1
1
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
OPTEK TECHNOLOGY, INC.
1215 West Crosby Road
Carrollton, Texas 75006
To Be Held March 19, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Optek
Technology, Inc. will be held on Wednesday, March 19, 1997, at 10:00 a.m.,
Dallas, Texas time at the offices of the Company, 1215 West Crosby Road,
Carrollton, Texas 75006, for the following purposes:
1.To elect a Board of Directors of six (6) persons as nominated in the
accompanying Proxy Statement, such Directors to hold office until the
next annual meeting of stockholders and until their successors are
elected;
2. To approve a Directors' Formula Compensation Plan for non-employee
Directors of Optek Technology, Inc.; and
3.To transact such procedural matters as may properly be brought before
the meeting or any adjournment or adjournments thereof.
Said meeting may be adjourned from time to time without other notice than
by announcement at said meeting, or at any adjournment thereof, and any and all
business for which said meeting is hereby noticed may be transacted at any such
adjournment.
The Board of Directors has fixed January 20, 1997 as the date for taking of
a record of the stockholders entitled to notice of and to vote at the meeting
and at any adjournment or adjournments thereof. The stock transfer books will
not be closed.
Enclosed is a form of Proxy solicited by the Board of Directors of the
Company. Stockholders who do not plan to attend the meeting in person are
requested to date, sign and return the enclosed Proxy in the enclosed envelope,
to which no postage need be affixed if mailed in the United States. Your Proxy
may be revoked at any time before it is exercised and will not be used if you
attend the meeting and prefer to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
THOMAS R. FILESI
President and Chief Executive Officer
Carrollton, Texas
January 20, 1997
<PAGE>
OPTEK TECHNOLOGY, INC.
1215 West Crosby Road
Carrollton, Texas 75006
PROXY STATEMENT
Solicitation by the Board of Directors
of Proxies from Stockholders for
the Annual Meeting of Stockholders
to be held on March 19, 1997
The Board of Directors of Optek Technology, Inc. (hereinafter called
"Optek" or the "Company") solicits your proxy in the enclosed form, which you
are requested to fill out, sign as indicated and return to the Company in the
enclosed self-addressed envelope, which requires no postage if mailed in the
United States. The approximate day on which this Proxy Statement and form of
proxy will be sent to security holders is February 10, 1997.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by filing a written revocation or a
duly executed proxy bearing a later date. Any written revocation may be
delivered in person or mailed to the Company at the address set out above. A
stockholder who attends the Annual Meeting in person may revoke his proxy at
the Annual Meeting and vote in person if he so desires.
Proxies are being solicited by mail and all expenses of solicitation have
been or will be borne by the Company.
January 20, 1997 has been fixed as the date of record for the determination
of stockholders of the Company entitled to notice of and to vote at the Annual
Meeting or at any adjournments thereof. At the close of business on that date,
3,965,495 shares of Common Stock, par value $0.01 per share (the "Common
Stock"), were issued and outstanding, each share entitling the holder thereof to
one vote. Cumulative voting in the election of Directors is not allowed.
The presence, in person or by proxy, of record holders of a majority of the
shares of Common Stock outstanding as of the date of record constitutes a quorum
for the transaction of business. Abstentions and broker non-votes will be
counted as present for purposes of determining the existence of a quorum.
Because Directors are elected by a plurality of the votes cast by stockholders,
abstentions and broker non-votes are not counted and have no effect in
determining which candidates have received the highest number of votes and are
elected, except in affecting the total number of votes cast for a nominee. The
vote of a majority of the shares represented at the meeting is required to
approve the Directors' Formula Compensation Plan; therefore, an abstention or
non-vote will have the same effect as a vote against the Plan. Under certain
circumstances, if you do not exercise the voting rights of stock in which you
hold a beneficial interest, those shares might be voted by the record holder.
All shares of the Company's Common Stock represented by proxies received
in time and in proper form and condition and not revoked will be voted as
specified in the proxy, or in the absence of specific direction, the proxy will
be voted by the person designated therein:
1.FOR the election as Directors of the Company of the six (6) nominees
named below to hold office until the next annual meeting of stockholders
and until their respective successors shall be duly elected. In the
event any of such nominees becomes unable to serve as a Director, the
proxies will be voted in accordance with the best judgment of the person
acting under it.
2.FOR the approval of the Directors' Formula Compensation Plan as
approved by the Board of Directors.
The management knows of no other matters to be submitted to the 1997 Annual
Meeting with respect to which the stockholders are entitled to vote, but if
other procedural matters do properly come before the meeting, the persons named
in the proxy will vote according to the best judgment of the appointed proxy.
