ANY SHAREHOLDER ENTITLED TO VOTE
AT THE FORTHCOMING ANNUAL MEETING, THE COMPANY WILL MAIL, AT NO CHARGE TO THE
SHAREHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 13A-L UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, FOR THE COMPANY'S MOST RECENT FISCAL YEAR. REQUESTS FROM
BENEFICIAL OWNERS OF THE COMPANY'S VOTING SECURITIES MUST SET FORTH A GOOD-FAITH
REPRESENTATION THAT, AS OF THE RECORD DATE FOR THE ANNUAL MEETING, THE PERSON
MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE AT
SUCH ANNUAL MEETING. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE DIRECTED TO:
Mr. John V. Goodger
Vice President, Treasurer and Assistant Secretary
Pioneer-Standard Electronics, Inc.
4800 East 131st Street
Cleveland, Ohio 44105
You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience a
return envelope is enclosed requiring no additional postage if mailed in the
United States.
By Order of the Board of Directors.
WILLIAM A. PAPENBROCK
Secretary
June 26, 1996
16
<PAGE> 20
APPENDIX A
PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE
AMENDED ARTICLES OF INCORPORATION
OF
PIONEER-STANDARD ELECTRONICS, INC.
Article Fourth of the Amended Articles of Incorporation (which is the only
portion of the Amended Articles of Incorporation affected by Proposal 2) shall
be deleted and replaced by the following:
"FOURTH: The authorized number of shares of the corporation is Eighty
Million (80,000,000) shares, all of which shall be Common Shares,
without par value."
A-1
<PAGE> 21
[INSERT MAP HERE]
[A map to meeting location is included.]
<PAGE> 22
PIONEER-STANDARD ELECTRONICS, INC.
ANNUAL MEETING OF SHAREHOLDERS -- JULY 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints John V. Goodger and William
A. Papenbrock, and each of them, as Proxy holders and attorneys,
P with full power of substitution, to appear and vote all of the Common
Shares of Pioneer-Standard Electronics, Inc. which the undersigned
R shall be entitled to vote at the Annual Meeting of Shareholders of the
Company, to be held at the Cleveland South Hilton Inn, 6200 Quarry
O Lane, Cleveland, Ohio, on Tuesday, July 23, 1996, at 11:00 A.M.,
Eastern Daylight Time, and at any adjournments thereof, hereby
X revoking any and all proxies heretofore given, and (ii) authorizes and
directs said Proxy holders to vote all of the Common Shares of the
Y Company represented by this Proxy as follows, WITH THE UNDERSTANDING
THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID SHARES WILL BE VOTED "FOR"
PROPOSALS 1 AND 2.
<TABLE>
<S> <C>
Election of Directors, Nominees: (change of address)
James L. Bayman, Gordon E. Heffern and Karl E. Ware. ------------------------------------
------------------------------------
------------------------------------
------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
PLEASE DETACH THE ABOVE PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 23
<TABLE>
<S> <C>
/ X / PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Amendment to the / / / / / / 3. In their discretion,
Directors Articles of to act on any other
(see reverse) Incorporation to matter or matters
increase the which may properly
number of come before the
authorized Common meeting.
Shares from
40,000,000 to
80,000,000.
For, except vote withheld from the following nominee(s):
-------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
Change
of / /
Address
Attend
Meeting / /
SIGNATURE(S)______________________________________________________ DATE _________________
SIGNATURE(S)______________________________________________________ DATE _________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH CARD
</TABLE>
