AVX
Notice of Annual Meeting of Shareholders
To Be Held July 17, 1997
<PAGE>
AVX CORPORATION
801 17th Avenue South Myrtle Beach, South Carolina 29577
To our Shareholders:
The Annual Meeting of Shareholders of AVX Corporation, a
Delaware corporation, will be held at the Kingston Plantation
Radisson Resort, 9800 Lake Drive, Myrtle Beach, South Carolina,
on Thursday, July 17, 1997, at 10:00 a.m., for the purpose of
acting upon the following matters, as well as such other
business as may properly come before the Annual Meeting or any
adjournment thereof:
1. To elect thirteen directors;
2 To ratify amendments to the 1995 Stock Option Plan;
3. To ratify the appointment of Coopers & Lybrand, L.L.P. as
the Company's independent auditors for the fiscal year
commencing April 1, 1997; and
4. To transact any other business that may properly come before
the Annual Meeting or any adjournment thereof.
Only shareholders of record on the books of the Company on May
24, 1997, will be entitled to vote at the Annual Meeting or any
adjournment thereof.
In order that your shares of stock may be represented at the
Annual Meeting, please date and sign the enclosed proxy card and
return it promptly in the enclosed envelope. If you attend the
Annual Meeting, you may vote in person even though you have
previously sent in your proxy card.
/S/ John S. Gilbertson
------------------
John S. Gilbertson
Corporate Secretary
Myrtle Beach, South Carolina
June 5, 1997
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
1
<PAGE>
AVX Corporation
801 17th Avenue South, Myrtle Beach, SC 29577
___________________________________
PROXY STATEMENT
Annual Meeting of Shareholders
To be held July 17, 1997
--------------------------------------
This Proxy Statement is furnished to the shareholders of AVX
Corporation ("AVX" or the "Company") in connection with the
solicitation on behalf of the Board of Directors (the "Board")
of proxies to be used at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on July 17, 1997, at 10:00 a.m., at
the Kingston Plantation Radisson Resort, 9800 Lake Drive, Myrtle
Beach, South Carolina and any adjournment thereof. The Company
expects that this Proxy Statement, with the accompanying proxy
and the Annual Report for fiscal year ended March 31, 1997, will
be mailed to shareholders on or about June 5, 1997.
Each share of AVX Corporation common stock, par value $.01
("Common Stock"), outstanding at the close of business on May
23, 1997, will be entitled to one vote on all matters acted upon
at the Annual Meeting. On May 24, 1997, the date for
determining shareholders entitled to vote at the Annual Meeting,
88,000,000 shares of Common Stock were outstanding.
Shares will be voted in accordance with the instructions
indicated in a properly executed proxy. In the event that the
voting instructions are omitted on any such proxy, the shares
represented by such proxy will be voted as recommended by the
Board. Shareholders have the right to revoke their proxies at
any time prior to a vote being taken, by (i) delivering written
notice of revocation before the Annual Meeting to the Corporate
Secretary at the Company's principal offices; (ii) executing a
proxy bearing a later date or time than the proxy being revoked
provided the new proxy is received by Wachovia Bank of North
Carolina (which will have a representative present at the Annual
Meeting); or (iii) voting in person at the Annual Meeting.
The presence at the Annual Meeting, in person or by proxy, of
shareholders holding in the aggregate a majority of the
outstanding shares of the Company's Common Stock entitled to
vote shall constitute a quorum for the transaction of business.
Proxies indicating stockholder abstentions will, in accordance
with Delaware law, be counted as represented at the Annual
Meeting for purposes of determining whether there is a quorum
present, but will not be voted for or against the proposal.
However, the effect of marking a proxy for abstention on any
proposal, other than the election of directors, has the same
effect as a vote against the proposal. Shares represented by
"broker non-votes" (i.e., shares held by brokers or nominees
that are represented at a meeting but with respect to which the
broker or nominee is not empowered to vote on a particular
proposal) will be counted for purposes of determining whether
there is a quorum, but will not be voted on such matter and will
not be counted for purposes of determining the number of votes
cast on such matter. With respect to any matter brought before
the Annual Meeting requiring the affirmative vote of a majority
or other proportion of the outstanding shares, an abstention or
broker non-vote will have the same effect as a vote against the
matter being voted upon.
The Company has been informed by the Trustee for the Company's
Stock Bonus Plans and the Deferred Compensation Plan that shares
of Common Stock held by the Trustee for such plans will be voted
by the Trustee in accordance with instructions received from the
participants, and if no instructions are received, such shares
will be voted in the same proportion as shares for which
instructions are received from other participants in the plan.
At the date of this Proxy Statement, management does not know
of any matter to be brought before the Annual Meeting for action
other than the matters described in the Notice of Annual Meeting
and matters incident thereto. If any other matters should
properly come before the Annual Meeting, the holders of the
proxies will vote and act with respect to such matters in
accordance with their best judgment. Discretionary authority to
do so is conferred by the enclosed proxy.