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the Company's Common
Stock held at January 20, 1997 by (i) each stockholder known by the Company to
own beneficially more than 5% of the Company's Common Stock, (ii) each of the
Company's Directors, nominees for Director and executive officers named in the
"Executive Compensation" section of this statement, and (iii) all executive
officers and Directors as a group. So far as is known to the Company, the
persons named in the table have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them, subject to
community property laws, where applicable, and the information contained in the
footnotes to the table.
<TABLE>
<CAPTION>
Number Percent Percen
of age Number of tage
Name and Address Outstand of Shares (2 of
ing Outstan Beneficia ) Benefi
Shares ding lly Owned cial
Owned Shares Owners
hip
(3)
<S> <C> <C> <C> <C <C>
>
First Source 0 0 3,150,000 (4 44.3%
Financial, Inc. )
2850 W. Golf Rd.,
5th Floor
Rolling Meadows,
IL 60008
Allstate Insurance 1,028,23 25.9% 1,028,230 25.9%
Company 0
Allstate Plaza
North E-5
Northbrook, IL
60062
James D. Crownover 282,602 7.1% 282,602 7.1%
P.O. Box 7812
Horseshoe Bay,
TX 78657
Thomas R. Filesi 201,000 5.1% 358,833 (5 8.7%
1180 Emerald )
Sound Blvd.
Oak Point, TX
75068
Grant A. Dove 10,800 * 206,601 (6 5.0%
15301 Dallas )
Parkway, Suite 840
Dallas, TX
75248
Michael E. Cahr 15,500 * 43,000 (7 1.1%
)
William H. 4,500 * 8,000 (8 *
Daughtrey, Jr. )
Rodes Ennis 16,100 * 43,600 (9 1.1%
)
Wayne Stevenson - * 15,750 (1 *
0)
William J. 450 * 450 *
Collinsworth
Richard G. Dahlberg 2,423 * 37,755 (1 *
1)
Thomas S. Garrett 46,666 1.2% 92,331 (1 2.3%
2)
Robert J. Kosobucki 5,333 * 14,665 (1 *
3)
All executive
officers and 302,772 * 820,985 (1 18.3%
Directors as a 4)
group (10 persons)
</TABLE>
- ------------------------------------------
* Less than 1%.
(1)Includes only shares of Common Stock actually issued and outstanding,
and not shares issuable upon exercise of options, warrants or other rights
to acquire common stock.
(2)Includes shares of Common Stock not outstanding which are subject to
rights to acquire shares exercisable or to become exercisable within 60
days of the date of this statement.
(3)Shares of Common Stock not outstanding which are subject to rights
exercisable or to become exercisable within 60 days of the date of this
statement are deemed to be outstanding for the purpose of computing the
percentage of beneficial ownership with respect to the holder of such
rights, but are not deemed to be outstanding for the purpose of computing
the percentage of any other person..
(4)Consists of 3,150,000 shares which may be acquired at any time prior to
October 31, 1998 upon exercise of a Warrant at an exercise price of $0.50
per share. The exercise price is subject to adjustment in the event the
Company fails to meet certain cumulative performance criteria. The
exercise price and number of shares are also subject to adjustment upon the
occurrence of certain events in order to address dilution.
(5)Includes 36,000 shares issuable pursuant to Incentive Stock Options at a
price of $2.31 per share. Also includes 8,500 shares exercisable at a
price of $2.125 per share, 100,000 shares exercisable at a price of $0.19
per share, 10,000 shares exercisable at a price of $6.05 per share and
3,333 shares to become exercisable at a price of $11.969 per share on March
19, 1997 pursuant to options issued under the Company's Long-Term Stock
Investment Plan. Mr. Filesi is President and Chief Executive Officer and a
Director of the Company.
(6)Includes 10,000 shares purchasable at a price of $1.53 per share
pursuant to warrants issued to the Company's non-employee Directors and
3,500 shares exercisable at a price of $2.11 per share and 3,500 shares
exercisable at a price of $1.04 per share pursuant to options awarded under
the Company's Directors' Formula Award Plan. Also includes 8,759 shares
purchasable at a price of $1.11 per share, 38,462 shares purchasable at a
price of $0.65 per share and 131,580 shares purchasable at a price of $0.19
per share, all issuable pursuant to warrants issued for services performed
by Mr. Dove as Chairman of the Board during the fiscal quarters ended April
30, 1993, July 31, 1993 and October 29, 1993. Mr. Dove is Chairman of the
Board and a Director of the Company.
(7)Includes 10,000 shares purchasable at a price of $1.53 per share
pursuant to warrants issued to the Company's non-employee Directors and
3,500 shares exercisable at a price of $2.11 per share, 3,500 shares
exercisable at a price of $1.04 per share, 3,500 shares exercisable at a
price of $0.44 per share, 3,500 shares exercisable at a price of $1.83 per
share, and 3,500 shares which will become exercisable at a price of $11.97
per share after the 1997 annual meeting pursuant to options awarded under
the Company's Directors' Formula Award Plan. Also includes 5,500 shares
owned of record by Mr. Cahr's wife of which Mr. Cahr may be deemed the
beneficial owner. Mr. Cahr is a Director of the Company.
