SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MERIX CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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
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pursuant to Exchange Act Rule 0-11. Set forth the amount on which
the filing fee is calculated and state how it was determined.
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[ ] 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
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<PAGE>
MERIX CORPORATION
Notice of Annual Meeting of Shareholders
September 23, 1996
To the Shareholders of Merix Corporation:
The Annual Meeting of Shareholders of Merix Corporation, an Oregon
corporation, will be held on Monday, September 23, 1996 at 9:00 a.m., local
time, at the Corporate Offices of the Company, 1521 Poplar Lane, Forest
Grove, Oregon 97116, for the following purposes, as more fully described in
the accompanying Proxy Statement:
1. To elect seven directors to serve for the ensuing year and until
their successors are elected.
2. To ratify the appointment of the independent auditor of the Company
for fiscal 1997.
3. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
You are respectfully requested to date and sign the enclosed proxy and
return it in the postage prepaid envelope enclosed for that purpose. You
may attend the meeting in person even though you have sent in your proxy,
since retention of the proxy is not necessary for admission to or
identification at the meeting.
By Order of the Board of Directors
SAMUEL R. DESIMONE, JR.
Samuel R. DeSimone, Jr.
Vice President of Corporate
Development, General Counsel and
Secretary
Forest Grove, Oregon
August 2, 1996
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THIS
MEETING IN PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
MERIX CORPORATION
1521 Poplar Lane
Forest Grove, Oregon 97116
--------------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Merix Corporation, an Oregon corporation ("Merix" or the "Company"), for
use at the annual meeting of shareholders to be held on Monday, September
23, 1996 at 9:00 a.m., local time, and at any adjournment or adjournments
thereof. The Company will hold the annual meeting at the Corporate Offices
of the Company, 1521 Poplar Lane, Forest Grove, Oregon 97116. The
approximate date this proxy statement and accompanying proxy card are first
being sent to shareholders is August 12, 1996.
Merix will bear the cost of preparing and mailing the proxy, proxy
statement and any other material furnished to the shareholders by the
Company in connection with the annual meeting. Proxies will be solicited by
the use of the mails. Officers and employees of the Company may also
solicit proxies by telephone or personal contact. Copies of solicitation
materials will be furnished to fiduciaries, custodians and brokerage houses
for forwarding to beneficial owners of the stock held in their names.
Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before its exercise. The
proxy may be revoked by filing with the Secretary of the Company an
instrument of revocation or duly executed proxy bearing a later date. The
proxy may also be revoked by affirmatively electing to vote in person while
in attendance at the meeting. However, a shareholder who attends the
meeting need not revoke the proxy and vote in person, unless so desired.
The shares represented by each proxy will be voted in accordance with the
instructions specified in the proxy, if given. If a signed proxy is
returned without instructions, it will be voted for the directors, for
approval of Deloitte & Touche LLP as independent auditor and in accordance
with this proxy statement on any other business that may properly come
before the meeting.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only outstanding voting security of the
Company. The record date for determining holders of Common Stock entitled
to vote at the annual meeting is August 2, 1996. On that date, there were
6,134,696 shares of Common Stock outstanding, entitled to one vote per share.
The Common Stock does not have cumulative voting rights.
1
<PAGE>
The following table shows Common Stock ownership on July 1, 1996 by
(i) each person who, to knowledge of the Company, beneficially owns more
than 5% of the Common Stock, (ii) each of the executive officers named in
the Summary Compensation Table below and (iii) all executive officers and
directors of the Company as a group:
Approximate
Shares(1) Percent
--------- -----------
Tektronix, Inc. .................... 2,105,000 34.31%
PO Box 1000
Wilsonville, OR 97070
J. & W. Seligman & Co. ............. 773,100(2) 12.60%
Keystone Small Company Growth Fund . 333,100(3) 5.43%
Deborah A. Coleman ................. 250,000(4) 4.08%
Lawrence C. Neitling ............... 51,500(5) *
Joseph H. Howell ................... 24,750(6) *
Terri L. Timberman ................. 12,000(7) *
Samuel R. DeSimone, Jr ............. 2,565(8) *
All executive officers and directors
as a group (10 persons) .......... 2,474,565(9) 40.34%
* Less than one percent
- -------------------
(1) Shares are held directly with sole voting and dispositive power except
as otherwise indicated.
(2) This information is based upon a Schedule 13G filed with the SEC on
February 2, 1996, reporting that J. & W. Seligman & Co. had sole
voting and dispositive power with respect to all 773,100 shares.
(3) This information is based upon a Schedule 13G filed with the SEC on
February 14, 1996, reporting that Keystone Small Company Growth Fund
had sole voting and dispositive power with respect to all 333,100
shares.
(4) Includes 8,334 shares of unvested restricted stock held by
Ms. Coleman, as to which she does not have the power to sell, and
stock options for 120,000 shares that are currently exercisable or
become exercisable before August 31, 1996.