2
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The following thirteen directors have been nominated by the
Board. Unless contrary instructions are given, it is intended
that the votes represented by the proxies will be cast for the
election of the persons listed below as directors. The
affirmative vote of the holders of a plurality of the shares of
Common Stock of the Company present in person or represented by
proxy and entitled to vote at the Annual Meeting is required for
the election of the directors. In the event that any of the
nominees should become unavailable, the Board may designate a
substitute. It is intended that all properly executed and
returned proxies will be voted for such substitute nominee. All
directors hold office until the next Annual Meeting of
shareholders or until their successors have been duly elected
and qualified.
KAZUO INAMORI Age 65 Chairman Emeritus of the Board effective
July 5, 1997. Chairman of the Board from the Company's
acquisition by Kyocera Corporation ("Kyocera") in January 1990
to July 1997, Chairman of the Board of Kyocera, which he founded
in 1959.
BENEDICT P. ROSEN Age 61 Chairman of the Board effective July 5,
1997 and President and Chief Executive Officer of the Company
since April 1993 and a member of the Board since January 1990.
Executive Vice President from February 1985 to March 1993 and
employed by the Company since 1972. Senior Managing and
Representative Director of Kyocera since June 1995 and
previously served as a Managing Director of Kyocera from 1992 to
June 1995. Director of Nitzanim-AVX/Kyocera-Venture Capital Fund
Ltd. and Aerovox Corporation.
JOHN S. GILBERTSON Age 53 Executive Vice President and Chief
Operating Officer of the Company since April 1994, Corporate
Secretary of the Company since April 1996 and a member of the
Board since January 1990. Executive Vice President from April
1992 to present, Senior Vice President from September 1990 to
March 1992 and employed by the Company since 1981. Director of
Kyocera since June 1995.
DONALD B. CHRISTIANSEN Age 58 Vice President of Finance, Chief
Financial Officer and Treasurer of the Company since April 1994
and a member of the Board since April 1992. Chief Financial
Officer from March 1992 to April 1994.
MARSHALL D. BUTLER Age 70 Member of the Board since December
1973 and Chairman of the Board from December 1973 to January
1990. Chief Executive Officer from December 1973 until his
retirement from the Company in March 1993. Director of Kyocera
from 1990 to June 1995. Chairman of the Board
of Nitzanim-AVX/Kyocera-Venture Capital Fund Ltd. and Alpha
Technologies Group, Incorporated. A Director of MassMutual
Corporate Investors and a Director of MassMutual Participation
Investors.
CARROLL A. CAMPBELL, JR. Age 57 Member of the Board since August
1995. Presently President and Chief Executive Officer of the
American Council of Life Insurance. Governor of South Carolina
from January 1987 to January 1995. Director of Fluor
Corporation, Telequest, Wachenhut Corporation and Norfolk
Southern Corporation.
KENSUKE ITOH Age 59 Member of the Board since January 1990.
President of Kyocera since June 1989 and a Representative
Director of Kyocera since 1985.
RODNEY N. LANTHORNE Age 52 Member of the Board since January
1990. President of a United States subsidiary of Kyocera since
January 1987. A Managing Director of Kyocera since 1990.
RICHARD TRESSLER Age 55 Member of the Board since October 1995.
Professor and head of the Department of Material Science and
Engineering at Pennsylvania State University since 1991.
3
<PAGE>
MASAHIRO UMEMURA Age 53 Member of the Board since January 1990.
General Manager of the Corporate Development Group of Kyocera
since June 1992 and Managing Director of Kyocera since June
1993. Executive Vice President and Treasurer of a United States
subsidiary of Kyocera from April 1986 to June 1992.
MASAHIRO YAMAMOTO Age 55 Member of the Board since February
1993. Senior Managing and Representative Director of Kyocera
since June 1995. Employee of Kyocera since 1977.
MICHIHISA YAMAMOTO Age 55 Senior Managing and Representative
Director of Kyocera since June 1992. Employee of Kyocera since
1970.
YUZO YAMAMURA Age 55 Member of the Board since July 1995.
President of Kyocera Elco Corporation, a subsidiary of Kyocera.
Senior Managing and Representative Director of Kyocera since
June 1995. Employee of Kyocera since 1965.
Ownership of Securities by Directors, Director Nominees and
Executive Officers
The Common Stock is the only class of equity securities of the
Company outstanding. As of May 12, 1997, the directors and
director nominees and each executive officer named in the
Summary Compensation Table, individually, and all directors,
director nominees and executive officers of the Company as a
group, beneficially owned shares of Common Stock of the Company
as follows:
Amount of Beneficial Ownership
Name of Direct &
Beneficial Indirect Percent of
Owner Ownership 1/ Class
Kazuo Inamori 11,875 *
Benedict P. Rosen 84,635 *
John S. Gilbertson 78,323 *
Donald B. Christiansen 31,777 *
C. Marshall Jackson 25,585 *
Ernie Chilton 28,800 *
Marshall D. Butler 4,875 *
Carroll A. Campbell, Jr. 1,875 *
Kensuke Itoh 66,154,875 75.2% 2/
Rodney N. Lanthorne 3,375 *
Masato Takeda 1,875 *
Richard Tressler 2,375 *
Masahiro Umemura 2,875 *
Masahiro Yamamoto 2,875 *
Michihisa Yamamoto 1,000 *
Yuzo Yamamura 2,875 *
All directors, director nominees
and executive officers as a group 66,496,109 75.5% 2/
(a total of 21 individuals including
those named above)
* Less than 1%
1/ Only includes options granted under the 1995 Stock Option
Plan and the Non-Employee Directors Stock Option Plan that were
exercisable within 60 days.