(8)Includes 3,500 shares which will become exercisable at a price of $11.97
per share after the 1997 annual meeting pursuant to options awarded under
the Company's Directors' Formula Award Plan. Mr. Daughtrey is a Director
of the Company.
(9)Includes 10,000 shares purchasable at a price of $1.53 per share
pursuant to warrants issued to the Company's non-employee Directors and
3,500 shares exercisable at a price of $2.11 per share, 3,500 shares
exercisable at a price of $1.04 per share, 3,500 shares exercisable at a
price of $0.44 per share, 3,500 shares exercisable at a price of $1.83 per
share and 3,500 shares which will become exercisable at a price of $11.97
per share after the 1997 annual meeting pursuant to options awarded under
the Company's Directors' Formula Award Plan. Mr. Ennis is a Director of
the Company.
(10)Includes 1,750 shares exercisable at a price of $2.18 per share
pursuant to the Company's Long-Term Stock Investment Plan and 3,500 shares
exercisable at a price of $1.04 per share, 3,500 shares exercisable at a
price of $0.44 per share, 3,500 shares exercisable at a price of $1.83 per
share and 3,500 shares which will become exercisable at a price of $11.97
per share after the 1997 annual meeting pursuant to options awarded under
the Company's Directors' Formula Award Plan. Mr. Stevenson is a Director
of the Company.
(11)Includes 26,000 shares exercisable at a price of $0.19 per share, 6,666
shares exercisable at a price of $6.05 per share, and 2,666 shares to
become exercisable at a price of $11.97 per share on March 19, 1997
pursuant to options issued under the Company's Long-Term Stock Investment
Plan. Mr. Dahlberg is Vice President, Engineering of the Company.
(12)Includes 10,000 shares issuable pursuant to Incentive Stock Options
presently exercisable at a price of $1.65 per share. Also includes 3,000
shares exercisable at a price of $2.125 per share, 23,333 shares
exercisable at a price of $0.19 per share, 6,666 shares exercisable at a
price of $6.05 per share and 2,666 shares to become exercisable at a price
of $11.97 per share on March 19, 1997 pursuant to options issued under the
Company's Long Term Stock Investment Plan. Mr. Garrett is Vice President,
Operations of the Company.
(13)Includes 6,666 shares exercisable at a price of $6.05 per share and
2,666 shares to become exercisable at a price of $11.97 per share on March
19, 1997. Mr. Kosobucki is Vice President, Worldwide Sales and Marketing
of the Company.
(14)Includes 248,162 shares which may be acquired upon exercise of employee
stock options presently exercisable or which will become exercisable on or
before March 19, 1997, 91,250 shares presently purchasable or which will
become purchasable after the 1997 annual meeting of stockholders pursuant
to warrants and options issued to the Company's non-employee Directors, and
178,801 shares issuable pursuant to warrants issued for services rendered.
Compliance With Section 16(a) of the Exchange Act.
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company and
upon written representations received by the Company, the following persons were
all Directors, executive officers or beneficial owners of more than 10 percent
of the Company's Common Stock during fiscal 1996 who failed to file any such
report on a timely basis, and the following table summarizes the timeliness of
all reports filed by them during that fiscal year:
<TABLE>
Reports Filed .
<CAPTION> Tim 1-5 Over 5
ely Days Days Late
Late
<S> <C> <C> <C>
Thomas R. 1 1
Filesi
William H. 4 2
Daughtrey, Jr.
William J. 1 1
Collinsworth
Richard G. 3 1
Dahlberg
Thomas S. 1 1
Garrett
Robert J. 2 1
Kosobucki
</TABLE>
Based thereon, none of such persons failed to file any report under Section
16(a) of the Exchange Act with respect to the Company's most recent fiscal year.
<PAGE>
ELECTION OF DIRECTORS AND INFORMATION
AS TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
At the 1997 Annual Meeting, the stockholders of the Company will elect six
(6) directors, in each case to hold office until the next Annual Meeting and
until their respective successors shall be duly elected. To be elected a
Director, each nominee must receive a plurality of all votes cast at the
meeting. There will be submitted by the Board of Directors to the 1997 Annual
Meeting for election as Directors the following six (6) nominees:
Grant A. Dove
Thomas R. Filesi
Michael E. Cahr
William H. Daughtrey, Jr.
Rodes Ennis
Wayne Stevenson
All of the nominees are now Directors of the Company and were elected to their
present terms of office at the Annual Meeting of Stockholders in March 1996.
Certain information concerning each of these nominees is set forth below. In
the event any of the nominees becomes unable to serve as a Director, the proxy
will be voted in accordance with the best judgment of the person acting under
it; however, no circumstances are at present known which would render any
nominee unavailable.
The Directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Ag Position
e
<S> <C <C>
>
Grant A. Dove 68 Director and Chairman of the
Board
Thomas R. 61 Director, President and Chief
Filesi Executive Officer
Michael E. 56 Director
Cahr
William H. 56 Director
Daughtrey
Rodes Ennis 61 Director
Wayne 61 Director
Stevenson
William J. 46 Vice President, Finance and
Collinsworth Chief Financial Officer
Richard G. 43 Vice President, Engineering
Dahlberg
Thomas S. 50 Vice President, Operations
Garrett
Robert J. 45 Vice President, Worldwide
Kosobucki Sales and Marketing
</TABLE>
Mr. Dove was elected a Director of the Company in July 1989 and Chairman of
the Board in March 1993. He is currently a managing partner of Technology
Strategies & Alliance, a strategic planning and investment banking firm. He
spent 28 years with Texas Instruments, retiring in 1987 as Executive Vice
President. He then served as Chairman and Chief Executive Officer of
Microelectronics and Computer Technology Corporation ("MCC"), a research and
development consortium, retiring in 1992. He currently serves on the boards of
the Cooper Cameron Corporation, a public company engaged in oilfield services;
U.S. WEST, Inc., a public company engaged in telecommunications; Control Data
Systems, Inc., a public corporation engaged in computer systems integration and
Intervoice, Inc., a public company engaged in telecommunications equipment and
software sales. Mr. Dove received his Bachelor of Science in Electrical
Engineering from Virginia Polytechnic Institute.
Mr. Filesi became President and a Director of the Company in April 1991.
Before joining Optek, he was with Motorola, Inc. Semiconductor Products Sector
in Phoenix, Arizona and Austin, Texas, completing his tenure there as Director
of Manufacturing, RF Products. In 1996, he received the Entrepreneur of the
Year Award in the Turnaround Category for the Southwest Region. He received a
Bachelor of Science degree in Chemical Engineering from Johns Hopkins University
and did graduate studies in Management Science at Johns Hopkins and Arizona
State.
Mr. Cahr was elected a Director of the Company in August 1988. He is
President and Chief Executive Officer of Allscrips Pharmaceuticals, Inc., a
private company engaged in the sale of prepackaged pharmaceuticals, having
served in that capacity since January 1995. Until late 1994 he was Manager of
Venture Capital at Allstate Venture Capital in Northbrook, Illinois, having been
with Allstate since 1987. Mr. Cahr received a Bachelor of Arts from Colgate
University and a Master of Business Administration from Fairleigh Dickinson
University.
Mr. Daughtrey was elected a Director of the Company in March 1992. Mr.
Daughtrey is currently President of Princeton Associates, Inc., a management
consulting firm. Prior to founding Princeton Associates, Inc. in January 1991,
he was Group Managing Partner for Virginia/Maryland Management Consulting
Services at Coopers & Lybrand, Richmond, Virginia from December 1984. On
September 1, 1995, JGB Industries, Inc., a company for which Mr. Daughtrey had
formerly served as interim President and Chief Executive Officer, filed for
protection under Chapter 11 of the Bankruptcy Code. He received a Bachelor of
Science in Physics and a Master of Science in Nuclear Physics from Virginia
Polytechnic Institute and a Master of Business Administration in Finance from
the University of Connecticut.
Mr. Ennis was elected a Director of the Company in February 1987. Mr.
Ennis acts as a general management consultant and formerly served as President
of the Journeys and Hardy Divisions of Genesco, Inc. from March 1990 to December
1992, having served as President of the Journeys Division of Genesco, Inc. since
November 1988. Mr. Ennis is a certified public accountant and received a
Bachelor of Science degree in accounting from Bowling Green College of Commerce.
He currently serves as a Director of Tread Corporation.
Mr. Stevenson was elected a Director of the Company in September 1992. Mr.
Stevenson is the Chairman and Chief Executive Officer of CSI Control Systems
International, Inc. located in Carrollton, Texas, a firm engaged in the
manufacture and installation of environmental controls for the commercial
market, a position he has held since 1986. Mr. Stevenson received a Bachelor of
Science in Chemical Engineering from Louisiana Tech and is a registered
professional engineer in Texas and Louisiana.
Mr. Collinsworth joined the Company as Vice President, Finance, and Chief
Financial Officer in October 1996. Prior to his employment by the Company, and
from 1991, he was a financial consultant specializing in start-up and troubled
companies. In that role, he worked with several private companies and also
served as interim Chief Operating Officer and Chief Financial Officer for
Intellicall, Inc. from April 1992 to September 1993 and Chief Financial Officer
for Value Added Communications, Inc. ("VAC") from June 1994 to October 1994. In
November 1995, VAC filed for protection under Chapter 11 of the Bankruptcy Code.