(5) Includes 5,000 shares of unvested restricted stock held by
Mr. Neitling, as to which he does not have the power to sell, and
stock options for 26,500 shares that are currently exercisable or
become exercisable before August 31, 1996.
(6) Includes 6,667 shares of unvested restricted stock held by Mr. Howell,
as to which he does not have the power to sell, and stock options for
14,750 shares that are currently exercisable or become exercisable
before August 31, 1996.
(7) Includes 1,667 shares of unvested restricted stock held by Ms.
Timberman, as to which she does not have the power to sell, and stock
options for 5,000 shares that are currently exercisable or become
exercisable before August 31, 1996.
(8) Includes 2,400 shares of unvested restricted stock held by Mr.
DeSimone, as to which he does not have the power to sell .
(9) Includes 2,105,000 shares held by Tektronix, Inc. ("Tektronix") as to
which directors of the Company disclaim beneficial ownership. Also
includes 24,068 shares of unvested restricted stock and stock options
for 195,000 shares held by executive officers and directors that are
currently exercisable or become exercisable before August 31, 1996.
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven directors who
are elected at the annual meeting to serve until the next annual meeting of
shareholders and until their respective successors are elected and
qualified. The nominees for director are listed below, together with
certain information about each of them. Ms. Coleman and Messrs. Karalis,
Neitling and Neun have served as directors of the Company since its
inception in March 1994. Mr. Boesenberg, Ms. Ellis and Dr. Nishimura were
elected directors of the Company immediately prior to its initial public
offering in May 1994.
Shares of Common
Stock Beneficially
Owned as of
July 1, 1996(1)
------------------------
Number Approximate
Name, Principal Occupation and Directorships Age of Shares(2) Percent
- -------------------------------------------- --- ------------ -----------
Charles M. Boesenberg....................... 48 6,250 *
Mr. Boesenberg has served as President and
Chief Executive Officer of Ashtech, Inc.
since February 1995. During 1994 he served as
Executive Vice President of Symantec
Corporation's Central Point Division. Prior
to the merger of Central Point Software Inc.
and Symantec, Mr. Boesenberg was President,
Chief Executive Officer and Chairman of
Central Point. Mr. Boesenberg joined Central
Point as President and Chief Operating
Officer in February 1992, and was elected
Chief Executive Officer and Chairman of the
Board in March 1992. From 1990 to 1992
Mr. Boesenberg was President of MIPS Computer
Systems, Inc., a semiconductor and computer
systems company. Mr. Boesenberg serves on
the Board of Directors of AER Energy
Resources, Inc. and Symantec Corporation.
Deborah A. Coleman.......................... 43 250,000(3) 4.08%
Chair of the Board of Directors and Chief
Executive Officer of the Company. From
November 1992 to the inception of the
Company, Ms. Coleman served as Vice President
of Materials Operations of Tektronix and was
responsible for management of the operations
of the Circuit Board Division of Tektronix.
Prior to joining Tektronix, Ms. Coleman held
various positions at Apple Computer, Inc. for
11 years, most recently as Vice President of
Information Systems and Technology from April
1990 to October 1992. Previous positions at
Apple Computer included Chief Financial
Officer and Vice President of Worldwide
Manufacturing Operations. Ms. Coleman serves
on the Board of Directors of Synopsys Inc.
and Octel Communications, Inc.
Carlene M. Ellis............................ 49 11,250 *
Ms. Ellis has served as Corporate Vice
President and Director of the Information
Technology Group of Intel Corporation since
September 1992. Ms. Ellis was Intel's
Director of Human Resources from September
1990 to September 1992 and Vice President of
its Administration Group from January 1989 to
September 1992.
John P. Karalis............................. 58 2,105,000(4) 34.31%
Mr. Karalis has served as Senior Vice
President, Corporate Development of Tektronix
since June 1995. He has served as Secretary
of Tektronix since September 1992. From
September 1992 to June 1995 he served as Vice
President, Corporate Development of
Tektronix. From May 1989 to September 1992,
Mr. Karalis practiced law with Brown and Bain
in Phoenix, Arizona. From January 1987 to May
1989, Mr. Karalis served as Vice President
and General Counsel of Apple Computer.
3
<PAGE>
Shares of Common
Stock Beneficially
Owned as of
July 1, 1996(1)
------------------------
Number Approximate
Name, Principal Occupation and Directorships Age of Shares(2) Percent
- -------------------------------------------- --- ------------ -----------
Lawrence C. Neitling........................ 48 51,500(5) *
Director and President and Chief Operating
Officer of the Company. Mr. Neitling served
as the Operations Manager of the Circuit
Board Division of Tektronix (the "Division")
from October 1985 to March 1990, when he
assumed responsibility for all operations of
the Division. Mr. Neitling became General
Manager of the Division in May 1991.
