<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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
SBE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not applicable
- --------------------------------------------------------------------------------
(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)(1)
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>
[SBE LOGO]
SBE, INC.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 1997
TO THE SHAREHOLDERS OF SBE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SBE, Inc.,
a California corporation (the "Company"), will be held on Wednesday, April 16,
1997, at 5:00 p.m. local time, at the Company's principal offices at 4550 Norris
Canyon Road, San Ramon, California, for the following purposes:
1. To elect five directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of Coopers & Lybrand LLP as the Company's
independent auditors for the fiscal year ending October 31, 1997.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on February 28, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
[signature]
Timothy J. Repp
CHIEF FINANCIAL OFFICER, VICE
PRESIDENT, FINANCE AND SECRETARY
San Ramon, California
March 4, 1997
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT ATTENDANCE AT THE MEETING WILL NOT BY ITSELF REVOKE A PROXY.
FURTHERMORE, IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
SBE, INC.
4550 NORRIS CANYON ROAD
SAN RAMON, CALIFORNIA 94583
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of SBE, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Wednesday,
April 16, 1997, at 5:00 p.m. local time, or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at 4550 Norris Canyon Road, San
Ramon, California. The Company intends to mail this proxy statement and
accompanying proxy card on or about March 7, 1997, to all shareholders entitled
to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on February
28, 1997 (the "Record Date") will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on the Record Date, the Company had
outstanding and entitled to vote 2,482,420 shares of Common Stock.
Each holder of record of Common Stock on the Record Date will be entitled to
one vote for each share held on all matters to be voted upon. With respect to
the election of directors, shareholders may exercise cumulative voting rights.
Under cumulative voting, each holder of Common Stock will be entitled to five
votes for each share held. Each shareholder may give one candidate all the votes
such shareholder is entitled to cast or may distribute such votes among as many
such candidates as such shareholder chooses. However, no shareholder will be
entitled to cumulate votes unless the candidate's name has been placed in
nomination prior to the voting and at least one shareholder has given notice at
the meeting, prior to the voting, of his or her intention to cumulate votes.
Unless the proxyholders are otherwise instructed, shareholders, by means of the
accompanying proxy, will grant the proxyholders discretionary authority to
cumulate votes.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
towards a quorum but are not counted for any purpose in determining whether a
matter is approved.
1
<PAGE>
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 4550
Norris Canyon Road, San Ramon, California 94583, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy. Furthermore, if the shares are held of record by a broker, bank
or other nominee and the shareholder wishes to vote at the meeting, the
shareholder must obtain from the record holder a proxy issued in the
shareholder's name.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the Company's
1998 Annual Meeting of Shareholders must be received by the Company not later
than November 7, 1997, in order to be included in the proxy statement and proxy
relating to that annual meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five nominees for the five Board positions presently authorized in
the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of shareholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Mr.
Raimon L. Conlisk, Mr. George E. Grega and Mr. William B. Heye, Jr. are
currently directors of the Company and were previously elected by the
shareholders. Mr. Ronald J. Ritchie and Dr. Randall L-W. Caudill were appointed
to the Board in February 1997 to fill the vacancies left upon the retirement of
Mr. William R. Gage and Mr. Harold T. Hahn in late 1996.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five nominees named below, subject to
the discretionary power to cumulate votes. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
The five candidates receiving the highest number of affirmative votes cast
at the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ----------------------------------------------------------------------------- --- -----------------
<S> <C> <C>
Mr. Raimon L. Conlisk........................................................ 74 1991
Mr. George E. Grega.......................................................... 67 1991
Mr. William B. Heye, Jr...................................................... 58 1991
Mr. Ronald J. Ritchie........................................................ 56 1997
Dr. Randall L-W. Caudill..................................................... 49 1997
</TABLE>
From 1977 to date, Mr. Conlisk has been President of Conlisk Associates, a
management consulting firm serving high-technology companies in the United
States and foreign countries. Since April 1994, Mr. Conlisk has served as
Chairman of the Board of Directors of Exar Corporation ("Exar"), a manufacturer
of application-specific integrated circuits. Mr. Conlisk also has served as a
2
<PAGE>
director of Exar since 1985. Mr. Conlisk was President, from 1984 to 1989, and
Chairman of the Board of Directors, from 1989 until retirement in June 1990, of
Quantic Industries, Inc. ("Quantic"), a manufacturer of electronic systems and
devices for aerospace, defense, and factory automation applications, and he
served as a director of Quantic from 1970 until retirement. From 1970 to 1973
and from 1987 to 1990, Mr. Conlisk served as a director of the American
Electronics Association.
