<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KENT ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
<PAGE>
KENT ELECTRONICS CORPORATION
1111 Gillingham Lane
Sugar Land, Texas 77478
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Thursday, July 1, 1999
10:00 a.m., Central Time
May 28, 1999
Dear Shareholder:
On behalf of the Board of Directors, you are cordially invited to attend the
1999 Annual Meeting of Shareholders of Kent Electronics Corporation to be held
at our offices located at 1111 Gillingham Lane, Sugar Land, Texas 77478, at
10:00 a.m., Central time, on Thursday, July 1, 1999. The Annual Meeting will
be held for the following purposes:
. to elect directors;
. to ratify the appointment of independent auditors for the fiscal year
ending April 1, 2000; and
. to conduct other business properly brought before the Annual Meeting.
Only shareholders of record at the close of business on May 13, 1999, will
be entitled to vote at the Annual Meeting. Whether or not you plan to attend
the Annual Meeting, your vote is important. We urge you to vote, date, sign
and return the enclosed Proxy card.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
Stephen J. Chapko
Secretary
<PAGE>
KENT ELECTRONICS CORPORATION
1111 Gillingham Lane
Sugar Land, Texas 77478
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
---------------------
This proxy statement is furnished in connection with solicitation of the
enclosed proxy by the Board of Directors of Kent Electronics Corporation
("Kent") for use at Kent's 1999 Annual Meeting of Shareholders. The
approximate date on which this proxy material is first being sent to
shareholders is May 28, 1999.
VOTING MATTERS
Common Stock Outstanding and Record Date
Kent's only class of capital stock outstanding with voting rights is its
common stock. The record date for the Annual Meeting is May 13, 1999, and each
share of Kent common stock you owned as of May 13, 1999, entitles you to one
vote on each proposal presented to the shareholders for action. On May 13,
1999, there were 27,969,508 shares of Kent common stock outstanding.
Quorum
A quorum of shareholders is necessary to hold a valid meeting. A quorum will
be present if shareholders holding a majority of the outstanding shares of
Kent common stock are present in person or by proxy. Abstentions and broker
non-votes are counted as present for establishing a quorum. Abstentions will
be counted in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes will not be counted for purposes of
determining whether a proposal has been approved.
Vote Required
Directors are elected by a plurality vote of shares present at the Annual
Meeting, meaning that the two nominees who receive the greatest number of
votes properly cast in the election of directors will be elected. All
proposals other than the election of directors must be approved by an
affirmative vote of the majority of shares present in person or by proxy at
the Annual Meeting.
Votes submitted by mail will be voted by the individuals named on the proxy
card in the manner you indicate. If you do not specify how you want your
shares voted, they will be voted in accordance with management's
recommendations. You may change your vote by voting in person at the Annual
Meeting or by submitting another proxy that is dated later.
THE KENT BOARD OF DIRECTORS
Structure
Our Board of Directors is divided into three classes for purposes of
election. One class is elected at each annual meeting of shareholders to serve
for a three-year term. The two directors that will be elected at the Annual
Meeting will be elected to a three-year term expiring in 2002. Kent's other
directors are not up for election this year and will continue to serve in
accordance with Kent's bylaws.
1
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
Directors Up For Election This Year for Terms Expiring in 2002
. MORRIE K. ABRAMSON, 64, a co-founder of Kent, has served as Chief
Executive Officer and a director since 1973 and as Chairman of the Board
since 1977. Mr. Abramson also served as President of Kent from 1995 to
1998. Mr. Abramson has been in the electronics distribution business since
1956. Mr. Abramson has also been Chairman of the Board of K*TEC
Electronics Corporation ("K*TEC"), Kent's wholly-owned manufacturing
subsidiary, since its incorporation in 1983.
. ALVIN L. ZIMMERMAN, 55, has been a shareholder, officer and director in
the law firm of Zimmerman, Axelrad, Meyer, Stern & Wise, P.C. and its
predecessor firms since 1984. As a judge, he presided over the 309th
Family District Court and the 269th Civil District Court of Harris County,
Texas from 1980 to 1984. Mr. Zimmerman has been a Kent director since
1986.
KENT'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES PRESENTED IN
PROPOSAL 1.
Directors with Terms Expiring in 2000
. TERRENCE M. HUNT, 51, has been an Executive Vice President of Kent and
President of Futronix Systems since January 1997. Prior to joining Kent,
Mr. Hunt founded Futronix Corporation in 1991, and served as its President
until it was acquired by Kent in January 1997. Mr. Hunt has been a Kent
director since 1997.
. DAVID SIEGEL, 73, is vice president, director and the founder of Great
American Electronics, a distribution company serving industrial
distributors. Mr. Siegel has been in the electronics distribution business
since 1954. Other directorships: Micronetics and Surge Components. Mr.
Siegel has been a Kent director since 1990.
Directors with Terms Expiring in 2001
. MAX S. LEVIT, 64, has been President of Grocers Supply Company, Inc.
since January 1992. Other directorships: M.D. Anderson Hospital and The
University of Texas--Houston Health Science Center. Mr. Levit has been a
Kent director since 1995.