Carl W. Neun................................ 52 2,105,000(4) 34.31%
Mr. Neun has served as Senior Vice President
and Chief Financial Officer of Tektronix
since June 1995. From March 1993 to June 1995
he served as Vice President and Chief
Financial Officer of Tektronix. From
September 1987 to March 1993, Mr. Neun served
as Senior Vice President of Administration
and Chief Financial Officer of Conner
Peripherals, Inc.
Dr. Koichi Nishimura........................ 57 11,250 *
Dr. Nishimura has served as Chief Executive
Officer of Solectron Corporation since
September 1992 and President since 1990. He
was Co-Chief Executive Officer from 1991 to
1992 and Chief Operating Officer of Solectron
from 1988 to 1991. He became a director of
Solectron in February 1991.
* Less than one percent.
- -------------------
(1) Shares are held directly with sole voting and dispositive power except
as otherwise indicated.
(2) Amounts for Mr. Boesenberg, Ms. Ellis and Dr. Nishimura represent
exercisable options granted to them pursuant to the Company's 1994
Stock Incentive Plan, as amended.
(3) Includes 8,334 shares of unvested restricted stock held by Ms.
Coleman, as to which she does not have the power to sell, and stock
options for 120,000 shares that are currently exercisable or become
exercisable before August 31, 1996.
(4) Consists of stock held by Tektronix, Inc. Messrs. Karalis and Neun
serve as directors of the Company as representatives of Tektronix. In
their capacities as executive officers of Tektronix, they may be
deemed to share with the board of directors of Tektronix voting and/or
dispositive power with respect to such shares of Common Stock. Messrs.
Karalis and Neun disclaim beneficial ownership of such shares.
(5) Includes 5,000 shares of unvested restricted stock held by Mr.
Neitling, as to which he does not have the power to sell, and stock
options for 26,500 shares that are currently exercisable or become
exercisable before August 31, 1996.
The Board of Directors met five times during the fiscal year ended
May 25, 1996. Each director attended at least 75% of the aggregate of the
meetings of the Board of Directors and the committees of which the director
was a member. The only standing committees of the Board of Directors are
the Audit and Finance Committee and the Human Resources and Compensation
Committee. The Company does not have a Nominating Committee. Shareholders
who wish to submit names for consideration as potential directors should do
so in writing addressed to the Board of Directors, c/o Samuel R. DeSimone,
Jr., Secretary, Merix Corporation, 1521 Poplar Lane, Forest Grove, Oregon
97116.
The Audit and Finance Committee is comprised of Messrs. Boesenberg and
Neun and Dr. Nishimura and met four times during the last fiscal year. The
Audit and Finance Committee nominates the independent auditor of the
Company for approval by the Board of Directors and the shareholders,
reviews the planned scope and results of the annual audit, confers with the
independent auditor, reviews the auditors' recommendations with respect to
accounting, internal control and other matters and makes recommendations to
the Board of Directors with respect to audit and finance matters.
4
<PAGE>
The Human Resources and Compensation Committee is comprised of
Ms. Ellis and Messrs. Boesenberg and Karalis and met four times during the
last fiscal year. The Human Resources and Compensation Committee makes
recommendations to the Board of Directors on executive and director
compensation plans, approves salaries for executive officers of the Company
and administers compensation plans as authorized by the Board of Directors.
Directors not affiliated with the Company or Tektronix receive an
annual retainer of $6,000, a fee of $500 for attendance at each Board or
committee meeting, an automatic option grant of 20,000 shares under the
Company's 1994 Stock Incentive Plan at the time first elected or appointed
to the Board of Directors, and annual automatic option grants thereafter of
5,000 shares. The options are 10-year options granted at the market price
on the date of grant and vest in four equal installments beginning one year
after the date of grant. All directors are reimbursed for expenses incurred
in connection with attending Board and committee meetings.
The proxies will be voted with respect to the election of the nominee
in accordance with the instructions specified in the proxy form. If no
instructions are given, proxies will be voted for the election of the
nominees. If for some unforeseen reason any of the nominees would not be
available as a candidate for director, the number of directors constituting
the Board of Directors may be reduced prior to the meeting or the proxies
may be voted for such other candidate or candidates as may be nominated by
the Board of Directors, in accordance with the authority conferred in the
proxy.
