<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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>
Celeritek, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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> 2
CELERITEK, INC.
3236 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 30, 1999
The Annual Meeting of Shareholders of Celeritek, Inc., a California
corporation (the "Company"), will be held on Friday, July 30, 1990 at 9:00 a.m.
at the offices of the Company located at 3236 Scott Boulevard, Santa Clara,
California 95054.
At the meeting, shareholders will consider and vote upon the following
proposals:
1. To elect a Board of Directors of the Company;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any and all postponements or adjournments thereof.
The Board of Directors has fixed the close of business on June 11, 1999 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting. Accordingly, only shareholders of record at the close of
business on that day will be entitled to vote at the meeting, notwithstanding
any transfer of shares on the books of the Company after that date.
A Proxy Statement which contains information with respect to the matters to
be voted upon at the meeting and a Proxy card and return envelope are furnished
herewith. Management urges each shareholder to carefully read the Proxy
Statement. If you cannot be present personally at the meeting, you are requested
to complete and sign the Proxy card and return it promptly in the envelope
enclosed for that purpose.
TAMER HUSSEINI
Chairman of the Board, President and
Chief Executive Officer
Santa Clara, California
June 18, 1999
IT IS DESIRABLE THAT AS MANY OF THE SHAREHOLDERS AS POSSIBLE BE REPRESENTED
AT THE MEETING IN PERSON OR BY PROXY. YOU ARE CORDIALLY INVITED TO ATTEND IN
PERSON. IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, OR ARE NOT SURE WHETHER
YOU WILL BE, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY SO
THAT YOUR SHARES WILL BE REPRESENTED. SIGNING A PROXY AT THIS TIME WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE
MEETING.
<PAGE> 3
CELERITEK, INC.
3236 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
------------------------
PROXY STATEMENT
GENERAL
DATE, TIME AND PLACE
This Proxy Statement is furnished to the shareholders of Celeritek, Inc., a
California corporation (the "Company"), in connection with the solicitation of
Proxies by the Board of Directors of the Company for use at the Annual Meeting
of Shareholders to be held at 9:00 a.m. on Friday, July 30, 1999, and any and
all postponements or adjournments thereof. It is anticipated that this Proxy
Statement and the enclosed Proxy card will be sent to such shareholders on or
about June 18, 1999.
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to (1) elect a Board of Directors of
the Company, (2) ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 2000 and (3) transact
such other business as may properly come before the meeting or any and all
postponements or adjournments thereof.
PROXY/VOTING INSTRUCTION CARDS AND REVOCABILITY OF PROXIES
When the Proxy in the enclosed form is returned, properly executed, the
shares represented thereby will be voted at the meeting in accordance with the
instructions given by the shareholder. If no instructions are given, the
returned Proxy will be voted in favor of the election of the nominees named
herein as directors and in favor of each of the other proposals. Any
shareholder, including a shareholder personally attending the meeting, may
revoke his or her Proxy at any time prior to its use by filing with the
Secretary of the Company, at the corporate offices at 3236 Scott Boulevard,
Santa Clara, California 95054, a written notice of revocation or a duly executed
Proxy bearing a later date or by voting in person at the Annual Meeting.
RECORD DATE AND SHARE OWNERSHIP
Shareholders of record at the close of business on June 11, 1999 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 7,381,211 shares of the Company's Common Stock were issued and
outstanding. For information regarding security ownership by management and by
5% shareholders, see "Share Ownership by Principal Shareholders and Management."
VOTING AND SOLICITATION; QUORUM
Each share has one vote. The required quorum for the transaction of
business at the Annual Meeting is a majority of the shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR",
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for the purposes of establishing a quorum and are also treated as shares
"represented and voting" at the Annual Meeting (the "Votes Cast") with respect
to such matter.
The Company believes that abstentions should be counted for the purpose of
determining the presence or absence of a quorum for the transaction of business,
but should not be counted as Votes Cast with respect to a proposal as to which
the shareholder has expressly abstained from voting.
Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for the purpose of determining the number of Votes Cast
<PAGE> 4
with respect to the proposal on which the broker has expressly not voted. Thus,
abstentions and broker non-votes will not affect the outcome of the voting on a
proposal that requires a majority of the Votes Cast.
