<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCIENTIFIC-ATLANTA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(LOGO) SCIENTIFIC ATLANTA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Scientific-Atlanta, Inc., will be
held on Wednesday, November 13, 1996, at 9:00 a.m., local time, at The
Ritz-Carlton Buckhead, 3434 Peachtree Road, N.E., Atlanta, Georgia 30326 for the
purpose of considering and voting upon the following matters, all of which are
described in the attached Proxy Statement:
1. The election of three directors;
2. A proposal to ratify the selection of Arthur Andersen LLP as
independent auditors of the Corporation for the current fiscal
year; and
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on September 20, 1996,
shall be entitled to notice of and to vote at the meeting or any adjournment
thereof.
A proxy solicited by the Board of Directors, together with a Proxy
Statement and a copy of the 1996 Annual Report, are enclosed herewith. Please
sign, date, and return the proxy promptly in the enclosed business reply
envelope. If you attend the meeting and wish to vote in person, you may do so by
withdrawing your proxy prior to the meeting.
By order of the Board of Directors
/s/ William E. Eason, Jr.
----------------------------------
William E. Eason, Jr.
Secretary
October 1, 1996
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY SO THAT YOUR VOTE
MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
Scientific-Atlanta, Inc., One Technology Parkway, South, Norcross, Georgia 30092
<PAGE> 3
SCIENTIFIC-ATLANTA, INC.
ONE TECHNOLOGY PARKWAY, SOUTH
NORCROSS, GEORGIA 30092
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Scientific-Atlanta, Inc. (the
"Corporation"), for use at the Annual Meeting of Shareholders of the Corporation
(the "Annual Meeting") to be held on November 13, 1996, and any adjournment
thereof. Shareholders of record as of the close of business on September 20,
1996 (the "Record Date") are entitled to notice of and to vote at the meeting.
On the Record Date, the Corporation had 77,133,330 shares of Common Stock, par
value $0.50 per share (the "Common Stock"), outstanding and entitled to vote at
the meeting, with each share entitled to one vote.
Copies of solicitation materials will be furnished to brokerage houses and
other fiduciaries for forwarding to beneficial owners of shares of the
Corporation's Common Stock. The Corporation has engaged Morrow & Co., Inc. to
assist in the solicitation of proxies from brokers, banks and their nominees
which are shareholders of record, at a cost of approximately $7,000. The costs
of this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be paid by the Corporation. In addition to solicitations by
mail, directors and regular employees of the Corporation may solicit proxies in
person or by telephone or telegraph without receiving any compensation in
addition to their regular compensation as directors or employees.
Proxies are first being mailed to shareholders on October 1, 1996. Any
proxy which is returned by a shareholder properly completed and which is not
revoked will be voted at the meeting in the manner specified therein. Unless
contrary instructions are given, the persons designated as proxy holders in the
accompanying proxy card (or their substitutes) will vote FOR the election of the
Board of Directors' nominees, FOR Proposal 2, and in the proxy holders'
discretion with regard to all other matters. Any proxy given pursuant to this
solicitation may be revoked prior to the meeting at any time by delivering an
instrument revoking it, or a duly executed proxy bearing a later date, to the
Secretary of the Corporation. Any proxy given pursuant to this solicitation may
also be revoked by any shareholder who attends the meeting and gives oral notice
of his election to vote in person, without compliance with any other
formalities.
The presence at the meeting, in person or by proxy, of a majority of the
shares of Common Stock outstanding on the Record Date will constitute a quorum
at the meeting. Votes cast by proxy or in person at the Annual Meeting will be
counted by the persons appointed by the Corporation to act as the inspectors of
election for the meeting. Inspectors of election will treat shares represented
by proxies that reflect abstentions or include "broker non-votes" as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions or "broker non-votes" do not constitute a vote "for" or
"against" any matter and thus will be disregarded in any calculation of "votes
cast." If a broker or nominee has indicated on the proxy that it does not have
discretionary authority to vote on a matter, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares may be considered entitled to vote for quorum purposes and entitled to
vote on other matters).
Any unmarked proxies, including those submitted by brokers or nominees,
will be voted in favor of the proposals and the nominees for the Board of
Directors, as indicated in the accompanying proxy card.
<PAGE> 4
CERTAIN BENEFICIAL OWNERSHIP
The following table sets forth information, as of the dates specified in
the notes below, as to shares of the Corporation's Common Stock held by persons
known to the Corporation to be the beneficial owners of more than five percent
of the Corporation's Common Stock based upon information publicly filed by such
persons:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
----------------------------------------------------- ----------------- ----------
<S> <C> <C>
FMR Corp............................................. 8,837,194(2) 11.59%
82 Devonshire Street
Boston, Massachusetts 02109
The Equitable Companies Incorporated................. 7,960,300(3) 10.4%
787 Seventh Avenue
New York, New York 10019
SunTrust Banks, Inc.................................. 4,573,260(4) 5.99%
25 Park Place, N.E.
Atlanta, Georgia 30303
</TABLE>
- ---------------
(1) The percent of class was computed by each beneficial owner as of a date
immediately preceding the filing of its Schedule 13G with the Securities
and Exchange Commission.
(2) Based on a Schedule 13G, dated March 8, 1996, filed with the Securities and
Exchange Commission by FMR Corp. and related entities. Of such shares, FMR
Corp. has sole voting power over 826,416 shares and sole dispositive power
over 8,837,194 shares. Includes shares held as trustee for certain of the
Corporation's employee benefit plans.
(3) Based on a Schedule 13G, dated February 9, 1996, filed with the Securities
and Exchange Commission by The Equitable Companies Incorporated and related
entities, including Alliance Capital Management L.P. The Equitable
Companies Incorporated and related entities have sole voting power over
6,997,600 shares and sole dispositive power over 7,960,300 shares.
(4) Based on a Schedule 13G, dated January 23, 1996, filed with the Securities
and Exchange Commission by SunTrust Banks, Inc. and related entities.
SunTrust Banks, Inc. and related entities have sole voting power over
2,404,887 shares, shared voting power over 14,868 shares, dispositive power
over 4,528,202 shares, and shared dispositive power over 44,358 shares.
