SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 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 STOCKHOLDERS
TO BE HELD ON MARCH 21, 2000
TO THE STOCKHOLDERS OF SBE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SBE,
Inc., a Delaware corporation (the "Company"), will be held on Tuesday, March 21,
2000, 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 one director to hold office until the 2003 Annual Meeting
of Stockholders.
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending October 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 31, 2000
as the record date for the determination of stockholders 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
/s/ Timothy J. Repp
Timothy J. Repp
Chief Financial Officer, Vice President,
Finance and Secretary
San Ramon, California
February 21, 2000
ALL STOCKHOLDERS 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 STOCKHOLDERS
MARCH 21, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of SBE, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Tuesday,
March 21, 2000, 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 the Company's offices at
4550 Norris Canyon Road, San Ramon, California. The Company intends to mail
this proxy statement and accompanying proxy card on or about February 21, 2000
to all stockholders 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 stockholders. 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 January
31, 2000 (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 2,905,861 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 at the Annual
Meeting.
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 will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
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
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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 stockholder wishes to vote at the meeting,
the stockholder must obtain from the record holder a proxy issued in the
stockholder's name.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 Annual
Meeting of Stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is October 24, 2000. Stockholder proposals or nominations for
director that are not to be included in such proxy statement and proxy must be
submitted between November 21, 2000 and December 21, 2000. Stockholders are
also advised to review the Company's By-laws, which contain additional
requirements with respect to advance notice of stockholder proposals and
director nominations.
PROPOSAL 1
ELECTION OF DIRECTOR
The Company's Certificate of Incorporation and By-laws provide that the
Board of Directors shall be divided into three classes, each class consisting,
as nearly as possible, of one third of the total number of directors, with each
class having a three-year term. Vacancies on the Board may be filled only by
persons elected by a majority of the remaining directors. A director elected by
the Board to fill a vacancy (including a vacancy created by an increase in the
Board of Directors) shall serve for the remainder of the full term of the class
of directors in which the vacancy occurred and until such director's successor
is elected and qualified.
The Board of Directors is presently composed of four members. William B.
Heye, Jr. is currently a director of the Company who was previously elected by
the stockholders and is the sole current director in the class whose term of
office expires in 2000. If elected at the Annual Meeting, Mr. Heye would serve
until the 2003 annual meeting and until his successor is elected and has
qualified, or until his earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting.
Set forth below is biographical information for the nominee and each person
whose term of office as a director will continue after the Annual Meeting.
NOMINEE FOR ELECTION FOR A THREE-YEAR TERM
EXPIRING AT THE 2003 ANNUAL MEETING
WILLIAM B. HEYE, JR.
Mr. Heye, 61, has served as President, Chief Executive Officer and a
director 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
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<PAGE>
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.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
RAIMON L. CONLISK
Mr. Conlisk, 77, has served as a director since 1991 and has served as
Chairman of the Board since December 1997. 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 director of Exar since 1985. From 1977 until his retirement in 1999,
Mr. Conlisk was President of Conlisk Associates, a management consulting firm
serving high-technology companies in the United States and foreign countries.
From 1991 through 1998, Mr. Conlisk served as a director of XeTel Corporation,
a contract manufacturer of electronic equipment. 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.
RANDALL L-W. CAUDILL
Dr. Caudill, 52, has served as a director since 1997. From January 1997 to
date, Dr. Caudill has been President of Dunsford 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 serves as a director of: PLM
International, Inc., an international diversified equipment leasing company;
Northwest Biotherapeutics, Inc., a developer of prostate cancer diagnostic and
therapeutic products; Ramgen Inc., an electric power generation company; and
Loc8.net, Inc, a developer of GPS-based location devices. Dr. Caudill received
a D. Phil. from Oxford University, where he was a Rhodes Scholar and a teaching
fellow.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
RONALD J. RITCHIE
Mr. Ritchie, 59, has served as a director since 1997. From October 1999 to
date, Mr. Ritchie has been president of Ritchie Associates, a business and
management consulting firm. Mr. Ritchie served as Chairman of the Board of VXI
Electronics, Inc., a supplier of power conversion components, from February 1998
until its acquisition by Celestica Inc. in September 1999. Mr. Ritchie was
President and CEO of Akashic Memories Corporation, a firm supplying thin film
hard disk media to manufacturers of disk drive products, from November 1996 to
January 1998. 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,
3
<PAGE>
Canaan Computer Corporation, Allied Signal Corporation and Texas Instruments.