. LARRY D. OLSON, 42, has been Kent's President and Chief Operating Officer
since 1998, and has been President of K*TEC since November 1997. Mr. Olson
previously served as Kent's Executive Vice President since 1994 and as
President of Kent Components since January 1997. Mr. Olson has been a Kent
director since 1998.
. RICHARD C. WEBB, 65, is a founder of Harris Webb & Garrison, a Houston-
based investment banking and brokerage firm and a wholly-owned subsidiary
of the Pinnacle Global Group. Mr. Webb has been in the investment banking
business since 1960 and was a founder of Lovett Underwood Neuhaus & Webb,
Inc., a subsidiary of Kemper Securities. Mr. Webb has been a Kent director
since 1986.
BOARD MEETINGS AND COMMITTEES
During Kent's last fiscal year, the Board of Directors held seven meetings.
All directors attended all of the meetings of the Board of Directors and the
committees on which they served in fiscal 1999, with the exception of one
director, who missed one Board meeting.
The Audit Committee reviews with Kent's independent auditors the plan, scope
and results of the annual audit and the procedures for and results of internal
controls. Present members of the Committee are Max Levit, David Siegel,
Richard Webb and Alvin Zimmerman. The Committee held two meetings during
fiscal 1999.
2
<PAGE>
The Compensation Committee is authorized to determine the compensation of
Mr. Abramson and to make recommendations to the Board regarding compensation
of Kent's other officers. Present members of the Committee are Max Levit,
David Siegel, Richard Webb and Alvin Zimmerman. The Committee held four
meetings during fiscal 1999.
The Stock Option Committee is authorized to grant options under, and to
otherwise administer, Kent's stock option plans, other than Kent's Amended and
Restated 1996 Non-Employee Director Stock Option Plan, which the entire Board
administers. Present members of the Committee are Max Levit, David Siegel and
Richard Webb. The Committee held four meetings during fiscal 1999.
DIRECTOR COMPENSATION
Board members that are not salaried employees of Kent receive separate
compensation for Board service, which may not exceed $50,000 annually. That
compensation includes:
<TABLE>
<S> <C>
Annual Retainer: $18,000
Attendance Fees: $1,000 for each Board meeting
$500 for each Board Committee meeting that is not held before
or after a Board meeting
Committee Chairman
Stipend: $2,000 annually
Stock Options: 7,500 shares annually, plus an additional one-time grant to each
non-employee director during fiscal 1999 ranging from 5,000 shares
to 11,563 shares.
</TABLE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of the persons
who are not directors and who are executive officers of Kent:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Keith K. Ayers.......... 60 Vice President
Frank M. Billone........ 54 Executive Vice President and Chief Information Officer
Stephen J. Chapko....... 45 Executive Vice President, Chief Financial Officer,
Treasurer and Secretary
William H. Fountain..... 42 Vice President
R. Michael Gibbons...... 41 Vice President of Kent and Executive Vice President
and General Manager of K*TEC
Richard J. Hightower.... 39 Executive Vice President of Kent and
President of Kent Components
David D. Johnson........ 34 Vice President, Corporate Controller
Mark A. Zerbe........... 38 Executive Vice President of Kent and
President of Kent Datacomm
</TABLE>
Mr. Ayers joined Kent in 1976 as a purchasing agent. Since then, he has
served in various capacities, including manager of the management information
systems. Mr. Ayers currently serves as Vice President and has responsibilities
for training, special projects and administrative matters.
Mr. Billone was appointed Executive Vice President in May 1998 and Chief
Information Officer in June 1997. He previously served as Vice President of
Information Services--Distribution since joining Kent in January 1996. Prior
to joining Kent, he held various information systems positions with General
Electric since 1967.
Mr. Chapko was appointed Executive Vice President, Chief Financial Officer
in January 1997. He served as Vice President and Treasurer of Kent since 1989,
and he was appointed Secretary in 1993. He joined Kent as Assistant Treasurer
in 1987.
3
<PAGE>
Mr. Fountain has been Vice President since 1987 and is responsible for
product management in the distribution operations. He joined Kent in 1980 as a
purchasing agent.
Mr. Gibbons joined Kent in February 1997 as Director of Quality for K*TEC.
In January 1998, he was appointed Vice President of Kent and Executive Vice
President and General Manager of K*TEC. Prior to joining Kent, Mr. Gibbons was
Manager, Product Center Quality at Schlumberger Dowell since 1993 and held
various quality and engineering positions with divisions of Schlumberger since
1984.
Mr. Hightower was appointed Executive Vice President and President of Kent
Components in May 1998, and previously served as Vice President and General
Manager of Kent Components since November 1997. He joined Kent in 1993 as a
General Manager and was appointed Regional Manager in 1995. Prior to joining
Kent, Mr. Hightower was a General Manager at Future Electronics since 1990.
Mr. Johnson was appointed Vice President, Corporate Controller in January
1996. He joined Kent in 1988 as Accounts Payable Supervisor.
Mr. Zerbe has served as Executive Vice President of Kent since 1994 and
became President of Kent Datacomm in January 1997. He previously served as a
Vice President of Kent since 1988. Mr. Zerbe joined Kent as a sales
representative in 1985.
Other than as set forth below under the heading "Executive Agreements," the
executive officers serve at the pleasure of the Board of Directors.