The cost of this solicitation will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegram or facsimile.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Proposals of the Company's shareholders that are intended to be presented
by such shareholders at the Company's 2000 Annual Meeting of Shareholders (the
"2000 Annual Meeting") must be received by the Company at its principal
executive offices, no later than February 19, 2000 in order to be considered for
possible inclusion in the Proxy Statement and form of Proxy relating to the 2000
Annual Meeting. Any such proposals must be submitted in writing and addressed to
the attention of the Company's Corporate Secretary at 3236 Scott Boulevard,
Santa Clara, California 95054.
In addition, proposals of the Company's shareholders that such shareholders
intend to present at the 2000 Annual Meeting, but not include in the Company's
Proxy Statement and form of Proxy relating to the 2000 Annual Meeting (a
"Non-Rule 14a-8 Proposal"), must be received by the Company at its principal
executive offices no later than May 31, 2000 and no earlier than May 1, 2000. In
the event that the Company does not receive timely notice with respect to a
Non-Rule 14a-8 Proposal, management of the Company would use its discretionary
authority to vote the shares it represents as the Board of Directors may
recommend.
PROPOSAL NO. ONE
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board of five directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's five nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until his successor has been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE(1) SINCE PRINCIPAL OCCUPATION OR EMPLOYMENT
---- ------ -------- ----------------------------------
<S> <C> <C> <C>
Tamer Husseini........ 55 1984 Chairman of the Board, President and Chief Executive
Officer of the Company
Robert J. 55 1998 Senior Vice President of Acuson Corporation
Gallagher(2)........
Thomas W. Hubbs(2).... 54 1998 Senior Vice President of interWAVE Communications
International Ltd.
William D. 65 1984 Director of SymmetriCom, Inc.
Rasdal(3)...........
Charles P. Waite(3)... 69 1984 Special Limited Partner of Greylock, a venture
capital firm.
</TABLE>
- ---------------
(1) As of the Record Date
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
2
<PAGE> 5
Mr. Husseini, a founder of the Company, has served as its Chairman of the
Board, President and Chief Executive Officer since the Company's organization in
1984. Prior to founding the Company, Mr. Husseini was employed by Granger
Associates, Inc. ("Granger"), a telecommunications company, as Vice President
from 1982 until 1984. Before joining Granger, Mr. Husseini was employed by
Avantek, Inc. ("Avantek"), a manufacturer of integrated circuits and components
for wireless communications applications and now a subsidiary of
Hewlett-Packard, from 1972 until 1982, most recently as General Manager of the
Microwave Transistor Division.
Mr. Gallagher was appointed to Celeritek's Board of Directors in October
1998. Since 1983, Mr. Gallagher has been employed by Acuson Corporation
("Acuson"), a manufacturer of medical ultrasound imaging systems. Mr. Gallagher
joined Acuson in January 1983 as Vice President, Finance and Chief Financial
Officer, became Executive Vice President in March 1991, was Chief Operating
Officer from January 1994 until March 1999, and was President of Acuson from May
1995 until November 1997, when he was appointed Vice Chairman of the Board. He
retired as Chief Operating Officer in March 1999 and is currently a Senior Vice
President of Acuson. Mr. Gallagher also serves on the Board of Directors of
Lumisys Incorporated.
Mr. Hubbs was appointed to Celeritek's Board of Directors in June 1998.
Since November 1998, Mr. Hubbs has served as Senior Vice President of interWAVE
Communications International, Ltd. ("interWAVE"), a developer of distributed
systems architecture for wireless communications. From April 1998 to October
1998, Mr. Hubbs served as Senior Vice President and Chief Financial Officer of
Walker Interactive Systems, Inc., a developer of financial applications software
products. From December 1995 to April 1998, Mr. Hubbs served as Senior Vice
President and Chief Financial Officer of interWAVE. From 1987 to 1995, Mr. Hubbs
served as Vice President and Chief Financial Officer of VeriFone, Inc. Mr. Hubbs
has 30 years of financial and operational management experience in leading
technology companies.
Mr. Rasdal has served on Celeritek's Board of Directors since the Company's
organization in 1984. Until June 1998, Mr. Rasdal served as Chairman of the
Board and Chief Executive Officer of SymmetriCom, Inc., ("SymmetriCom")a
position he held since 1989, and continues to serve on SymmetriCom's Board of
Directors. Mr. Rasdal joined SymmetriCom in 1985 as President and Chief
Executive Officer. Prior to his employment with SymmetriCom, Mr. Rasdal was
employed by Granger as President and Chief Operating Officer. Prior to his
employment with Granger, Mr. Rasdal served as Vice President and General Manager
of Avantek's Microwave Integrated Circuit and Semiconductor Operations. Mr.