From January 1985 to date, Mr. Grega has been President of George E. Grega
Associates, an international business and management consulting firm. From 1985
to date, Mr. Grega has served as a director of Exar. Mr. Grega was an employee
of General Electric Company, a diversified international manufacturer of
defense, electrical and other products, from 1950 through 1984, including
service from 1970 to 1973 as President and Chief Executive Officer of General
Electric Japan, Ltd.
Mr. Heye has been President and Chief Executive Officer of the Company since
November 1991. From 1989 to November 1991, he served as Executive Vice President
of Ampex Corporation, a manufacturer of high-performance scanning recording
systems, and President of Ampex Video Systems Corporation, a wholly-owned
subsidiary of Ampex Corporation and a manufacturer of professional video
recorders and editing systems for the television industry. From 1986 to 1989,
Mr. Heye served as Executive Vice President of Airborn, Inc., a manufacturer of
components for the aerospace and military markets. Prior to 1986, Mr. Heye
served in various senior management positions at Texas Instruments, Inc. in the
United States and overseas, including Vice President and General Manager of
Consumer Products and President of Texas Instruments Asia, Ltd., with
headquarters in Tokyo, Japan.
Mr. Ritchie has been President and CEO of Akashic Memories Corporation, a
firm supplying thin film hard disk media to manufacturers of disk drive
products, since November 1996. Mr. Ritchie was President of Ritchie Associates,
a business and management consulting firm, from May 1994 to November 1996. From
August 1992 to April 1994, Mr. Ritchie was President and Chief Operating Officer
of Computer Products, Inc. a supplier of power conversion components and system
applications for the computer and networking industry. Prior to August 1992, Mr.
Ritchie held President or senior executive positions at Ampex Corporation,
Canaan Computer Corporation, Allied Signal Corporation and Texas Instruments.
From January 1997 to date, Dr. Caudill has been President of Dunford Hill
Capital Partners, a consulting firm serving high-technology and biotechnology
companies in the United States and abroad. From February 1993 to December 1996,
Dr. Caudill served as Managing Director of the San Francisco corporate finance
office of Prudential Securities, an investment banking firm. From June 1987 to
February 1993, Dr. Caudill was Managing Director in charge of Prudential
Securities' Mergers and Acquisitions Department, and he served as co-head of the
Investment Banking department in 1991. Dr. Caudill received a D. Phil. from
Oxford University, where he was a Rhodes Scholar and a teaching fellow.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended October 31, 1996, the Board held 12 meetings.
The Board has an Audit Committee and a Compensation Committee, but does not have
a nominating committee or any committee performing a similar function.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained;
receives and considers the auditors' comments as to controls, adequacy of staff
and management performance and procedures in connection with audit and financial
controls; and performs other related duties delegated to such committee by the
Board. The Audit Committee, which consisted of two non-employee directors,
Messrs. Hahn and Conlisk, held three meetings during fiscal 1996. The Board
appointed Mr. Grega to fill the vacancy in the Audit Committee following Mr.
Hahn's retirement.
3
<PAGE>
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee, which consists of two non-employee
directors, Messrs. Conlisk and Grega, held 15 meetings during fiscal 1996.
During fiscal 1996, each Board member attended 75% or more of the aggregate
of the meetings of the Board and of the committees on which he served during the
fiscal year, held during the period for which he was a director or committee
member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Coopers & Lybrand LLP as the Company's independent
auditors for the fiscal year ending October 31, 1997 and has further directed
that management submit the selection of independent auditors for ratification by
the shareholders at the Annual Meeting. Coopers & Lybrand LLP has audited the
Company's financial statements since 1974. Representatives of Coopers & Lybrand
LLP are expected to be present at the Annual Meeting, will have an opportunity
to make a statement if they so desire and will be available to respond to
appropriate questions.
Shareholder ratification of the selection of Coopers & Lybrand LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Coopers & Lybrand
LLP to the shareholders for ratification as a matter of good corporate practice.