2
<PAGE> 5
The following table sets forth information as of June 28, 1996, regarding
ownership of the Corporation's Common Stock and Common Stock equivalents by each
director of the Corporation, by each executive officer named in the Summary
Compensation Table and by all directors and executive officers as a group:
<TABLE>
<CAPTION>
(A) (B) (C) (D)
NO. OF SHARES SUBJECT
NO. OF SHARES TO OPTIONS NO. OF SHARES
OWNED EXERCISABLE PRIOR TO OF RESTRICTED STOCK DEFERRED COMMON
NAME DIRECTLY(1) AUGUST 27, 1996 NOT YET VESTED(2) STOCK EQUIVALENTS(3)
----------------------- ------------- --------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Marion H. Antonini..... 6,000 48,750 -- 5,730
William E. Kassling.... 12,500 48,750 -- --
Wilbur Branch King..... 16,824 28,126 -- --
Mylle Bell Mangum...... 6,798 16,875 -- --
Alonzo L. McDonald..... 8,500(4) 56,250 -- --
James F. McDonald...... 182,674 537,500 44,854 --
David J. McLaughlin.... 15,504 23,125 -- --
James V. Napier........ 17,618 127,501 -- 12,672
Sidney Topol........... 36,702 3,750 -- --
H. Allen Ecker......... 5,978 131,950 13,922 --
John H. Levergood...... 6,268 57,500 20,794 --
Jack W. Simpson, Sr.... 983 75,500 41,742(5) --
Harvey A. Wagner....... 6,730 50,000 11,500 --
All Directors and
Executive Officers as
a Group.............. 460,165 1,751,077 231,524 18,402
</TABLE>
The total shares beneficially owned by each individual director and
executive officer (columns A, B and C) constituted less than 1% of the
outstanding Common Stock at June 28, 1996, except that the shares beneficially
owned by James F. McDonald (columns A, B and C) constituted approximately 1% of
the outstanding Common Stock at the same date. The aggregate shares beneficially
owned by all directors and executive officers as a group (columns A, B and C)
represented approximately 3.2% of the outstanding Common Stock at June 28, 1996.
- ---------------
(1) Each person has sole voting and dispositive power with respect to the shares
shown. With respect to executive officers, the number of shares directly
owned includes shares held in the Corporation's Voluntary Employee
Retirement and Investment Plan (401(k) plan), with respect to which such
officers have voting and dispositive power.
(2) This column sets forth the number of restricted shares of Common Stock which
were granted under the Corporation's Long-Term Incentive Plan (the "LTIP")
and which had not vested as of June 28, 1996. Except as set forth in Note
(5) below, vesting of these restricted shares is based upon achievement of
specified performance criteria.
(3) Represents the number of shares of the Corporation's Common Stock used in
determining the value of the Phantom Stock Sub-Account under the Deferred
Compensation Plan for Non-Employee Directors. Under the terms of this Plan,
no shares are ever issued to the non-employee directors and they have no
voting or dispositive power with respect to any shares.
(4) Of the 8,500 shares reported as directly owned by Mr. Alonzo L. McDonald,
8,000 shares are held by the Alonzo McDonald Jr. Trust, for which Mr.
McDonald serves as the sole trustee with his wife being the sole
beneficiary.
(5) Of the 41,742 restricted shares held by Mr. Simpson, 25,000 restricted
shares were granted under the LTIP, with the vesting tied exclusively to
the elapse of time and continued employment by Mr. Simpson with the
Corporation.
3
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide for the division
of the Board of Directors into three classes, with the directors in each class
serving for a term of three years. At the Annual Meeting, three nominees for
director are to be elected to serve until the Annual Meeting of Shareholders in
1999 and until their successors are elected and qualified. All of the nominees
for election as directors at this meeting, and all directors whose term of
office will continue after the Annual Meeting, are currently directors of the
Corporation.
Directors are to be elected by a plurality of the votes cast at the Annual
Meeting in person or by proxy by the holders of shares entitled to vote in the
election. The Board of Directors is informed that all of the nominees are
willing to serve as directors, but if any of them should decline or be unable to
act as a director, the persons designated as proxy holders in the accompanying
proxy card(s) (or their substitutes) will vote for such substitute nominee or
nominee(s) as may be designated by the Board of Directors unless the Board
reduces the number of directors accordingly.
NOMINEES FOR DIRECTOR
The following information has been furnished by the respective nominees for
election as directors for a term expiring in 1999.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
------------------------------ ------------------------------------------------- --------
<S> <C> <C>
Marion H. Antonini Chairman, President and Chief Executive Officer, 1990
Welbilt Corporation
William E. Kassling Chairman and Chief Executive Officer, 1990
Westinghouse Air Brake Company
Mylle Bell Mangum Executive Vice President-Strategic Management, 1993
Holiday Inn Worldwide
</TABLE>
Mr. Antonini has been Chairman of the Board of Welbilt Corporation since
July 1990 and President and Chief Executive Officer of that company since
September 1990. From 1986 to 1990, Mr. Antonini served as Chairman of KD
Equities, a merchant banking firm. Prior to that, he served as Group Vice
President of Xerox Corporation's Worldwide Operations from 1982 to 1986 and in
other executive positions with that company. Mr. Antonini, 66, is a director of
Berisford International, Vulcan Materials Company and Engelhard Corporation.
Mr. Kassling was a Group Vice President of American Standard, Inc. for more
than five years before becoming Chairman of the Board and Chief Executive
Officer of Westinghouse Air Brake Company in March 1990. Mr. Kassling is 52 and
is a director of Dravo Corporation and Commercial Intertech.
Ms. Mangum has been Executive Vice President-Strategic Management of
Holiday Inn Worldwide ("Holiday Inn") since August 1992. Ms. Mangum is also a
member of the Board of Directors and Executive Committee of Holiday Inn. From
1985 until August 1992, Ms. Mangum was Director, Corporate Planning and
Development with BellSouth Corporation. Ms. Mangum is 47 and is a director of
Reynolds Metals.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
FOR EACH NOMINEE FOR DIRECTOR UNLESS THE VOTING SHAREHOLDER INDICATES HE OR SHE
HAS WITHHELD HIS OR HER AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES.
4
<PAGE> 7
OTHER DIRECTORS
The following information has been furnished by the other directors, whose
terms of office will continue after the 1996 Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
- ----------------------------------------- ------------------------------------------------- --------
<S> <C> <C>
Wilbur Branch King Attorney at Law, Of Counsel to Kilpatrick & Cody 1971
Alonzo L. McDonald Chairman and Chief Executive Officer, Avenir 1985
Group, Inc.