Mr. Collinsworth is a certified Public Accountant and received a Bachelor of
Business Administration from the University of North Texas.
Mr. Dahlberg was elected Vice President, Engineering in March 1994. Mr.
Dahlberg has been employed by the Company since 1983 and has served in various
engineering capacities. He received a Bachelor of Science degree in Electrical
Engineering from Texas Tech University and is a Registered Professional Engineer
in the State of Texas.
Mr. Garrett joined the Company in October 1991 as Vice President,
Operations. In April 1988 he founded Garrett Consulting Group and was President
of that firm until December 1990, at which time it merged with Northwest
Technology Group, Inc. These companies provided comprehensive consulting
services to the micro-electronics and other high technology related industries.
Mr. Garrett received a Bachelor of Arts in Chemistry from Lamar University and
he has completed studies toward a Master of Science in Industrial Economics and
Management.
Mr. Kosobucki joined the Company as Vice President, Worldwide Sales and
Marketing in July 1995. Prior to his employment by Optek, he served in various
strategic marketing and sales capacities for Summagraphics Corp. from 1991,
serving during that time as a Vice President, Senior Vice President and finally,
Director of Strategic Sales and Product Marketing. Mr. Kosobucki received a
Bachelor of Science in Electrical Engineering from Cornell University and a
Master of Business Administration from the University of Michigan. He is a
Registered Professional Engineer in the State of New York.
Directors are elected annually and serve until their successors are duly
elected and qualified. Officers serve at the discretion of the Board, subject
to contractual rights. There is no family relationship between any Director,
nominee for Director or executive officer of the Company.
The Company's Board of Directors has appointed a Compensation Committee,
composed of the non-employee Directors Cahr, Ennis and Stevenson; an Audit
Committee, composed of the non-employee Directors Ennis, Daughtrey and
Stevenson; and a Board Affairs Committee composed of the non-employee Directors
Daughtrey, Cahr and Stevenson. The Compensation Committee administers the
Company's employee benefit plans and sets executive compensation. The Audit
Committee has been appointed to review the Company's financial statements and
its relationship with its independent auditors. The Board Affairs Committee
selects nominees for the Board of Directors to be presented for consideration to
the Company's stockholders and reviews the remuneration of non-employee
Directors; the committee will consider nominees recommended by stockholders
submitted in the manner provided for stockholders' proposals herein.
During the fiscal year ended October 25, 1996, the Compensation Committee
held three meetings, the Audit Committee held two meetings and the Board Affairs
Committee held two meetings. During the fiscal year ended October 25, 1996, the
Company's Board of Directors held a total of six meetings, and each incumbent
Director then serving attended at least 75% of the aggregate number of meetings
of the Board and its Committees, except Mr. Stevenson who attended 63% of such
meetings.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes monetary and non-monetary compensation
awarded to, earned by or paid to the Company's five most highly compensated
officers during the three fiscal years ended October 25, 1996:
<TABLE>
<CAPTION> Long Term
Compensation
Annual Awards
Compensati .
on
Number
of
Name and Principal Year Salary Bonu Shares
Position s Subject
to
Options
Granted
<S> <C> <C> < <C> <C>
C
>
Thomas R. Filesi 1996 $175,000 $175 10,000
,000
President and 1995 $175,000 $150 30,000
Chief Executive ,000
Officer
1994 $172,307 $110 300,000
,000
William J. 1996 $5,192 ( $25, 20,000
Collinsworth 1 000
)
Vice President,
Finance
and Chief
Financial Officer
Richard G. Dahlberg 1996 $91,400 $65, 8,000
000
Vice President, 1995 $91,400 $60, 20,000
Engineering 000
1994 $89,994 $40, 80,000
000
Thomas S. Garrett 1996 $115,000 $75, 8,000
000
Vice President, 1995 $115,000 $65, 20,000
Operations 000
1994 $113,231 $50, 70,000
000
Robert J. Kosobucki 1996 $89,811 ( $52, 8,000
2 000
)
Vice President, 1995 $36,538 ( $23, 30,000
World 3 000
)
Wide Sales and
Marketing
</TABLE>
(1)Represents compensation paid for October 1996
(2)Does not include $44,900 paid for moving expenses
(3)Represents compensation paid from July 1995 - October 27, 1995
Option Grants
The following table contains information about stock options granted to the
executive officers named in the preceding table during the fiscal year ended
October 25, 1996:
<TABLE>
<CAPTION> Potential
Percenta Realizable Value
Number ge of Exe at Assumed Annual
of Total rci Expir Rates
Shares Options se ation of Stock Price
Underlyi Granted Pri Appreciation
ng to ce for Option Term
Employee
s in
Name Options Fiscal Date 5% ($) 10%
Granted Year $/S ($)
har
e)
<S> <C> <C> <C> <C> <C> <C>
Thomas R. 10,000 5.7% $11 3/19/ $75,411 $190
Filesi .97 2006 ,323
William J. 20,000 11.5% $10 10/21 $129,150 $325