If the shareholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its shareholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and voting at the Annual Meeting will be required
to ratify the selection of Coopers & Lybrand LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP TABLE
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1996 by (a) all those
known by the Company to be beneficial owners of more than 5% of its Common
Stock; (b) each director and nominee for director; (c) each of the executive
officers named in the Summary Compensation Table; and (d) all Named Executive
Officers, other executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
------------------------------
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF TOTAL (2)
- --------------------------------------------------------------------------------- ----------- -----------------
<S> <C> <C>
Mr. Steven T. Newby.............................................................. 172,750 7.0
6116 Executive Boulevard, Suite 701
Rockville, MD 20852
Mr. William R. Gage.............................................................. 158,471 6.4
4550 Norris Canyon Road
San Ramon, CA 94583
Mr. William B. Heye, Jr. (3)..................................................... 145,599 5.5
4550 Norris Canyon Road
San Ramon, CA 94583
Mr. Franklin P. Johnson.......................................................... 133,995 5.4
2275 E. Bayshore Road, Suite 150
Palo Alto, CA 94301
Mr. Raimon L. Conlisk (3)........................................................ 9,500 *
Mr. George E. Grega (3).......................................................... 9,500 *
Mr. Ronald J. Ritchie............................................................ -- --
Dr. Randall L-W. Caudill......................................................... -- --
Mr. Eugene K. Buechele (3)....................................................... 19,200 *
Mr. Michael R. Coker (3)......................................................... 25,000 1.0
Mr. Norman E. O'Shea (3)......................................................... 13,500 *
Mr. Anthony J. Spielman (3)...................................................... 10,100 *
All Named Executive Officers, other executive officers and directors as a group
(9 persons) (4)................................................................ 254,474 9.3
</TABLE>
- ------------------------
* Less than one percent.
(1) This table is based on information supplied by officers, directors and
principal shareholders of the Company and on any Schedules 13D or 13G filed
with the Securities and Exchange Commission. Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the shareholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned.
(2) Applicable percentages are based on 2,479,920 shares outstanding on December
31, 1996, adjusted as required by rules promulgated by the Securities and
Exchange Commission.
(3) Includes 143,500, 9,500, 9,500, 19,200, 25,000, 13,500 and 10,000 shares
that Messrs. Heye, Conlisk, Grega, Buechele, Coker, O'Shea and Spielman,
respectively, have the right to acquire within 60 days of the Record Date
under the Company's option plans. Messrs. Buechele, O'Shea and Spielman are
no longer employees of the Company, and the options held by them set forth
above expire in March 1997.
(4) Includes shares held by Messrs. Heye, Conlisk and Grega described in the
footnotes above and 20,375 shares that executive officers of the Company not
named in the table above have the right to acquire within 60 days of the
Record Date under the Company's option plans.
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
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of
5
<PAGE>
the Company's equity securities, to file with the Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
shareholders are required by Commission regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
During fiscal 1996, non-employee directors received for their services as
directors an annual retainer of $3,000 plus fees of $1,000 for each Board and
Committee meeting attended and a fee of $500 for each telephone conference Board
or Committee meeting in which such director participated. During fiscal 1996,
the two non-employee directors who are members of the Company's Corporate
Strategy Committee (Messrs. Conlisk and Grega) received an additional $3,000
each fiscal quarter as directors' fees in connection with their services on the
Corporate Strategy Committee. In fiscal 1996, the total compensation paid to
non-employee directors as directors' fees was $59,000. The members of the Board
are also eligible for reimbursement for their expenses in connection with
attendance at Board meetings in accordance with Company policy.
Each non-employee director of the Company also receives stock option grants
under the 1991 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Only non-employee directors of the Company are eligible to receive
options under the Directors' Plan. Options granted under the Directors' Plan are
intended by the Company not to qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended.
Option grants under the Directors' Plan are non-discretionary. On April 1 of
each year (or the next business day should such date be a legal holiday), each
member of the Company's Board who is not an employee of the Company is
automatically granted under the Directors' Plan, without further action by
either the Company, the Board or the shareholders, an option to purchase 5,000
shares of Common Stock of the Company. No other options may be granted at any
time under the Directors' Plan. The exercise price of options granted under the
Directors' Plan is 100% of the fair market value of the Common Stock subject to
the option on the date of the option grant. Options granted under the Directors'
Plan vest in four equal installments commencing on the date one year after the
grant of the option, provided that the optionee has, during the entire year
prior to each such vesting date, provided continuous service to the Company as a
non-employee director or as an employee of the Company or an affiliate of the
Company. The term of options granted under the Directors' Plan is five years. In
the event of a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction
involving the Company, the vesting of each option will accelerate and the option
will terminate if not exercised prior to the consummation of the transaction
unless any surviving corporation assumes such options or substitutes similar
options for such options.
