<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
CODE-ALARM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
CODE ALARM LOGO
950 E. WHITCOMB
MADISON HEIGHTS, MI
48071-6408
810-583-9620
1-800-421-3209
FAX 810-585-4799
April 25, 1997
To our Shareholders:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Code-Alarm, Inc., which will be held at the Northfield Hilton, Troy, Michigan
on Tuesday, May 20, 1997 at 10:00 a.m. All holders of record of the Company's
Common Stock at the close of business on April 11, 1997 are entitled to vote at
the Annual Meeting. We hope that you will be able to attend the Annual Meeting.
If you are unable to attend, you are urged to complete, sign, date and return
the proxy card in the enclosed envelope in order to make certain that your
shares will be represented at the meeting.
Sincerely,
RAND W. MUELLER
Rand W. Mueller
President
<PAGE> 3
CODE-ALARM, INC.
950 EAST WHITCOMB
MADISON HEIGHTS, MICHIGAN 48071
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of
Code-Alarm, Inc. will be held at the Northfield Hilton, Troy, Michigan on
Tuesday, May 20, 1997, at 10:00 a.m. for the following purposes:
(1) To elect two directors;
(2) To approve the appointment of Deloitte & Touche LLP as Independent
Certified Public Accountants to audit the books and records of the
Company for the year ending December 31, 1997; and
(3) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 11, 1997 will be
entitled to vote at the meeting and at any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
CRAIG S. CAMALO
Craig S. Camalo
Secretary
April 25, 1997
Madison Heights, Michigan
EACH SHAREHOLDER IS URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY PROMPTLY
<PAGE> 4
CODE-ALARM, INC.
950 EAST WHITCOMB
MADISON HEIGHTS, MICHIGAN 48071
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1997
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Code-Alarm, Inc.
(the "Company") in connection with the solicitation of proxies by or on behalf
of the Board of Directors to be voted at the 1997 Annual Meeting of Shareholders
of the Company to be held at the Northfield Hilton, Troy, Michigan, on Tuesday,
May 20, 1997, at 10:00 a.m. and at any adjournment thereof. This Proxy Statement
and form of proxy were first sent or given to shareholders on or about April 25,
1997.
Shares represented by all properly executed proxies delivered pursuant to
this solicitation will be voted in accordance with the directions given, unless
previously revoked, if delivered in time to be voted at the Annual Meeting.
Shareholders who execute a proxy in the accompanying form may revoke the proxy
at any time before it is exercised by giving written notice to the Secretary
bearing a later date than the proxy, by submitting a later-dated proxy, or by
voting the shares represented by such proxy in person at the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company. In addition to the use of the mails, proxies may be
solicited personally or by telephone by officers, directors and regular
employees of the Company without additional compensation. The Company will
reimburse banks, brokers and other custodians, nominees and fiduciaries for
their costs in sending the proxy materials to the beneficial owners of the
Common Stock.
Shareholders of record at the close of business on April 11, 1997 will be
entitled to vote at the Annual Meeting. On that date, 2,320,861 shares of Common
Stock were issued and outstanding. Each share of Common Stock entitles the
holder to one vote. Shares may not be voted cumulatively for the election of
directors. For purposes of determining the number of votes cast with respect to
a particular matter, only those votes cast "for" or "against" are included.
Abstentions are counted only for purposes of determining whether a quorum is
present at the meeting, while broker non-votes are not counted for any purposes.
Presence in person or by proxy of holders of a majority of the shares of Common
Stock will constitute a quorum at the Annual Meeting. Assuming a quorum is
present, directors are elected by a plurality of all votes cast.
The Company's Annual Report to Shareholders for the year ended December 31,
1996 is enclosed herewith.
ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven directors.
The Company's Bylaws provide that the directors shall be divided into three
classes as nearly equal in size as possible. At each Annual Meeting of the
Shareholders of the Company, one class of directors is elected to serve for a
three-year term.
Two directors are to be elected at the 1997 Annual Meeting, each of whom
will hold office until the 2000 Annual Meeting or until his successor is
elected. The Board of Directors has nominated the following persons for
election:
William S. Pickett
Jack D. Rutherford
MESSRS. WILLIAM S. PICKETT AND JACK D. RUTHERFORD ARE PRESENTLY DIRECTORS
OF THE COMPANY.
