<PAGE>
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
Boston Acoustics, Inc.
__________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
__________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount of which
the filing fee is calculated and state how it was determined):
_____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
5) Total fee paid:
_____________________________________________________________________
/ / 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:
_____________________________________________________________________
<PAGE>
July 10, 1995
BOSTON ACOUSTICS, INC.
70 BROADWAY
LYNNFIELD, MA 01940
Dear Stockholder:
It is my pleasure to invite you to attend the Annual Meeting of Stockholders
of Boston Acoustics, Inc. (the "Company"). The Meeting will be held at the
Company on Tuesday, August 15, 1995, at 3:00 p.m.
The notice of meeting and proxy statement which follow describe the business
to be transacted at the Meeting. In addition, we plan to give you a report on
the status of the Company's business. Stockholders will have an opportunity to
comment and ask questions during the Meeting.
It is important that your shares be represented at the Meeting, regardless
of the number you may hold. Therefore, whether or not you plan to attend, please
sign, date and return the proxy card as soon as possible. This will not prevent
you from voting your shares in person if you do come to the Meeting.
I look forward to seeing you on August 15th.
Sincerely yours,
FRANCIS L. REED
CHIEF EXECUTIVE OFFICER
<PAGE>
BOSTON ACOUSTICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 15, 1995, 3:00 P.M.
You are hereby notified that the Annual Meeting of Stockholders of Boston
Acoustics, Inc. (the "Company") will be held on August 15, 1995 at 3:00 p.m. at
the offices of the Company, 70 Broadway, Lynnfield, Massachusetts, to consider
and act upon the following matters:
1. To fix the number of directors of the Company at five (5) and to elect
five (5) directors for the ensuing year.
2. To ratify the action of the Directors in appointing Arthur Andersen LLP
as auditors for the Company.
3. To act upon such other business as may properly come before the meeting
or any adjournment thereof.
Even if you plan to attend the Meeting personally, please be sure to sign,
date and return the enclosed proxy in the enclosed envelope to:
Bank of Boston
Shareholders Services Division
P.O. Box 1719
Boston, MA 02105
Only stockholders of record on the books of the Company at the close of
business on July 5, 1995 are entitled to receive notice of, and to vote at, the
Annual Meeting and at any adjournment thereof.
By order of the Board of Directors,
JOSEPH D.S. HINKLEY,
CLERK
July 10, 1995
IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF ADDITIONAL
PROXY SOLICITATION, PLEASE VOTE, DATE AND SIGN YOUR PROXY AND RETURN IT PROMPTLY
IN THE ENVELOPE PROVIDED EVEN IF YOU PLAN TO ATTEND THE MEETING PERSONALLY. IF
YOU DO ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN
PERSON, YOU MAY DO SO. YOUR COOPERATION IS GREATLY APPRECIATED.
<PAGE>
BOSTON ACOUSTICS, INC.
EXECUTIVE OFFICES
70 BROADWAY
LYNNFIELD, MA 01940
PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This proxy statement and the accompanying proxy form are being mailed by
Boston Acoustics, Inc. (the "Company") to the holders of record of the Company's
outstanding shares of Common Stock, $.01 par value ("Common Stock"), commencing
on or about July 10, 1995. The accompanying proxy is solicited by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on August 15, 1995 (the "Meeting") and any adjournments thereof. The cost
of solicitation of proxies will be borne by the Company. Directors, officers and
employees may assist in the solicitation of proxies by mail, telephone,
telegraph, and personal interview without additional compensation.
When a proxy is returned, prior to or at the Meeting, properly signed, the
shares represented thereby will be voted by the proxies named in accordance with
the stockholder's instructions indicated on the proxy card. You are urged to
specify your choices on the enclosed proxy card. If the proxy is signed and
returned without specifying choices, the shares will be voted FOR the election
of Directors as set forth in this Proxy Statement, FOR proposal 2 and in the
discretion of the proxies as to other matters that may properly come before the
Meeting. SENDING IN A PROXY WILL NOT AFFECT A STOCKHOLDER'S RIGHT TO ATTEND THE
MEETING AND VOTE IN PERSON. A proxy may be revoked by notice in writing
delivered to the Clerk of the Company at any time prior to its use, by a
duly-executed proxy bearing a later date, or by voting in person by ballot at
the Meeting. A stockholder's attendance at the Meeting will not by itself revoke
a proxy.