James F. McDonald President and Chief Executive Officer, 1993
Scientific-Atlanta, Inc.
David J. McLaughlin Chief Executive Officer, Troy Biosciences, Inc. 1987
James V. Napier Chairman of the Board, Scientific-Atlanta, Inc. 1978
Sidney Topol President, The Topol Group, Inc. 1972
</TABLE>
Mr. King was a partner in the law firm of Kilpatrick & Cody in Atlanta,
Georgia, for more than five years until his retirement in December 1986. Mr.
King has been Of Counsel to that firm since his retirement. Kilpatrick & Cody
represents the Corporation from time to time in certain legal matters. Mr. King
is 67. His term of office as a director of the Corporation expires in 1998.
Mr. Alonzo L. McDonald has been Chairman and Chief Executive Officer of
Avenir Group, Inc., a firm of private development bankers, for more than five
years. Previously, he was President and Vice Chairman of the Board of Bendix
Corporation and Managing Director and Chief Executive Officer for worldwide
operations of McKinsey & Company. He served as Director of the White House staff
during the Carter administration and in several other key government positions.
Mr. McDonald is 68 and is a director of CAE Industries and LaFarge Corporation.
His term of office as a director of the Corporation expires in 1998.
Mr. James F. McDonald was elected President and Chief Executive Officer of
the Corporation, effective July 15, 1993. Mr. McDonald was a general partner of
J. H. Whitney & Company, a private investment firm, from 1991 until his
employment by the Corporation. From 1989 to 1991, he was President and Chief
Executive Officer of Prime Computer, Inc., a supplier of CAD/CAM software and
computer systems. Prior to that time, he was President and Chief Operating
Officer of Gould, Inc., a computer and electronics company (1984 to 1989), and
held a variety of positions with IBM Corporation (1963 to 1984). Mr. McDonald is
56 and is a director of Burlington Resources, Inc. and Wachovia Bank of Georgia.
His term of office as a director of the Corporation expires in 1998.
Mr. McLaughlin, 60, has been Chief Executive Officer of Troy Biosciences,
Inc., a biotechnology company, since July 1, 1996. From January 1, 1985 to June
30, 1996, he served as President of McLaughlin and Company, Inc. From 1987 until
1990 he also served as Managing Principal of Sibson & Company, Inc., consultants
in the field of human resources. He is a director of Exide Electronics Group,
Inc., Smart & Final, Inc., Troy Biosciences, Inc., and Evolve Software, Inc. His
term of office as a director of the Corporation expires in 1997.
Mr. Napier has been Chairman of the Board of the Corporation since November
1992. Mr. Napier served as interim Chief Executive Officer of the Corporation
from December 1992 until July 1993. From 1988 to 1992, he was Chairman and
President of Commercial Telephone Group, Inc., a designer of telecommunications
products. From 1986 to 1988, he was an independent business consultant. From
March 1985 until March 1986, he served as President of HBO & Company, which
provides information processing materials and services to health care
facilities. Previously, he was Chairman and Chief Executive Officer of Contel
Corporation, a telecommunications company. Mr. Napier is 59 and is a director of
Engelhard Corporation, Vulcan Materials Company, HBO & Company, Intelligent
Systems, L.P., Personnel Group of America, Westinghouse Air Brake Company, and
Rhodes, Inc. His term of office as a director of the Corporation expires in
1997.
5
<PAGE> 8
Mr. Topol, 71, served as President of the Corporation from 1971 to 1983,
Chief Executive Officer from 1975 to 1987, and Chairman of the Board from 1978
to 1990. He is presently President of The Topol Group, Inc., a consulting and
investment firm, a position he has held for more than five years. Mr. Topol is a
director of Alpha Industries, Inc., Primestar Partners, the Public Broadcasting
System, and Wandel and Golterman Technologies, Inc. He previously served as
Chairman of the Massachusetts Telecommunications Council. His term of office as
a director of the Corporation expires in 1997.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met five times during the 1996 fiscal year to
consider matters related to the Corporation's business. The Board of Directors
has an Executive Committee, an Audit Committee, a Human Resources and
Compensation Committee, a Governance and Nominations Committee and a Pension
Investment Committee. Each director attended more than 75% of the aggregate of
the total number of meetings of the Board and the committees of which he or she
is a member during the period of the 1996 fiscal year that he or she served as a
director or committee member.
The Executive Committee acts for the Board of Directors between meetings,
subject to certain limitations. Members of the Executive Committee, which met
twice during the 1996 fiscal year, are directors Antonini, Kassling, King, James
F. McDonald and Napier. Mr. Napier is Chairman.
The Audit Committee makes recommendations as to the selection of
independent auditors, evaluates the audit services and the Corporation's
financial, accounting and internal audit policies, functions and systems, and
approves the engagement of independent auditors to provide non-audit services.
The Audit Committee met three times during the 1996 fiscal year. The Audit
Committee consists of directors Antonini, King, Alonzo L. McDonald, Napier and
Topol. Mr. Antonini is Chairman.
The Human Resources and Compensation Committee makes determinations as to
the compensation and benefits to be paid to the Corporation's officers and key
employees. The Human Resources and Compensation Committee met three times during
the 1996 fiscal year. The members of the Committee are directors Antonini,
Mangum, McLaughlin, and Napier. Mr. McLaughlin is Chairman.
The Governance and Nominations Committee considers nominations for
directors (and will consider nominees by shareholders) and provides oversight of
the governance of the Board of Directors, including issues concerning size,
committee structure, membership and compensation of the Board. Nominations
should be in writing, addressed to Chairman, Governance and Nominations
Committee, c/o the Office of the General Counsel, Scientific-Atlanta, Inc., One
Technology Parkway, South, Norcross, Georgia 30092. The Governance and
Nominations Committee met twice during the 1996 fiscal year. The members of the
Committee are directors Alonzo L. McDonald, Kassling, King and Napier. Mr. King
is Chairman.
The Pension Investment Committee reviews the performance of firms which
provide investment advice and services to the Corporation on pension investment
matters. Members of this Committee are directors Mangum, Kassling, McLaughlin,
and Topol. Mr. Kassling is Chairman. The Committee met twice during the 1996
fiscal year.