A brief biography of each of the nominees and other directors whose term of
office will continue after the Annual Meeting is presented under the caption
"Directors, Nominees and Executive Officers." In the event that any of the
above-named nominees are unable to serve as a director, the Board of Directors
may designate a substitute nominee, in which event the shares represented by the
proxies will be voted for such substitute nominee.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
1
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 18, 1997, certain information
regarding the beneficial ownership of the Company's Common Stock by each
director, nominee for director, each person known by the Company to own
beneficially more than five percent of such outstanding Common Stock and all
directors and officers as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
--------------------
BENEFICIAL OWNER NUMBER PERCENT
- ----------------------------------------------------------------------------------
<S> <C> <C>
Rand W. Mueller(1).......................................... 11,250(2) (3)
Kenneth M. Mueller(1)....................................... 120,793(4) 5.2%
William S. Pickett.......................................... 850(4) (3)
Alan H. Foster.............................................. 750(4) (3)
Marshall J. Mueller(1)...................................... 6,750(4) (3)
Jack D. Rutherford.......................................... 12,200(4) (3)
Peter J. Stouffer........................................... 7,970(5) (3)
Robyn L. Mueller Trust(6)................................... 538,810 23.2%
Dimensional Fund Advisors, Inc. ............................ 161,700(7) 6.7%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
All directors and officers as a group (11 in number)........ 189,648(8) 8.2%
- ----------------------------------------------------------------------------------
</TABLE>
(1) Rand W. Mueller and Marshall J. Mueller are brothers, and Kenneth M. Mueller
is their father. Each of them disclaims beneficial ownership of each other's
shares of Common Stock as a result of this family relationship.
(2) Includes 11,250 shares of Common Stock as to which Rand W. Mueller has the
right to acquire beneficial ownership, within 60 days, by the exercise of
options granted under the Company's 1987 Stock Option Plan. Mr. Mueller
disclaims beneficial ownership of 538,810 shares of Common Stock held in his
wife's trust and 1,000 shares of Common Stock held in trust for each of his
two minor sons.
(3) Less than one percent.
(4) Includes 750 shares of Common Stock as to which the director has the right
to acquire beneficial ownership, within 60 days, by the exercise of options
granted under the Company's 1987 Stock Option Plan.
(5) Includes 7,019 shares of Common Stock as to which Peter J. Stouffer has the
right to acquire beneficial ownership, within 60 days, by the exercise of
options granted under the Company's 1987 Stock Option Plan.
(6) Robyn L. Mueller is the wife of Rand Mueller and the Trustee of the Robyn L.
Mueller Trust.
(7) Based upon a statement on Schedule 13G filed by Dimensional Fund Advisors,
Inc. ("Dimensional"), a registered investment advisor, on February 5, 1997.
Dimensional's Schedule 13G reflects that these shares are held in portfolios
of DFA Investment Dimensions Group Inc., a registered open-end investment
company, the DFA Investment Trust Company, a registered open-end investment
company, or the DFA Group Trust and the DFA Participating Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims beneficial
ownership of such shares.
(8) Includes 29,644 shares of Common Stock which officers have the right to
acquire beneficial ownership, within 60 days, by the exercise of options
granted under the Company's 1987 Stock Option Plan.
2
<PAGE> 6
SHAREHOLDER AGREEMENT
On May 29, 1987, Rand W. Mueller, Kenneth M. Mueller and Larry J. Vingleman
(the "Shareholders") had entered into a Shareholder Agreement pursuant to which
the Shareholders will vote their shares in accordance with the desires of the
holders of a plurality of the shares of Common Stock held by the Shareholders.
In accordance with the terms of the Shareholder Agreement, the Shareholder
Agreement was terminated on February 15, 1997 by Shareholders owning greater
than two-thirds of the shares subject to the Shareholder Agreement.
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the Board of Directors shall consist of
seven directors, and that the directors shall be divided into three classes as
nearly equal in size as possible. At each annual meeting of the shareholders of
the Company, one class of directors is elected to serve for a three-year term.
Except for executive officers who have entered into employment agreements with
the Company, officers serve at the discretion of the Board of Directors (see
"Executive Compensation").