VOTING SECURITIES AND RECORD DATE
The Company has one class of Common Stock outstanding. Each share of Common
Stock is entitled to one vote. The Board of Directors has fixed July 5, 1995 as
the record date for the Meeting. Only holders of record of the Company's Common
Stock on the record date are entitled to notice of and to vote at the Meeting.
On the record date, there were 4,326,704 shares of Common Stock issued and
outstanding.
The Company's By-laws provide that a quorum shall consist of the
representation in person or by proxy at the Meeting entitled to vote a majority
in interest of the votes that are entitled to be cast at the Meeting.
The election of directors is by plurality of the votes cast at the Meeting
and the ratification of the appointment of Arthur Andersen LLP as the Company's
auditors requires a vote of the majority of the Common Stock represented in
person or by proxy at the Meeting and voting thereon. With regard to the
election of directors, votes may be left blank, cast in favor or withheld; votes
that are left blank will be excluded entirely from the vote and will have no
effect. Votes that are withheld will have the effect of a negative vote.
Abstentions may be specified on all proposals (other than the election of
directors) and will be counted as present for purposes of the proposal on which
the abstention is noted. Because the proposal to ratify the appointment of
Arthur Andersen LLP as the Company's auditor's requires the approval of a
majority of the votes properly cast at the Meeting, either in person or by
proxy, abstentions will have the effect of a negative vote. Broker non-votes
(i.e., shares held by a broker or nominee which are represented at the Meeting,
but with respect to which the broker or nominee is not empowered to vote on a
particular proposal) will be counted in determining a quorum for each proposal.
However, broker non-votes will be treated as unvoted shares and, accordingly,
will not be counted in determining the outcome of any proposal which requires
the affirmative vote of a majority of the votes cast.
<PAGE>
The Company's Annual Report to Stockholders, including financial statements
for the fiscal year ended March 25, 1995, is being mailed to stockholders of
record of the Company concurrently with this proxy statement. The Annual Report
is not, however, a part of the proxy soliciting materials.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
One of the purposes of the Meeting is to fix the number of directors of the
Company at five (5) and to elect five (5) directors to serve until the next
annual meeting of stockholders and until their successors shall have been duly
elected and qualified. It is intended that the proxies solicited by the Board of
Directors will be voted in favor of the five (5) nominees named below, unless
otherwise specified on the proxy card. All of the nominees are currently members
of the Board and have consented to be named and to serve if elected. There are
no family relationships between any nominees, Directors or executive officers of
the Company except that Mr. Reed and Mrs. Reed are married to each other and
Paul F. Reed, an executive officer, is their son.
The Board knows of no reason why any of the nominees will be unavailable or
unable to serve as a Director, but in such event, proxies solicited hereby will
be voted for the election of another person or persons to be designated by the
Board of Directors.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED
BELOW.
The following are summaries of the background and business experience and
descriptions of the principal occupations of the nominees:
Francis L. Reed (age 62) has been a Director and Treasurer since co-founding
the Company in February 1979. He served as President of the Company from its
inception until April 1986, when he became Chief Executive Officer. Mr. Reed was
formerly a Vice President of Advent Corporation, a manufacturer of loudspeakers
and other audio equipment.
Andrew G. Kotsatos (age 55) has been a Director and Assistant Clerk since
co-founding the Company in February 1979. He also served as Executive Vice
President of the Company until April 1986, when he became President. Mr.
Kotsatos previously held positions with two other audio manufacturers, KLH
Research and Development Corporation and Advent Corporation. His last position
at Advent was Audio Products Manager and Chief Speaker Designer.
Fred E. Faulkner, Jr. (age 48) has been a Director of the Company since
December 1986. Mr. Faulkner has been employed by the Millipore Corporation, a
leader in separation technology, for more than the past nine years. Between 1985
and 1994 he served Millipore as Vice President of Engineering of its Products
Division. Since 1994 he has been Vice President of Technical Operations of
Millipore's Microelectronics Division.