2/ Includes the 66,150,000 shares of Common Stock owned
directly or indirectly by Kyocera as to which Mr. Itoh, as
President and Representative Director of Kyocera, may be deemed
to have voting and investor power.
The information provided in the above chart as to each
director, director nominee and named executive officer,
individually, and all directors, director nominees and executive
officers as a group, is based on information received from such
individuals. However, the listing of such shares is not
necessarily an admission of beneficial ownership by the person.
Unless otherwise indicated in the footnotes, such individuals
held, together with certain members of their family, sole voting
and investment power over the shares.
4
<PAGE>
Security Ownership of Certain Beneficial Owners
Set forth below is a table indicating those persons whom the
management of the Company believes to be beneficial owners of
more than 5% of any class of the Company's securities as of May
24, 1997.
Shares
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
Kyocera Corporation
5-22 Kitainoue-cho Higashino
Yamashina-ku, Kyoto 607, Japan 66,150,000 75.2%
Except for Mr. Itoh, who may be deemed to beneficially own the
shares held by Kyocera as a result of his voting and investment
power of these shares, to the best of the Company's knowledge,
as of May 24, 1997, no other person owned more than 5% of the
outstanding voting securities of the Company.
Compliance With Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and officers, and persons who own more
than 10% of the Company's Common Stock, to file reports of
ownership and changes in ownership of any class of the Company's
registered equity securities with the Securities and Exchange
Commission and the New York Stock Exchange. The Company
believes that during fiscal year ended March 31, 1997, all
Section 16(a) filing requirements applicable to its directors
and officers were complied with.
Board of Directors - Meetings Held and Committees
The Board held four meetings during fiscal year ended March 31,
1997. During that period, all the directors attended 75% of the
meetings of the Board and meetings of the committees of the
Board on which they served, except Messrs. Takeda, Yamamoto and
Yamamura who are residents of Japan and are representatives on
the Board for Kyocera. Because of time and logistics to travel,
Messrs. Takeda, Yamamoto and Yamamura attended two Board
meetings.
The Board has the following standing committees:
Executive Committee. The Executive Committee has been, and
from time to time is, delegated authority by the Board to
exercise the powers of the Board in matters pertaining to the
management of the business. The Executive Committee held no
meetings during fiscal year ended March 31, 1997. The members
of the Executive Committee are Messrs. Inamori (Chairman),
Rosen, Butler, Lanthorne and Umemura.
Audit Committee. The functions of the Audit Committee include
(a) making recommendations to the full Board as to engagement of
the Company's independent auditors, (b) reviewing with the
independent auditors the plan and results of the audit
engagement, (c) reviewing the scope and results of the Company's
internal audit procedures, and (d) reviewing proposed audit fees
and other fees of the independent auditors. The Audit
Committee held one meeting during fiscal year ended March 31,
1997. The members of the Audit Committee are Messrs. Butler
(Chairman), Campbell and Tressler.
Compensation Committee. The Compensation Committee has the
full power and authority of the Board with respect to the
determination of compensation for all executive officers of the
Company. The Compensation Committee also has full power and
authority over any compensation plan approved by the Board other
than the 1995 Stock Option Plan, including the issuance of
shares of Common Stock, as such Compensation Committee may deem
necessary or desirable in accordance with such compensation
plans. The Compensation Committee held three meetings during the
fiscal year ended March 31, 1997. The members of the
Compensation Committee are Messrs. Inamori (Chairman), Itoh,
Campbell and Tressler.
Equity Compensation Committee. The Equity Compensation
Committee is a subcommittee of the Compensation Comittee and is
responsible for any action on all matters concerning the 1995
Stock Option Plan. This committee consists of the Messrs.
Tressler (Chairman), Campbell and Butler. The Equity
Compensation Committee held one meeting during the fiscal year
ended March 31, 1997.
Special Advisory Committee. The Special Advisory Committee is
required to review and approve all material contracts and
transactions between the Company and related parties. The
Special Advisory Committee held one meeting during fiscal year
ended March 31, 1997. The members of the Special Advisory
Committee are Messrs. Campbell (Chairman), Butler and Tressler.
5
<PAGE>
Compensation of Directors
Each director who is not an employee of the Company or Kyocera
is paid an annual director's fee of $30,000, an attendance fee
of $2,500 per Board meeting and reimbursement of travel
expenses. Non-employee directors who are required to attend
committee meetings will receive $2,500 in addition to reasonable
expenses for each meeting attended. In addition, each director
who is not an employee of the Company is granted stock options
pursuant to the 1995 Non-Employee Directors Stock Option Plan.
Non-Employee Directors Stock Option Plan
Pursuant to the 1995 Non-Employee Directors Stock Option Plan
adopted by the Company, options are granted to members of the
Board who are not employees of the Company (a "Non-Employee
Director") for the purchase of an aggregate of up to 100,000
shares of Common Stock. The 1995 Non-Employee Directors Stock
Option Plan is administered by the Board.