6
<PAGE> 9
COMPENSATION OF OFFICERS AND DIRECTORS
CASH COMPENSATION
The following table sets forth in the prescribed format the compensation
paid to the Chief Executive Officer and the other four most highly compensated
executive officers of the Corporation for services rendered in all capacities
during the Corporation's last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------------------- --------
RESTRICTED
OTHER STOCK SECURITIES LTIP ALL OTHER
NAME AND FISCAL ANNUAL AWARD(S) UNDERLYING PAYOUTS COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMP.(1) ($)(2) OPTIONS(#) ($)(3) SATION($)(4)
- ------------------------------ ------ --------- -------- -------- ---------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James F. McDonald............. 1996 $ 590,385 $300,000 $ -- $ -- 125,000 $ -- $ 153,768
President and Chief 1995 522,115 429,600 -- -- 200,000 82,218 86,731
Executive Officer 1994 494,231 344,000 -- 1,350,000 350,000 103,808 154,016
H. Allen Ecker................ 1996 250,115 81,000 2,654 -- 15,000 -- 47,672
Senior Vice President, 1995 234,539 148,800 2,200 -- 20,000 162,087 17,607
Technical Operations 1994 215,115 130,000 1,816 -- 17,200 36,207 5,446
John H. Levergood............. 1996 332,192 76,000 2,654 -- 25,000 -- 62,823
Senior Vice President 1995 307,673 197,700 2,200 -- 40,000 216,630 20,124
1994 282,769 161,500 1,816 -- --(5) 53,610 17,560
Jack W. Simpson, Sr........... 1996 290,192 149,400 -- 434,375(7) 60,000 -- 185,599
Senior Vice President(6) 1995 266,539 125,600 -- -- 24,000 141,351 78,633
1994 177,885 159,500 -- -- 60,000 41,564 126,213
Harvey A. Wagner.............. 1996 260,192 95,400 -- -- 25,000 -- 55,404
Senior Vice President, Chief 1995 240,000 150,000 -- -- --(9) 15,786 193,437
Financial Officer and 1994 13,846 -- -- -- 50,000 -- 70,477
Treasurer(8)
</TABLE>
- ---------------
(1) The amounts disclosed in this column represent preferential earnings on
deferred compensation.
(2) The value of restricted stock which vests based upon criteria other than
performance-based criteria, is set forth in this column. Restricted shares
granted to executive officers pursuant to the Corporation's Long-Term
Incentive Plan, which shares vest based upon the performance of the
Corporation, are not reflected in this column, but are included in the
"Long-Term Incentive Plan -- Awards in 1996 Fiscal Year" chart which
follows. On June 28, 1996, the number and value of all outstanding grants
of restricted stock held by the named executive officers were as follows:
Mr. McDonald, 44,854 shares/$695,237; Mr. Ecker, 13,922 shares/$215,791;
Mr. Levergood, 20,794 shares/$322,307; Mr. Simpson, 41,742 shares/$647,001;
Mr. Wagner, 11,500 shares/$178,250. Dividends are paid by the Corporation
on restricted stock held by such executive officers.
(3) This column does not include any amounts for fiscal 1996 because no
previously granted performance-based restricted stock awards vested as a
result of the Corporation's performance during fiscal 1996. For fiscal
years 1995 and 1994, the amounts disclosed in this column included cash
payouts under the Corporation's 1990 Long-Term Incentive Plan and the value
of restricted stock previously granted under the Corporation's Long-Term
Incentive Plan (adopted in 1994), which restricted stock vested based upon
the Corporation's performance during the listed fiscal years. No further
cash payouts are available for future years under the Corporation's 1990
Long-Term Incentive Plan.
(4) For the 1996 fiscal year, this column includes $72,003, $155,513, and
$25,566 paid as relocation assistance to Messrs. McDonald, Simpson and
Wagner, respectively, and $75,015, $40,585, $56,073, $25,620, and $25,394
of life insurance premiums paid by the Corporation on behalf of Messrs.
McDonald, Ecker, Levergood, Simpson and Wagner, respectively. All other
amounts in fiscal year 1996 represent contributions to the Corporation's
401(k) Plan.
(5) No options were granted to Mr. Levergood during the Corporation's 1994
fiscal year. Mr. Levergood received a two-year grant of options during the
1993 fiscal year.
(6) Mr. Simpson joined the Corporation as Senior Vice President, Network Systems
Group during fiscal 1994.
7
<PAGE> 10
(7) A grant of 25,000 shares of restricted stock was made to Mr. Simpson in
fiscal 1996. All of these shares will vest on February 24, 1999, provided
Mr. Simpson is employed by the Corporation on that date. The amount shown
represents the dollar value of the restricted stock award, calculated by
multiplying the closing market price of the Corporation's Common Stock on
the date of grant by the number of shares awarded. Dividends are paid on
this restricted stock.
(8) Mr. Wagner joined the Corporation as Senior Vice President, Chief Financial
Officer and Treasurer during fiscal 1994.
(9) No options were granted to Mr. Wagner during the Corporation's 1995 fiscal
year. Mr. Wagner received a two-year grant of options when he commenced his
employment with the Corporation during the 1994 fiscal year.
STOCK OPTIONS
The following tables set forth certain information in the prescribed
formats with respect to options granted and exercised under the Corporation's
various stock option plans during the last fiscal year:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(1)
- ----------------------------------------------------------------------------------- -----------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(#) YEAR ($/SH) DATE(2) 5%($) 10%($)
- ------------------------------- ----------- ----------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James F. McDonald.............. 125,000 9.5% $ 21.625 8/23/05 $1,699,981 $4,308,085
H. Allen Ecker................. 15,000 1.1% $ 21.625 8/23/05 $ 203,998 $ 516,970
John H. Levergood.............. 25,000 1.9% $ 21.625 8/23/05 $ 339,996 $ 861,617
Jack W. Simpson, Sr............ 25,000 1.9% $ 21.625 8/23/05 $ 339,996 $ 861,617
35,000 2.7% $ 17.375 2/24/06 $ 382,447 $ 969,195
Harvey A. Wagner............... 25,000 1.9% $ 21.625 8/23/05 $ 339,996 $ 861,617
</TABLE>
- ---------------
(1) The dollar amounts in these columns are determined using assumed rates of
appreciation set by the Securities and Exchange Commission and are not
intended to forecast future appreciation, if any, in the market value of
the Corporation's Common Stock. Such amounts are based on the assumption
that the named persons hold the options for their full ten-year term. The
actual value of the options will vary in accordance with the market price
of the Corporation's Common Stock.