4
<PAGE>
KENT COMMON STOCK BENEFICIALLY OWNED
BY DIRECTORS, OFFICERS AND FIVE PERCENT SHAREHOLDERS
The following table shows the beneficial ownership of Kent common stock as
of May 13, 1999, unless otherwise specified, by (1) each director, (2) Kent's
chief executive officer and the four most highly compensated executive
officers during fiscal 1999 (the "Named Executive Officers"), (3) all persons
who are known by Kent to own beneficially more than 5% of the outstanding
shares of common stock, and (4) Kent's directors and executive officers as a
group:
<TABLE>
<CAPTION>
Shares Owned Total Stock-Based
Beneficially(1) Holdings(2)
--------------------- ---------------------
Name and Address Number Percent Number Percent
---------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
Morrie K. Abramson................. 934,150(3) 3.3% 1,234,150(4) 4.3%
Stephen J. Chapko.................. 47,083(5) * 117,500(6) *
Richard J. Hightower............... 22,833(7) * 52,500(8) *
Larry D. Olson..................... 97,433(9) * 221,600(10) *
Mark A. Zerbe...................... 68,633(11) * 162,800(12) *
Terrence M. Hunt................... 618,200(13) 2.2% 628,200(14) 2.2%
Max S. Levit....................... 40,938(15) * 40,938(15) *
David Siegel....................... 69,313(16) * 69,313(16) *
Richard C. Webb.................... 52,500(17) * 52,500(17) *
Alvin L. Zimmerman................. 79,313(18) * 79,313(18) *
Loomis, Sayles & Company, L.P.
One Financial Center
Boston, Massachusetts 02111....... 1,813,175(19) 6.5% 1,813,175(19) 6.5%
Schroder Capital Management, Inc.
787 Seventh Avenue, 34th Floor
New York, New York 10019.......... 1,701,900(20) 6.1% 1,701,900(20) 6.1%
State of Wisconsin Investment Board
P. O. Box 7842
Madison, Wisconsin 53707.......... 3,087,200(21) 11.0% 3,087,200(21) 11.0%
All executive officers and
directors
as a group (15 persons)........... 2,207,362(22) 7.7% 2,961,681(23) 10.1%
</TABLE>
- --------
* Less than 1%
(1) The persons listed have the sole power to vote and dispose of shares
beneficially owned by them except as otherwise indicated. The calculation
of shares that may be acquired upon the exercise of outstanding options as
indicated in the footnotes includes options exercisable within 60 days.
(2) The amounts in this column include the equity securities shown in the
"Shares Owned Beneficially" column and options that are not currently
exercisable within 60 days.
(3) Includes 200,000 shares that may be acquired upon the exercise of
outstanding options that have been transferred to trusts for the benefit
of Mr. Abramson's children, as to which Mr. Abramson disclaims beneficial
ownership. Also includes 5,000 shares held in trust for Mr. Abramson's
children, as to which shares Mr. Abramson disclaims beneficial ownership.
(4) Includes 300,000 shares subject to options that are not currently
exercisable.
(5) Includes 17,083 shares that may be acquired upon exercise of outstanding
options.
(6) Includes 70,417 shares subject to options that are not currently
exercisable.
(7) Includes 12,833 shares that may be acquired upon exercise of outstanding
options.
(8) Includes 29,667 shares subject to options that are not currently
exercisable.
(9) Includes 20,833 shares that may be acquired upon exercise of outstanding
options.
(10) Includes 124,167 shares subject to options that are not currently
exercisable.
5
<PAGE>
(11) Includes 20,833 shares that may be acquired upon exercise of outstanding
options.
(12) Includes 94,167 shares subject to options that are not currently
exercisable.
(13) Includes 581,134 shares held by THMJH Family Trust, 5,000 shares held by
THMJH Family Partners, Ltd. and 12,042 shares held in trust for Mr.
Hunt's children.
(14) Includes 10,000 shares subject to options that are not currently
exercisable.
(15) Includes 33,438 shares that may be acquired upon the exercise of
outstanding options.
(16) Includes 6,500 shares that are owned by Mr. Siegel's wife. Also includes
50,313 shares that may be acquired upon the exercise of outstanding
options, of which 22,500 shares may be acquired upon the exercise of
outstanding options that have been transferred to Mr. Siegel's children.
Mr. Siegel disclaims beneficial ownership of the options transferred to
his children.
(17) Includes 25,000 shares that may be acquired upon the exercise of
outstanding options.
(18) Includes 57,813 shares that may be acquired upon the exercise of
outstanding options.
(19) As reported in a Schedule 13G filed by Loomis, Sayles & Company, L.P.
with the Securities and Exchange Commission on February 10, 1999.
Represents shares that may be acquired upon conversion of Kent's 4 1/2%
Convertible Subordinated Notes Due 2004.
(20) As reported in a Schedule 13G filed by Schroder Capital Management, Inc.
with the Securities and Exchange Commission on February 11, 1999.
(21) As reported on Schedule 13G filed by the State of Wisconsin Investment
Board with the Securities and Exchange Commission on April 7, 1999.
(22) Includes 558,412 shares that may be acquired upon the exercise of
outstanding options.