Rasdal also serves on the Board of Directors of Advanced Fibre Communications,
Inc.
Mr. Waite has served on Celeritek's Board of Directors since the Company's
organization 1984. He has been with Greylock, a venture capital firm, since 1966
and is currently a special limited partner. Mr. Waite also serves on the Board
of Directors of Teltone Corporation.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under California law. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NAMED NOMINEE.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the fiscal year ended March 31, 1999 ("Fiscal 1999"), there were
eight meetings of the Board of Directors and each incumbent director attended at
least 75% of the aggregate of (i) the total number of meetings of the Board of
Directors (held during the period for which such director has been a director)
and (ii) the total number of meetings of committees of the Board of Directors on
which such person served (during the period that such director served). In
addition, the Board of Directors took action by unanimous written consent on one
occasion in Fiscal 1999.
3
<PAGE> 6
The Board of Directors has two standing committees: an Audit Committee and
a Compensation Committee. The Audit Committee is composed of Messrs. Gallagher
and Hubbs. Also serving on the Audit Committee in Fiscal 1999 were Robert C.
Mullaley, until his death in October 1998, and William H. Younger, until his
resignation from the Board in September 1998. The Compensation Committee is
composed of Messrs. Rasdal and Waite. The Company has no Nominating Committee or
committee performing similar functions.
The Audit Committee monitors the performance of the independent auditors,
recommends their engagement or dismissal to the Board of Directors and monitors
the Company's internal financial and accounting organization and financial
reporting. The Compensation Committee recommends executive compensation
arrangements for action by the Board as a whole. During Fiscal 1999, the Audit
Committee held one meeting and the Compensation Committee held one meeting.
DIRECTOR COMPENSATION
During Fiscal 1999, each non-employee director of the Company was paid
$1,500 for each Board meeting attended. The Company also reimburses its
directors for certain expenses incurred by them in their capacity as directors
or in connection with attendance at Board meetings. In addition, each
non-employee director of the Company is eligible to participate in the Company's
Outside Directors' Stock Option Plan (the "Director Plan"). Under the terms of
the Director Plan, each non-employee director automatically receives a
nonstatutory option to purchase 6,000 shares of the Company's Common Stock, (the
"First Option Grant") on the later of the consummation of the Company's initial
public offering or the date on which the optionee first becomes a director of
the Company. The vesting of the First Option Grant is based on continued service
as a director at the rate of 25% of the shares issuable upon exercise of such
option per year over a four-year period. Beginning four years after the First
Option Grant for each non-employee director, and each year thereafter, such
non-employee director shall automatically be granted an option to purchase 1,500
additional shares of Common Stock based on continued service as a director, all
of which option shares vest one year after the date of grant. During Fiscal
1999, Mr. Gallagher received a First Option Grant of 6,000 shares at a per share
exercise price of $3.125 and Mr. Hubbs received a First Option Grant of 6,000
shares at a per share exercise price of $6.9375.
PROPOSAL NO. TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
OF THE COMPANY
Ernst & Young LLP, Certified Public Accountants, have been the independent
auditors for the Company since 1993 and, upon recommendation of the Audit
Committee, their reappointment as independent auditors for the fiscal year
ending March 31, 2000 has been approved by the Board of Directors, subject to
ratification by the shareholders.
The Company has been advised by Ernst & Young LLP that neither it nor any
of its members has had any relationship with the Company or any of its
affiliates during the past three years other than as independent auditors. The
Company has been advised that a representative of Ernst & Young LLP will be
present at the Annual Meeting, will be available to respond to appropriate
questions, and will be given an opportunity to make a statement if he or she so
desires.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Although not required to be submitted for shareholder approval, the Board
of Directors has conditioned its appointment of its independent auditors upon
receiving the affirmative vote of a majority of the shares represented, in
person or by proxy, and voting at the Annual Meeting. In the event the
shareholders do not approve the selection of Ernst & Young LLP, the appointment
of independent auditors will be reconsidered by the Board of Directors. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
4
<PAGE> 7
SHARE OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of May 31, 1999, by (i) all persons known to the Company to be
the beneficial owners of more than 5% of the Company's Common Stock, (ii) the
Company's Chief Executive Officer, (iii) the four most highly compensated
executive officers other than the Chief Executive Officer, (iv) each director
and (v) all directors and executive officers as a group. A total of 7,381,211
shares of the Company's Common Stock was outstanding as of May 31, 1999.