Mr. Ritchie also serves as director of PixTech, Inc. a provider of field
emission displays to worldwide customers.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended October 31, 1999, the Board held five
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 consists of two non-employee directors, Dr.
Caudill and Mr. Conlisk, held two meetings during fiscal 1999.
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 Ritchie, held three meetings during fiscal 1999.
Dr. Caudill and George E. Grega, a former non-employee director of the Company,
also served as members of the Compensation Committee during portions of fiscal
1999.
During fiscal 1999, 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 PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending October 31, 2000 and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers
LLP or its predecessor, Coopers & Lybrand LLP, has audited the Company's
financial statements since 1974. Representatives of PricewaterhouseCoopers 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.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's By-laws
or otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders 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 stockholders.
4
<PAGE>
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions
will be counted toward the tabulation of votes cast on this matter and will have
the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether this matter
has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
5
<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, 1999 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 executive officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)
---------------- -----------------------
NUMBER PERCENT
OF SHARES OF TOTAL(2)
--------- -----------
<S> <C> <C>
Mr. Steven T. Newby 626,144 21.5%
555 Quince Orchard Road, Suite 606
Gaithersburg, MD 20878
Mr. William B. Heye, Jr.(3) 197,813 6.7%
4550 Norris Canyon Road
San Ramon, CA 94583
Mr. J. Carlo Cannell(4) 165,300 5.7%
600 California Street, Floor 14
San Francisco, CA 94108
Mr. Raimon L. Conlisk(3) 12,500 *
Mr. Ronald J. Ritchie(3) 3,750 *
Dr. Randall L-W. Caudill(3) 3,750 *
Mr. Michael R. Coker(3) 92,656 3.1%
Mr. Timothy J. Repp(3) 47,500 1.6%
Mr. David A. Schaetzel(3) 4,000 0.1%
All executive officers and directors as a group 361,969 11.6%
(7 persons)(3)
<FN>
* Less than one percent.
(1) This table is based on information supplied by officers, directors
and principal stockholders of the Company and on any Schedules 13D
or 13G filed with the Securities and Exchange Commission (the
"SEC"). Unless otherwise indicated in the footnotes to this table
and subject to community property laws where applicable, the
Company believes that each of the stockholders named in this table
has sole voting and investment power with respect to the shares
indicated as beneficially owned.
(2) Applicable percentages are based 2,905,861 shares outstanding on
December 31, 1999, adjusted as required by rules promulgated by
the SEC.
(3) Includes 52,500, 12,500, 3,750, 3,750, 85,000, 47,500, and 4,000
shares that Messrs. Heye, Conlisk, Ritchie, Caudill, Coker, Repp
and Schaetzel, respectively, have the right to acquire within 60
days after the date of this table under the Company's option
plans.
(4) Represents shares as to which Mr. Cannell has reported that he
possesses shared voting and dispositive power. Voting and
dispositive power with respect to these shares is held by four
entities, of which Mr. Cannell is either general partner or
investment advisor.
</TABLE>
6
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC 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 stockholders are required by SEC 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, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
7
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
During fiscal 1999, non-employee directors received for their services as
directors a quarterly participation fee 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. Each
Committee chairman also receives an additional quarterly fee of $750. The
Chairman of the Board receives, in lieu of all other fees, a fee of $40,000. In
fiscal 1999, the total compensation paid to non-employee directors as directors'
fees was $112,500. 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
Code.