(23) Includes 754,319 shares subject to options that are not currently
exercisable.
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION COMMITTEE(1)
The Compensation Committee and the Stock Option Committee (collectively, the
"Committees") are both composed entirely of outside directors, and together,
the Committees develop and make recommendations to the Board regarding Kent's
executive compensation policies. This Report describes Kent's executive
officer compensation program and the basis on which the Committees made
compensation determinations for Kent's executive officers in fiscal 1999.
The Committees have designed Kent's executive compensation program based on
their belief that executive compensation should reflect the value created for
shareholders while supporting Kent's strategic goals. The Committees' goals
are to establish a compensation program that:
. links the interests of management and shareholders;
. links executive compensation with the short-term and long-term strategic
goals and objectives of Kent;
. rewards outstanding contributions to Kent; and
. attracts and retains executives of high caliber and ability.
- --------
(1) Notwithstanding filings by Kent with the Securities and Exchange
Commission ("SEC") that have incorporated or may incorporate by reference
other SEC filings (including this proxy statement) in their entirety, this
Report of the Compensation Committee and the Stock Option Committee shall
not be incorporated by reference into such filings and shall not be deemed
to be "filed" with the SEC except as specifically provided otherwise or to
the extent required by Item 402 of Regulation S-K.
6
<PAGE>
For fiscal 1999, that program consisted of base salary, a related bonus
program tied to Kent's performance and a stock option program. The
Compensation Committee is responsible for the base salary and bonus components
of the program, and the Stock Option Committee is responsible for the stock
option component of the program. The Committees regularly review the
components of Kent's executive compensation program for which they are
responsible to ensure that they are consistent with Kent's objectives.
Base Salary. In determining the appropriate base salaries of Kent's
executive officers, the Compensation Committee generally considers the level
of executive compensation in similar companies in the industry. In addition,
the Compensation Committee takes into account (1) the performance of Kent and
the roles of the individual executive officers with respect to such
performance, and (2) the particular executive officer's specific
responsibilities and the performance of such executive officer in those areas
of responsibility. From time to time, the Compensation Committee also confers
with third party compensation and employee benefit consultants and reviews
published information, in order to acquire competitive information.
Annual Incentives. The bonus program provides an annual cash bonus to
executive officers as a direct financial incentive to achieve and exceed
Kent's annual goals. Kent also currently maintains for Mr. Abramson an
incentive cash bonus plan (the "CEO Bonus Plan"), which provides that Mr.
Abramson's annual bonus will be tied to Kent's achievement of certain budgeted
goals as determined by the Compensation Committee. Mr. Abramson did not earn a
bonus under the CEO Bonus Plan in fiscal 1999.
In addition, Kent maintains bonus programs for the Named Executive Officers,
pursuant to which they receive cash bonuses based on the achievement of
certain targeted goals for the entire company, or for certain divisions of
Kent.
Long-Term Incentives. Kent currently maintains the 1996 Employee Incentive
Plan (the "Incentive Plan"), the Amended and Restated 1987 Stock Option Plan,
an Executive Vice President of Sales-Distribution Stock Option Plan and
Agreement, an Executive Vice President of Operations-Distribution Stock Option
Plan and Agreement, a Vice President, Secretary and Treasurer Stock Option
Plan and Agreement and a Vice President, Corporate Controller Stock Option
Plan and Agreement. These stock option plans link executive officer
compensation and shareholder return and enable executive officers to develop
and maintain a significant, long-term stock ownership position in Kent's
common stock.
Chief Executive Officer. Kent maintains an employment agreement with Mr.
Abramson (the "Employment Agreement"), which provides for Kent's continued
employment of Mr. Abramson until March 31, 2001 for a minimum annual base
salary and bonus of $950,000. The Compensation Committee believes that the
Employment Agreement secures Mr. Abramson's commitment to continue leading
Kent over the next two years.
The Compensation Committee believes that the cash compensation of the chief
executive officer ("CEO") should be impacted by Kent's performance. Mr.
Abramson, who has served as CEO of Kent since 1973, earned a base salary in
fiscal 1999 of $484,126, which the Compensation Committee believes to be below
the average of the base salary for chief executive officers of other companies
engaged in the same or similar businesses as Kent with comparable
qualifications, experience and responsibilities. Mr. Abramson also earned in
fiscal 1999 the minimum bonus required under the Employment Agreement.
Named Executive Officers. Consistent with Kent's compensation program
outlined above, compensation for each of the Named Executive Officers, as well
as other senior executives, consists of a base salary, bonus and stock
options. The Compensation Committee believes that the base salaries for the
Named Executive Officers for fiscal 1999 were at levels below competitive
amounts paid to executives of other companies engaged in the same or similar
businesses as Kent with comparable qualifications, experience and
responsibilities. Mr. Zerbe earned his bonus as a result of Kent Datacomm
having achieved certain targeted goals. Cash bonuses have been accrued for
payment to all other Named Executive Officers as determined at the discretion
of the Compensation Committee. In determining the amount of these
discretionary bonuses, the Compensation Committee considered,
7
<PAGE>
among other things, (1) the strong leadership of the Named Executive Officers
in guiding the Company through a difficult business environment, (2)
implementation of cost control initiatives and (3) the strategic efforts of
the Named Executive Officers to position Kent for a return to performance
levels that are more consistent with Kent's historical performance.