(2) These stock options were awarded under the Corporation's 1992 Employee Stock
Option Plan (the "1992 Plan"). The options become exercisable at the rate
of 25% per year commencing on the date of grant, except that if a change of
control occurs (as defined in the 1992 Plan), all options become
exercisable immediately. Options under the 1992 Plan may be exercised
within a period of two years following a termination by reason of
retirement, within one year following a termination by reason of death or
disability, and within thirty days following a termination for other
reasons, except for cause, in which case such options expire immediately
upon the giving of the notice of such termination. The 1992 Plan grants
broad discretion to change or modify the material terms of option grants.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
James F. McDonald........... None -- 393,750/281,250 $ 75,000/$25,000
H. Allen Ecker.............. None -- 118,900/ 33,800 $901,499/$52,938
John H. Levergood........... None -- 41,250/ 38,750 $ 61,875/ --
Jack W. Simpson, Sr......... None -- 63,250/ 80,750 -- / --
Harvey A. Wagner............ None -- 43,750/ 31,250 -- / --
</TABLE>
- ---------------
(1) The amounts in this column are calculated using the difference between the
closing market price of the Corporation's Common Stock at the end of the
Corporation's 1996 fiscal year and the option exercise prices.
LONG-TERM INCENTIVE AWARDS
The following table sets forth, in the prescribed format, certain
information with respect to awards that were made during fiscal 1996 under
long-term incentive plans:
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1996 FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK
OTHER PERIOD PRICE-BASED PLANS
NUMBER OF UNTIL MATURATION ----------------------------------------
NAME SHARES(#) OR PAYOUT(1) THRESHOLD(#) TARGET(#)(2) MAXIMUM(#)
- --------------------------------- --------- ---------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
James F. McDonald................ 16,720 10 years 1,672 -- 16,720
H. Allen Ecker................... 4,110 10 years 411 -- 4,110
John H. Levergood................ 6,260 10 years 626 -- 6,260
Jack W. Simpson, Sr.............. 5,480 10 years 548 -- 5,480
Harvey A. Wagner................. 4,930 10 years 493 -- 4,930
</TABLE>
- ---------------
(1) Vesting of these shares is based on achieving specified improvements in the
Corporation's weighted five-year average return on equity. Results are
reviewed annually, and shares vest based on the degree of improvement
achieved. Any shares which have not vested at the end of the ten-year term
are forfeited.
(2) Vesting of the right to receive the performance-based restricted stock
awards is based on the degree of improvement in the Corporation's weighted
five-year average return on equity. Upon achieving the minimum level of
improvement, ten percent of the rights become vested, as shown in the
"Threshold" column. Upon achievement of a specified maximum five-year
average return on equity, all such awards will be vested. No "target," as
such, has been established, but improvements in the Corporation's return on
equity between the "threshold" and the "maximum" levels will result in the
vesting of a proportionate number of awards.
RETIREMENT PLANS AND OTHER ARRANGEMENTS
Defined Benefit Retirement Plan. The Corporation presently has in effect a
non-contributory retirement plan (the "Retirement Plan") for the benefit of its
employees which provides for the payment of fixed benefits upon normal
retirement at age 65 on the basis of years of service and all cash compensation
of each employee. Examples of annual retirement benefits payable under the
Retirement Plan are set forth in the table below. These examples are based on
the following: (i) retirement at the normal retirement age of 65, (ii) "average
compensation" is the average compensation in the highest consecutive five of the
last ten calendar years of
9
<PAGE> 12
service that immediately precede retirement, and (iii) the benefits are straight
life annuities. Benefits under the Retirement Plan are not reduced by Social
Security benefits. The years of service, as of June 28, 1996, credited for
retirement benefits for the persons named in the Summary Compensation Table are
James F. McDonald, 2 11/12 years; H. Allen Ecker, 19 2/3 years; John H.
Levergood, 24 11/12 years; Jack W. Simpson, Sr., 2 2/3 years; and Harvey A.
Wagner, 2 years.
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
-----------------------------------------------
AVERAGE ANNUAL COMPENSATION 15 20 25 30 35
- ------------------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000......................................... $22,864 $31,658 $40,452 $41,039 $41,457
150,000......................................... 27,902 38,633 49,365 50,080 50,591
175,000......................................... 27,902 38,633 49,365 50,080 50,591
200,000......................................... 27,902 38,633 49,365 50,080 50,591
225,000......................................... 27,902 38,633 49,365 50,080 50,591
250,000......................................... 27,902 38,633 49,365 50,080 50,591
500,000......................................... 27,902 38,633 49,365 50,080 50,591
</TABLE>
- ---------------
(1) The Corporation also maintains a supplemental executive retirement plan for
certain key executive officers, including Messrs. McDonald, Ecker, Simpson
and Wagner. Provisions of the plan include a ten-year vesting requirement
and a normal retirement age of 65. Benefits are based upon up to fifty
percent of final average pay with offsets for the Retirement Plan, Social
Security benefits and any retirement benefits payable from former
employers. The Corporation has also agreed to provide to Mr. Levergood
supplemental retirement benefits based upon Mr. Levergood's average annual
earnings multiplied by a retirement factor. Under this arrangement, Mr.
Levergood could receive retirement benefits of up to sixty percent of his
average annual earnings (base salary and annual bonus) for the highest
three years of his employment with the Corporation. The table does not
include such supplemental benefits.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") changed the Internal
Revenue Code by placing an annual maximum limit of $150,000 on the compensation
which may be considered in determining a participant's benefits. Previous to
this change in the statute, the Internal Revenue Code allowed a maximum limit of
$235,840 (i.e., $200,000, indexed for a cost of living adjustment). Effective
July 1, 1994, the Corporation adopted a non-qualified Restoration Retirement
Plan ("Restoration Plan") to replace the benefits to certain participants that
had been eliminated by the changes made to the Internal Revenue Code by OBRA.
Thus, effective July 1, 1994, participants' compensation, as defined in the
Restoration Plan, in excess of the newly prescribed limit and up to what the
limit would have been had OBRA not been enacted will be considered under the
Restoration Plan. Participants under the Corporation's Supplemental Executive
Retirement Plan ("SERP") will continue to have all compensation, as defined in
the SERP, in excess of the maximum limit prescribed by the Internal Revenue Code
considered in determining their pension benefits. The above table does not
include any benefits under the Restoration Plan.