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OWNED
---------------- ------------ -----------
<S> <C> <C>
State of Wisconsin Investment Board(1)...................... 1,077,300 14.6%
121 East Wilson Street
P.O. Box 7842
Madison, Wisconsin 53707
Wellington Management Company, LLP(1)....................... 663,200 9.0%
75 State Street
Boston, MA 02109
Interactive Research Advisors, Inc.(1)...................... 522,200 7.1%
101 Park Center Plaza
Suite 1300
San Jose, CA 95113
Tamer Husseini(2)........................................... 222,300 3.0%
Robert D. Jones(2,3)........................................ 144,060 2.0%
Gary J. Policky(2,4)........................................ 114,037 1.5%
Richard G. Finney(2)........................................ 73,574 1.0%
Charles P. Waite(2)......................................... 44,773 *
William D. Rasdal(2,5)...................................... 44,072 *
Perry A. Denning(2)......................................... 41,767 *
Thomas W. Hubbs(2).......................................... 1,500 *
Robert J. Gallagher......................................... 0 --
All directors and executive officers as a group (11
persons)(2)............................................... 791,079 10.4%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) As of June 4, 1999, based on information received from The Nasdaq Stock
Market, Inc.
(2) Includes 54,790, 19,479, 11,979, 22,292, 41,767, 4,500, 4,500, 1,500, and
230,179 shares which Messrs. Husseini, Jones, Policky, Finney, Denning,
Waite, Rasdal, Hubbs and all present directors and executive officers as a
group, respectively, have the right to acquire within 60 days of May 31,
1999 upon the exercise of stock options.
(3) Includes 124,581 shares held by The Jones Living Trust as to which Mr. Jones
shares voting and dispositive power.
(4) Includes 1,878 shares held by Mr. Policky's spouse.
(5) Includes 39,572 shares held by The Rasdal Family Trust as to which Mr.
Rasdal shares voting and dispositive power.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities to file certain
reports regarding ownership of, and transactions in, the Company's securities
with the Securities and Exchange Commission (the "SEC"). Such officers,
directors and ten percent (10%) share-
5
<PAGE> 8
holders are also required by SEC rules to furnish the Company with copies of all
Section 16(a) forms that they file.
Based solely on its review of such forms furnished to the Company and
written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and more than ten percent (10%) shareholders were complied with during
Fiscal 1999, except that the Form 3 required to be filed by Robert G. Gallagher
and the Form 4 required to be filed by Perry A. Denning to report stock options
granted in August 1997 were filed late.
CERTAIN TRANSACTIONS
During Fiscal 1999 and the fiscal year ending March 31, 2000 ("Fiscal
2000"), stock options under the Company's 1994 Stock Option Plan (the "1994
Plan") or the Director Plan were granted to the following executive officers and
directors as of the grant dates and for the number of shares of Common Stock and
at the exercise prices set forth below opposite their names:
<TABLE>
<CAPTION>
PER SHARE EXPIRATION
OFFICER/DIRECTOR PLAN DATE OF GRANT NO. OF SHARES EXERCISE PRICE DATE
---------------- ---- ------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Perry A. Denning.................... 1994 07/06/98(1) 25,000 $5.625 08/13/07
Perry A. Denning.................... 1994 07/06/98(1) 25,000 5.625 08/13/07
Perry A. Denning.................... 1994 07/06/98(1) 20,000 5.625 05/01/08
Perry A. Denning.................... 1994 03/31/99(2) 15,000 4.00 03/31/09
Richard G. Finney................... 1994 07/06/98(1) 10,000 5.625 03/01/06
Richard G. Finney................... 1994 07/06/98(1) 15,000 5.625 05/01/08
Richard G. Finney................... 1994 03/31/99(2) 15,000 4.00 03/31/09
Robert J. Gallagher................. Director 10/26/98 6,000 3.125 10/26/08
William Hoppin...................... 1994 07/06/98(1) 15,000 5.625 11/14/06
William Hoppin...................... 1994 07/06/98(1) 25,000 5.625 03/19/07
William Hoppin...................... 1994 07/06/98(1) 25,000 5.625 03/19/07
William Hoppin...................... 1994 07/06/98(1) 25,000 5.625 03/19/07
William Hoppin...................... 1994 07/06/98(1) 25,000 5.625 03/19/07
P. Michael Houlihan................. 1994 01/27/99 75,000 5.875 01/27/09
Thomas W. Hubbs..................... Director 06/25/98 6,000 6.9375 06/25/08
Tamer Husseini...................... 1994 07/06/98(1) 30,000 5.625 03/01/06
Tamer Husseini...................... 1994 07/06/98(1) 25,000 5.625 05/01/08
Tamer Husseini...................... 1994 03/31/99(2) 50,000 4.00 03/31/09
Robert D. Jones..................... 1994 07/06/98(1) 10,000 5.625 03/01/06
Robert D. Jones..................... 1994 07/06/98(1) 12,500 5.625 05/01/08
Gary J. Policky..................... 1994 07/06/98(1) 10,000 5.625 03/01/06
Gary J. Policky..................... 1994 07/06/98(1) 12,500 5.625 05/01/08
</TABLE>
- ---------------
(1) Granted pursuant to the Company's option repricing program (the
"Repricing"). See "Ten Year Option Repricing."