Limitation of Tax Deduction for Executive Compensation. The Committees
desire their compensation program to be cost and tax effective. Certain
federal tax laws prohibit publicly traded companies from receiving a tax
deduction on compensation paid to Named Executive Officers in excess of $1
million annually. Consequently, the Committees continually review all
compensation components to maximize corporate tax deductions when feasible and
consistent with its employment agreements and annual commitments to the Named
Executive Officers.
Compensation Committee: Max S. Levit, David Siegel, Richard C. Webb and
Alvin L. Zimmerman.
Stock Option Committee: Max S. Levit, David Siegel and Richard C. Webb.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee or the Stock Option Committee had,
during fiscal 1999, any relationships requiring disclosure by Kent, except Mr.
Zimmerman, who is a shareholder, officer and director of Zimmerman, Axelrad,
Meyer, Stern & Wise, P.C., a law firm retained by Kent.
8
<PAGE>
COMPENSATION TABLES
The following table sets forth compensation information for the Named
Executive Officers during Kent's fiscal years 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------- ------------
Other Annual Securities All Other
Name and Principal Fiscal Salary Bonus Compensation Underlying Compensation(1)
Position Year ($) ($) ($) Options (#) ($)
------------------ ------ ------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Morrie K. Abramson...... 1999 484,126 532,763 116,862(2) 0 68,241
Chairman of the Board
and 1998 435,741 1,700,268 92,974 0 71,267
Chief Executive Officer 1997 390,250 1,767,268 44,328 500,000 69,000
Mark A. Zerbe........... 1999 217,100 271,979 8,977 20,000 18,953
Executive Vice
President and 1998 193,700 308,034 8,746 0 14,169
President of Kent
Datacomm 1997 164,602 110,138 6,875 20,000 13,425
Larry D. Olson.......... 1999 305,747 158,383 6,926 50,000 7,357
President and 1998 206,696 251,719 5,415 0 17,302
Chief Operating Officer 1997 164,602 110,138 6,474 20,000 16,102
Stephen J. Chapko....... 1999 217,087 75,000 8,396 30,000 14,255
Executive Vice
President, 1998 175,006 150,000 8,092 0 13,611
Chief Financial
Officer, 1997 99,523 100,000 8,075 20,000 9,804
Treasurer and Secretary
Richard J. Hightower.... 1999 217,068 29,981 6,345 20,000 6,243
Executive Vice
President and 1998 125,104 164,650 4,154 10,000 10,923
President of Kent
Components 1997 100,893 50,981 0 5,000 7,508
</TABLE>
- --------
(1) Includes, in fiscal 1999, company matching contributions of $4,569,
$4,710, $4,955, $4,861 and $3,641, respectively, pursuant to Kent's Tax-
Deferred Savings and Retirement Plan and Trust, and company matching
contributions of $63,672, $14,243, $2,402, $9,394 and $2,602,
respectively, pursuant to Kent's Deferred Compensation Plan.
(2) Includes $80,656 attributable to travel on an aircraft in which Kent has
an aggregate undivided ownership interest of 12.5%. The Board has adopted
a policy that directs Mr. Abramson to use Kent's aircraft to the fullest
extent practicable for his business and personal air travel.
9
<PAGE>
Option Grants in Fiscal 1999
<TABLE>
<CAPTION>
% of Total Potential Realizable Value
Options Exercise Market at Assumed Annual Rates of
Granted to Price Price on Stock Price Appreciation
Options Employees (per Date of for Option Terms
Granted in Fiscal share) Grant Expiration ---------------------------
Name (#) 1999 ($) ($) Date (5%) (10%)
---- ------- ---------- -------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Morrie K. Abramson...... 0 0 0 0 -- 0 0
Mark A. Zerbe........... 20,000 4.9% 8.94 8.94 09/01/08 $112,446 $284,961
Larry D. Olson.......... 50,000 12.3% 8.94 8.94 09/01/08 $281,116 $712,403
Stephen J. Chapko....... 30,000 7.4% 8.94 8.94 09/01/08 $168,670 $427,442
Richard J. Hightower.... 20,000 4.9% 8.94 8.94 09/01/08 $112,446 $284,961
</TABLE>
Aggregated Option Exercises in Fiscal 1999 and 1999 FY-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired At 1999 Fiscal Year End At 1999 Fiscal Year End
on Value --------------------------- ---------------------------
Name Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
---- -------- ---------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Morrie K. Abramson...... 570,000 $5,808,300 200,000/300,000 N/A/N/A
Mark A. Zerbe........... 105,000 $ 601,438 20,833/ 94,167 N/A/$188,481
Larry D. Olson.......... 35,000 $ 299,600 20,833/124,167 N/A/$229,581
Stephen J. Chapko....... 0 0 17,083/ 70,417 N/A/$ 98,906
Richard J. Hightower.... 0 0 12,833/ 29,667 N/A/N/A
</TABLE>
10
<PAGE>
PERFORMANCE GRAPHS
The following graphs compare the performance of Kent's common stock to a
Peer Group Index (as defined below) and the New York Stock Exchange Market
Index (the "NYSE Market Index") for Kent's last five fiscal years and last ten
fiscal years, respectively. The Peer Group Index is made up of the companies
whose common stock has traded publicly for the last ten years and whose
primary four-digit SIC Code is the same as Kent's.