The Board of Directors recommends a vote FOR the election of the
nominees listed above. Directors are elected by a plurality of the votes
cast by the shares entitled to vote if a quorum is present at the annual
meeting. Abstentions are counted for purposes of determining whether a
quorum exists at the annual meeting, but are not counted and have no effect
on the determination of whether a plurality exists with respect to a given
nominee.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation information for the Chief
Executive Officer and certain other executive officers of the Company. The
information reflects compensation received by such persons from Tektronix
in fiscal 1994 while the business of the Company was conducted as a
division of Tektronix.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-----------------------
Annual Compensation Restricted Securities
Fiscal ------------------- Stock Underlying All Other
Year Salary(1) Bonus(2) Awards($)(3) Options(#) Compensation(4)
------ --------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman ....... 1996 $217,642 $ 34,500 -- 15,000 $ 9,843
(Chair and Chief 1995 222,046 178,112 -- -- 5,095
Executive Officer) 1994 246,864 165,952 $225,000 240,000 9,448
Lawrence C. Neitling ..... 1996 207,690 25,000 -- 30,000 8,306
(President and Chief 1995 177,894 89,984 -- -- 4,056
Operating Officer) 1994 167,518 236,369 135,000 75,000 17,321
Joseph H. Howell ......... 1996 165,000 16,500 -- 8,000 11,848
(Senior Vice President 1995(5) 53,942 67,702 232,500 75,000 23,085
and Chief Financial
Officer)
Terri L. Timberman ....... 1996 120,000 12,000 -- 10,000 4,918
(Vice President, 1995 107,310 38,520 -- -- 3,219
Human Resources) 1994 83,066 23,562 45,000 20,000 4,984
Samuel R. DeSimone, Jr. .. 1996(5) 88,976 22,500 84,637 20,000 2,453
(Vice President of
Corporate Development,
General Counsel and
Secretary)
- -------------------
<FN>
(1) Ms. Coleman's fiscal 1994 compensation was for services rendered as
Vice President of Materials' Operations of Tektronix. Mr. Neitling's
fiscal 1994 compensation was for services rendered as General Manager
of the Circuit Board Division of Tektronix. Ms. Timberman's fiscal
1994 compensation was for services rendered in various human resources
management positions for Tektronix. 1994 amounts for Ms. Coleman, Mr.
Neitling and Ms. Timberman also include the payout of their vacation
accrued upon termination from Tektronix of $6,772, $38,864, and
$6,701, respectively. Ms. Coleman's compensation for fiscal 1994 also
includes $35,042 for moving and relocation expenses paid by Tektronix
in connection with Ms. Coleman's relocation to Oregon in fiscal 1993.
(2) Ms. Coleman and Mr. Neitling's fiscal 1994 compensation includes
transition bonuses of $100,000 and $200,000 respectively, paid on
June 1, 1994 upon completion of the Reorganization and Offering (as
defined in "Certain Relationships and Transactions"). Bonus amounts
for fiscal 1995 and 1996 represent amounts paid under the Company's
Corporate Incentive Plan, except that Mr. DeSimone's fiscal 1996 bonus
amount includes a starting bonus of $10,000 and Mr. Howell's fiscal
1995 bonus includes a relocation bonus of $41,250.
(3) Dollar amounts set forth in the table represent the value of the
shares on the date of grant. The restricted shares vest ratably over a
three-year period, subject to continued employment. As of May 25,
1996, the number of unvested shares of restricted stock held by the
named executives and the value of such shares on such date were as
follows: Ms. Coleman - 8,334 shares ($256,270.50), Mr. Neitling -
5,000 shares ($153,750) Mr. Howell - 6,667 shares ($205,010.25),
Ms. Timberman - 1,667 shares ($51,260.25) and Mr. DeSimone - 2,400
shares ($73,800).
(4) Amounts for 1994 were contributed by Tektronix under its 401(k) Plan.
Amounts for 1995 and 1996 consist principally of amounts contributed
by the Company under its 401(k) Plan. Mr. Howell's fiscal 1995 amount
includes $21,466 for relocation expenses.
(5) Messrs. Howell and DeSimone began their employment with the Company in
fiscal 1995 and 1996, respectively.
</FN>
</TABLE>
6
<PAGE>
Stock Option Grants
The following table provides information regarding stock options
granted to executive officers in fiscal 1996.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------- Potential Realizable Value at
Number of Percent of Assumed Annual Rates
Shares Total Options of Stock Price Appreciation
Underlying Granted to for Option Term(2)
Options Employees in Exercise Price Expiration -----------------------------
Name Granted(1) Fiscal Year per Share Date 5% 10%
---- ----------- ------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman .......... 15,000 4.83% $31.38 10/09/05 $295,974 $ 750,055
Lawrence C. Neitling ........ 30,000 9.66% $31.38 10/09/05 591,947 1,500,110
Joseph H. Howell ............ 8,000 2.57% $31.38 10/09/05 157,853 400,029
Terri L. Timberman .......... 10,000 3.22% $31.38 10/09/05 197,316 500,037
Samuel R. DeSimone, Jr. ..... 20,000 6.44% $35.27 09/11/05 443,567 1,124,086
- -------------------
<FN>
(1) Under the terms of the option agreements with these executive
officers, each of the options is subject to accelerated vesting in the
event of a future change in control of the Company or the occurrence
of certain events indicating an imminent change in control of the
Company. Each of the options is subject to early termination in the
event of termination of employment. Each option terminates 12 months
after termination following death or disability and 90 days after
termination for any other reason. These options become exerciseable in
four equal annual installments beginning one year after the date of
grant.