During fiscal 1996, the Company granted options covering 5,000 shares to
each non-employee director of the Company at an exercise price per share of
$7.75, the fair market value of such Common Stock on the date of grant (based on
the closing sales price as reported on the Nasdaq National Market System on the
date of grant). As of December 31, 1996, 16,000 options had been exercised under
the Directors' Plan.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended October 31, 1996, 1995
and 1994, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at October 31, 1996 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
---------------
ANNUAL COMPENSATION NUMBER OF
SHARES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS OPTIONS (2) COMPENSATION (3)
- ------------------------------------------ --------- ----------- --------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Mr. William B. Heye, Jr. ................. 1996 $ 210,060 -- 15,000 $ 6,573
President and 1995 $ 210,060 -- -- $ 6,865
Chief Executive Officer 1994 $ 200,052 $ 16,658 -- $ 8,253
Mr. Eugene K. Buechele (4) ............... 1996 $ 137,808 -- 40,000 $ 1,908
Vice President, Engineering 1995 $ 137,808 -- 5,000 $ 2,389
1994 $ 117,757 $ 10,066 20,000 $ 3,937
Mr. Michael R. Coker (4) ................. 1996 $ 128,540 $ 20,000 60,000 $ 2,533
Vice President, 1995 -- -- -- --
Sales and Marketing 1994 -- -- -- --
Mr. Norman E. O'Shea (4) ................. 1996 $ 120,000 $ 12,000 19,000 $ 2,447
Vice President, Manufacturing 1995 $ 88,615 -- -- $ 2,139
1994 -- -- -- --
Mr. Anthony J. Spielman (4) .............. 1996 $ 145,004 -- 10,000 $ 1,065
Vice President, 1995 $ 132,504 -- 5,000 $ 1,095
Network Systems Marketing 1994 $ 63,464 $ 20,126 15,000 --
</TABLE>
- ------------------------
(1) Includes amounts earned but deferred at the election of the Named Executive
Officer pursuant to the Company's Savings and Investment Plan and Trust.
(2) Fiscal 1996 amounts include certain options granted in fiscal 1996 and prior
fiscal years that were repriced in fiscal 1996. See "Option Repricing
Information" below.
(3) Includes $1,995, $754, $283, $377 and $432 attributable in fiscal 1996,
$1,995, $455, $0, $339 and $432 attributable in fiscal 1995 and $2,251,
$404, $0, $0 and $0 attributable in fiscal 1994 to Messrs. Heye, Buechele,
Coker, O'Shea and Spielman, respectively, to premiums paid by the Company
for group term life insurance. The remaining sum for each Named Executive
Officer was paid by the Company as matching contributions to the Company's
Savings and Investment Plan and Trust.
(4) Messrs. Coker, O'Shea and Spielman joined the Company in March 1996,
February 1995 and May 1994, respectively. Mr. O'Shea left the Company in
December 1996 in connection with sale of the Company's manufacturing
operations to XeTel Corporation. Messrs. Buechele and Spielman left the
Company in October 1996.
7
<PAGE>
STOCK OPTION INFORMATION
The Company grants options to its executive officers under its 1987 Stock
Option Plan (the "1987 Plan"). As of October 31, 1996, options to purchase a
total of 791,050 shares had been granted and were outstanding under the 1987
Plan and options to purchase 13,913 shares remained available for grant
thereunder.
The following tables show for fiscal 1996 certain information regarding
options granted to the Named Executive Officers during fiscal 1996 and options
held by the Named Executive Officers at fiscal year end. No Named Executive
Officer exercised any options during fiscal 1996.