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 the
Company, the Board or the stockholders of the Company, 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 1999, the Company granted options covering an aggregate of
15,000 shares to the non-employee directors of the Company at an exercise price
of $4.50 per share, 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 on the date of grant). As of December 31, 1999, 17,750 options had been
exercised under the Directors' Plan.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows for the fiscal years ended October 31, 1999, 1998
and 1997, as applicable, compensation awarded or paid to, or earned by, the
Company's Chief Executive Officer and its other executive officers at October
31, 1999 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
NUMBER OF SHARES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS UNDERLYING OPTIONS COMPENSATION(2)
- --------------------------- ---- --------- -------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Mr. William B. Heye, Jr. 1999 $ 250,088 -- 50,000 $ 9,412
President and Chief Executive 1998 $ 243,350 -- 50,000 $ 9,587
Officer 1997 $ 210,060 $ 236,094 -- $ 13,906
Mr. Michael R. Coker 1999 $ 281,804 -- 20,000 $ 3,558
Vice President, Sales 1998 $ 252,277 -- 15,000 $ 3,664
1997 $ 264,962 $ 71,624 20,000 $ 11,244
Mr. Timothy J. Repp 1999 $ 164,577 -- 30,000 $ 5,324
Vice President, Finance, Chief 1998 $ 142,506 -- 15,000 $ 4,567
Financial Officer and Secretary 1997 $ 126,206 $ 102,714 -- $ 9,659
Mr. David A. Schaetzel(3) 1999 $ 113,768 $ 18,000 34,000 $ 3,369
Vice President, Engineering
<FN>
(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) Includes $3,912, $558, $232 and $200 attributable in fiscal 1999 to Messrs. Heye,
Coker, Repp and Schaetzel, $4,213, $614, and $217 attributable in fiscal 1998 to
Messrs. Heye, Coker, and Repp, and $2,394, $357, and $184 attributable in fiscal
1997 to Messrs. Heye, Coker and Repp, respectively, for premiums paid by the
Company for group term life insurance. Also includes $500 attributable in fiscal
1999 to each of Messrs. Heye and Repp for length of service awards. 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.
(3) Mr. Schaetzel became an executive officer on June 28, 1999. Therefore, no
amounts are shown for fiscal 1998 or 1997.
</TABLE>
9
<PAGE>
Stock Option Information
The Company grants options to its executive officers under the 1996 Stock
Option Plan. The following tables show for fiscal 1999 certain information
regarding options granted to the Named Executive Officers during fiscal 1999
and options held by the Named Executive Officers at fiscal year end.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS DURING FISCAL 1999
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
---------------------------------------------------------------- FOR OPTION TERM
NUMBER OF % OF TOTAL OPTIONS EXERCISE --------------------------
SECURITIES GRANTED TO OR BASE
UNDERLYING 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. 50,000 11.9% $ 8.00 12/8/2005 $162,840 $379,487
Mr. Michael R. Coker 20,000 4.8% $ 8.00 12/8/2005 $ 65,136 $151,795
Mr. Timothy J. Repp 30,000 7.2% $ 8.00 12/8/2005 $ 97,704 $227,692
Mr. David A. Schaetzel(4) 30,000 7.2% $ 5.13 07/1/2006 $ 62,592 $145,865
4,000 1.0% $ 8.00 12/8/2005 $ 13,027 $ 30,359
<FN>
(1) Generally, options granted vest annually in equal increments over a period of four years and have a term of
seven years.
(2) Options to purchase 418,500 shares of Common Stock were granted to employees in fiscal 1999.
(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.
(4) The option to purchase 4,000 shares of Common Stock was granted to Mr. Schaetzel under the Company's 1998
Non-Officer Stock Option Plan before he became an executive officer.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Shares Underlying Unexercised
Acquired on Value Options at Fiscal Year Value of Unexercised
Name Exercise Realized(1) End Options at Fiscal Year End(2)
- ------------------------ ----------- ----------- -------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. William B. Heye, Jr. 139,400 $ 331,075 23,750 91,250 -- --
Mr. Michael R. Coker -- -- 72,500 42,500 -- --
Mr. Timothy J. Repp -- -- 34,375 43,125 -- --
Mr. David A. Schaetzel -- -- 3,000 43,000 $281 $844
<FN>
(1) Fair market value of the Company's Common Stock on the date of exercise minus the exercise
price of the options.
(2) Fair market value of the Company's Common Stock at October 31, 1999 ($4.00) minus the exercise price
of the options solely to the extent that options were "in-the-money" as of such date.
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION (1)
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 stockholders to build stockholder
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.
- --------------------
(1) THIS SECTION IS NOT "SOLICITING MATERIAL," IS NOT DEEMED "FILED" WITH THE
COMMISSION AND IS NOT TO BE INCORPORATED BY REFERENCE IN ANY FILING OF THE
COMPANY UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
THE EXCHANGE ACT, WHETHER MADE BEFORE OR AFTER THE DATE HEREOF AND IRRESPECTIVE
OF ANY GENERAL INCORPORATION LANGUAGE IN ANY SUCH FILING.
11
<PAGE>
- - 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 1999
increased from fiscal 1998.
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 occurs if profit before tax does not
exceed a threshold determined by comparing the cost of capital to the return on
assets employed. Except for bonuses to Mr. Schaetzel, no bonuses were paid to
executive officers for fiscal 1999, as the Company's profit before tax did not
exceed such threshold.