(2) Granted during Fiscal 2000 as Fiscal 1999 technically ended on March 28,
1999.
6
<PAGE> 9
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation earned in the last three fiscal
years by the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers who were serving as executive officers at
the end of Fiscal 1999 (together, the "Named Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------- SECURITIES ALL OTHER
NAME AND SALARY BONUS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) ($)
------------------ ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Tamer Husseini........................ 1999 302,187 -- 55,000(2) 9,793(1)
Chairman of the Board, 1998 249,225 97,000 -- 9,966
President and CEO 1997 244,575 38,200 -- 6,092
Robert D. Jones....................... 1999 192,592 -- 22,500(3) 7,251(1)
Senior Vice President, 1998 159,609 58,179 -- 6,961
Marketing and Sales 1997 149,412 53,288 -- 6,703
Richard G. Finney..................... 1999 170,907 -- 25,000(4) 11,127(1)
Vice President, Subsystems 1998 170,775 38,000 -- 5,287
Division 1997 149,528 34,305 -- 2,181
Gary J. Policky....................... 1999 173,659 -- 22,500(3) 15,796(1)
Vice President, Engineering 1998 169,613 30,000 -- 10,400
and Chief Technical Officer 1997 159,532 15,000 -- 4,631
Perry A. Denning...................... 1999 170,627 -- 70,000(5) 9,036(1)
Vice President, 1998 117,697 50,000 -- 3,918
Semiconductor Division 1997 -- -- -- --
</TABLE>
- ---------------
(1) Represents premiums paid on term life insurance, supplemental accidental
death and dismemberment insurance and medical reimbursement insurance. With
the exception of Robert D. Jones, also includes Company matching 401(k) Plan
contributions.
(2) Includes the repricing in July 1998 of 30,000 option shares originally
granted in March 1996 and 25,000 option shares originally granted in May
1998. See "Ten Year Option Repricing".
(3) Includes the repricing in July 1998 of 10,000 option shares originally
granted in March 1996 and 12,500 option shares originally granted in May
1998. See "Ten Year Option Repricing".
(4) Includes the repricing in July 1998 of 10,000 option shares originally
granted in March 1996 and 15,000 option shares originally granted in May
1998. See "Ten Year Option Repricing".
(5) Includes the repricing in July 1998 of 50,000 option shares originally
granted in August 1997 and 20,000 option shares originally granted in May
1998. See "Ten Year Option Repricing".
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding the stock
options granted during Fiscal 1999 to each of the Named Officers. No stock
appreciation rights were granted to the Named Officers during Fiscal 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(5)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR(2) PER SHARE(3) DATE(4) 5% 10%
---- ---------- -------------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Tamer Husseini.......... 30,000 2.7% $5.625 03/01/06 $106,126 $268,944
Tamer Husseini.......... 25,000 2.2% 5.625 05/01/08 88,438 224,120
Robert D. Jones......... 10,000 0.9% 5.625 03/01/06 35,375 89,648
Robert D. Jones......... 12,500 1.1% 5.625 05/01/08 44,219 112,060
Richard G. Finney....... 10,000 0.9% 5.625 03/01/06 35,375 89,648
Richard G. Finney....... 15,000 1.3% 5.625 05/01/08 53,063 134,472
Gary J. Policky......... 10,000 0.9% 5.625 03/01/06 35,375 89,648
Gary J. Policky......... 12,500 1.1% 5.625 05/01/08 44,219 112,060
Perry A. Denning........ 25,000 2.2% 5.625 08/13/07 88,438 224,120
Perry A. Denning........ 25,000 2.2% 5.625 08/13/07 88,438 224,120
Perry A. Denning........ 20,000 1.8% 5.625 05/01/08 70,751 179,296
</TABLE>
- ---------------
(1) All options were granted effective July 6, 1998 pursuant to the Repricing.