The Directors and Executive Officers of the Company and its wholly-owned
subsidiaries, Tessco Group, Inc. ("Tessco"), Anes, Inc. d.b.a. Anes Security,
Inc. ("Anes"), Chapman Security Systems, Inc. ("Chapman"), Europe Auto
Equipement S.A. ("EAE"), Code-Alarm Europe Ltd. and Intercept Systems, Inc.
("Intercept Systems"), and their respective positions and ages are as follows:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITION(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rand W. Mueller(2)................... 47 1985 1999 President, Director and Chairman of
the Board
Alan H. Foster....................... 71 1988 1999 Director
Kenneth M. Mueller(2)................ 74 1979 1998 Consultant and Director
William S. Pickett................... 77 1987 1997 Director
Marshall J. Mueller(2)............... 49 1991 1998 Director
Jack D. Rutherford................... 63 1991 1997 Director
Peter J. Stouffer.................... 34 1995 1999 Director, and Vice President of
Engineering, Manufacturing
Robert V. Wagner(3).................. 62 -- -- Secretary, Treasurer, Vice President of
Finance and CFO
Craig S. Camalo(4)................... 46 -- -- Secretary, Treasurer, Vice President of
Finance and CFO
John C. Moffat....................... 37 -- -- Vice President OEM Development and
Marketing
Michael P. Schroeder................. 34 -- -- Vice President, Sales, North America
John G. Chupa(5)..................... 39 -- -- Vice President, Legal Counsel
Alain Lombard........................ 42 -- -- Director General of EAE
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All positions are with the Company except as otherwise indicated.
(2) Rand W. Mueller and Marshall J. Mueller are brothers, and Kenneth M. Mueller
is their father.
(3) Robert V. Wagner retired from the Company effective January 31, 1997.
(4) Craig S. Camalo was elected as Secretary, Treasurer, Vice President of
Finance and CFO effective January 31, 1997.
(5) John G. Chupa resigned from the Company effective September 30, 1996. Mr.
Chupa continues to do legal work for the Company.
3
<PAGE> 7
Rand W. Mueller has been a full-time employee of the Company since January
1985 and has been the President since May 1986.
Alan H. Foster has been an independent consultant to various governmental
bodies, corporations and financial institutions for the last five years. He is
also an adjunct professor at the School of Business Administration of the
University of Michigan. From 1967 to 1978, Mr. Foster served as Vice President
and Treasurer of American Motors Corporation.
Kenneth M. Mueller is retired. He has been a consultant to the Company
since August 1987. Mr. Mueller was a New York-based consultant to the Ministry
of Agriculture and Food, Government of Ontario, Canada from August 1985 to June
1987. Prior to that time, he was President of Agribusiness Council, Inc., a New
York-based not-for-profit corporation assisting lesser-developed countries in
developing profitable agricultural ventures.
William S. Pickett is retired. He was the President and General Manager of
American Motors (Canada) Inc. prior to his retirement in 1982.
Marshall J. Mueller is a former executive officer and former director of
the Company. From May 1980 to January 1990, Mr. Mueller held various senior
management positions with the Company, including President and Executive Vice
President. Mr. Mueller was on sabbatical since his resignation from his office
as Executive Vice President and director in January 1990. Mr. Mueller was
reelected to the Company's Board of Directors on May 21, 1991 and has served
continuously since that date. As of January 1, 1997, Mr. Mueller has been
associated with Growth Funding Inc.
Jack D. Rutherford is Chairman and Chief Executive Officer of ICM
Industries, Inc., a private company that owns and controls various operating
subsidiaries in basic manufacturing industries serving the automotive,
construction equipment and capital goods industries. Prior to co-founding ICM
Industries, Inc. in 1985, Mr. Rutherford was employed by International Harvester
Corporation in various senior management capacities, including Vice Chairman and
President and Chief Operating Officer. Prior to that time, Mr. Rutherford was
with Ford Motor Company since 1952 in various operations management and
manufacturing assignments.