FIVE YEAR CUMULATIVE TOTAL RETURN
[FIVE YEAR CUMULATIVE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Kent Electronics Corporation.......... 100.00 165.34 396.53 266.22 242.40 115.60
Peer Group Index(1)................... 100.00 111.25 142.17 154.05 171.06 89.04
NYSE Market Index..................... 100.00 110.92 144.87 169.16 246.35 263.58
</TABLE>
Assumes $100 invested on April 2, 1994 in Kent common stock or Index and
that dividends are reinvested.
11
<PAGE>
TEN YEAR CUMULATIVE TOTAL RETURN
[TEN YEAR CUMULATIVE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
FISCAL YEAR
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ------ ------ ------ ------ ------ ------ -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kent Electronics
Corporation............ 100.00 140.43 304.26 340.43 457.45 455.33 752.82 1,805.49 1,212.17 1,103.71 526.34
Peer Group Index(1)..... 100.00 132.58 138.01 183.84 230.26 230.80 256.76 328.13 355.55 394.80 205.50
NYSE Market Index....... 100.00 116.25 131.61 144.80 166.18 173.01 191.91 250.64 292.67 426.22 456.03
</TABLE>
Assumes $100 invested on April 1, 1989 in Kent common stock or Index and
that dividends are reinvested.
- --------
(1) Includes the following companies:
All American Semiconductor, Arrow Electronics, Avnet, Bell Industries, Bell
Microproducts, Brightpoint, Cellstar, Dunn Computer, Electrocon
International, Farmstead Telephone Group, Gentner Communications,
Highwaymaster Communications, Intellicell, Internet Communications, Jaco
Electronics, Kent Electronics, Marshall Industries, Norstan, Nu-Horizons
Electronics, Pioneer-Standard Electronics, Premier Farnell, Rada
Electronics Industries, Reptron Electronics, Richardson Electronics, Savoir
Technology Group, Taitron Components, Tessco Technologies, Video Display,
View Tech and World Access.
Executive Agreements
Abramson Agreements
The Employment Agreement between Mr. Abramson and Kent expires on March 31,
2001 and provides for a minimum annual base salary and bonus of at least
$950,000. Upon the termination of Mr. Abramson's employment for any reason
(other than for "just cause" or without "good reason" prior to a "change in
control" as such terms are defined in the Employment Agreement), he or his
spouse, or the estate of either, will receive an annual retirement benefit of
$750,000 for the greater of (1) 15 years, (2) Mr. Abramson's life or (3) the
life of his spouse. If Mr. Abramson dies or becomes disabled prior to March
31, 2001, the annual retirement benefit will be $950,000 until March 31, 2001,
and $750,000 per year thereafter. No retirement benefits would be paid,
however, if prior to a change in control, Kent terminates Mr. Abramson for
just cause or he resigns without good reason. The retirement benefits payable
under the Employment Agreement will be adjusted annually to reflect increases
in the cost of living as measured by the Consumer Price Index. Mr. Abramson
has
12
<PAGE>
the right to require Kent to secure its obligations to pay the retirement
benefits payable under the Employment Agreement by contributing cash to a
trust for the benefit of Mr. Abramson in an amount sufficient to satisfy its
obligations to Mr. Abramson. To date, Mr. Abramson has not required Kent to
secure its obligations to pay the retirement benefits, but he reserves the
right to do so in the future. If prior to a change in control Kent discharges
Mr. Abramson without just cause or he resigns for good reason, Mr. Abramson is
entitled to receive a cash lump sum payment equal to all compensation due to
him for the remainder of the term of the Employment Agreement. If Mr.
Abramson's employment is terminated for any reason after a change in control,
Mr. Abramson is entitled to receive a cash lump sum payment equal to five
times his highest annual compensation in any year during the term of the
Employment Agreement. Upon a change in control, Kent is required to contribute
cash to a trust for the benefit of Mr. Abramson in an amount sufficient to
satisfy its obligations to Mr. Abramson if his employment is terminated after
the change in control.
In January 1993, Kent entered into an Executive Health Care Benefits and
Consulting Agreement with Mr. Abramson. This agreement provides that Mr.
Abramson may provide consulting services to Kent after retirement and that he
will be covered under Kent's health care plan. Mr. Abramson will pay all
required premiums and other costs for Medicare coverage. Kent will provide
medical, dental and prescription drug benefits for Mr. Abramson and his spouse
for those items and expenses which are eligible to be covered under the health
care plan, to the extent not covered by Medicare.
In March 1993, Kent entered into an agreement with Mr. Abramson pursuant to
which Kent, upon a change in control of Kent, will make a cash payment to him
sufficient to pay all excise taxes imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended. Such payment will place him in the same
after-tax position as if there had been no such taxes.