STOCK OPTION GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED (1) FISCAL YEAR (2) PER SHARE (3) DATE 5% 10%
- ----------------------------------- ------------- ------------------- --------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mr. William B. Heye, Jr............ 15,000 1.7% $ 10.50 11/28/02 $ 64,118 $ 149,423
Mr. Eugene K. Buechele............. 15,000 1.7% $ 10.50 11/28/02 $ 64,118 $ 149,423
20,000 2.3% $ 8.93 12/05/00 $ 64,118 $ 149,423
5,000 0.6% $ 8.93 12/05/01 $ 18,177 $ 42,360
Mr. Michael R. Coker............... 40,000 4.6% $ 4.38 09/24/03 $ 71,324 $ 166,215
20,000 2.3% $ 8.25 03/07/03 $ 67,172 $ 156,538
Mr. Norman E. O'Shea............... 10,000 1.1% $ 4.38 09/24/03 $ 17,831 $ 41,554
4,000 0.5% $ 10.50 11/28/02 $ 17,098 $ 39,846
15,000 1.7% $ 8.93 02/06/02 $ 54,531 $ 127,081
Mr. Anthony J. Spielman............ 5,000 0.6% $ 10.50 11/28/02 $ 64,118 $ 149,423
</TABLE>
- ------------------------
(1) Generally, options granted vest annually in equal increments over a period
of four years and have a term of seven years. The Board may reprice the
options granted. Certain of the options listed above were issued as a result
of repricing options originally granted in fiscal 1996 and prior fiscal
years. See "Option Repricing Information" below.
(2) Options to purchase 888,606 shares of Common Stock were issued in fiscal
1996, 374,608 of which were issued in an option repricing in May 1996. See
"Option Repricing Information" below.
(3) Exercise price is the closing sales price of the Company's Common Stock as
reported on the Nasdaq National Market on the date of grant or repricing.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL YEAR END (1)
------------------------------
NAME EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Mr. William B. Heye, Jr........................................................ 143,150 17,250
Mr. Eugene K. Buechele......................................................... 19,200 20,800
Mr. Michael R. Coker........................................................... 0 60,000
Mr. Norman E. O'Shea........................................................... 4,750 24,250
Mr. Anthony J. Spielman........................................................ 10,000 15,000
</TABLE>
- ------------------------
(1) The exercise price of all options held by Named Executive Officers exceeded
the closing sales price of the Company's Common Stock on October 31, 1996
(I.E., were not "in-the-money" on October 31, 1996).
8
<PAGE>
OPTION REPRICING INFORMATION
BOARD OF DIRECTORS REPORT ON OPTION REPRICING
On May 30, 1996, after a significant decline in the market price of the
Company's Common Stock, the Board implemented a Company-wide repricing program
pursuant to which all employees (including executive officers) were offered the
opportunity to have those of their stock options with exercise prices greater
than the then-market value of the Common Stock modified to, among other things,
reduce the exercise price of incentive stock options and nonstatutory stock
options to $10.50 and $8.93 per share, respectively, which equals 100% and 85%,
respectively, of the fair market value of the Common Stock on the date of the
repricing. A substantial majority of the repriced options were held by executive
officers. The Board took this action because it determined that the purpose of
the Company's stock option program of providing an equity incentive for
optionees to remain in the employ of the Company and work diligently in its best
interests would not be achieved for optionees holding options exercisable above
the market price, particularly in light of the intense competition in the
networking product industry for talented employees, and that retaining the
services of such employees was absolutely critical in fostering the best
interest of the Company and the stockholders.
Raimon L. Conlisk, Chairman
George E. Grega
TEN-YEAR OPTION REPRICING TABLE
The table set forth below contains certain information concerning the
repricing of options received by the Named Executive Officers and other
executive officers of the Company during the last ten years.
<TABLE>
<CAPTION>
NUMBER OF PER SHARE
SECURITIES MARKET PRICE EXERCISE NEW PER
UNDERLYING OF STOCK AT PRICE PER SHARE LENGTH OF ORIGINAL
OPTIONS TIME OF SHARE AT TIME EXERCISE OPTION TERM REMAINING
NAME DATE REPRICED REPRICING OF REPRICING PRICE AT DATE OF REPRICING
- ----------------------------- --------- ------------- ------------- ------------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. William B. Heye, Jr., ... 5/30/96 15,000 $ 10.50 $ 12.00 $ 10.50 6 years
President and
Chief Executive Officer
Mr. Eugene K. Buechele, ..... 5/30/96 15,000 $ 10.50 $ 12.00 $ 10.50 6 years
Vice President, Engineering 5/30/96 5,000 $ 10.50 $ 9.00 $ 8.93 4 years
5/30/96 20,000 $ 10.50 $ 9.25 $ 8.93 3 years
Mr. Michael K. Coker, ....... -- -- -- -- -- --
Vice President,
Sales and Marketing
Mr. Norman E. O'Shea,........ 5/30/96 4,000 $ 10.50 $ 12.00 $ 10.50 6 years
Vice President, 5/30/96 15,000 $ 10.50 $ 9.75 $ 8.93 5 years
Manufacturing
Mr. Timothy J. Repp, ........ 5/30/96 7,500 $ 10.50 $ 12.00 $ 10.50 6 years
Chief Financial Officer, 5/30/96 6,000 $ 10.50 $ 13.25 $ 8.93 3 years
Vice President,
Finance and Secretary
Mr. Anthony J. Spielman, .... 5/30/96 5,000 $ 10.50 $ 12.00 $ 10.50 6 years
Vice President, Network 5/30/96 5,000 $ 10.50 $ 9.00 $ 8.93 4 years
Systems Marketing
</TABLE>
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for the
administration of the compensation programs in effect for the Company's
executive officers. These programs have been designed to ensure that the
compensation paid to the executive officers is substantially linked to both
Company and individual performance. Accordingly, a significant portion of the
compensation for which an executive officer is eligible is comprised of variable
components based upon individual achievement and Company performance measures.