Peter J. Stouffer was appointed Vice President of Engineering for the
Company in January 1993 pursuant to a management reorganization which
effectively eliminated the Company's previously separate operating divisions. In
December 1995, Mr. Stouffer was appointed to the Board of Directors of
Code-Alarm, Inc. and was given the additional responsibility of world wide
manufacturing. Previously, Mr. Stouffer served as Executive Vice President and
General Manager of the Company's Intercept Systems, Inc. subsidiary from August
1990 through December 1992, and served as the Company's Vice President of
Engineering from May 1989 through September 1990. From December 1986 to May
1989, Mr. Stouffer was the manager of engineering for the Company. Prior to
December 1986, he was an engineer at the Pontiac Motors Division of General
Motors Corporation.
Robert V. Wagner became an employee and Divisional Controller in January of
1993, and was elected by the Company's Board of Directors as Vice President of
Finance and Chief Financial Officer, Secretary and Treasurer in August of 1993.
Prior to joining the Company, he held a senior financial position with MLX
Corporation, was CFO of General Automotive Corporation, Operations Controller of
Volkswagen of America, CFO of American Sunroof Corp. (ASC), various senior
finance and treasury positions with American Motors Corporation, and on the
Finance Staff at various Ford Motor Co. divisions. From 1956 to 1961, Mr. Wagner
was employed by Touche, Niven, Bailey & Smart (nee. Deloitte & Touche) where he
earned the designation Certified Public Accountant.
Craig S. Camalo joined the Company as Corporate Controller and Chief
Accounting Officer in April of 1996, and was elected by the Company's Board of
Directors as Vice President of Finance and Chief Financial Officer, Secretary
and Treasurer in January of 1997. Prior to joining the Company, Mr. Camalo held
a similar position with Letts Industries, Inc. and was Chief Financial Officer
of Hydro Aluminum. From 1975 to 1982, Mr. Camalo was employed by Deloitte and
Touche LLP where he earned the designation as a Certified Public Accountant.
4
<PAGE> 8
John G. Chupa joined the Company as General Counsel in November 1993, and
was appointed Vice President in December of 1994. Prior to joining the Company,
he was associated with the law firms Dykema Gossett and Harness Dickey and
Pierce, specializing in the practice of intellectual property law. From 1985
through 1988, he was a Senior Engineer with the Allen Bradley division of
Rockwell International Corporation. Mr. Chupa is currently completing his
doctorate in electrical engineering.
Alain Lombard joined the Company in January 1994 as Vice President European
Operations and Director General of the EAE subsidiary. Prior to joining the
Company, he was President of Code-Alarm Europe Ltd., and Lombard Imports
Corporation. From 1985 through 1989, Mr. Lombard was a Senior Financial Analyst
with IBM's European Headquarters.
John C. Moffat joined the Company in November 1987 as district Manager of
the OEM Division. Mr. Moffat has been promoted steadily through the Company,
most recently as Vice President of OEM Development and Marketing in March 1995.
Mr. Moffat was the Company's National Sales Manager from December 1990 until
March 1995.
Michael P. Schroeder joined the Company in March 1984 as Engineering
Technician. Mr. Schroeder was promoted to Vice President of North American Sales
in March 1995. From December 1992 to March 1995, Mr. Schroeder was the Company's
Director of Sales in the U.K.
The Company's Board of Directors has the following standing committees,
whose responsibilities and present members are as follows:
COMPENSATION COMMITTEE -- The Compensation Committee, which met once in
1996, has responsibility for reviewing the compensation of the directors and
officers of the Company and administering the Company's stock option and
incentive compensation plans. Messrs. Kenneth Mueller, Rutherford, Stouffer and
Marshall Mueller are members of the Compensation Committee.
AUDIT COMMITTEE -- The Audit Committee, which met twice in 1996, is
responsible for recommending to the full Board of Directors the selection of
independent accountants; reviewing the engagement of the auditors (including the
fee, scope and timing of the audit); reviewing with the auditors and management
the Company's policies and procedures with respect to accounting and financial
controls; reviewing with the independent auditors, upon completion of their
audit, their report or opinion, their perception of the Company's financial and
accounting personnel, any significant transactions which are not a normal part
of the Company's business, any changes in accounting principles and practices,
all significant proposed adjustments and any recommendations they may have for
improving internal accounting controls, choice of accounting principles or
management systems; and meeting with the Company's accounting staff to discuss
internal accounting and financial controls and the extent to which
recommendations made by the independent auditors have been implemented. Messrs.
