SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TESSCO Technologies Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $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) 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:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee previously paid with preliminary materials.
<PAGE>
( ) 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:
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TESSCO Technologies Incorporated
34 Loveton Circle
Sparks, Maryland USA 21152-5100
-------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
July 15, 1997
-------------------------------------------------------------------------------
To the Shareholders of TESSCO Technologies Incorporated:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of
Shareholders (the "Annual Meeting") of TESSCO Technologies Incorporated, a
Delaware corporation (the "Company"), will be held at the Company's corporate
headquarters, 34 Loveton Circle, Sparks, Maryland USA, on July 15, 1997 at 11:00
a.m., local time, for the following purposes:
1. To elect two directors for a three year term ending in
2000.
2. To ratify the selection of Arthur Andersen LLP as the
Company's independent public accountants.
3. To act upon any other matter which may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of
business on May 29, 1997 as the record date for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. A list of
shareholders as of the record date will be available for inspection by
shareholders at the Company's corporate headquarters during business hours for a
period of ten days prior to the Annual Meeting.
Your attention is directed to the attached Proxy Statement and to
the enclosed Annual Report of the Company for the fiscal year ended March 28,
1997.
By Order of the Board of Directors,
Janet W. Barnhill
Secretary
Sparks, Maryland
June 30, 1997
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
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TESSCO Technologies Incorporated
34 Loveton Circle
Sparks, Maryland USA 21152-5100
--------------------------------------
PROXY STATEMENT
--------------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is being furnished to shareholders of TESSCO
Technologies Incorporated, a Delaware corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company of proxies for
use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at
the Company's corporate headquarters, 34 Loveton Circle, Sparks, Maryland, on
July 15, 1997 at 11:00 a.m., local time, and at any adjournments thereof.
Solicitation
The solicitation is being made primarily by the use of the mails,
but directors, officers and employees may also engage in the solicitation of
proxies by telephone. The cost of soliciting proxies will be borne by the
Company, and no compensation will be paid by the Company in connection with the
solicitation of proxies, except that the Company may reimburse brokers,
custodians, nominees and other recordholders for their reasonable out-of-pocket
expenses in forwarding proxy material to beneficial owners.
This Proxy Statement and the accompanying form of proxy are being
sent to shareholders on or about June 30, 1997.
Revocation of Proxies
A proxy may be revoked at any time prior to its exercise by the
filing of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
additional documentation from your record holder to vote personally at the
Annual Meeting.
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Voting Rights and Outstanding Shares
The close of business on May 29, 1997 has been fixed by the Board
of Directors of the Company as the record date (the "Record Date") for
determining the shareholders of the Company entitled to notice of and to vote at
the Annual Meeting. On the Record Date, the Company had outstanding 4,352,242
shares of common stock, $0.01 par value per share (the "Common Stock"). Each
share of Common Stock entitles the holder thereof to one vote on each matter to
be voted upon at the Annual Meeting. There is no cumulative voting for the
election of directors.
The presence, in person or by proxy, of at least a majority of
the total number of shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. In the event there are not sufficient
votes for a quorum or to approve any proposal at the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
All outstanding shares of the Company's Common Stock represented
by properly executed and unrevoked proxies received in the accompanying form in
time for the Annual Meeting will be voted. A shareholder may, with respect to
the election of directors (i) vote for the election of the named director
nominees, (ii) withhold authority to vote for all such director nominees, or
(iii) vote for the election of all such director nominees other than any nominee
with respect to whom the shareholder withholds authority to vote by striking a
line through such nominee's name on the proxy. A shareholder may, with respect
to each other matter specified in the notice of meeting (i) vote "FOR" the
matter, (ii) vote "AGAINST" the matter, or (iii) "ABSTAIN" from voting on the
matter. Shares will be voted as instructed in the accompanying proxy on each
matter submitted to shareholders. If no instructions are given, the shares will
be voted FOR the election of the named director nominees and FOR the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants.
A proxy submitted by a shareholder may indicate that all or a
portion of the shares represented by such proxy are not being voted by such
shareholder with respect to a particular matter. This could occur, for example,
when a broker is not permitted to vote Common Stock held in street name on
certain matters in the absence of instructions from the beneficial owner of the
Common Stock. The shares subject to any such proxy which are not being voted
with respect to a particular matter (the "non-voted shares") will be considered
shares not present and entitled to vote on such matter, although such shares may
be considered present and entitled to vote for other purposes and will count for
purposes of determining the presence of a quorum.
The affirmative vote of a plurality of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled to vote on the
election of directors is required to elect directors. Accordingly, if a quorum
is present at the Annual Meeting, the two persons receiving the greatest number
of votes will be elected to serve as directors. Therefore, withholding authority
to vote for a director(s) and non-voted shares with respect to the election of
directors will not affect the outcome of the election of directors. Under
Delaware law, abstentions are generally considered as shares entitled to vote
and thus have the same effect as a vote against such matter. Non-voted shares
with respect to a matter will not be considered as entitled to vote on such
matter and thus will not affect the determination of whether such matter is
approved.