Agreements with Certain Persons. The Corporation has letter agreements
with Messrs. Ecker, Levergood, Simpson and Wagner, which agreements provide for
the continuation of salary and certain benefits for a twelve-month period
(twenty-four months with respect to Mr. Levergood) in the event of termination
of employment without cause. The Corporation also has agreements with Messrs.
McDonald, Simpson, Ecker and Wagner, which agreements provide for the payment of
two times the executive's compensation plus the continuation of the executive's
benefits for two years in the event the executive's employment with the
Corporation is terminated within two years from the time of a change of control
of the Corporation (as defined in the agreement), unless such termination is for
cause. The Corporation has an agreement with Mr. Levergood which entitles Mr.
Levergood to receive the continuation of his base salary for up to thirty-six
months in the event Mr. Levergood is terminated by the Corporation within
eighteen months of a change of control of the Corporation, as defined in such
agreement. In the event Mr. Levergood voluntarily terminates his employment
within eighteen months of a change of control of the Corporation, Mr. Levergood
is entitled to a continuance of his base salary for twenty-four months or until
his normal retirement date or death, whichever occurs first.
10
<PAGE> 13
DIRECTOR COMPENSATION
Annual Fees. Each director who is not an employee receives a $25,000
annual retainer, paid quarterly, and $1,250 for each meeting of the Board and
each meeting of a committee he or she attends. The Chairman of the Board and
each Committee chair receives an additional annual retainer of $60,000 and
$5,000, respectively, paid quarterly. Non-employee directors may elect to defer
all or a portion of their retainer and meeting fees under the Corporation's
Deferred Compensation Plan for Non-Employee Directors. At the election of the
participant, deferred amounts are deposited into either an interest account,
which earns interest at a rate set annually by the Human Resources and
Compensation Committee, or into a phantom stock account, which is deemed to
represent the number of shares of the Corporation's Common Stock which the
amount deferred could purchase at the 20-day average closing price of such stock
for the month in which the amount is deferred.
Non-Employee Director Retirement Plan. Under the Retirement Plan for
Non-Employee Directors, each director who is not an employee of the Corporation
("Non-Employee Director"), who has been a member of the Board of Directors for
at least thirty-six consecutive months and who retires on or after his
sixty-fifth birthday is entitled to receive for the remainder of his life an
annual retirement benefit equal to the annual retainer paid by the Corporation
to its directors for the last year that he was a director. A reduced benefit is
provided for Non-Employee Directors who retire prior to age sixty-five. The Plan
also provides for payments to a Non-Employee Director who becomes totally and
permanently disabled and for payments to the spouse of a Non-Employee Director
who dies.
Non-Employee Director Stock Option Plan. Under this plan, an initial
option to purchase 20,000 shares of the Corporation's Common Stock is granted to
each Non-Employee Director upon commencing his or her service on the Board. An
option to purchase an additional 5,000 shares is granted to each such director
on the date of each annual meeting of shareholders. The exercise price for each
option is the closing sale price of the Corporation's Common Stock on the New
York Stock Exchange on the date the option is granted. Each option is
exercisable as to 25% of the shares covered thereby after the expiration of one
year following the date of grant and for an additional 25% of the shares after
the expiration of each succeeding year. The options granted under this plan are
exercisable only by a Non-Employee Director, except in certain limited
circumstances.
Stock Plan for Non-Employee Directors. This plan provides for 500 shares
of the Corporation's Common Stock to be granted to each Non-Employee Director on
the date of each annual meeting of the Corporation's shareholders. In addition,
under this plan, each Non-Employee Director is allowed, at his or her election,
to receive up to 100% of his or her quarterly compensation from the Corporation
in the form of shares of the Corporation's Common Stock. Further, under the
Deferred Compensation Plan for Non-Employee Directors, each Non-Employee
Director may defer all or a portion of the shares awarded under this plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Napier, who served as interim Chief Executive Officer of the
Corporation from December 1992 until July 1993, is a member of the Human
Resources and Compensation Committee.
11
<PAGE> 14
REPORT OF THE
HUMAN RESOURCES AND COMPENSATION COMMITTEE
ROLE OF THE COMMITTEE AND THE BOARD
The Human Resources and Compensation Committee sets compensation policies
for the Corporation's senior management within guidelines approved by the Board
of Directors. The Committee evaluates individual and corporate performance from
a short-term and long-term perspective, establishes base salaries and approves
annual and long-term incentives for all officers, and administers the
Corporation's option and incentive plans. The Committee's recommendations
regarding the compensation of the Chief Executive Officer are subject to the
approval of the full Board.
COMPENSATION PHILOSOPHY
The Corporation's executive compensation program is designed to attract,
motivate and retain highly qualified executives and to encourage the achievement
of superior performance. The program is designed to:
- Foster a performance oriented environment with a high level of variable
compensation based on the short-term and long-term performance of the
individual, team, business unit and Corporation against demanding goals
and objectives.
- Provide total compensation opportunities which exceed industry medians
for superior financial results and outstanding personal performance.
- Align the interests of the Corporation's executives and shareholders
through the use of stock-based compensation plans.
BASE SALARIES
The Corporation positions its base salaries to be fully competitive with
the range of compensation levels of comparably-sized, high-technology companies
and with the Corporation's direct business competitors which have similar market
characteristics. National surveys such as Hewitt Associates' Total Compensation
Database(TM) and Radford Associates' Management Total Compensation Report and,
periodically, independent compensation consultants are utilized by the Committee
when determining such salaries.
In determining whether the base salaries of executives, including the Chief
Executive Officer, should be increased, the Committee takes into account
individual performance, performance of the operations directed by that
executive, and the positioning of compensation within established salary ranges.
INCENTIVE COMPENSATION
Under the Corporation's compensation philosophy, the majority of
compensation is intended to be payable under incentive plans. Payments and
awards under these incentive plans are based on the achievement of annual and
long-term goals and, accordingly, are "at risk." Executives of the Corporation
are eligible to participate in the following incentive plans as determined by
the Committee:
Senior Officer Annual Incentive Plan. This plan has been designed to
qualify as "performance-based" compensation under Internal Revenue Code
(the "Code") Section 162(m) ("Code Section 162(m)"). It is being used
currently only for the Corporation's Chief Executive Officer. Payments
under the plan are based upon the achievement of annual goals. The award
determination for Mr. McDonald under the Senior Officer Annual Incentive
Plan is discussed in the next section of this report.