Collinswort .25 /2006 ,950
h
Richard G. 8,000 4.6% $11 3/19/ $60,329 $152
Dahlberg .97 2006 ,258
Thomas S. 8,000 4.6% $11 3/19/ $60,329 $152
Garrett .97 2006 ,258
Robert J. 8,000 4.6% $11 3/19/ $60,329 $152
Kosobucki .97 2006 ,258
</TABLE>
Option Exercises And Fiscal Year End Option Values
The following table reflects option exercises during the fiscal year ended
October 25, 1996, the number of shares underlying both exercisable and
unexercisable options as of the fiscal year end and the value of unexercised "in
the money" options as of the fiscal year end:
<TABLE>
Number of Shares Value of
Underlying Unexercised Unexercised
Options In the
at Fiscal Year End Money
Options
at Fiscal
Year End
(2)
Numbe
r of Value
Name Share Reali Exercisabl Unexercisab Exerc Unexe
s zed e le isabl rcisa
Qcqui (1) e ble
red
on
Exerc
ise
<S> <C> <C> <C> <C> <C> <C>
Thomas R. 100,0 $1,16 54,500 130,000 $444, $1,44
Filesi 00 8,500 590 6,250
William J. 0 0 0 20,000 0 $17,5
Collinswor 00
th
Richard G. 36,22 $307, 6,666 47,333 $33,8 $345,
Dahlberg 3 806 30 215
Thomas S. 46,66 $551, 19,666 44,667 $160, $320,
Garrett 6 125 830 496
Robert J. 3,333 $35,7 6,666 28,000 $33,8 $114,
Kosobucki 05 30 408
</TABLE>
(1)For purposes of calculating the value realized, the Company has used the
average of the bid and asked prices as reported by a market maker on the date
of exercise through April 22, 1996 and the closing price as reported by
Nasdaq thereafter.
(2)For purposes of calculating the value of unexercised "in the money" options,
the Company has used the closing price as reported by Nasdaq as of October
25, 1996.
Employment Agreements
The Company has entered into employment agreements with the President and
Vice Presidents of the Company. The agreements provide a term of three years
and two years, respectively, with evergreen provisions extending the term an
additional year at the end of each year of service unless either party gives
notice of intent not to renew at least six months and three months,
respectively, prior to the end of each year of service. These agreements also
provide for lump sum payment of the lesser of the compensation payable during
the balance of the term or the amount $1.00 less than a "parachute" payment
under the Internal Revenue Code if certain terms of the executives' employment
are altered and the executive elects to terminate after a change of control of
the Company.
All such agreements contain provisions assigning all discoveries by the
employee to the Company and restricting use or disclosure of confidential
information.
Compensation Committee Report on Executive Compensation
The Compensation Committee reviews and recommends to the Board of Directors
the compensation payable to the executive officers of the Company. The
determination of base salary has been based in the past largely upon that level
required to compete with other employers in the industry in which the Company is
engaged. The Compensation Committee annually reviews compensation payable to the
executives and the award of options and other nonmonetary benefits to those
individuals.
At present, the Compensation Committee has determined to hold the base
salaries of the Company's more highly paid personnel at a relatively constant
level from year to year. The intent of this policy is to have base salaries in
the lower range of competitive industry companies, but to use "at risk" cash
bonuses to augment total cash compensation when Optek performs well.
As a result, the chief executive officer and other officers of the Company
were awarded bonuses based upon their performance related to goals established
prior to the beginning of the fiscal year. The Committee believes that
providing key managerial personnel the means to achieve additional compensation
through these programs stimulates the kind of productive efforts evidenced
during the 1996 fiscal year.
Further, to provide longer-term incentives, the Compensation Committee has
awarded stock options which will provide a return to these executives as the
Company becomes successful. During 1996, the Committee approved awards of ten
year stock options to key managerial personnel in order to incentivize execution
of the long-term plan and to align their interests with those of the
stockholders.
Michael E. Cahr
Rodes Ennis
Wayne Stevenson
Directors Compensation
Non-employee Directors of the Company receive a yearly fee of $12,000 paid
in quarterly installments, $1,000 for each Directors' meeting attended, $2,000
per year committee chairman fee to be paid in quarterly installments, and $750
for each committee meeting attended outside of the regularly scheduled board
meetings and are reimbursed for travel expenses incurred in connection with each
such meeting.
Each non-employee Director of the Company is also awarded upon election at
an annual meeting of stockholders options to acquire up to 3,500 shares of the
Common Stock pursuant to the Company's Directors' Formula Award Plan. These
awards contain the following rights:
1.Stock Options - Options to acquire common stock which are not entitled
to treatment as incentive stock options under the Internal Revenue Code.