Hunt Agreements
Kent entered into an Employment Agreement with Mr. Hunt (the "Hunt
Employment Agreement"), effective upon the acquisition by Kent of Futronix
Corporation and Wire & Cable Specialties Corporation, which together formed
Kent's Futronix Systems division ("Futronix"). The Hunt Employment Agreement
expires April 1, 2000 (the "Employment Term") and provides that Mr. Hunt will
receive a minimum annual salary of $150,000. Mr. Hunt also is entitled to
fringe benefits comparable to those provided to other officers of Kent and its
subsidiaries in comparable executive positions. In addition, Mr. Hunt is
entitled to receive a bonus, to be determined by the Board of Directors, on
the same basis as other officers of Kent and its subsidiaries in comparable
executive positions.
If Mr. Hunt resigns or the Hunt Employment Agreement is terminated for
"cause," Mr. Hunt will receive any unpaid salary and fringe benefits that have
accrued through the date of termination. If Mr. Hunt becomes totally disabled,
Kent may terminate the Hunt Employment Agreement, and upon such termination,
Mr. Hunt would be entitled to (1) any unpaid salary and fringe benefits that
have accrued through the date of termination; (2) any benefits that he may be
entitled to receive under any then existing disability benefit plans of Kent
(including plans included in the fringe benefits), and (3) in the fiscal year
immediately following the fiscal year of termination, a bonus prorated for the
period for which Mr. Hunt was actually employed (a "Proportionate Bonus").
Upon Mr. Hunt's death, Kent must pay to Mr. Hunt's estate any unpaid salary
and fringe benefits that have accrued through the date of death and a
Proportionate Bonus. If the Hunt Employment Agreement is terminated without
cause, Mr. Hunt would be entitled to an amount equal to (1) the salary for the
remainder of the Employment Term plus (2) an amount equal to (a) the bonus
paid to Mr. Hunt for the fiscal year immediately preceding the fiscal year of
termination divided by 12, multiplied by (b) the number of months from the end
of the last fiscal year for which a bonus was paid through the end of the
Employment Term. If, however, the aggregate amount payable to Mr. Hunt upon
termination without cause is not at least equal to one year's salary, then
Kent may either increase the amount to be paid to Mr. Hunt to one year's
salary or release Mr. Hunt from
13
<PAGE>
the covenants not to compete to which he is subject. Kent shall also continue
to provide Mr. Hunt with the health benefits in effect at the time of
termination, for 18 months or until Mr. Hunt obtains health benefits from
another source.
The distribution center of Futronix in Houston, Texas is leased from a trust
of which Mr. Hunt is the trustee. Effective April 1, 1999, the base annual
rent of Kent for the property is $420,000, and prior to April 1, 1999, the
base annual rent for the property was $300,000. In addition to the base amount
of rent, Kent is responsible for all expenses related to the operation of the
property, including maintenance, utilities, taxes and insurance. The term of
the lease expires on December 31, 2003, and Kent has an option to renew the
lease for an additional five-year term. Kent believes that the terms of the
lease, including the annual rent, are on terms no less favorable than those
that could be obtained from an unrelated third party.
Severance Agreements
In November 1998, Kent entered into severance agreements with Messrs.
Billone, Chapko, Hightower, Hunt, Olson and Zerbe (each, an "Officer"). In
general, these agreements provide that if, after a change in control, the
Officer's employment is terminated for any reason, the Officer shall be
entitled to a cash lump sum payment equal to the highest amount of his annual
cash compensation (two times that amount, in Mr. Olson's case) during the five
years preceding or the year of the change in control. In addition, all of the
stock options granted to the Officer shall immediately vest on the date of
termination following a change in control. Kent will also will make a cash
payment to the Officer sufficient to pay all excise taxes imposed by Section
4999 of the Internal Revenue Code of 1986, as amended. Such payment will place
the Officer in the same after-tax position as if there had been no such taxes.
Certain Transactions
Mr. Zimmerman, a director of Kent, is a shareholder, officer and director of
the law firm of Zimmerman, Axelrad, Meyer, Stern & Wise, P.C., a firm retained
by Kent.
During fiscal 1997 and 1998, Kent made loans to certain current and former
executive officers and directors of Kent to finance their purchase of Kent
common stock. Such persons with loans from Kent of $60,000 or more, and their
respective loan balances and weighted-average interest rates, are set forth in
the table below. The loan balances in the table below include outstanding
principal and accrued interest.
<TABLE>
<CAPTION>
Largest Loan
Balance in Loan Balance at Interest
Name Fiscal 1999 April 3, 1999 Rate
---- ------------ --------------- --------
<S> <C> <C> <C>
Morrie K. Abramson..................... $495,491 $495,491 6.36%
Frank M. Billone....................... $179,238 $179,238 6.47%
Stephen J. Chapko...................... $107,905 $107,905 6.02%
William H. Fountain.................... $248,943 $248,943 6.74%
Richard J. Hightower................... $226,137 $226,137 6.02%
Pamela P. Huffman...................... $126,298 -- 5.89%
David D. Johnson....................... $511,505 $511,505 6.35%
Max S. Levit........................... $194,230 $194,230 6.27%
Larry D. Olson......................... $341,239 $341,239 6.26%
David Siegel........................... $121,477 $121,477 6.33%
Richard C. Webb........................ $473,830 $473,830 6.43%
Mark A. Zerbe.......................... $288,389 $288,389 6.18%
</TABLE>
14
<PAGE>
PROPOSAL 2--RATIFICATION AND APPOINTMENT OF AUDITORS
The Board of Directors has appointed Grant Thornton LLP as Kent's
independent auditors for the fiscal year ending April 1, 2000, and Kent is
asking shareholders to ratify this appointment. Representatives of Grant
Thornton will be at the Annual Meeting to respond to appropriate questions.