Annual Incentive Plan. Under the Annual Incentive Plan (the "AIP"),
awards are made based on company, group and/or business unit results and
assessments of individual performance. Quantitative and qualitative
objectives are weighted 60% and 40%, respectively, in setting "target"
awards for corporate staff participants and 75% and 25%, respectively, for
business unit participants.
12
<PAGE> 15
Quantitative objectives, consistent with annual business plans
approved by the Board, are used in determining the amount of the award
governed by the company, group and/or business unit performance. Awards
under the quantitative portion of the AIP are not made if the minimum
thresholds are not met. The Committee may also take into account
non-recurring extraordinary circumstances unrelated to the Corporation's
financial performance.
The award for Mr. McDonald under the AIP is discussed in the next
section of this report. AIP awards for Messrs. Wagner and Ecker were based
on the quantitative performance of the Corporation, as measured by profit
before tax, gross margin, return on net assets and revenue results versus
plan, and an assessment of their individual performance against personal
qualitative objectives. In the case of Messrs. Levergood and Simpson, the
quantitative portion of their awards was based on the performance of their
respective business units, as measured by the same financial factors
already discussed and, to a lesser degree, by corporate performance. They
were also assessed on their individual performance against personal
qualitative objectives.
Senior Officer and AIP awards for the Chief Executive Officer and the
four other most highly compensated executives of the Corporation are
included in the "Bonus" column of the Summary Compensation Table.
Long-Term Incentive Plan. This plan permits the Committee to use one
or more long-term incentives to motivate excellent long-term performance.
In fiscal year 1996, performance-based restricted stock awards were granted
to twenty key executives, including Messrs. McDonald, Levergood, Ecker,
Wagner and Simpson. These awards will vest over a term of up to ten years,
based on improvement in the Corporation's weighted average return on equity
over the previous five-year period. The number of shares granted are shown
in the Long-Term Incentive Plan -- Awards in 1996 Fiscal Year Table. Based
on the Corporation's performance, no previous grants vested during fiscal
year 1996.
Stock Option Plan. A larger group of executives, including the
executives named in the Summary Compensation Table, receive grants of stock
options under the provisions of the 1992 Stock Option Plan. The objective
of the grants is to align the interests of the executives with the
interests of the Corporation's shareholders by affording the executives the
opportunity of a potentially significant financial benefit if their efforts
result in stock price appreciation. The Committee takes into account the
performance of the individual recipient, the number of options previously
awarded to any individual participant and the Corporation's grant levels
compared to competitive practices, targeting near a median grant posture.
Grants made in fiscal 1996 to Mr. McDonald and the other named executives
are shown in the Summary Compensation Table and in the Option Grants Table.
During fiscal 1996, options for a total of 1,275,050 shares were granted to
406 optionees.
POLICY RELATIVE TO CODE SECTION 162(M)
The Omnibus Budget Reconciliation Act of 1993 (OBRA) limited deductible
senior officer annual compensation to $1,000,000, unless the compensation
qualifies as "performance-based" compensation under Code Section 162(m). In
general, the Corporation will seek to maximize the use of the
"performance-based" exemption provided under Code Section 162(m). The Committee
also believes that inclusion of qualitative (non-quantitative) objectives play
an important role in incentive plans. The Committee will continue to base a
portion of incentive payments on such qualitative assessments, even though they
may not meet the Code Section 162(m) requirements to qualify as
"performance-based" compensation.
STOCK OWNERSHIP
The Committee believes that significant ownership of Common Stock by
officers and directors more closely aligns the upside and downside returns for
these individuals with the Corporation's other shareholders. As a result, the
Corporation's officers and directors agreed during fiscal year 1994 to increase
their ownership over time to a level of one times the annual salary for officers
(three times in the case of the Chief Executive Officer) and three times the
annual retainer for outside directors. As of the end of fiscal year 1996,
officers'
13
<PAGE> 16
holdings averaged 2.2 times base salaries, and outside director holdings
averaged 10.0 times annual cash retainers (based on the closing price of the
Common Stock at the 1996 fiscal year end).
CHIEF EXECUTIVE OFFICER COMPENSATION
At the beginning of fiscal year 1996, Mr. McDonald's base salary was
increased to a level near the median for Chief Executive Officers of
similarly-situated high technology companies. This increase was based on Mr.
McDonald's excellent performance during the previous year and the rapid growth
in the size of the Corporation.
During fiscal year 1996, Mr. McDonald was granted a stock option of 75,000
shares. This was based on the approximately median of grants to Chief Executive
Officers by other comparable high technology companies. He also received an
option of 50,000 shares, which represented the last grant under the initial
compensation arrangements set when Mr. McDonald became the Corporation's
President and Chief Executive Officer in 1993.
Under the Senior Officer Annual Incentive Plan, Mr. McDonald had an
opportunity to earn a maximum of $432,000 if the Corporation achieved 125% or
more of its targeted performance as measured by profits before tax, gross
margin, return on net assets and sales (revenue). The results for fiscal year
1996 did not reach threshold levels, and, therefore, no payments were made under
the plan.
Mr. McDonald also had an opportunity to earn additional incentive pay under
the Annual Incentive Plan, based on his performance against qualitative
objectives. The Committee approved payment of $300,000, based on excellent
performance in spite of a telecommunications industry-wide slowdown during
fiscal year 1996. In reaching its decision, the Committee noted implementation
of a new organization with focused accountability for specific lines of
business, further improvement in customer relations, an overall improvement in
the trend of gross margins, successful launch of a high-volume manufacturing
facility in Mexico, and the development of a new strategic planning process.
Mr. McDonald received a grant of 16,720 performance-based shares of
restricted stock under the Long-Term Incentive Plan. Based upon the
Corporation's 1996 fiscal year Return on Equity performance, there was no
vesting of any performance-based shares previously granted under the Long-Term
Incentive Plan.
OTHER COMPENSATION PLANS
The Corporation also has various broad-based employee benefit plans.