Pickett, Foster and Rutherford are members of the Audit Committee. Mr. Rand
Mueller is a nonvoting member of the Audit Committee.
NOMINATING COMMITTEE -- The Nominating Committee, which met twice in 1996,
has responsibility for researching and reviewing the qualifications of
prospective nominees for seats on the Company's Board of Directors. In carrying
out its responsibilities, the Nominating Committee will consider candidates
suggested by other directors, employees and shareholders of the Company.
Suggestions for candidates, accompanied by biographical material for evaluation,
may be sent to the Secretary of the Company at the Company's principal executive
offices. Messrs. Pickett, Foster, Kenneth Mueller and Rand Mueller are members
of the Nominating Committee.
The Company's Board of Directors held six meetings in 1996. Various
additional action was taken by the directors by unanimous written consent. Jack
D. Rutherford attended less than 75 percent of the aggregate of the total number
of meetings of the Board of Directors and the total number of meetings held by
all committees of the Board on which he served.
5
<PAGE> 9
DIRECTORS' COMPENSATION
Directors who are not employees or consultants of the Company are paid an
annual fee of $2,000 as well as $1,000 for each Board of Directors meeting and
$1,000 for each committee meeting attended.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to Rand W. Mueller, the Company's President and Chief Executive Officer and
Peter Stouffer, the Company's Vice President of Engineering and Manufacturing.
Both are also Directors of the Company. No other executive officer of the
Company was paid in excess of $100,000 for services rendered to the Company
during the fiscal year ended December 31, 1996.
The Company did not make any payments to Mr. Mueller or any other executive
officers under long-term compensation plans during the years presented.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- --------------------------
AWARDS
----------------
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD SAR (#) PAYOUTS COMPENSATION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rand W. Mueller 1996 $200,000 $ 62,184 (1)(2) -- 0 -- --
President and CEO 1995 $170,833 $ 88,015 (1) -- 25,000 -- --
1994 $133,000 $114,430 (1) -- 10,000 -- --
Peter J. Stouffer 1996 $105,000 $ 0 (1) -- 0 -- --
1995 $105,000 $ 12,584 (1) -- 3,000 -- --
1994 $ 85,000 $ 25,000 (1) -- 15,000 -- --
Alain Lombard 1996 $103,846 $ 0 (1) -- 0 -- --
1995 $112,781 $ 11,026 (1) -- 3,000 -- --
1994 $110,067 $ 15,925 (1) -- 10,000 -- --
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company provided Mr. Mueller and Mr. Stouffer with automobiles, and Mr.
Mueller with income tax preparation and other non-cash fringe benefits. In
1996, these fringe benefits did not exceed the lesser of $50,000 or ten
percent of his total salary and bonus.
(2) The Company has an employment agreement with Rand W. Mueller that provides
for a minimum base salary of $200,000 effective June, 1995, and also a
percentage of the Company's operating income. The agreement, as amended,
expires on May 29, 1997. Mr. Mueller's employment can be terminated only
for cause.