(2) In accordance with rules of the Securities and Exchange Commission,
these amounts are the hypothetical gains or "option spreads" that
would exist for the options based on assumed rates of annual compound
stock price appreciation of 5% and 10% from the date the options were
granted over the full option term.
</FN>
</TABLE>
Fiscal Year-End Option Values
The following table indicates the number of shares acquired upon
exercise of options during the last fiscal year and the value realized, the
number of shares subject to exercisable (vested) and unexercisable
(unvested) stock options as of May 25, 1996 and the value of exercisable
and unexercisable "in-the-money" options, which represents the positive
spread between the exercise price of existing stock options and the price
of the Common Stock at May 25, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at May 25, 1996(#) at May 25, 1996(1)($)
Shares Acquired Value --------------------------- --------------------------
on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
--------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman .......... 0 0 120,000 135,000 $2,610,000 $2,610,000
Lawrence C. Neitling ........ 11,000 296,938 26,500 67,500 576,375 815,625
Joseph H. Howell ............ 4,000 49,000 14,750 64,250 110,625 421,875
Terri L. Timberman .......... 5,000 125,250 5,000 20,000 108,750 217,500
Samuel R. DeSimone, Jr. ..... 0 0 0 20,000 0 0
- -------------------
<FN>
(1) Calculated based on the May 24, 1996 closing stock price.
</FN>
</TABLE>
Severance Agreements
The Company has entered into Executive Severance Agreements with
Ms. Coleman, Mr. Neitling, Mr. Howell, Ms. Timberman and Mr. DeSimone
pursuant to which the Company has agreed to provide each executive
severance benefits upon the Company's termination of their employment
without cause. "Cause" is generally defined as (a) the willful and
continued failure to perform substantially the executive's reasonably
assigned duties (except a failure resulting from incapacity due to physical
or mental illness) after a demand for performance has been made and the
manner of nonperformance has been specifically identified or (b) the
willful engaging in illegal conduct materially injurious to the Company.
Termination of employment does not
7
<PAGE>
include assignment of the executive to different responsibilities
consistent with the executive's area of professional expertise, except in
the case of Ms. Coleman, with respect to whom termination of employment
includes her removal as Chief Executive Officer of the Company. In the
event of a termination of employment without cause, Ms. Coleman would
receive a lump sum payment equal to twice her annual base pay, Mr. Neitling
would receive a lump sum payment equal to 1.5 times his annual base pay,
Mr. Howell would receive a lump sum payment equal to his annual base pay,
Ms. Timberman would receive a lump sum payment equal to six months of her
annual base pay and Mr. DeSimone would receive a lump sum payment equal to
his annual base pay. Each executive is also entitled to a portion of the
benefits under any incentive plan in which the executive participates,
prorated for the year in which the executive's employment is terminated,
and accelerated vesting or accrual of stock options or other stock awards.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Human Resources and Compensation Committee
The Human Resources and Compensation Committee of the Board of
Directors (the "Committee") consists of three outside directors. Pursuant
to authority delegated by the Board of Directors, the Committee approves
compensation of executive officers, including the Chief Executive Officer.
The Committee is also responsible for reviewing and approving executive
compensation programs and administering the Company's stock incentive and
executive compensation plans. The Committee also provides advice on a broad
range of human resources issues including best practices in the areas of
benefits, staffing, succession planning and general compensation.
Compensation Policy
The Board of Directors and the Committee believe that the Company's
total executive compensation programs should be related to corporate
performance. The Company has developed a total compensation strategy that
ties a significant portion of executive compensation to achievement of
pre-established financial results. The primary objective of the executive
compensation program is to:
* Attract and retain talented executives;
* Motivate executives to achieve long term business strategies
while achieving near term and financial targets; and
* Align executive performance with Merix's strategic and tactical
goals.
The Company has base pay and annual incentive compensation programs
for its executive officers, as well as a 401(k) plan. These programs are
designed to offer compensation that is competitive with compensation
offered by companies of similar size and complexity within the electronics
and similar industries. The Company targets the 50th percentile for base
pay and 65-70th percentile for total compensation. The Committee uses
comparative information from a group of companies in the electronics
industry for establishing executive compensation, general compensation
structures and Company performance goals. The Committee periodically
engages a compensation consulting firm to assist in this process.
Base Salaries
Base salaries for the Chief Executive Officer and other executive
officers are initially determined by evaluating the responsibilities of the
position and the experience of the individual, and by reference to the
competitive marketplace for corporate executives. This includes a
comparison of base salary and total compensation for comparable positions
at other companies.