2.Reload Options - Options to reacquire shares of common stock which are
used to exercise stock options at the market price used in connection
with such exercise.
3.Alternative Appreciation Rights - Rights to acquire an equivalent
number of shares equal in present market value to the difference between
current market value and exercise price of the stock purchasable pursuant
to any of the preceding options.
The exercise price of all options granted is 100% of the fair market value of
the Company's Common Stock on the date of grant, determined on a formula based
upon the price of the Common Stock for the twenty trading days preceding the
date of the award. Each option awarded pursuant to the Directors' Plan vests
and becomes fully exercisable if such individual continues to serve as a
Director until the next annual meeting of stockholders. Options granted under
the Plan expire ten years from the date of grant, and no option may be exercised
by any person after the expiration of its term.
HISTORICAL STOCK PERFORMANCE
The following graph compares the cumulative stockholder return on the
Company's Common Stock with the cumulative return of (1) equity securities
listed on the NASDAQ Market Index and (2) other companies reporting results who
are classified in the same Standard Industrial Classification number as the
Company.
Compare 5-Year Cumulative Total Return
Among Optek Technology, Inc.
Nasdaq Market Index and SIC Code Index
<TABLE>
<CAPTION> 199 199 199 199 199
2 3 4 5 6
<S> <C> <C> <C> <C> <C>
Optek 107 53. 84. 415 630
Technology, .69 85 62 .38 .77
Inc.
Nasdaq 96. 127 135 160 188
Market Index 87 .13 .16 .32 .27
SIC Code 122 189 227 424 456
Index .01 .55 .42 .25 .96
</TABLE>
<PAGE>
INFORMATION CONCERNING THE DIRECTORS' FORMULA COMPENSATION PLAN
The Company's Directors' Formula Compensation Plan (the "Directors' Plan")
will be submitted to the stockholders of the Company for their approval and
ratification at the Annual Meeting of Stockholders to be held on March 19, 1997.
The affirmative vote of stockholders holding a majority of the shares of Common
Stock represented, in person or by proxy, at a meeting at which a quorum shall
be present is required for such approval.
General
The Board of Directors approved the Directors' Plan for submission to the
stockholders on December 10, 1996. The Directors' Plan, as approved, provides
for the reservation and issuance of up to 100,000 shares of the Company's Common
Stock. The closing price for shares of the Company's Common Stock on January
20, 1997 as reported by the Nasdaq National Market System was $10.00 per share.
Eligibility
Each individual elected or re-elected to serve as a Directory of the
Company who is a Non-Employee Director (as defined in Rule 16b-3 promulgated by
the Securities and Exchange Commission) is eligible to participate under this
Plan. Currently, four persons who would be eligible to participate under the
Directors' Plan have been nominated to positions as Directors.
Plan Elections
Under the Directors' Plan, each participant may by written election to the
Company delivered by December 31 of a calendar year elect, in lieu of all or
part of the annual retainer otherwise payable to him during the following
calendar year:
(a)to defer payment of such amounts until after he has ceased to be a
Director, to be paid in ten annual installments bearing interest at the prime
rate or upon his death;
(b)to receive shares of the Company's Common Stock, the number of shares to
equal the amount of the retainer for which an election is given divided by the
greater of (i) the fair market value of the Company's Common Stock on the date
of grant, determined on a formula basis upon the price of the Common Stock for
the twenty trading days preceding the date of the award; or (ii) $5.00 per
share;
(c)to receive options to purchase the Company's Common Stock, as described
below.
Stock Options
A participant may elect to receive stock options rather than cash or shares
of Common Stock. The Directors' Plan has been designed so that participants in
effect pay the market value for optioned shares (or higher if the market price
falls below a threshold price) on the date their retainer payment would
otherwise be made. Half of that payment is made through the exchange of the
participant's retainer payment for issuance of the option; the balance is
represented by the exercise price. These calculations and other terms are made
as follows:
(a)Exercise Price. The exercise price of all options granted under the
Plan is 50% of the greater of (i) the fair market value of the Company's Common
Stock on the date of grant, determined on a formula basis upon the price of the
Common Stock for the twenty trading days preceding the date of the award or (ii)
$5.00 per share.
(b)Number of Shares. The number of shares subject to the option shall be
determined in a manner intended to approximate the value of the retainer payment
as of the date of payment by dividing the amount of the retainer for which
election is made by the difference between the market price on the date of grant
and the exercise price.
(c)Exercise of Options. Each option awarded pursuant to the Directors'
Plan vests upon issuance. Each exercise of an option must be made by written
notice to the Company. The exercise price may be paid in cash or in whole or in
part in the Company's Common Stock at its fair market value determined on the
formula basis previously described.
(c)Termination of Options. Options granted under the Plan expire ten years
from the date of grant, and no option may be exercised by any person after the
expiration of its term.