John G. Markos (age 68) has been a Director of the Company since August of
1987. Mr. Markos is the President and co-founder of Yell-O-Glow Corporation, a
produce distributor.
Dorothea T. Reed (age 60) has been a Director of the Company since August
1988. Mrs. Reed was Accounting Manager of the Company from June 1979 to December
1986.
2
<PAGE>
BOARD OF DIRECTORS
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met six times during the fiscal year ended March 25,
1995. The Board of Directors has standing Audit and Compensation Committees. The
Board has no nominating committee. All of the directors attended 75% or more of
the meetings of the Board and of the Board committees on which they served
during the fiscal year ended March 25, 1995.
The Compensation Committee, which was first constituted on May 11, 1993, and
currently consists of Mrs. Reed and Messrs. Faulkner and Markos, is responsible
for evaluating compensation plans for employees, management and directors, and
making recommendations on compensation to the Board. Prior to the creation of
the Compensation Committee, all compensation decisions were made by the full
Board of Directors, including decisions made prior to May 11, 1993 relative to
the compensation reported under the caption "Executive Compensation" elsewhere
herein. The Compensation Committee met once during the fiscal year ended March
25, 1995. The Audit Committee, which consists of Mrs. Reed and Messrs. Faulkner
and Markos, oversees the accounting and audit functions of the Company,
including matters relating to the appointment and activities of the Company's
auditors. The Audit Committee met once during the fiscal year ended March 25,
1995.
COMPENSATION OF DIRECTORS
Each Director who is not an officer of the Company is entitled to an annual
fee of $6,000, and an additional annual fee of $1,500 for service on the Audit
Committee and an additional annual fee of $1,000 for service on the Compensation
Committee on which he or she serves. In fiscal 1995, Mrs. Reed also received the
benefit of $5,018 in split dollar insurance premiums paid by the Company with
respect to life insurance on her life.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the amount of Common Stock owned or deemed
beneficially owned as determined under the rules of the Securities and Exchange
Commission (the "SEC"), directly or indirectly, by each Director, the Chief
Executive Officer, the three other executive officers listed in the Summary
Compensation Table elsewhere herein and by all Directors and executive officers
of the Company and its subsidiaries, as a group. In accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, a person is deemed to be
the beneficial owner, for purposes of this table, of any shares of Common Stock
if he or she has or shares voting power or investment power with respect to such
security or has the right to acquire beneficial ownership at any time within
sixty days of July 5, 1995. As used herein "voting power" is the power to vote
or direct the voting of shares, and "investment power" is the power to dispose
of
3
<PAGE>
or direct the disposition of shares. Except as indicated in the notes following
the table below, each individual named has sole voting and investment power with
respect to the shares listed as being beneficially owned by such individual.
<TABLE>
<CAPTION>
NO. COMMON SHARES
AND NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- - ----------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Andrew G. Kotsatos........................................................... 963,344(1) 22.1%
70 Broadway
Lynnfield, MA 01940
Francis L. Reed.............................................................. 952,800(2) 21.8
70 Broadway
Lynnfield, MA 01940
Dorothea T. Reed............................................................. 952,800(3) 21.8
32 Apple Hill Lane
Lynnfield, MA 01940
T. Rowe Price Associates, Inc................................................ 319,800(4) 7.4
100 East Pratt Street
Baltimore, MD 21202
Moses A. Gabbay.............................................................. 38,696(5) *
Ira S. Friedman.............................................................. 11,500(6) *
John G. Markos............................................................... 23,000(7) *
Fred E. Faulkner, Jr......................................................... 600(8) *
All Directors and Executive Officers as a group (11 persons)................. 2,022,540(9) 45.7
<FN>
* Indicates less than 1% ownership.
(1) Includes 242,836 shares owned by Mr. Kotsatos' wife and children as to
which beneficial ownership is disclaimed. Also includes 27,520 shares that
may be acquired upon exercise of options.
(2) Includes 245,410 shares owned by Dorothea T. Reed, Mr. Reed's wife and a
director, as to which beneficial ownership is disclaimed. Includes 36,480
shares that may be acquired upon exercise of options. Also includes 7,166
shares held jointly with Mr. Reed's wife. See footnote 3 below.