Annual salary adjustments are considered and determined by evaluating
the performance of the Company and each executive officer, and also take
into account any new responsibilities. The Committee, when
8
<PAGE>
appropriate, also considers non-financial performance measures that focus
attention on improvement in management processes.
Corporate Incentive Plan
The Company's executive officers participate in the Company's
Corporate Incentive Plan, an annual cash incentive compensation plan.
Company performance objectives are established and approved by the Board of
Directors at the beginning of the fiscal year. Performance measures have
established thresholds, targets and maximums that determine the amount of
cash payment under the plan. The Company's performance objectives for the
fiscal year are specified each year and approved by the full Board of
Directors.
The Corporate Incentive Plan for fiscal 1996 provided that 40% of the
award was based on sales criteria, 40% of the award was based on operating
income criteria and 20% of the award was based on individual performance.
Each participant was assigned a leverage percentage, which represented the
base salary that would be received under the plan if the plan criteria were
met, and the leverage percentages ranged from 10% to 60%. The plan provided
for additional cash payments if the targets were exceeded, subject to a
maximum amount of twice the leverage percentage. The Company's sales and
net income for fiscal 1996 did not meet the predetermined plan levels for
the year. However, based on individual performance and contributions and
the overall performance of the Company, including the consummation of two
acquisitions and the successful integration of those operations with and
into the Company, the Board of Directors decided to grant executive
officers bonuses of 25% of the amount they would have otherwise received
had the plan levels been achieved. As a result, cash bonuses under the plan
for fiscal 1996 were significantly lower than cash bonuses received in
fiscal 1995 when the Company's sales and net income were in excess of the
predetermined plan levels for that year. Amounts paid under the Corporate
Incentive Plan to the Chief Executive Officer and the other executive
officers are set forth in the Summary Compensation Table.
Stock Options
All employees of the Company, including executive officers, are
eligible to participate in the Company's Stock Option Plan. All option
grants are approved by the Committee. Guidelines for the number of options
granted have been established and are reviewed periodically to ensure
competitiveness. Actual grants are based on individual performance and
contribution to the Company's strategic success. The Stock Option Plan
supports the linkage between executives, employees and other shareholders
to the long term business strategies. Option and restricted stock grants
made to executive officers for fiscal 1994, 1995 and 1996 are reflected in
the Summary Compensation Table.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986 limits to
$1,000,000 per person the amount that the Company may deduct for
compensation paid to any of its most highly compensated officers in any
year after 1993. The Company anticipates that the levels of salary and
bonus to be paid by the Company will not generally exceed that limit. Under
proposed regulations, the $1,000,000 cap on deductibility will not apply to
compensation received through the exercise of nonqualified stock options
that meet certain requirements. This option exercise compensation is equal
to the excess of the market price at the time of exercise over the option
price and, unless limited by Section 162(m), is generally deductible by the
Company. The Company's current policy is generally to grant options that
meet the requirements of the proposed regulations.
Human Resources and Compensation Committee Report Submitted By:
Charles M. Boesenberg, Chairman
Carlene M. Ellis
John P. Karalis
Compensation Committee Interlocks and Insider Participation
John P. Karalis is an executive officer of Tektronix, Inc. See
"Certain Relationships and Transactions" regarding transactions between
Tektronix and the Company.
9
<PAGE>
Performance Graph
The graph below compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total return on the Nasdaq
Composite U.S. Index and a peer group of companies in the Company's
industry over the period indicated, assuming the investment of $100 on
May 25, 1994, the date of the Company's initial public offering, and
reinvestment of any dividends. In accordance with guidelines of the SEC,
the stockholder return for each entity in the peer group index has been
weighted on the basis of market capitalization as of each quarterly
measurement date set forth on the graph. The stock price performance shown
on the graph below is not necessarily indicative of future price
performance.
[Performance Graph located here--Total Stockholder
Return; points plotted on graph are shown below]
<TABLE>
<CAPTION>
5/25/94 11/30/94 5/27/95 11/30/95 5/25/96
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Merix Corp. 100 170.51 248.72 371.79 315.38
Nasdaq Index 100 103.44 120.72 147.51 174.54
Peer Group 100 129.53 185.60 265.01 281.84
- -------------------
<FN>
(1) The selected peer group consists of ADFlex Solutions, Inc., Altron,
Inc., Advanced Circuits, Inc., Continental Circuits Corporation,
Elexsys International, Inc., Hadco Corporation, M-Wave, Inc., Parlex
Corporation, Sanmina Corporation, Sheldahl, Inc. and Sigma Circuits,
Inc. Such companies have been selected for the peer group on the basis
of, among other factors, the similarity of their business to that of
the Company and their market capitalization relative to that of the
Company.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company was formed in March 1994 to succeed to the business
conducted by the Circuit Board Division of Tektronix. Pursuant to an Asset
Transfer Agreement dated as of May 31, 1994 (the "Asset Transfer
Agreement"), all of the business of the Circuit Board Division of Tektronix
was transferred to the Company immediately prior to the consummation of the
Company's initial public offering (the "Reorganization and Offering").