Each Non-Employee Director serving on the Board on August 14,
1995, and each other Non-Employee Director subsequently elected
for the first time shall automatically receive an option for
7,500 shares of Common Stock (the "Initial Option"). Beginning
in the year in which the fifth anniversary of the grant of the
Initial Option occurs and in each year thereafter, each
Non-Employee Director who has been re-elected as a member of the
Board shall automatically receive an additional option for 1,000
shares of Common Stock. Each Initial Option granted under the
1995 Non-Employee Directors Stock Option Plan will vest at the
rate of 25% of the shares subject to the initial grant
commencing on the first anniversary of the date of grant, so
that such Initial Options will be fully vested as of the fourth
anniversary of the initial grant. All options other than
Initial Options become exercisable in full beginning on the
first anniversary of the date of the grant of the option. In
the event the Non-Employee Director ceases to be a director by
reason of retirement, incapacity or death, the total number of
shares of Common Stock covered by option grants shall thereupon
become exercisable; otherwise, options granted shall
automatically be forfeited if such person shall cease to be a
director. Retirement shall mean resignation from the Board upon
reaching retirement age or otherwise resigning or not standing
for re-election with the approval of the Board but shall not
include any termination of service as a result of fraud,
intentional misrepresentation, embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
majority owned subsidiary. The 1995 Non-Employee Directors
Stock Option Plan requires that options granted thereunder will
expire on the date which is ten years after the date of grant.
All options granted to Non-Employee Directors have an exercise
price equal to the average of the high and low sales prices of
the Common Stock as reported on the New York Stock Exchange
Composite Transactions Tape on the date of the grant. Options
may be exercised by the payment of cash, the tendering of shares
of Common Stock or a combination of cash and shares. Options
granted under the 1995 Non-Employee Directors Stock Option Plan
are not assignable.
Unless sooner terminated by action of the Board, the 1995
Non-Employee Directors Stock Option Plan will terminate on
August 1, 2005. Subject to certain exceptions, the 1995
Non-Employee Directors Stock Option Plan may be amended or
discontinued by the Board without stockholder approval.
Federal Income Tax Consequences
There are no Federal tax consequences either to the
Non-Employee Directors or to the Company upon the grant of an
option. On exercise of an option, the excess of the
date-of-exercise fair market value of the shares acquired over
the option price will generally be taxable to the Non-Employee
Director as ordinary income and deductible by the Company. The
disposition of shares acquired upon exercise of the option
generally result in a capital gain or loss for the Non-Employee
Director but will have no tax consequences for the Company.
Deferred Compensation Plan
The Company sponsors a nonqualified deferred compensation
program for non-employee directors which permits participants to
defer their compensation related to services rendered as a Board
member. The plan provides for several investment options.
6
<PAGE>
Executive Compensation
Cash Compensation
The following table shows cash compensation paid and certain
other compensation paid or accrued, by the Company during the
fiscal years ended March 31, 1997, 1996, and 1995, to each of
the Company's five most highly compensated executive officers as
of the end of the last completed fiscal year, including the
Chief Executive Officer, in all capacities in which they served.
<TABLE>
<CAPTION>
Summary Compensation Table
Other Securities All
Annual Underlying Other
Fiscal Salary Bonus Compensation Options Compensation
Name & Position Year ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
<FN1> <FN2>
Benedict P. Rosen 1997 $495,000 $184,650 $17,100 75,000 $32,725
President 1996 465,000 730,716 15,484 150,000 31,963
Chief Executive Officer 1995 450,000 762,830 3,788 31,721
John S. Gilbertson 1997 348,000 128,775 10,035 62,500 32,691
Executive Vice President 1996 322,500 505,470 9,056 125,000 32,019
Chief Operating Officer 1995 300,000 471,280 8,919 31,721
Donald B. Christiansen 1997 205,000 52,480 12,032 50,000 32,613
Chief Financial Officer 1996 190,000 136,530 10,307 100,000 31,940
Vice President 1995 178,000 99,240 9,639 30,972
C. Marshall Jackson 1997 183,500 46,870 8,357 50,000 32,601
Senior Vice President of 1996 170,000 134,797 8,303 100,000 30,750
Marketing 1995 158,000 122,640 8,357 26,303
Ernie Chilton 1997 180,850 20,000 15,745 50,000 24,400
Senior Vice President of 1996 162,800 123,000 9,939 100,000 22,000
Tantalum 1995 150,000 90,000 9,658 20,000
<FN>
<FN1> The stock options granted during the fiscal years ended
March 31, 1997 and 1996, were granted pursuant to the 1995 Stock
Option Plan. Includes 75,000 stock options granted to Mr. Rosen
in August 1996 which are contingent upon stockholder approval of
the proposal included in this Proxy Statement to increase the
number of shares of Common Stock which may be issued under the
1995 Stock Option Plan. See Proposal II
<FN2>All other Compensation includes: the Company's contribution
on behalf of the respective executive officer pursuant to the
terms of the AVX Ltd. Pension Plan ("Pension Plan"), AVX
Corporation Deferred Compensation Plan ("DCP"), AVX Corporation
Stock Bonus Plan ("Bonus Plan") and the AVX Corporation
Retirement Plan ("Savings Plan"). Mr. Chilton participates in a
defined benefit pension plan maintained by AVX Limited, a
wholly-owned subsidiary of AVX Corporation. The pension plan
provides for a retirement benefit at a normal Pension Date, as
defined, equal to 60% of the Final Pensionable Salary, as
defined, after having completed at least 20 years of continuing
service. Mr. Chilton has been employed by AVX Limited since
1979. The table below sets forth the component of All Other
Compensation described above, for the fiscal year ended March 31, 1997, for
the above named executive officers:
</FN>
</TABLE>
Pension Plan DCP Bonus Plan Savings Plan
Benedict P. Rosen $13,000 $4,725 $15,000
John S. Gilbertson 13,000 4,691 15,000
Donald B. Christiansen 13,000 4,613 15,000
C. Marshall Jackson 13,000 4,601 15,000
Ernie Chilton $ 24,400
7
<PAGE>
Stock Option Grants
The following table provides certain information concerning the
grant of options during the fiscal year ended March 31, 1997 to
the executive officers named in the Summary Compensation Table.