(3) Includes 663,744 shares of Common Stock and 36,480 shares that may be
acquired upon exercise of options, beneficially owned by Francis L. Reed,
Mrs. Reed's husband, who is also a director and the CEO, as to which
beneficial ownership is disclaimed. Also includes 7,166 shares which are
held jointly with Mr. Reed. See footnote 2 above.
(4) This information is as of June 15, 1995, and is derived from a letter dated
June 16, 1995, from Dorothy B. Jones, Assistant Vice President, Compliance
Department, T. Rowe Price Associates, Inc. ("Price Associates"). In such
letter, Ms. Jones represents that Price Associates has sole voting power
for 10,500 shares and sole dispositive power for 319,800 shares. These
securities are owned by various individual and institutional investors
which Price Associates serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, as amended,
Price Associates is deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(5) Includes 5,000 shares as to which Mr. Gabbay shares voting and investment
power with his son and 5,000 shares as to which Mr. Gabbay shares voting
and investment power with his daughter. Also includes 8,000 shares that may
be acquired upon exercise of options.
(6) Includes 8,000 shares that may be acquired upon exercise of options.
(7) Includes 5,000 shares owned by a corporation of which Mr. Markos is a
principal stockholder, officer and director and as to which beneficial
ownership is disclaimed. Also includes 18,000 shares owned by Mr. Markos'
wife as to which beneficial ownership is disclaimed.
(8) Includes 400 shares owned by Mr. Faulkner's children as to which beneficial
ownership is disclaimed.
(9) Includes 100,000 shares that can be acquired upon the exercise of certain
options held by Directors or executive officers of the Company. See
footnotes 1-3 and 5-8 above.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Directors, executive officers and persons who own more than 10% of the
outstanding shares of Common Stock of the Company to file with the Securities
and Exchange Commission and NASDAQ reports of ownership and changes in ownership
of voting securities of the Company and to furnish copies of such reports to the
Company. Based solely on a review of copies of such reports furnished to the
Company or written representations from certain persons that no reports were
required for those persons, the Company believes that all Section 16(a) filing
requirements were complied with during the fiscal year ended March 25, 1995,
except that, through inadvertence, Robert A. Clark, Vice President of
Manufacturing, did not timely file his Form 3 in fiscal 1995 and he failed to
report 100 shares of Common Stock held by his son on his Form 3. Mr. Clark filed
an amendment to Form 3 to report the shares of the Company's Common Stock held
by his son, although Mr. Clark disclaims beneficial ownership of such shares.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables and notes present the compensation provided by the
Company to its Chief Executive Officer and the Company's most highly-compensated
executive officers who earned total compensation of $100,000 or more (four
persons, including the Chief Executive Officer), for the last three fiscal
years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------
OTHER ANNUAL ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR(1) $ $ ($)(2) $
- - ---------------------------------------------------- ----------- --------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Francis L. Reed..................................... 1995 200,200 122,139 8,676 69,018(3)
1994 200,200 58,075 -- 9,606
(Chief Executive Officer & Treasurer) 1993 200,200 64,081 -- 9,635
Andrew G. Kotsatos.................................. 1995 170,500 61,394 23,393 33,980(4)
1994 170,500 49,459 -- 33,887
(President and Assistant Clerk) 1993 170,500 54,574 -- 33,905
Moses A. Gabbay..................................... 1995 138,750 29,480 -- 146(5)
1994 128,333 22,727 -- --
(Vice President--Engineering) 1993 118,750 22,717 -- --
Ira S. Friedman..................................... 1995 124,154 25,817 -- 118(6)
1994 105,289 18,568 -- --
(Vice President--Marketing) 1993 95,384 18,261 -- --
<FN>
(1) The Company's fiscal year ends on the last Saturday of March.
(2) Reflects car allowances provided by the Company.