See "Ten Year Option Repricing."
(2) Based on a total of 1,119,000 shares granted to all employees in Fiscal
1999, which number includes 754,500 shares granted pursuant to the Repricing
but does not include 205,500 shares granted in May 1998 that were cancelled
in exchange for options granted pursuant to the Repricing.
(3) The exercise price is equal to the closing price of the Company's Common
Stock on the date of grant.
(4) Options may terminate before their expiration date if the optionee's status
as an employee or consultant is terminated or upon optionee's death.
(5) Potential gains are net of the exercise price but before taxes associated
with the exercise. The 5% and 10% assumed annual rates of compounded stock
appreciation based upon the deemed fair market value are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future common stock price. Actual
gains, if any, on stock option exercises are dependent on the future
financial performance of the Company, overall market conditions and the
option holder's continued employment through the vesting period. There can
be no assurance that the amounts reflected in this table will be achieved.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information with respect to option exercises
in Fiscal 1999 by the Named Officers and the value of such officers' unexercised
options at the close of business on March 26, 1999 (the last market trading day
prior to the end of Fiscal 1999).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
SHARES END(#) FISCAL YEAR END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tamer Husseini............ 0 -- 50,207 27,293 22,500 0
Robert D. Jones........... 0 -- 17,604 12,396 7,500 0
Richard G. Finney......... 0 -- 20,209 14,375 9,584 0
Gary J. Policky........... 7,500 35,625 10,104 12,396 0 0
Perry A. Denning.......... 0 -- 33,851 36,149 0 0
</TABLE>
- ---------------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on the date of exercise, minus the exercise price.
(2) Market value of underlying securities based on the closing price of $4.00 of
the Company's Common Stock on March 26, 1999, minus the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee, consisting of directors Charles P.
Waite and William D. Rasdal, reviews and approves compensation and benefits for
the Company's executive officers, and grants options to executive officers under
the 1994 Plan. No interlocking relationship exists between the Company's Board
of Directors or the compensation committee of any other company, nor has any
such interlocking relationship existed in the past.
9
<PAGE> 12
TEN YEAR OPTION REPRICING
The following table identifies stock options to purchase shares of the
Company's Common Stock held by the Named Officers which were granted at a lower
exercise price during Fiscal 1999 pursuant to the Repricing in exchange for
options previously granted to the Named Officers. See "Report of the
Compensation Committee of the Board of Directors on Executive Compensation and
Repricing of Options" for additional information regarding the Repricing.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES EXERCISE OPTION TERM
UNDERLYING MARKET PRICE OF PRICE AT NEW REMAINING AT
OPTIONS STOCK AT TIME OF TIME OF EXERCISE DATE OF
NAME DATE REPRICED(#) REPRICING ($) REPRICING($) PRICE($) REPRICING
---- -------- ----------- ---------------- ------------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Perry A. Denning.............. 07/06/98 25,000 5.625 13.00 5.625 9 yrs, 38 days
Vice President, 07/06/98 25,000 5.625 13.00 5.625 9 yrs, 38 days
Semiconductor Division 07/06/98 20,000 5.625 10.00 5.625 9 yrs, 300 days
Richard G. Finney............. 07/06/98 10,000 5.625 10.00 5.625 7 yrs, 238 days
Vice President, 07/06/98 15,000 5.625 10.00 5.625 9 yrs, 300 days
Subsystems Division
William Hoppin................ 07/06/98 15,000 5.625 13.875 5.625 8 yrs, 131 days
Vice President, Sales 07/06/98 25,000 5.625 10.75 5.625 8 yrs, 256 days
07/06/98 25,000 5.625 10.75 5.625 8 yrs, 256 days
07/06/98 25,000 5.625 10.75 5.625 8 yrs, 256 days
07/06/98 25,000 5.625 10.75 5.625 8 yrs, 256 days
Tamer Husseini................ 07/06/98 30,000 5.625 10.00 5.625 7 yrs, 238 days
Chairman of the Board, 07/06/98 25,000 5.625 10.00 5.625 9 yrs, 300 days
President and Chief
Executive Officer
Robert D. Jones............... 07/06/98 10,000 5.625 10.00 5.625 7 yrs, 238 days
Senior Vice President, 07/06/98 12,500 5.625 10.00 5.625 9 yrs, 300 days
Marketing and Sales
Gary J. Policky............... 07/06/98 10,000 5.625 10.00 5.625 7 yrs, 238 days
Vice President, Engineering 07/06/98 12,500 5.625 10.00 5.625 9 yrs, 300 days