KENT'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of our records, all reports required to be filed
pursuant to Section 16(a) of the Exchange Act were filed on a timely basis.
Shareholder Proposals for the 2000 Annual Meeting
If you want to submit a proposal for possible inclusion in Kent's 2000 Proxy
Statement, we must receive it on or before January 27, 2000.
Proposals and Nominations for the 2000 Annual Meeting
Under Kent's bylaws, a shareholder that desires to nominate a person to be
elected as a director of Kent or to bring any other matter before the annual
meeting must give adequate notice to Kent's Secretary. To be adequate, that
notice must contain information specified in our bylaws and be received by us
not less than 90 days nor more than 120 days prior to the date that is the one
year anniversary of the previous year's annual meeting. If, however, the date
of the annual meeting has changed by more than 30 days from the anniversary
date, notice of a nomination or other matter to be brought before the annual
meeting must be received by the 10th day following the earlier of (1) the date
on which notice of the annual meeting was mailed or (2) the date on which
public disclosure of the date of the annual meeting was made. Under this
criteria, shareholders must provide us with notice of a nomination or other
matter to be brought before the 2000 annual meeting between March 2, 2000 and
April 1, 2000.
Solicitation of Proxies
Kent is soliciting this proxy on behalf of its Board of Directors. This
solicitation is being made by mail but also may be made in person or by
special letter, telephone, or fax. We have hired Morrow & Co. at an estimated
cost of $3,500, plus out-of-pocket expenses, to assist in the solicitation.
Revocability of Proxy
You may revoke the enclosed proxy by filing a written notice of revocation
with the Secretary of Kent or by providing a later executed proxy.
KENT WILL FURNISH WITHOUT CHARGE ADDITIONAL COPIES OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 3, 1999 TO INTERESTED SECURITY
HOLDERS ON REQUEST. KENT WILL FURNISH TO ANY SUCH PERSON ANY EXHIBITS
DESCRIBED IN THE LIST ACCOMPANYING SUCH REPORT UPON PAYMENT OF REASONABLE FEES
RELATING TO KENT'S FURNISHING SUCH EXHIBITS. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE SECRETARY AT KENT'S ADDRESS PREVIOUSLY SET FORTH.
15
<PAGE>
[MAP APPEARS HERE]
Kent Electronics Corporation
1999 Annual Meeting of Shareholders
July 1, 1999, 10:00 a.m., Central Time
Meeting to be held at the Company's offices located at
1111 Gillingham Lane, Sugar Land, TX 77478 (281) 243-4000
[LOGO APPEARS HERE]
<PAGE>
PROXY PROXY
KENT ELECTRONICS CORPORATION
1111 GILLINGHAM LANE
SUGAR LAND, TEXAS 77478
ANNUAL MEETING OF SHAREHOLDERS JULY 1, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Kent Electronics Corporation ("Kent")
hereby appoints MORRIE K. ABRAMSON and STEPHEN J. CHAPKO, and each of them,
attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to vote in respect of the undersigned's shares of Kent Common
Stock at Kent's Annual Meeting of Shareholders to be held on July 1, 1999, at
10:00 a.m., Central time, at Kent's offices located at 1111 Gillingham Lane,
Sugar Land, Texas 77478 and at any adjournment(s) thereof, the number of shares
the undersigned would be entitled to cast if personally present.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
KENT'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES SET FORTH BELOW AND "FOR" PROPOSAL Please mark
2 BELOW. your votes as [X]
indicated in
this example
PROPOSAL 1: To elect directors:
FOR all nominees WITHHOLD Nominees: Morrie K. Abramson and Alvin L. Zimmerman
listed to the right AUTHORITY
(except as marked to vote for all nominees Instruction: To withhold authority to vote for any individual nominee, write such
to the contrary) listed to the right name or names in the space provided below.
[_] [_]
____________________________________________________________________
PROPOSAL 2: To ratify the appointment of Grant Thornton LLP 3: In their discretion, on such other matters as may properly come
as Kent's independent public accountants for the before the 1999 Annual Meeting of Shareholders or any
fiscal year ending April 1, 2000. adjournment(s) thereof; all as more particularly described in the
Proxy Statement, receipt of which is hereby acknowledged.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[_] [_] [_] [_] [_] [_]
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder(s).
__________ IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
| THE DIRECTOR NOMINEES SET FORTH ABOVE AND PROPOSAL 2.
All prior proxies are hereby revoked.
_________________________________________________________
| PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE |
| PROXY CARD USING THE ENCLOSED ENVELOPE. |
_________________________________________________________
SIGNATURE _____________________________________________ SIGNATURE _________________________________________ DATE __________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee, guardian, etc., please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