(3) This includes $69,108 paid in premiums for two life insurance policies,
each with split dollar arrangements, one covering the life of Mr. Reed and
the other covering the survivor of Mr. Reed and his spouse. The Company,
Mr. Reed and Mr. Reed's spouse entered into agreements concerning the
respective life insurance policies pursuant to which the Company will
receive, in the event of the insureds' deaths, an amount equal to the
aggregate amount of its premium payments under the respective policies and
the beneficiary of the policies will receive the excess.
(4) This includes $33,802 paid in premiums for two life insurance policies,
each with split dollar arrangements, one covering the life of Mr. Kotsatos
and the other covering the survivor of Mr. Kotsatos and his spouse. The
Company, Mr. Kotsatos and Mr. Kotsatos' spouse entered into agreements
concerning the life insurance policies pursuant to which the Company will
receive, in the event of the insureds' deaths, an amount equal to the
aggregate amount of its premium payments under the respective policies and
the beneficiary of the policies will receive the excess. This also includes
$178 contributed by the Company under a defined contribution plan
established under Section 401(k) of the Internal Revenue Code, as amended
(the "Code").
(5) Reflects Company contributions under a defined contribution plan
established under Section 401(k) of the Code.
(6) Reflects Company contributions under a defined contribution plan
established under Section 401(k) of the Code.
</TABLE>
6
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The Company granted no stock options to any of the named executive officers
of the Company during the fiscal year ended March 25, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT FY-END (#) AT FY-END ($)(2)
ACQUIRED REALIZED ------------------------- -------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------- --------------- -------------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Francis L. Reed.......... -- -- 36,480 9,120 286,368 71,592
Andrew G. Kotsatos....... -- -- 27,520 6,880 216,032 54,008
Moses A. Gabbay.......... -- -- 8,000 -- 70,000 --
Ira S. Friedman.......... 18,500 174,250 8,000 -- 70,000 --
<FN>
(1) Value realized equals fair market value on the date of exercise, less the
exercise price, times the number of shares acquired without deducting taxes
or commissions paid by employee.
(2) Value of unexercised options equals fair market value of the shares
underlying in-the-money options on March 24, 1995 ($17.75 per share), which
was the last trading day of the Company's fiscal year, less exercise price,
times the number of options outstanding.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dorothea T. Reed, a member of the Compensation Committee of the Board of
Directors, is married to Francis L. Reed, a Director and executive officer, and
is the mother of Paul F. Reed, an executive officer of the Company.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE STOCK PERFORMANCE GRAPH CONTAINED ELSEWHERE HEREIN SHALL NOT BE INCORPORATED
BY REFERENCE INTO ANY SUCH FILINGS NOR SHALL THEY BE DEEMED TO BE SOLICITING
MATERIAL OR DEEMED FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
REPORT OF THE COMPENSATION COMMITTEE
During the fiscal year ended March 25, 1995, the Compensation Committee of
the Board of Directors (the "Committee") was responsible for establishing and
administering the compensation policies which govern annual salary, bonuses, and
stock-based incentives (currently stock options) for directors and officers.
OVERVIEW
The Company has historically established levels of executive compensation
that provide for a base salary intended to allow the Company to hire and retain
qualified management. The Company has also
7
<PAGE>
provided annual cash incentive bonuses based on the Company's performance during
the fiscal year to reward executives for their contributions to the Company's
achievements. From time to time the Company has also granted stock options to
executives and key employees to keep the management focused on the stockholders'
interests. The Committee believes that the Company's past and present executive
compensation practices provide an overall level of compensation that is
competitive with companies of similar size, complexity and financial performance
and that its executive compensation practices have allowed it to retain key
personnel whose contribution has maintained and increased the Company's
profitability.
In fiscal 1995, the Committee determined the compensation for senior
executive officers, other than the base salary and bonus of the Chief Executive
Officer and the President, based largely on recommendations by the Company's
Chief Executive Officer and President. In view of their substantial ownership of
the Company's Common Stock, the Chief Executive Officer and President have not,
in four of the last five fiscal years, been awarded, or requested, increases in
their compensation (for changes in the cost of living or otherwise) to track
increases in compensation of executives of comparable companies. The annual base
salary compensation of the Chief Executive Officer and the President has, in
fact, not increased since fiscal 1990. However, in fiscal 1995, following its
annual review of compensation (both annual and long-term) of all of the
Company's executives and employees, the Compensation Committee declared an
additional bonus to the Chief Executive Officer based on the continued superior
performance of the Company and to permit the Chief Executive Officer and his
wife to purchase an additional insurance policy on the life of his wife so that
in the event of her death her estate will have increased liquidity to meet its
tax obligations so as to reduce or eliminate the need to resort to a forced sale
of the Company's Common Stock.