In addition, hypothetical gains or spreads, calculated based on
assumed rates of annual compounded stock price appreciation of
5% and 10% over the term of the option, have been included in
the table.
<TABLE>
<CAPTION>
Options Granted During the Fiscal Year Ended March 31, 1997
Individual Grants <FN1> <FN2>
Number of % Total
Securities Options Potential Realizable Value at
Underlying Granted Exercise Assumed Annual Rates Of Stock
Options Employees Base Price Expiration Appreciation for Option Term
Granted In Fiscal Year ($/share) 3/ Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Benedict P. Rosen 75,000 14.0% $18.125 <FN3> 8/12/06 $854,900 $2,116,500
John S. Gilbertson 62,500 11.7 18.125 8/12/06 712,400 1,805,500
Donald B. Christiansen 50,000 9.4 18.125 8/12/06 569,900 1,444,300
C. Marshall Jackson 50,000 9.4 18.125 8/12/06 569,900 1,444,300
Ernie Chilton 50,000 9.4 18.125 8/12/06 569,900 1,444,300
<FN>
<FN1> Each option was granted on August 12, 1996, to purchase
shares of Common Stock. Twenty five percent of the shares
subject to the options become exercisable one year from the date
of grant and 25% become exercisable on each of the three
succeeding anniversaries, provided the optionee continues to be
employed by the Company or any of its subsidiaries. The actual
value an optionee receives is dependent on future stock market
conditions, and there can be no assurance that the amounts
reflected in the right hand columns of the table will actually
be realized. No gain to the optionee is possible without an
appreciation in the stock value which will benefit all
shareholders commensurately. Includes 75,000 shares of Common
Stock underlying stock options granted to Mr. Rosen which are
contingent upon the approval by the shareholders of the proposal
included in this Proxy Statement to increase the number of
shares of Common Stock which may be issued under the 1995 Stock
Option Plan .
<FN2> The options were granted pursuant to the 1995 Stock Option
Plan and do not provide for tandem or stand alone stock
apprecation rights.
<FN3> Payment for shares of Common Stock upon exercise of a stock
option may be made in cash, or with the Company's consent,
shares of Common Stock or a combination of cash and shares of
Common Stock.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
Number of Shares Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at Fiscal Year End at Fiscal Year End
Name Exercisable (#) Unexercisable (#) Exercisable($) Unexercisable ($)
<S> <C> <C> <C> <C>
Benedict P. Rosen 37,500 187,500 $0 $206,250
John S. Gilbertson 31,250 156,250 0 171,875
Donald B. Christiansen 25,000 125,000 0 137,500
C. Marshall Jackson 25,000 125,000 0 137,500
Ernie Chilton 25,000 125,000 0 137,500
</TABLE>
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended March 31, 1997, the Compensation
Committee was comprised of Messrs. Inamori, Itoh, Campbell and
Tressler. Dr. Inamori is Chairman of the Board and Mr. Itoh is
President of Kyocera. Kyocera owns 66,150,000 shares, or 75.2%,
of the Company's outstanding Common Stock and has engaged in a
significant number and variety of related company transactions.
Report of Compensation Committee
This report provides an overview of the Company's executive
compensation philosophy and describes the role of the
Compensation Committee.
8
<PAGE>
The Board established a Compensation Committee in August 1995,
in connection with the Company's initial public offering.
Beginning with fiscal year commencing April 1, 1996, the
Compensation Committee, subject to review by the Board, made
determinations regarding salary levels and annual incentive
bonus opportunities for executive officers, and performed such
other compensation related functions that were delegated to the
Compensation Committee by the Board.
The Company's compensation policy reflects a commitment to an
executive compensation plan which enables the Company to
attract, retain and motivate highly qualified management
professionals. The Company's compensation philosophy is to
directly align executive compensation with the financial
performance of the organization. The Company believes that the
relationship between executive compensation and Company
performance will create benefit for all shareholders.
The Executive compensation program has been developed by the
Compensation Committee using various factors which include,
historical earnings, review of industry competition executive
compensation plans, and consultation with compensation experts.