Amendment of the Plan
The Directors' Plan may be amended from time to time by the Board of
Directors; provided, however, that the approval of the holders of a majority of
the Common Stock present or represented and entitled to vote at a duly held
meeting of the stockholders or by a consent of stockholders having the effect
thereof shall be required if any such amendment would (i) materially increase
the benefits accruing to participants under the Directors' Plan; (ii) materially
increase the number of securities which may be issued under the Directors' Plan;
or (iii) materially modify the requirements as to eligibility for participation
under the Directors' Plan; provided, further, that the Directors' Plan shall not
be amended more frequently than one every six months, except to comply with tax
and benefits laws.
Term of Plan
The Directors' Plan shall become effective on the date approved by the
holders of a majority of shares at the 1997 Annual Meeting of Stockholders. No
awards shall be made after the last day of Optek's 2006 fiscal year; provided,
however, that the Plan and all awards made prior to such date shall remain in
effect until such awards have been satisfied.
Tax Information
Options awarded under the Directors' Plan are not intended to qualify for
treatment as incentive stock options and will therefore not be entitled to the
tax benefits afforded such qualified options.
In general, unless an option has a readily ascertainable fair market value
at grant, a recipient is not required to recognize or report any gain upon the
initial issuance of the option. Since options for Optek Common Stock are not
actively traded, the mere issuance of options under the Directors' Plan should
not result in a taxable event.
Typically, the initial taxable event will occur upon exercise of the
option. Each recipient of an option under the Directors' Plan will be required
to report as compensation the amount realized when the option is exercised,
calculated as the difference between the market value of the common stock
acquired on the date of exercise and the aggregate exercise price.
Conversely, upon any exercise of options, the Company will be entitled to a
tax deduction equal to the amount reportable by the individual, subject,
however, to withholding requirements. Under the terms of the Directors' Plan,
the Company has the right to require a participant to pay all applicable
withholding taxes prior to delivery of any shares acquired upon exercise of an
option or to withhold the number of shares sufficient to satisfy such
requirements.
However, because a participant by electing to receive an option thereby
forgoes the payment of cash in the following calendar year, the Internal Revenue
Service might seek to characterize the receipt of the option as compensation in
lieu of cash. The Company believes such characterization is not likely since
the Internal Revenue Service has previously recognized elections to defer cash
compensation, if elected in advance of payment, and the Company would be
entitled to a matching deduction if the receipt of the option was treated as
fully taxable to the individual.
After the exercise of a Stock Option, any stock acquired will be treated as
a capital asset of the participant. Upon resale, the individual would be
required to report the difference between the resale price and the market value
of the Common Stock on the date of exercise as a capital gain (or loss) for
income tax purposes.
Upon the death of an optionee who has not exercised his or her option, the
value of such option (determined under applicable Treasury regulations) will be
includable in the optionee's estate for federal estate tax purposes. Upon the
exercise of such option, the holder's basis in the option shares will include
the value of the option included in the estate plus the price paid for the
option shares.
Prior Awards
No awards have been made under the Directors' Plan to date. Information
concerning previous issuances of options and warrants is set forth herein under
"Executive Compensation - Directors Compensation."
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected KPMG Peat Marwick LLP as
the Company's auditors for fiscal 1997. Representatives of KPMG Peat Marwick
are expected to be present at the Annual Meeting of Stockholders to be held on
March 19, 1997 to make any statement if they desire to do so and to respond to
any appropriate questions of the stockholders.
STOCKHOLDERS' PROPOSALS
The day by which proposals of stockholders intended to be presented at the
1998 annual meeting of stockholders must be received by the Company for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting is September 22, 1997.
It is important that proxies be returned promptly. Stockholders are
requested to date, sign and return the enclosed proxy in the enclosed envelope,
to which no postage need be affixed if mailed in the United States. If you
attend the 1997 Annual Meeting, you may revoke your proxy and vote in person
if you so desire; otherwise your proxy will be voted for you.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas R. Filesi, President
Carrollton, Texas
January 20, 1997
NOTICE: Upon written request from a stockholder of record at January 20, 1997
(or from any beneficial owner representing that he/she is or was entitled to
vote at the meeting), the Company will furnish without charge a copy of its
Annual Report on Form 10-K for the fiscal year ended October 25, 1996, as filed
with the Securities and Exchange Commission, including financial statements and
schedules thereto and a list of exhibits not contained therein. The Company
will furnish copies of the full text of any of the exhibits described in the
list of exhibits accompanying the Annual Report on Form 10-K, if requested, upon
payment in advance of the prescribed fee limited to the Company's reasonable
expenses incurred in providing copies of the exhibits. Requests should be
directed to:
William J. Collinsworth
Vice President - Finance
Optek Technology, Inc.
1215 West Crosby Road
Carrollton, Texas 75006