The Compensation Committee expects to continue its annual review of the
compensation (both annual and long-term) of all the Company's executives and
employees to assure that all of the Company's executives and employees continue
to be properly motivated to serve the interests of the Company's stockholders.
EXECUTIVE OFFICER COMPENSATION
BASE SALARY. Base salary is generally set within the ranges of salaries of
executive officers with comparable qualifications, experience and
responsibilities at other companies of similar size, complexity and
profitability taking into account the position involved and the level of the
executive's experience. In addition, consideration is given to other factors,
including an officer's contribution to the Company as a whole. Since fiscal year
1994, the base salary for the named executive officers, other than the Chief
Executive Officer and the President, increased on average approximately $14,600.
The Committee awarded such increases to keep the Company a competitive employer
and to allow for increases in the cost of living. As noted above, there have
been no increase in the base salary of the Chief Executive Officer or President
during the last five fiscal years.
ANNUAL BONUS COMPENSATION. Over the past five fiscal years, the Company has
awarded cash bonuses to its executive officers on a discretionary basis. In
determining bonus awards, the Committee considers the financial and nonfinancial
achievements of the Company, including the areas of revenue growth,
profitability, expansion of the Company's markets and new product introductions.
Prior to fiscal 1995, the Company maintained relatively even bonus levels
for the executive officers named in the Summary Compensation Table, including
the Chief Executive Officer and the President. The Committee awarded an
additional bonus to the Chief Executive Officer based upon the continued
outstanding financial and non-financial achievements of the Company in fiscal
1995. The Committee also increased the cash bonuses of the other executive
officers. The Committee believes that the Company's performance, in particular
its revenue growth and profitability, and the individual performances of the
executive officers,
8
<PAGE>
merit such increases. The Committee also believes that bonuses are necessary to
keep total compensation of the Company's executives competitive with executive
compensation at similarly situated companies. It is expected that bonus
compensation will continue to move in parallel with increases in base salary
until such time as the Company's financial results, the individual performance
of the executive or the job market for key executives, warrants a change in the
percentage of total compensation which is comprised of bonuses.
LONG TERM INCENTIVES. The Committee believes that the long-term incentives
awarded by the Company in the last three fiscal years were generally below the
levels found at the comparable companies. Currently, stock options are the
Company's primary long-term incentive vehicle. Stock option awards have been
made from time to time to persons who currently serve as middle and upper level
managers, including the Chief Executive Officer and other executive officers
named in the Summary Compensation Table. The size of awards has historically
been based on position, responsibilities, and individual performance.
The Committee is aware that the Company's grants of stock options are less
frequent and smaller in size than the grants of many comparable companies, but
the Board believes that the overall mix of compensation components has been
adequate. However, it is expected that the Compensation Committee will continue
to monitor this aspect of compensation (along with other key aspects of
compensation) to assure that all of the Company's key employees continue to
focus on the profitability of the Company and, thus, the interests of the
Company's stockholders.
On January 12, 1995 the Board of Directors authorized the implementation of
a defined contribution plan pursuant to the provisions of Section 401(k) of the
Internal Revenue Service. On March 1, 1995, the Company established the Boston
Acoustics, Inc. 401(k) Retirement Plan (the "Plan"). Pursuant to the Plan, the
Company may make matching contributions to the Plan of 25% of participants'
contributions, up to 5% of a participant's compensation for the Plan year.
The Compensation Committee
Fred E. Faulkner, Jr.
John G. Markos
Dorothea T. Reed
9
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of the
Company's Common Stock against the cumulative total return on the CRSP Total
Return Index for the NASDAQ Stock Market (U.S. Companies) and a Company-selected
peer group index that includes: Harmon Industries, Inc., Polk Audio, Inc., and
International Jensen, Inc. The peer group index was formed on a weighted average
basis based on market capitalizations, adjusted at the end of each year.