The key elements of the executive compensation program are base
salary, annual incentive bonus and stock options in addition to
those benefits provided under the Company's retirement plans.
The Compensation Committee and its subcommittee, The Equity
Compensation Committee, review and approve each element of the
Company's executive compensation program and periodically
assesses the effectiveness of the program as a whole. This
program covers the chief executive officer, the four other named
executive officers and all other executive officers of the
Company. Specifically, the committees approve the salaries of
all executive officers, cash awards under the Company's
Officers' Annual Incentive Program ("OAIP"), the grant of stock
options under the 1995 Stock Option Plan ("SOP"), and the
provision of any special benefits or perquisites to executive
officers.
The Base Salary Program
The base salary program is intended to provide base salary
levels that are externally competitive and internally equitable,
and to reflect each individual's sustained performance and
cumulative contribution to the Company. Each executive
officer's individual performance is reviewed to arrive at merit
increase determinations. These merit increases are then
reviewed within the context of the total merit increase budget
to determine reasonableness.
The Officers' Annual Incentive Program
The OAIP provides for annual cash incentive compensation based
on various performance measures for executive officer positions.
Bonus awards are paid under the OAIP generally if the Company's
financial performance exceeds a predetermined performance
target. The bonus awards for the Chief Executive Officer and
the Chief Operating Officer are based on a percentage of
profits. The rest of the executive officer bonuses are derived
from a pool determined based on a percentage of profits.
Stock Option Plan
The SOP is designed to reward executive officers and other key
employees directly for appreciation in the long-term price of
the Company's stock. The plan directly links the compensation
of executive officers to gains by the shareholders and
encourages executive officers to adopt a strong stakeholder
orientation in their work. The SOP also places what can be a
significant element of compensation at risk because the options
have no value unless there is apprecation over time in the value
of Company stock.
With the understanding that the value (if any) of stock options
is based on future performance, the Company bases stock option
grants on levels of expected value for long-term incentive
grants among other companies and other comparable corporate
employers. The Equity Compensation Committee periodically
reviews the practices, grant levels, and grant values of other
companies to ensure the plan continues to meet the Company's
objectives.
Chief Executive Officer Compensation
As President and Chief Executive Officer of the Company, Mr.
Rosen's base salary and merit increase for fiscal year ended
March 31, 1997, reflect his substantial responsibilities. Based
on these responsibilities, the Board awarded Mr. Rosen a base
salary of $495,000 reflecting a merit increase of 6.4% over the
prior year.
Mr. Rosen received an Annual Incentive Bonus. Such bonus was
based on the Company's financial results for the fiscal year
ended March 31, 1997. In August 1996, Mr. Rosen was awarded
stock options for 75,000 shares of Common Stock condtioned upon
shareholder approval of an increase in the number of shares
authorized for issuance under the 1995 Stock Option Plan.
9
<PAGE>
Deferred Compensation Plan
Each employee of the Company whose annual compensation is in
excess of $150,000, is eligible to participate in the deferred
compensation plan. The Company contributes an equivalent amount
that the officer would have been entitled to under the Company's
regular retirement program, up to allowable statutory
limitations, but is otherwise limited under regulatory
requirements.
Summary
The Compensation Committee believes the executive compensation
program is adequate to accomplish the program's goals of
attracting, retaining, and motivating highly qualified
management professionals. The Committee additionally believes
the executive compensation program is fair to both the executive
officers and the Company.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD:
Kazuo Inamori, Chairman
Carroll A. Campbell, Jr.
Kensuke Itoh
Richard Tressler
Employment Agreement
Benedict Rosen has an employment agreement that provides for a
two year advisory period upon his retirement from the Company.
During this advisory period Mr. Rosen will receive an annual
payment equivalent to his most recent base salary. If Mr. Rosen
dies previous to or during the two year advisory period, his
heirs will be entitled to the compensation Mr. Rosen would have
received.
Performance Graph
The following chart compares the percentage change in the
cumulative total shareholder return on the Company's Common
Stock from August 15, 1995 through March 31, 1997, with the
cumulative total return of the S&P 500 Stock Index and a Peer
Group Index. The Peer Group is comprised of the following
companies: AMP, Amphenol, Kemet, Methode, Molex and Vishay.
Fiscal year 1996 Peer Group figures have been revised to exclude
Augat, which is no longer a publicly traded company.
Comparison of Quarterly Cumulative Total Return:
AVX, Peer Group, S&P 500
Value of $100 Invested on August 15, 1995
<TABLE>
<CAPTION>
Aug-15-95 Sep-30-95 Dec-31-95 Mar-31-96 Jun-30-96 Sep-30-96 Dec-31-96 Mar-31-97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVX 100 131 104 86 73 91 85 83
Custom Peer Group 100 97 91 94 91 91 92 85
S&P 500 100 105 111 117 122 126 137 140
</TABLE>
The Stock Price Performance Graph above and the foregoing
Report of Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Act of 1934,
except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed
filed under such Acts.