6
<PAGE> 10
STOCK OPTION PLAN
The following table sets forth certain information concerning repricing of
certain stock options granted pursuant to the Company's 1987 Stock Option Plan
(the "1987 Plan"):
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
NUMBER OF MARKET LENGTH OF ORIGINAL
SECURITIES PRICE EXERCISE PRICE NEW TERM REMAINING
UNDERLYING AT TIME AT TIME EXCHANGE AT DATE OF
NAME DATE(1) OPTIONS REPRICED OF REPRICING OF REPRICING PRICE REPRICING(2)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rand W. Mueller May 14, 1996 25,000 $5.00 $ 8.11 $5.50 4 years 1 month
Rand W. Mueller May 14, 1996 10,000 $5.00 $11.28 $5.50 3 years
Rand W. Mueller May 14, 1996 25,000 $5.00 $ 5.23 $5.50 1 year 10 months
Rand W. Mueller May 14, 1996 15,000 $5.00 $ 5.50 $5.50 7 months
Alain Lombard May 14, 1996 3,000 $5.00 $ 7.38 $5.00 9 years 1 month
Alain Lombard May 14, 1996 10,000 $5.00 $11.50 $5.00 8 years 4 months
Peter J. Stouffer May 14, 1996 3,000 $5.00 $ 7.38 $5.00 9 years 1 month
Peter J. Stouffer May 14, 1996 10,000 $5.00 $11.50 $5.00 8 years 4 months
Peter J. Stouffer May 14, 1996 5,000 $5.00 $10.25 $5.00 8 years
Peter J. Stouffer May 14, 1996 2,500 $5.00 $ 8.25 $5.00 4 years 7 months
Peter J. Stouffer May 14, 1996 1,000 $5.00 $15.25 $5.00 4 years
Peter J. Stouffer May 14, 1996 2,000 $5.00 $20.25 $5.00 3 years 7 months
Peter J. Stouffer May 14, 1996 2,000 $5.00 $13.00 $5.00 3 years 2 months
Peter J. Stouffer May 14, 1996 500 $5.00 $14.00 $5.00 2 years 10 months
Robert V. Wagner May 14, 1996 3,000 $5.00 $ 7.38 $5.00 9 years 1 month
Robert V. Wagner May 14, 1996 10,000 $5.00 $11.50 $5.00 8 years 4 months
Robert V. Wagner May 14, 1996 5,000 $5.00 $10.25 $5.00 8 years 1 month
Robert V. Wagner May 14, 1996 5,000 $5.00 $11.00 $5.00 7 years 4 months
John C. Moffat May 14, 1996 3,000 $5.00 $ 7.38 $5.00 9 years 1 month
John C. Moffat May 14, 1996 1,000 $5.00 $10.25 $5.00 8 years 4 months
Michael P. Schroeder May 14, 1996 3,000 $5.00 $ 7.38 $5.00 9 years 1 month
Michael P. Schroeder May 14, 1996 1,000 $5.00 $10.25 $5.00 8 years 4 months
Michael P. Schroeder May 14, 1996 500 $5.00 $14.00 $5.00 2 years 10 months
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On May 14, 1996, all participants in the 1987 Plan were given the option of
exchanging their existing stock options.
(2) All 1987 Plan participants who exchanged their existing option forfeited the
time credited toward the vesting of the existing options. All new options
shall vest as follows with May 14, 1996 deemed to be the grant date:
<TABLE>
<CAPTION>
TIME FROM MAY 14, 1996 TOTAL % OF OPTIONS VESTING
- ---------------------- --------------------------
<S> <C>
6 months - 1 years 5%
1 year - 2 years 15%
2 years - 3 years 35%
3 years - 4 years 60%
4 years + 100%
</TABLE>
7
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rand W. Mueller 0 0 3,750 71,250 0 0
Peter J. Stouffer 0 0 4,506 23,869 0 0
Alain Lombard 0 0 650 12,350 0 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In determining the compensation to be paid to the Company's executive
officers, the Compensation Committee follows compensation policies designed to
align executive compensation with the Company's overall business strategy,
values and stockholder interests. Accordingly, these policies are intended to
(i) reward executives for the long-term enhancement of shareholder value, (ii)
motivate senior executives to achieve strategic business initiatives, (iii)
foster a performance-oriented environment that rewards individual achievement in
addition to company success, (iv) recognize company performance compared to
performance levels of comparable companies in the industry, and (v) attract and
retain executives whose abilities are critical to the competitiveness of the
Company.
The key components of executive compensation and the Company's present
policies with respect to each are as follows:
- - BASE SALARIES are reviewed at least annually based on factors such as the
individual executive's level of responsibility and position in the Company as
well as informal comparisons with executives in similar positions with
comparable companies in the industry;
- - CASH BONUSES are based on the performance of both the individual, as evaluated
by the Board of Directors, and the Company, measured primarily in terms of
improvement in the Company's operating profitability and return on investment;
and
- - STOCK OPTIONS are granted at the discretion of the Board of Directors and are
intended to increase motivation toward enhancement of the Company's long-term
success as measured by the Company's share price.
It has been the Company's policy to establish base salary levels for
executives that are modest by industry standards while providing the potential
for significant bonuses and stock option awards if the Company's performance so
warrants.