and Chief Technical Officer
Margaret E. Smith(1).......... 07/06/98 20,000 5.625 10.00 5.625 7 yrs, 238 days
Former Vice President, 07/06/98 17,500 5.625 10.00 5.625 9 yrs, 300 days
Finance and Chief Financial
Officer
</TABLE>
- ---------------
(1) Ms. Smith resigned as Vice President, Finance and Chief Financial Officer
effective January 1, 1999.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION AND REPRICING OF OPTIONS
The Compensation Committee of the Board of Directors (the "Committee")
determines the compensation of the Company's Chief Executive Officer and its
other executive officers. The Committee is composed entirely of outside
directors. In addition to determining the salary and bonus compensation for all
of the Company's executive officers, the Committee determines the nature and
timing of awards and grants under the Company's stock option plans.
The goals of the compensation program are to align compensation with the
Company's performance and objectives and to attract, retain and reward executive
officers whose contributions are critical to the long-term success of the
Company.
The primary components of the Company's compensation package are salary,
bonuses and stock options.
10
<PAGE> 13
Salary
The level of base salary for executive officers is set based upon their
scope of responsibility, level of experience and individual performance. The
salary range for each position is reviewed against the Radford Survey (a third
party compensation survey) data for high-tech companies with similar sales
volumes located on the West Coast. Additionally, the Committee takes into
account general business and economic conditions. The Company sets its salary to
be competitive with the marketplace. None of the factors considered is assigned
a specific weight.
Bonuses
The Company's executive bonus plan provides the opportunity for annual cash
bonuses based on accomplishment of specific individual performance objectives
and Company profit objectives. These objectives are set at the beginning of the
fiscal year based on the Company's long-term and short-term objectives, and
performance against these objectives is assessed at the end of the year. Based
on the financial performance of the Company, no bonuses were paid to executives
of the Company in Fiscal 1999.
Stock Options
The Committee believes that the granting of stock options is an important
method of rewarding and motivating management by aligning management's interests
with the Company's shareholders. The Committee also recognizes that a stock
incentive program is a necessary element in a competitive compensation package.
The program utilizes a vesting schedule to encourage key employees of the
Company to continue in the employ of the Company and encourages employees to
maintain a long-term prospective. In determining the size of stock option
grants, the Committee focuses primarily on the Company's performance and the
perceived role of such executive in accomplishing these objectives as well as
the satisfaction of individual performance objectives. The Committee also
considers the number of outstanding unvested options which the officer holds and
the size of previous option awards to that officer. The Committee does not
assign specific weights to these items.
Compensation of the Chief Executive Officer
Mr. Tamer Husseini has been President, Chief Executive Officer and Chairman
of the Board since the founding of the Company in 1984. The Committee used the
same compensation policy described above for all executive officers to determine
Mr. Husseini's Fiscal 1999 compensation. In setting both the cash-based and the
equity-based elements of Mr. Husseini's compensation, the Committee considered
competitive forces, the Company's performance and Mr. Husseini's leadership in
achieving the Company's long-term strategic goals. During Fiscal 1999, Mr.
Husseini received a salary of $302,187. During Fiscal 1999, Mr. Husseini was
granted options to purchase 55,000 shares of Common Stock. Of this amount,
30,000 were repriced options originally granted in a prior year and 25,000 were
repriced options originally granted in May 1998. See "Ten Year Option
Repricing." Given the Company's financial performance in Fiscal 1999, due to the
difficulty of achieving the Company's financial goals, no bonus was paid to Mr.
Husseini. The Committee believes Mr. Husseini's Fiscal 1999 compensation fairly,
sufficiently and relative to the Company's performance, rewarded him for this
performance and will serve to retain him as a key employee on whom the Company
is dependent for its continued success.