Tektronix transferred to the Company all of the assets used exclusively in
the Division's business and approximately $17.5 million in cash in exchange
for 6,000,000 shares of Common Stock and a note in the principal amount of
$10 million (the "Note"). The Note bears interest at the rate of 7.5% per
annum and is payable over five years. The Company granted Tektronix a
security interest in the Company's real property (including improvements)
to secure repayment of the Note pursuant to a Trust Deed. Tektronix
10
<PAGE>
may set off any amounts not paid by the Company when due under the Note
against any amounts Tektronix or its subsidiaries owe the Company under the
Supply Agreements described below.
The Asset Transfer Agreement provides that the Company will use all
reasonable efforts to nominate and maintain as members of its Board of
Directors two individuals designated by Tektronix and three additional
independent individuals, so long as Tektronix holds at least 25% of the
outstanding shares of the Company's Common Stock. Messrs. Karalis and Neun
have been nominated pursuant to the agreement. If the Company increases the
size of its Board of Directors beyond seven while this covenant is in
effect, Tektronix is entitled to designate such number of directors as
represents two-sevenths of the total number of directors.
Tektronix, through certain participating divisions and subsidiaries,
and the Company have also entered into seven separate Supply Agreements.
During the three-year term of the Supply Agreements, the participating
divisions and subsidiaries agreed to purchase from the Company annually at
least the lesser of 90% of their aggregate annual requirements for the type
of products sold by the Company or $28.5 million, at prices calculated in
accordance with an agreed-upon formula, subject to certain adjustments.
Tektronix may, without the consent of the Company, elect to sell or
otherwise transfer any of its participating divisions or subsidiaries to a
successor in interest by way of merger, sale or other reorganization,
provided, however, that any such successor in interest shall be bound by
the terms of the Supply Agreements applicable to such subsidiary or such
division prior to such sale or transfer. Tektronix's obligation under all
of the Supply Agreements shall be satisfied if the aggregate amount
purchased under the Supply Agreements is annually at least the lesser of
90% of the aggregate requirements of all of the participating units for the
type of products sold by the Company or $28.5 million. The pricing
methodology for products sold under the Supply Agreements is based upon the
Company's cost (as defined) plus a margin (expressed as a multiple) for
accelerated delivery. Prices may not exceed prices charged to other
customers by the Company for comparable products and quantities. During the
last fiscal year net sales to Tektronix pursuant to the Supply Agreements
were $32,010,020.
In addition, the Company and Tektronix entered into Waste Management
and Services Agreements covering certain environmental matters. During the
last fiscal year, the Company paid $426,441 to Tektronix pursuant to these
agreements.
2. APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors has appointed Deloitte & Touche LLP as the
Company's independent auditor for the current fiscal year, subject to
ratification of the appointment by the shareholders of the Company at the
annual meeting. Deloitte & Touche LLP has audited the financial statements
of the Company since incorporation. Proxies will be voted in accordance
with the instructions specified in the proxy form. If no instructions are
given, proxies will be voted for approval of Deloitte & Touche LLP as
independent auditor. Representatives of Deloitte & Touche LLP are expected
to be present at the annual meeting, will have the opportunity to make a
statement, if they so desire, and will be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than 10%
of the Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Executive officers,
directors and beneficial owners of more than 10% of the Common Stock are
required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of
such forms received by the Company and on written representations from
certain reporting persons that they have complied with the relevant filing
requirements, the Company believes that all Section 16(a) filing
requirements applicable to its executive officers and directors were
complied with during the fiscal year ended May 25, 1996.
11
<PAGE>
OTHER MATTERS
Shareholder Proposals to be Included in the Company's Proxy Statement
A shareholder proposal to be considered for inclusion in proxy
materials for the Company's 1997 annual meeting must be received by the
Company not later than April 14, 1997.