The Compensation Committee based the 1996 compensation of the Company's
executive officers on the policies described above. In particular, the salary of
the Company's Chief Executive Officer, Mr. Rand Mueller, in 1996 was based on a
variety of factors including an informal comparison with salaries of chief
executive officers of comparable companies in the industry, Mr. Mueller's base
salary levels in prior years, as well as the terms of the Company's employment
agreement with Mr. Mueller. In recognition of Mr. Mueller's performance, his
base salary was set at $200,000 starting in June, 1995.
On May 14, 1996, all participants in the Company's 1987 Stock Option Plan
(the "Plan"), other than Mr. Mueller, were given the option of exchanging their
existing options for options with an exercise price of $5.00 per share. Mr.
Mueller was permitted to exchange his existing options for options with an
exercise price of $5.50 per share. For vesting purposes, all options issued upon
exchange are deemed to have been granted on May 14, 1996. See "Stock Option
Plan" and "Ten-Year Option Repricing" table on page 7 for details. The Board of
Directors determined that, based upon the Company's current stock price, the
stock option granted prior to May 14, 1996 did not constitute a reasonable
incentive for employee performance. The Board of
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<PAGE> 12
Directors believes the lower exercise price reflects a realistic and reasonable
goal that will effectively incentivize the Company's officers and employees.
Jack D. Rutherford, Chairman
Kenneth M. Mueller
Marshall J. Mueller
Peter J. Stouffer
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Peter J. Stouffer served on the Company's Compensation
Committee. Mr. Stouffer also served as Vice President of Engineering,
Manufacturing during 1996 and, therefore, is an officer of the Company.
9
<PAGE> 13
PERFORMANCE GRAPH
The following graph sets forth a yearly comparison of the cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the NASDAQ Stock Market and an index of NASDAQ Electronic Components
Stocks for the five year period ended December 31, 1996. The graph assumes $100
invested on December 31, 1991 in Code-Alarm, Inc. Common Stock, the NASDAQ Stock
Market index and the industry index, with all dividends reinvested.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CODE-ALARM, INC. NASDAQ MARKET INDUSTRY INDEX
(FISCAL YEAR COVERED) INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 104 116 156
1993 209 134 215
1994 152 131 237
1995 109 185 393
1996 61 227 679
</TABLE>
CERTAIN TRANSACTIONS
On May 27, 1992, the Company loaned $65,000 to Rand W. Mueller, the
Company's President and Chief Executive Officer, on a two-year mortgage note at
7.5 percent interest per annum collateralized by a second lien on Mr. Mueller's
residence. On May 15, 1996, the Company extended the loan by an additional year.
The largest aggregate balance owing on the loan during 1996 was $73,522,
including accrued interest; as of March 31, 1997, the balance outstanding on the
loan was $74,740, including accrued interest.
Except as described in the previous paragraph, the Company did not make
loans to its officers, directors, employees or principal shareholders during
1996, except for loans made in the ordinary course of business, such as travel
advances, expense account advances, relocation advances or reasonable salary
advances.
10
<PAGE> 14
APPROVAL OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Effective July 24, 1995, the Board of Directors of the Company, based on
the recommendation of the Audit Committee, appointed Deloitte & Touche LLP as
the independent accountants of the Company. Deloitte & Touche LLP replaces
Coopers & Lybrand L.L.P. (dismissed July 19, 1995), the Company's previous
independent accountants. The reports of Coopers & Lybrand L.L.P. on the
financial statements of the Company during the past two years were unqualified.
During the Company's two most recent fiscal years and the subsequent interim
period from the date of the last audited financial statement through July 19,
1995, there were no disagreements with Coopers & Lybrand L.L.P. on any matter of
accounting principles or practices, financial statement disclosure, audit scope
or procedures.
At the 1997 Annual Meeting, the shareholders will be asked to approve the
appointment of Deloitte & Touche LLP as independent accountants of the Company
for the 1997 year. Representatives of Deloitte & Touche LLP are expected to
attend the 1997 Annual Meeting. They will have an opportunity to make a
statement if they desire to do so and will be available to respond to
shareholder questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of their ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file. Specific due dates
for these reports have been established and the Company is required to report in
this proxy statement any delinquent filings and failures to file such reports.
Based solely on its review of the copies of such reports received by it and
written representations of its incumbent directors and officers, the Company
believes that during the period from January 1 to December 31, 1996, all filing
reports applicable to its directors, officers and greater than ten percent
beneficial owners were complied with.