10
<PAGE>
PROPOSAL II
PROPOSED RATIFICATION OF AN AMENDMENT
TO THE 1995 STOCK OPTION PLAN
The Board has adopted, subject to stockholder approval,
amendments to the 1995 Stock Option Plan to (i) increase the
number of shares that may be issued under the plan by 1,100,000
and (ii) modify the 300,000 share limit on the stock options
that may be granted to any one individual to apply to grants in
any five-year period.
As of May 24, 1997, 1,488,500 shares of Common Stock were
subject to outstanding options granted under the 1995 Stock
Option Plan, excluding options conditionally granted (the
"Conditional Grant") on August 12, 1996 to Mr. Rosen to purchase
75,000 shares of Common Stock at $18.125 per share, which grant
was conditioned upon stockholder approval of an increase in
number of shares available for issuance under the 1995 Stock
Option Plan. Other than the Conditional Grant to Mr. Rosen, no
additional stock options are presently contemplated to be
granted under the 1995 Stock Option Plan.
The purpose of the 1995 Stock Option Plan is to promote Company
success by aligning employee financial interests with long-term
shareholder value. The Board believes that the number of shares
remaining available for issuance will be insufficient to achieve
the purpose of the plan unless the additional shares are
authorized. The modification of the 300,000 share limit with
respect to which any one individual may be granted stock options
to apply to grants in any five-year period allows the Company
more flexibility in providing equity incentives to its employees
while assuring that any compensation deemed paid by the Company
in connection with the exercise of these options will qualify as
performance-based compensation which is not subject to the $1
million limitation on the tax deductibility of executive
compensation per covered individual imposed under Section 162
(m) of the Internal Revenue Code of 1986, as amended
(the "Code" ).
The material terms of the 1995 Stock Option Plan are summarized
below.
Stock Option Plan
Pursuant to the 1995 Stock Option Plan, as amended, options may
be granted to officers and key employees of the Company for the
purchase of up to an aggregate of 2,650,000 shares of Common
Stock. As of May 24, 1997, approximately 90 employees (including
10 officers) of the Company were eligible to participate in the
1995 Stock Option Plan. The 1995 Stock Option Plan is
administered by the Equity Compensation Committee which
determines, in its discretion, the number of shares subject to
each option granted and the related purchase price and option
period. Incentive stock options ("ISO's"), as defined by the
Code and nonqualified stock options ("NQSO's") may currently be
granted under the 1995 Stock Option Plan. No person, however,
may be granted options under this plan during any five year
period representing an aggregate of more than 300,000 shares of
Common Stock. The 1995 Stock Option Plan requires that the
exercise price for each stock option may not be less than 100%
of the fair market value of the Common Stock on the date the
option is granted.
Under the 1995 Stock Option Plan, no ISO may be granted to an
employee who owns more than 10% of the total combined voting
power of all classes of outstanding stock of the Company unless
the option price is at least 110% of the fair market value of
the Common Stock at the date of grant. An ISO may not be
granted to any employee if the aggregate fair market value of
the Common Stock (determined as of the date of grant) with
respect to which such options have been granted are exercisable
for the first time by such employee during any calendar year
exceeds $100,000.
The 1995 Stock Option Plan requires that each stock option
shall expire on the date specified by the Equity Compensation
Committee, but not more than ten years from its date of grant;
however, in the case of an employee who at the time of such
grant owns more than 10% of the total combined voting power of
all classes of outstanding stock of the Company, such options
shall not be exercisable after the expiration of five years
after the date of grant. Options will become exercisable in
accordance with the stock option agreement; provided, however,
that no options shall be exercisable until the six-month
anniversary of the date of its grant. Except as provided
otherwise in the applicable agreement or upon termination of
employment due to death, retirement after age 55 ("Retirement")
or incapacity, if the employee voluntarily terminates his
employment or he is terminated for cause, his or her option
(whether or not vested) shall immediately terminate. If the
employee's employment is terminated by the Company for reasons
other than cause, the option may be exercised within 90 days of
such termination but in no event beyond the scheduled expiration
of the option. If the employee's employment is terminated due
to death, retirement or incapacity, the option may (a) at the
discretion of the Equity Compensation Committee, become fully
vested and (b) be exercised, to the extent vested, including
options vested in accordance with (a) above, during the one-year
period following such termination but in no event beyond the
scheduled expiration of the option. Options may be exercised by
the payment of cash, or unless prohibited by the option
agreement, by the delivery of shares of Common Stock. Options
granted under the 1995 Stock Option Plan are not assignable.
11
<PAGE>
Federal Income Tax Consequences
The following brief description of the tax consequences of
awards under the 1995 Stock Option Plan is based on Federal tax
laws currently in effect and does not purport to be a complete
description of such Federal tax consequences.
Options
There are no Federal tax consequences either to the optionee or
to the Company upon the grant of an ISO or of a NQSO. On the
exercise of an ISO, the optionee will not recognize any income
and the Company will not be entitled to a deduction, although
such exercise may give rise to alternative minimum tax liability
for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of
grant or one year of the date of exercise, the optionee will
recognize ordinary income and, subject to the limitation
described below, the Company will be entitled to a deduction,
equal to the excess of the fair market value of the shares on
the date of exercise over the option price (limited generally to
the gain on the sale). The balance of any gain, and any loss,
will be treated as a capital gain or loss to the optionee. If
the shares are disposed of after the foregoing holding
requirements are met, the Company will not be entitled to any
deduction, and the entire gain or loss for the optionee will be
treated as a capital gain or loss.