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
12
<PAGE>
outstanding common shares appreciates, thereby aligning a substantial part of
the executive officer's compensation package with the return realized by the
stockholders.
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 seven 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 1999, the Committee granted stock options to its executive
officers as set forth in the table entitled "Stock Option Grants During Fiscal
1999" 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 stockholders.
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 1999 increased from fiscal 1998. Due to the
Company's performance, the Committee did not award a cash bonus to Mr. Heye for
fiscal 1999.
Ronald J. Ritchie, Chairman
Raimon L. Conlisk
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, during the fiscal year ended October 31, 1999, the
Compensation Committee consisted of Messrs. Conlisk and Ritchie and, for
portions of such year, Messrs. Caudill and Grega, none of whom is an employee of
the Company. None of these non-employee directors has any interlocking or other
type of relationship that would call into question his independence as a
committee member.
13
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON (1)
The following chart shows the total stockholder return of an investment of
$100 on October 31, 1994 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.
<TABLE>
<CAPTION>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN ON INVESTMENT
[GRAPHIC OMITTED]
OCT 94 OCT 95 OCT 96 OCT 97 OCT 98 OCT 99
- ------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SBE, Inc. 100.000 158.065 53.226 180.645 85.484 51.613
Nasdaq Computers 100.000 169.859 213.431 280.521 445.821 873.258
Nasdaq Total Return 100.000 134.684 158.920 209.168 234.092 390.844
</TABLE>
- --------------------
(1) THIS SECTION IS NOT "SOLICITING MATERIAL," IS NOT DEEMED "FILED" WITH
THE COMMISSION AND IS NOT TO BE INCORPORATED BY REFERENCE IN ANY FILING OF THE
COMPANY UNDER THE SECURITIES ACT OR THE EXCHANGE ACT, WHETHER MADE BEFORE OR
AFTER THE DATE HEREOF AND IRRESPECTIVE OF ANY GENERAL INCORPORATION LANGUAGE IN
ANY SUCH FILING.
14
<PAGE>
CERTAIN TRANSACTIONS
In November 1998, the Company amended a stock option that entitled William
B. Heye, Jr., the Company's President and Chief Executive Officer, to acquire
139,400 shares of the Company's Common Stock at $4.25 per share to provide that
such option could be exercised pursuant to a deferred payment alternative.
Thereafter, Mr. Heye exercised such option pursuant to the deferred payment
alternative, with a net value realized (the difference between the exercise
price and the fair market value of such shares, based on the closing sales price
reported on the Nasdaq National Market for the date of exercise) of $331,075.
In connection with such exercise, Mr. Heye borrowed $743,800 from the Company,
an amount equal to the sum of the exercise price for such option and certain
taxes payable by Mr. Heye upon such exercise. Such loan was evidenced by a full
recourse promissory note in the amount of $743,800, the payment of which was
secured by shares of the Company's Common Stock (including after-acquired
shares) held by Mr. Heye with a fair market value in excess of the principal
amount of the loan on the date of exercise. Such loan bears interest at a rate
of 4.47% per annum, with interest payments due annually and the entire principal
amount due in November 2000. At January 31, 2000, $743,800 of the principal
amount of such note was outstanding.
The Company has entered into indemnity agreements with certain officers and
directors that 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 Delaware law and the Company's
Certificate of Incorporation, as amended, and the Company's By-laws.
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
/s/ Timothy J. Repp
Timothy J. Repp
Chief Financial Officer, Vice President,
Finance and Secretary
February 21, 2000
15
<PAGE>
SBE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 21, 2000
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. that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
SBE, Inc. to be held at 4550 Norris Canyon Road, San Ramon, California, at 5:00
p.m. local time on March 21, 2000, and at any and all postponements,
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 THE
NOMINEE 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE FOR DIRECTOR LISTED
BELOW.
PROPOSAL 1: To elect one director to hold office until the 2003 Annual
Meeting of Stockholders and until his or her successor is
elected.
|_| FOR the nominee listed |_| WITHHOLD AUTHORITY
below to vote for the nominee
below
NOMINEE: William B. Heye, Jr.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 BELOW.
PROPOSAL 2: To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending
October 31, 2000
|_| FOR |_| AGAINST |_| ABSTAIN
(Continued on other side)
<PAGE>
(Continued from other side)
Dated: ____________, 2000
_________________________________________
_________________________________________
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, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