OTHER BUSINESS
The Company is not aware of any other business to be acted upon at the 1997
Annual Meeting other than that which is discussed in this Proxy Statement. In
the event that any other business requiring a vote of the shareholders is
properly presented at the meeting, the holders of the proxies shall have
discretionary authority to vote your shares in such manner as they shall deem
appropriate or to abstain from voting any or all of such shares. The holders of
the proxies also shall have discretionary authority to vote your shares in such
manner as they shall deem appropriate or to abstain from voting any or all of
such shares on other matters incident to the conduct of the meeting.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any shareholder proposal intended to be presented for consideration at the
1998 Annual Meeting and to be included in the Company's Proxy Statement and form
of proxy must be received at the principal executive offices of the Company by
the close of business on December 18, 1997. Proposals should be sent to the
attention of the Secretary.
You are encouraged to exercise your right to vote by marking the
appropriate boxes, dating and signing the enclosed proxy card. It is not
necessary to mark any boxes if you wish to vote in accordance with the
recommendations of the Board of Directors. The proxy card may be returned in the
enclosed envelope, postage paid if mailed in the United States or Canada. A
prompt response will be helpful and your cooperation is appreciated.
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<PAGE> 15
<TABLE>
<S><C>
PLEASE MARK VOTES
/X/ AS IN THIS EXAMPLE
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CODE-ALARM, INC.
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Mark box at right if an address change or comment has been noted
on the reverse side of this card. / /
RECORD DATE SHARES:
1. ELECTION OF DIRECTORS.
FOR WITHHOLD FOR ALL EXCEPT
WILLIAM S. PICKETT
JACK D. RUTHERFORD / / / / / /
If you do not wish your shares voted "For" a particular nominee, mark the "For All Except" box
and strike a line through the nominee's name. Your shares will be voted for the remaining
nominee.
FOR AGAINST ABSTAIN
2. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS / / / / / /
Proposal to ratify the appointment of Deloitte & Touche
LLP as independent certified public accountants to audit
the books and records of the Company for the year ending
December 31, 1997.
3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
Meeting.
YOUR SIGNATURE SHOULD APPEAR THE SAME AS YOUR NAME APPEARS
HEREON. IF SIGNING AS ATTORNEY, EXECUTOR, TRUSTEE OR GUARDIAN,
PLEASE INDICATE THE CAPACITY IN WHICH SIGNING. WHEN SIGNING
AS JOINT TENANTS, ALL PARTIES TO THE JOINT TENANCY MUST SIGN.
WHEN THE PROXY IS GIVEN BY A CORPORATION, IT SHOULD BE SIGNED BY
AN AUTHORIZED OFFICER AND THE CORPORATE SEAL AFFIXED.
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------------------
Shareholder sign here Co-owner sign here
---------------- ---------------
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DETACH CARD DETACH CARD
</TABLE>
<PAGE> 16
CODE-ALARM, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CODE-ALARM, INC.
The undersigned shareholder of CODE-ALARM, INC. (the "Company") hereby appoints
William S. Pickett, Marshall J. Mueller and Alan H. Foster, or any one of them,
Proxies, with full power of substitution, to vote all Common Stock of the
Company standing in the name of the undersigned at the 1997 Annual Meeting of
Shareholders of the Company to be held at the Northfield Hilton, Troy,
Michigan, on Tuesday, May 20, 1997, at 10:00 a.m., and at any adjournment
thereof, hereby ratifying all that said Proxies or their substitutes may do by
virtue hereof; and the undersigned authorized and instructs said Proxies to
vote as indicated on the reverse side, revoking any proxies heretofore given.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE. IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE THIS PROXY FOR THE
ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED IN ITEM 1., FOR THE APPROVAL OF
ITEM 2., AND WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO
IN ITEM 3. THE UNDERSIGNED RATIFIES ALL THAT THE PROXIES OR ANY ONE OF THEM OR
THEIR SUBSTITUTES MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF AND
REVOKES ALL PRIOR PROXIES.
Receipt of the Notice of said Meeting and of the Proxy Statement and Annual
Report of the Company for the year ended December 31, 1996 accompanying this
Proxy is hereby acknowledged.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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