EXECUTIVE COMPENSATION PRINCIPLES
The design and implementation of the Company's executive compensation
programs are based on a series of general principles. These principles may be
summarized as follows:
- Align the interests of management and shareholders to build shareholder
value by the encouragement of consistent, long-term Company growth.
- Attract and retain key executive officers essential to the long-term
success of the Company.
- Reward executive officers for long-term corporate success by facilitating
their ability to acquire an ownership interest in the Company.
- Provide direct linkage between the compensation payable to executive
officers and the Company's attainment of annual and long-term financial
goals and targets.
- Emphasize reward for performance at the individual and corporate level.
COMPONENTS OF EXECUTIVE COMPENSATION
The components of the Company's executive compensation programs may be
listed as follows, with a detailed summary provided below:
- Base Salary
- Cash Bonus
- Long-Term Incentives
- Benefits and Perquisites
Each component is calibrated to a competitive market position, with market
information provided by compensation surveys prepared by independent consulting
firms and information collected from companies selected by the Company's
Compensation Committee as appropriate comparators of compensation practices. The
companies selected by the Compensation Committee as appropriate comparators are
generally represented in the Nasdaq Computer Manufacturing Index, whose
performance over the past five years is compared to that of the Company in the
chart appearing under the heading Performance Measurement Comparison.
BASE SALARY
The base salary for each executive officer is determined on the basis of
individual performance, the functions performed by the executive officer and the
scope of the executive officer's ongoing responsibilities, and the salary levels
in effect for comparable positions based on information provided by the
compensation surveys referenced above and comparator information. The weight
given to each of these factors varies from individual to individual. In general,
base salary is designed primarily to be competitive within the relevant industry
and geographic market. Most executive officer salaries in fiscal 1996 remained
unchanged from fiscal 1995.
Each executive officer's base salary is reviewed annually to ensure
appropriateness, and increases to base salary are made to reflect competitive
market increases and individual factors. Company performance does not play a
significant role in the determination of base salary.
CASH BONUS
The Company's Management Incentive Plan provides for the funding of a bonus
pool based upon the Company's year-to-year rate of revenue growth and profit
before tax. No funding of the bonus pool
10
<PAGE>
occurs if profit before tax does not exceed a threshold determined by comparing
the cost of capital to the return on assets employed. The Company did not
realize before-tax profits in fiscal 1996; therefore, the bonus pool was not
funded and no cash bonuses were paid to executive officers for such fiscal year.
Bonuses paid to Messrs. Coker and O'Shea were negotiated when they joined the
Company, principally to entice them to forgo bonuses at their respective
previous employers.
LONG-TERM INCENTIVES
Long-term incentives are provided through stock option grants. These option
grants are intended to motivate the executive officers to manage the business to
improve long-term Company performance. Customarily, option grants are made with
exercise prices equal to the market price of the shares on the date of grant and
will be of no value unless the market price of the Company's outstanding common
shares appreciates, thereby aligning a substantial part of the executive
officer's compensation package with the return realized by the shareholders.
The size of each option grant is designed to create a meaningful opportunity
for stock ownership and is based upon several factors, including relevant
information contained in the compensation surveys described above, an assessment
of the option grants of comparable companies and the individual performance of
each executive officer.