International Jensen, Inc. became a public company on February 12, 1992, and was
accorded no weight in the index for fiscal years 1990 and 1991. Cumulative total
return is measured assuming an initial investment of $100 on March 31, 1990 and
reinvestment of dividends.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL
RETURN AMONG BOSTON ACOUSTICS, INC.,
THE NASDAQ MARKET-US INDEX AND A PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BOSTON ACOUSTICS PEER GROUP NASDAQ STOCK MARKET-US
<S> <C> <C> <C>
Mar-90 100 100 100
Mar-91 131 51 114
Mar-92 202 90 146
Mar-93 194 87 167
Mar-94 202 127 181
Mar-95 204 170 201
</TABLE>
10
<PAGE>
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen LLP as
auditors of the Company for the fiscal year ending March 30, 1996 and further
directed that management submit the selection of auditors for ratification by
the stockholders. Arthur Andersen LLP were the Company's auditors for the fiscal
year ended March 25, 1995.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting, with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY
THE CHOICE OF ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On April 14, 1995, the Company made a loan to Mr. Kotsatos, a director and
executive officer of the Company, to assist him in meeting certain tax
obligations. The loan bore an interest rate of 9% per annum. On April 25, 1995,
Mr. Kotsatos made a payment of $100,275 to the Company, representing the full
amount due in connection with the loan and the largest amount ever outstanding
on the loan.
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Any stockholder proposal intended to be presented for consideration at the
Company's 1996 annual meeting of stockholders, scheduled to be held on August
19, 1995, and included in the Company's proxy statement, must submit the
proposal to the Company so that it is received at the executive offices of the
Company not later than March 22, 1996. Any stockholder desiring to submit a
proposal should consult applicable regulations of the Securities and Exchange
Commission.
OTHER MATTERS
As of the date of this proxy statement, management of the Company knows of
no matter not specifically referred to above as to which any action is expected
to be taken at the Meeting of stockholders. It is intended, however, that the
persons named as proxies will vote the proxies, insofar as the same are not
limited to the contrary, in regard to such other matters and the transaction of
such other business as may properly be brought before the Meeting, as seems to
them to be in the best interests of the Company and its stockholders.
11
<PAGE>
P R O X Y
BOSTON ACOUSTICS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR
ANNUAL MEETING OF STOCKHOLDERS -- AUGUST 15, 1995
The undersigned hereby appoint Francis L. Reed and Andrew G.
Kotsatos, and each of them, with full power of substitution, proxies of
the undersigned to represent and vote all shares of stock of BOSTON
ACOUSTICS, INC. which the undersigned would be entitled to vote, if
personally present, at the Annual Meeting of Stockholders of said
Corporation, to be held at the Company's offices at 70 Broadway,
Lynnfield, Massachusetts on August 15, 1995 at 3:00 P.M., and at any
adjournments thereof, as directed below, on all matters coming before
said meeting.
This proxy when properly executed will be voted as directed on the
reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE REVERSE SIDE, FOR
PROPOSAL 2 AND IN THE DISCRETION OF THE PROXIES ON ITEM 3.
The undersigned hereby revokes all proxies heretofore given by the
undersigned to vote at said meeting or any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SEE REVERSE
SIDE
<PAGE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. To fix the number of directors of the Company at five and to elect five
directors for the ensuing year.
NOMINEES: Francis L. Reed, Andrew G. Kotsatos, Fred E. Faulkner, Jr., John
G. Markos, Dorothea T. Reed.
FOR / / WITHHELD / /
/ /
-----------------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
FOR AGAINST ABSTAIN
/ / / / / /
2. To ratify the action of the
Directors in selecting Arthur
Andersen LLP as auditors for the
Company.
3. To transact such other business as may properly come before the
meeting.
MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT / / COMMENTS / /
NOTE: If shares are Signature: ---------------------- Date ----------
registered in more than
one name, signatures of
all such persons are
required. When signing as
attorney, executor,
administrator, trustee or
guardian, please give
full title as such.
Signature: ---------------------- Date ----------