On exercise of a NQSO, the excess of the date-of-exercise fair
market value of the shares acquired over the option price will
generally be taxable to the optionee as ordinary income and,
subject to the limitation described below, deductible by the
Company. The disposition of shares acquired upon exercise of a
NQSO will generally result in a capital gain or loss for the
optionee, but will have no tax consequences for the Company.
Limitation on Company's Deduction
Pursuant to Code Section 162(m), the Company's tax deduction
for all compensation paid to specified officers in any one year
is limited to $1,000,000. The Company's deduction arising from
an underlying stock acquired through the exercise of an NQSO (or
the sale of the underlying stock acquired through the exercise
of an ISO before the required holding periods are met) will be
exempt from this limitation if certain outside director and
shareholder approval requirements are met.
The affirmative vote of the holders of a majority of the shares
of Common Stock of the Company present in person or represented
by proxy at the Annual Meeting and entitled to vote on the
Proposal is required for approval of the amendments to the 1995
Stock Option Plan. The amendments to the 1995 Stock Option Plan
are conditional upon and are of no force and effect unless the
proposal receives approval by the requisite vote of the
shareholders.
The Board recommends a vote FOR ratification of the amendments
to the 1995 Stock Option Plan.
12
<PAGE>
PROPOSAL III
PROPOSED RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board has appointed Coopers & Lybrand, L.L.P. as the
independent auditors to examine the accounts of the Company for
the fiscal year commencing April 1, 1997. Coopers & Lybrand
L.L.P. has been serving the Company in this capacity for many
years. In the event that ratification of this selection of
auditors is not approved by the affirmative vote of a majority
of the shares voting on the proposal, the selection of
independent auditors will be reconsidered by the Board.
A member of Coopers & Lybrand L.L.P. is expected to be in
attendance at the Annual Meeting with the opportunity to make a
statement and respond to questions.
The Board recommends a vote FOR ratification of the appointment
of Coopers & Lybrand L.L.P. as the Company's independent
auditors.
Shareholder Proposals
If any shareholder intends to present a proposal to the Company
for inclusion in its proxy statement relating to the Annual
Meeting of Shareholders expected to be held in July 1998, or
wishes to recommend nominees to the Board, such proposal, in
writing and addressed to the Corporate Secretary, must be
received by the Company no later than January 16, 1998.
In general, stockholder proposals intended to be presented at
an Annual Meeting, including proposals for the nomination of
directors, must be received by the Company 60 days in advance of
the meeting, or prior to May 15, 1998, to be considered for the
1998 Annual Meeting.
Proxy Solicitation
The entire cost of this solicitation will be borne by the
Company, including reimbursement of banks, brokerage firms,
custodians, nominees and fiduciaries for their reasonable
Xexpenses in sending proxy materials to the beneficial owners of
stock. Solicitation will primarily be made by mail, but proxies
may be solicited personally, by telephone or by facsimile. In
addition, the Company has retained Wachovia Bank of North
Carolina to assist in the solicitation of proxies at a fee
estimated to be $8,000, excluding out-of-pocket expenses.
By order of the Board,
/S/ John S. Gilbertson
-------------------
John S. Gilbertson
Corporate Secretary
June 5, 1997
13
<PAGE>
AVX CORPORATION
Directors Recommend Voting For 1, 2 and 3
Mark box at right if an address change or comment has been noted
on the reverse side of this card. _______
RECORD DATE SHARES:
Please be sure to sign and date this Proxy Date_____________________
Shareholder sign here ____________________ Co-owner sign here ____________
DETACH CARD
1. Election of Directors, For Withhold For All
Except
Nominees:
Marshall D. Butler Kensuke Itoh Masahiro Umemura
Carroll A. Campbell, Jr. Rodney N. Lanthorne Masahiro Yamamoto
Donald B. Christiansen Benedict P. Rosen Michihisa Yamamoto
John S. Gilbertson Richard Tressler Yuzo Yamamura
Kazuo Inamori
NOTE: 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(s') name(s). Your shares will be voted for the
remaining nominee(s).
2. Ratify an increase to the number of shares by 1,100,000 that
may be issued pursuant to the terms of the 1995 Stock Option
Plan and modify the 300,000 share limit.
For Against Abstain
3. Proposal to approve the election of Coopers & Lybrand
L.L.P. certified public accountants as the independent auditors
of the corporation.
For Against Abstain
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AVX CORPORATION
17TH Ave. South - Myrtle Beach, South Carolina 29577
The undersigned hereby appoint Benedict P. Rosen, President and
Chief Executive Officer, or John S. Gilbertson, Executive Vice
President, Chief Operating Officer and Corporate Secretary, as
Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated
on the reverse side, all the shares of Common Stock of AVX
Corporation held of record by the undersigned on May 24, 1997 at
the Annual Meeting of Shareholders to be held on July 17, 1997,
or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER, IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) hereon.
When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer, if a partnership, please sign in partnership
name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_____________________________ _____________________________
_____________________________ ______________________________
___________________________ _____________________________