Each option grant allows the executive officer to acquire shares of the
Company's Common Stock at a fixed price per share (customarily the market price
on the grant date) over a specified period of time (customarily four years). The
option generally vests in equal installments over a period of four years,
contingent upon the executive officer's continued employment with the Company.
Accordingly, the option will provide a return to the executive officer only
if the executive officer remains employed by the Company and the market price of
the underlying shares appreciates over the option term.
In fiscal 1996, the Committee granted stock options to its executive
officers as set forth in the table entitled "Option Grants in Last Fiscal Year"
contained elsewhere in this proxy statement. The Committee believes that stock
options, particularly incentive stock options, encourage long-term Company stock
ownership, and therefore that such grants are in the best interests of the
Company and its shareholders.
BENEFITS AND PERQUISITES
The benefits and perquisites component of executive compensation is
generally similar to that which is offered to all of the Company's employees.
CHIEF EXECUTIVE OFFICER (CEO) COMPENSATION
In setting the compensation payable to the Chief Executive Officer, William
B. Heye, Jr., the goal is to provide compensation competitive with other
companies in the industry while at the same time making a significant percentage
of Mr. Heye's potential earnings subject to consistent, positive, long-term
Company performance. In general, the factors utilized in determining Mr. Heye's
compensation were similar to those applied to the other executive officers in
the manner described in the preceding paragraphs.
Mr. Heye's salary in fiscal 1996 remained unchanged from fiscal 1995. As a
result of the Company's performance during fiscal 1996, the Committee did not
grant Mr. Heye any cash bonus. During fiscal 1996, Mr. Heye purchased 145 shares
of Common Stock at a price of $823 under the Company's 1992 Employee Stock
Purchase Plan. The Committee granted Mr. Heye a stock options during fiscal 1996
to purchase 15,000 shares of Common Stock at an exercise price of $10.50 per
share (the closing price on the date of grant).
Raimon L. Conlisk, Chairman
George E. Grega
11
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The following chart shows the value of an investment of $100 on October 31,
1991 in cash of (a) the Company's Common Stock, (b) the Nasdaq Computer
Manufacturing Index ("Nasdaq Computers") and (c) the CRSP Total Return Index for
the Nasdaq Stock Market (United States companies) ("Nasdaq Total Return"). All
values assume reinvestment of the full amount of all dividends and are
calculated as of October 31 of each year.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN ON INVESTMENT
<TABLE>
<CAPTION>
OCT. 91 OCT. 92 OCT. 93 OCT. 94 OCT. 95 OCT. 96
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SBE, Inc............................................ 100.000 327.273 248.273 187.879 296.970 100.000
Nasdaq Computers.................................... 100.000 121.479 123.681 140.028 237.849 298.862
Nasdaq Total Return................................. 100.000 112.759 145.292 146.065 196.726 232.127
</TABLE>
12
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings to which he is or may be made a party
by reason of his position as a director, officer or other agent of the Company,
and otherwise to the full extent permitted under California law and the
Company's Restated Articles of Incorporation, as amended, and Bylaws.
OTHER BUSINESS
The Board knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors
[signature]
Timothy J. Repp
CHIEF FINANCIAL OFFICER AND SECRETARY
March 4, 1997
13
<PAGE>
SBE, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 1997
The undersigned hereby appoints WILLIAM B. HEYE, JR. and TIMOTHY J. REPP,
and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, to vote all of the shares of stock of SBE, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of Shareholders
of SBE, Inc. to be held at 4550 Norris Canyon Road, San Ramon, California, at
5:00 p.m. local time on April 16, 1997, and at any and all continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as
to any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors, whether by cumulative voting or otherwise, to
hold office until the next Annual Meeting of Shareholders and
until their successors are elected.
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as written below) to vote for all nominees below
NOMINEES: R.L. Conlisk, G.E. Grega, W.B. Heye, Jr., R.J. Ritchie,
R.L-W. Caudill
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH
NOMINEE(S)' NAME(S) BELOW:
_________________________________________________________________
1.
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2 BELOW.
PROPOSAL 2: To ratify the selection of Coopers & Lybrand LLP as the Company's
independent auditors for the fiscal year ending October 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
Dated: __________________, 1997
__________________________________________________
__________________________________________________
Signature(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON.
IF THE STOCK IS REGISTERED IN THE NAMES OF TWO OR
MORE PERSONS, EACH SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS AND
ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF
SIGNER IS A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY AUTHORIZED OFFICER
SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
2.