Shareholder Proposals Not in the Company's Proxy Statement
Shareholders wishing to present proposals for action at this annual
meeting or at another shareholders' meeting must do so in accordance with
the Company's Bylaws. A shareholder must give timely notice of the proposed
business to the Secretary. To be timely, a shareholder's notice must be in
writing, delivered to or mailed and received at the principal executive
offices of the Company not less than 50 days nor more than 75 days prior to
the meeting; provided, however, that if less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made, notice by
the shareholder, to be timely, must be received no later than the close of
business on the tenth day following the earlier of the day on which such
notice of the date of the meeting was mailed or such public disclosure was
made. For each matter the shareholder proposes to bring before the meeting,
the notice to the Secretary must include (a) a brief description of the
business desired to be brought before the meeting and the reasons for
conducting such business at the meeting, (b) the name and address of the
shareholder proposing such business, (c) the class and number of shares of
the Company which are beneficially owned by the shareholder and (d) any
material interest of the shareholder in such business. The officer
presiding at the meeting may, if in the officer's opinion the facts
warrant, determine that business was not properly brought before the
meeting in accordance with the Company's Bylaws. If such officer does so,
such officer shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Shareholder Nominations for Director
Shareholders wishing to directly nominate candidates for election to
the Board of Directors at an annual meeting must do so in accordance with
the Company's Bylaws by giving timely notice in writing to the Secretary as
defined above. The notice shall set forth (a) the name and address of the
shareholder who intends to make the nomination, (b) the name, age, business
address and residence address of each nominee, (c) the principal occupation
or employment of each nominee, (d) the class and number of shares of the
Company which are beneficially owned by each nominee and by the nominating
shareholder, (e) any other information concerning the nominee that must be
disclosed of nominees in proxy solicitations pursuant to Regulation 14A of
the Securities Exchange Act of 1934, and (f) the executed consent of each
nominee to serve as a director of the Company if elected. Shareholders
wishing to make any director nominations at any special meeting of
shareholders held for the purpose of electing directors must do so, in
accordance with the Bylaws, by delivering timely notice to the Secretary
setting forth the information described above for annual meeting
nominations. To be timely, the notice must be given (a) if given by any
shareholder who made a demand for the meeting, concurrently with the
delivery of such demand, and (b) otherwise, not later than the close of
business on the tenth day following the day on which the notice of the
special meeting was mailed. The officer presiding at the meeting may, if in
the officer's opinion the facts warrant, determine that a nomination was
not made in accordance with the procedures prescribed by the Bylaws. If
such officer does so, such officer shall so declare to the meeting and the
defective nomination shall be disregarded.
12
<PAGE>
Other Business
The Board of Directors does not intend to present any business for
action of the shareholders at the annual meeting except the matters
referred to in this proxy statement. If any other matters should properly
come before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote thereon in accordance with their
judgment on such matters.
Whether or not you expect to be present at the meeting, please sign
the accompanying form of proxy and return it promptly in the enclosed
stamped return envelope.
By Order of the Board of Directors
SAMUEL R. DESIMONE, JR.
Samuel R. DeSimone, Jr.
Vice President of Corporate
Development, General Counsel
and Secretary
August 2, 1996
13
<PAGE>
P
R MERIX CORPORATION
O Proxy Solicited on Behalf of the Board of Directors of
X the Company for the Annual Meeting September 23, 1996
Y
The undersigned hereby appoints Deborah A. Coleman, Lawrence C. Neitling,
John P. Karalis, and each of them, proxies with full power of substitution,
to vote in behalf of the undersigned at the Annual Meeting of Shareholders
of Merix Corporation on September 23, 1996, and at any adjournment thereof,
all shares of the undersigned in Merix Corporation. The proxies are
instructed to vote as follows:
The shares represented by this proxy will be voted in accordance with
instructions, if given. If no instructions are given, they will be voted
for the directors and for the independent auditor. The proxies may vote in
their discretion as to other matters that may come before the meeting.
1. Election of Directors, Nominees: (change of address/comments)
Charles M. Boesenberg, Deborah A. Coleman, ---------------------------
Carlene M. Ellis, John P. Karalis,
Lawrence C. Neitling, Carl W. Neun, ---------------------------
Dr. Koichi Nishimura.
---------------------------
2. Approval of Deloitte & Touche as
independent auditor. ---------------------------
The shares represented by this proxy will be (If you have written in the
voted in accordance with instructions, if above space, please mark the
given. If no instructions are given, they corresponding box on the
will be voted for the directors and for the reverse side of this card)
independent auditor. The proxies may vote in
their discretion as to other matters that may
come before the meeting.
(The Board of Directors recommends a vote FOR Items 1 and 2.) SEE
PLEASE SIGN ON OTHER SIDE AND RETURN PROMPTLY REVERSE
SIDE
<PAGE>
[ X ] Please mark your votes as in
this example.
1. Election of Directors 2. Approved of Deloitte & Touche
FOR WITHHELD as Independent auditor.
[ ] [ ] FOR AGAINST ABSTAIN
[ ] [ ] [ ]
For, except vote withheld from the
following nominee(s):
- ----------------------------------------
To facilitate meeting arrangements, [ ]
please check here if you plan to
attend the meeting in person.
Please check here if you have a change [ ]
of address or comments on the reverse
side.
SIGNATURE(S) DATE
----------------------------------- ----------------------------
NOTE: Please sign exactly as name(s) appears hereon. Joint owners should
each sign. Please mark, date, sign and return proxy card promptly. Receipt
is acknowledged of the notice and proxy statement relating to this meeting.