Policy Regarding Deductibility of Compensation.
The Company is required to disclose its policy regarding qualifying
executive compensation for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax, the otherwise allowable deduction for compensation paid or
accrued with respect to the executive officers of a publicly-held company, which
is not performance-based compensation is limited to no more than $1 million per
year. It is not expected that the compensation to be paid to the Company's
executive officers for Fiscal 2000 will exceed the $1 million limit per officer;
however,
11
<PAGE> 14
to the extent such compensation to be paid to such executive officers exceeds
the $1 million limit per officer, such excess will be treated as
performance-based compensation.
Repricing of Options
On June 25, 1998, the Company determined to give all then current employees
of the Company, including the Named Officers, the opportunity to have their
options amended so that, effective July 6, 1998, the per share exercise price of
their options would be equal to the closing price of the Company's Common Stock
on such date, which price was $5.625 (the "Repricing Offer"). The Board
determined that each option amended pursuant to the Repricing Offer would
continue to be subject to the same terms and conditions to which it was subject
prior to the amendment (including, but not limited to, the number of shares,
vesting schedule, amount of vesting as of the date of the Repricing, and
expiration date), except (i) the per share exercise price would be the closing
price of the Company's Common Stock on July 6, 1998, and (ii) the option would
be subject to a six-month blackout period, so that it would not be exercisable
before January 6, 1999 (the "Black-Out Period"); provided, however, that in the
case of the option holder's death, disability, or termination without cause, or
in the case of a change of control of the Company, the Black-Out Period would
not apply and instead the terms of the 1994 Plan would be controlling.
The Company believes that given the disparity, in June 1998, between the
trading price of its Common Stock and the exercise price of certain existing
stock options, the Repricing was desirable in order to incentivize the Company's
employees to work towards the future growth of the Company and to retain key
personnel. In exchange for the reduction in the per share exercise price, each
repriced option became subject to the Black-Out Period.
COMPENSATION COMMITTEE
William D. Rasdal
Charles P. Waite
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholders' return on the
Company's Common Stock with the total return on the S & P 500 Index and the S &
P High Technology -- Composite Index over the same period for the months of
December 1995 through March 1999 (assuming the investment of $100 in the
Company's Common Stock, the S & P 500 Index and the S & P High
Technology -- Composite Index, and reinvestment of all dividends). The Company's
Common Stock began trading on the Nasdaq Stock Market on December 20, 1995.
COMPARISON OF 39 MONTHS CUMULATIVE TOTAL RETURN*
AMONG CELERITEK, INC., THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
<TABLE>
<CAPTION>
12/20/95 3/96 3/97 3/98 3/99
-------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CELERITEK, INC. 100.00 130.00 138.00 141.00 50.00
S&P 500 100.00 107.00 129.00 190.00 226.00
S&P TECHNOLOGY SECTOR 100.00 102.00 138.00 209.00 335.00
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: June 18, 1999
13
<PAGE> 16
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CELERITEK, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Celeritek, Inc., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated June 18, 1999, and hereby appoints
Tamer Husseini and P. Michael Houlihan, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1999 Annual Meeting
of Shareholders of Celeritek, Inc. to be held on July 30, 1999 at 9:00 a.m., at
the offices of the Company, at 3236 Scott Boulevard, Santa Clara, California
95054 and at any adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side:
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS NAMED HEREIN, "FOR" EACH PROPOSAL
LISTED, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING. EITHER OF SUCH ATTORNEYS OR SUBSTITUTES SHALL HAVE AND MAY
EXERCISE ALL OF THE POWERS OF SAID ATTORNEYS-IN-FACT HEREUNDER.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 17
1. ELECTION OF DIRECTORS:
NOMINEES: Tamer Husseini, Robert J. Gallagher, Thomas W. Hubbs,
William D. Rasdal, Charles P. Waite
___ FOR ALL NOMINEES
___ WITHHELD FROM ALL NOMINEES
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME OF THE NOMINEE(S) ON THE LINE ABOVE.
2. Proposal to ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending
March 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such other matter or matters which may properly come
before the meeting and any adjournment(s) thereof.
(This Proxy should be dated, signed by the
shareholder(s) exactly as his or her name
appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a
fiduciary capacity should so indicate. If shares
are held by joint tenants or as community
property, both should sign.)
Signature:________________ Date:______ Signature:________________ Date:______