Executives participate in these plans on the same terms as eligible,
non-executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executives under the plans. The Corporation offers an
Employee Stock Purchase Plan pursuant to the provisions of Section 423 of the
Code under which employees may purchase Common Stock. The Voluntary Employee
Retirement and Investment Plan pursuant to the provisions of Section 401(k) of
the Code, permits employees to invest in a variety of funds on a pre-tax basis.
Matching contributions under the plan are made in Common Stock of the
Corporation.
The Corporation also maintains pension, insurance and other benefit plans
for its employees.
Submitted by the Human Resources and Compensation Committee:
David J. McLaughlin, Chairman
Marion H. Antonini
Mylle Bell Mangum
James V. Napier
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph shows a comparison of total return to shareholders for
the Corporation, the Standard & Poor's High Technology Index and the Standard &
Poor's 500 for the Corporation's last five fiscal years:
[GRAPH]
<TABLE>
<CAPTION>
S&P High
Measurement Period Scientific- Technology
(Fiscal Year Covered) Atlanta, Inc. S&P 500 Index
<S> <C> <C> <C>
1991 100 100 100
1992 165 112 105
1993 354 127 123
1994 375 130 134
1995 484 161 209
1996 344 198 244
</TABLE>
PROPOSAL NO. 2
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP to be the
independent auditors of the Corporation for the fiscal year ending June 27,
1997, and proposes that the shareholders ratify this selection at the Annual
Meeting. Arthur Andersen LLP also acted as independent auditors of the
Corporation for the 1996 fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
Ratification of the selection of Arthur Andersen LLP requires the
affirmative vote of a majority of the shares voting on such proposal (i.e.,
shares voting for or against the proposal).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL. PROXIES SOLICITED BY THE BOARD DIRECTORS WILL BE VOTED FOR THIS
PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR AN ABSTENTION IS SPECIFICALLY
INDICATED.
15
<PAGE> 18
OTHER MATTERS
The Board of Directors of the Corporation knows of no other matters which
are to be brought before the meeting. However, if any such other matters should
be presented for consideration and voting, it is the intention of the persons
named in the enclosed form of proxy to vote the proxy in accordance with their
best judgment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's officers,
directors, and persons who own more than ten percent of a registered class of
the Corporation's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than ten percent (10%) shareholders are required by SEC
regulations to furnish the Corporation with copies of all Section 16(a) forms
they file. Based solely on a review of the copies of such forms furnished to the
Corporation, the Corporation believes that during the last fiscal year, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were complied with, except that
Jack W. Simpson, Sr., Marion H. Antonini and David J. McLaughlin inadvertently
filed late their respective Statements of Changes in Beneficial Ownership for
the months of August 1995, October 1995 and December 1995, respectively.
FORM 10-K ANNUAL REPORT
A copy of the Corporation's Annual Report on Form 10-K, including financial
statements and schedules, filed with the Securities and Exchange Commission for
the fiscal year ended June 28, 1996, is included in the Annual Report to
Shareholders which accompanies these proxy materials. Copies of any exhibit(s)
to the Form 10-K will be furnished on request and upon the payment of the
Corporation's expenses in furnishing such exhibit(s). Any request for exhibits
should be in writing addressed to William E. Eason, Jr., Senior Vice President,
General Counsel and Corporate Secretary, Scientific-Atlanta, Inc., One
Technology Parkway, South, Norcross, Georgia 30092.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals by shareholders for presentation at the 1997 Annual Meeting must
be received by the Corporation not later than June 2, 1997, in order to be
included in the Corporation's Proxy Statement and form of proxy relating to that
meeting. Such proposals should be in writing and addressed to William E. Eason,
Jr., Senior Vice President, General Counsel and Corporate Secretary,
Scientific-Atlanta, Inc., One Technology Parkway, South, Norcross, Georgia
30092.
By order of the Board of Directors
/s/ William E. Eason, Jr.
----------------------------------
William E. Eason, Jr.
Secretary
October 1, 1996
16
<PAGE> 19
APPENDIX A
SCIENTIFIC-ATLANTA, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON NOVEMBER 13, 1996
The undersigned hereby appoints James V. Napier, James F. McDonald and William
E. Eason, Jr., and each of them, with full power of substitution, attorneys and
proxies of the undersigned, to represent the undersigned and to vote the Common
Stock as specified below at the Annual Meeting of Shareholders of
Scientific-Atlanta, Inc. to be held on November 13, 1996 at 9:00 a.m., local
time, at The Ritz-Carlton Buckhead, 3434 Peachtree Road, N.E., Atlanta, Georgia
30326, and at any adjournment thereof, upon the following matters and in
accordance with their best judgment with respect to any other matters which may
properly come before the meeting, all as more fully described in the Proxy
Statement for said Annual Meeting (receipt of which is hereby acknowledged).
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR
PROPOSAL 2, AND IN ACCORDANCE WITH THE BEST JUDGMENT OF THE DESIGNATED
INDIVIDUALS WITH RESPECT TO MATTERS INCIDENT TO THE CONDUCT OF THE MEETING OR
WHICH MAY OTHERWISE PROPERLY COME BEFORE THE MEETING. IF ANY OF THE NOMINEES
FOR DIRECTOR ARE UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE
PROXYHOLDER WILL VOTE FOR SUCH OTHER PERSON OR PERSONS AS THE BOARD OF DIRECTORS
MAY RECOMMEND.
(Continued and to be signed and dated on the reverse side.)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS FAVORS AN AFFIRMATIVE VOTE FOR THE NOMINEES FOR DIRECTOR
LISTED BELOW AND FOR PROPOSAL 2.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for [ ] EXCEPTIONS [ ]
all nominees listed below
NOMINEES: MARION H. ANTONINI, WILLIAM E. KASSLING AND MYLLE BELL MANGUM
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the EXCEPTIONS box and write that nominees name on the
line provided below.)
- ----------------------------------------------------------------------
2. Ratification of selection of ARTHUR ANDERSEN LLP as independent auditors Change of Address or
of the Corporation Comments Mark Here [ ]
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROXY DEPARTMENT
NEW YORK, NY 10203-0064
NOTE: Please date and sign this Proxy exactly as name appears.
When signing as attorney, trustee, administrator, executor or
guardian, please give your title as such. In the case of
joint (tenants, each joint owner should sign.
Dated: , 1995
-----------------------------
---------------------------------------------
Signature
---------------------------------------------
Signature (if held jointly)
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [ ]
</TABLE>
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