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The Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournment
thereof. Proxies solicited hereby will be tabulated by inspectors of election
designated by the Board, who will not be employees or directors of the Company
or any of its affiliates.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. Election of Directors
The Company's Bylaws provide that the Board of Directors is
divided into three classes, each class consisting, as nearly as possible, of
one-third of the total number of directors, and with each class having a
three-year term. Each year the directors in one class are elected to serve for a
term of three years. The Board of Directors is presently composed of six
members. One class of directors, consisting of Martin L. Grass and Morton F.
Zifferer, Jr., has a term of office expiring at the Annual Meeting, or until
their successors are elected and qualified. Messrs. Grass and Zifferer have each
been nominated for a three-year term expiring at the Annual Meeting of
Shareholders in 2000 and until their successors are elected and qualified.
The persons named in the enclosed proxy intend to vote properly
executed and returned proxies FOR the election of all nominees proposed by the
Board of Directors unless authority to vote is withheld. In the event that any
nominee is unable or unwilling to serve, the persons named in the proxy will
vote for such substitute nominee or nominees as they, in their discretion, shall
determine. The Board of Directors has no reason to believe that any nominee
named herein will be unable or unwilling to serve.
Set forth below is information concerning the nominees for
election and those directors whose term continues beyond the date of the Annual
Meeting.
Nominees for Director for a Three Year Term
Expiring at the 2000 Annual Meeting.
Martin L. Grass, age 43, has been a director of the Company since
November 1993. He has served as Chairman and Chief Executive Officer of Rite Aid
Corporation, one of the nation's largest drug store chains, since March 1995.
From 1989 through 1995 Mr. Grass served as President and Chief Operating Officer
of Rite Aid, and he has been a director of Rite Aid since 1982. Mr. Grass has
also served as Vice Chairman, Executive Vice President and Treasurer of Super
Rite Corporation, a food wholesaler and supermarket operator from 1989 through
1995. Mr. Grass is a director of Mercantile Bankshares Corporation.
Morton F. Zifferer, Jr., age 49, has been a director of the
Company since November 1993. He has served as Chairman, President and Chief
Executive Officer of New Standard Corporation, a metal products manufacturer,
since 1983.
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<PAGE>
Directors Continuing in Office.
Directors whose term will expire at the 1998 Annual Meeting:
Jerome C. Eppler, age 73, has been a director of the Company
since 1985. He is a partner of Eppler & Company, a private financial advisor.
Since March 1995, Mr. Eppler has also been an owner of Olympic Capital Partners,
an investment banking firm.
Dennis J. Shaughnessy, age 50, has been a director of the Company
since 1989. He has served as Managing Director of Grotech Capital Group, Inc.
since 1989. From 1985 to 1989, Mr. Shaughnessy served as President and Chief
Executive Officer of CRI International, Inc., an oil services company. Mr.
Shaughnessy also currently serves on the Boards of Forensic Technologies
Incorporated and Secure Computing Corporation.
Directors whose term will expire at the 1999 Annual Meeting:
Robert B. Barnhill, Jr., age 53, has served as President and
Chief Executive Officer of the Company since 1975, as a director since 1967, and
as Chairman of the Board since November 1993. He is the husband of Janet W.
Barnhill, Secretary of the Company. Mr. Barnhill is a director of Polk Audio,
Inc. and Provident Bankshares Corporation.
Benn R. Konsynski, Ph.D., age 46, has been a director of the
Company since November 1993. He has been the George S. Craft Professor of
Business Administration for Decision and Information Analysis at the Goizueta
Business School of Emory University since April 1992. From 1987 to April 1992,
Dr. Konsynski was a professor at the School of Business of Harvard University.
He has been a consultant to the Company since 1989.
Board Committees and Meetings
The Board of Directors has an Audit Committee consisting of
Messrs. Eppler, Konsynski and Zifferer, and a Compensation Committee consisting
of Messrs. Grass, Shaughnessy and Zifferer. The Board of Directors does not have
a nominating committee.
The Audit Committee is primarily concerned with the effectiveness
of the audits of the Company by the Company's independent public accountants.
Its duties include recommending the selection of independent accountants,
reviewing the scope of audits conducted by them, as well as the results of their
audits, and reviewing the organization and scope of the Company's internal
system of accounting and financial controls. The Audit Committee met two times
during fiscal 1997.
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The Compensation Committee is responsible for the overall
administration of the Company's compensation policies and practices, including
the recommendation of compensation for officers and employees of the Company and
for matters relating to compensation plans and arrangements. In addition, the
Compensation Committee approves awards under and administers the Company's
Employee Incentive Stock Option Plan and 1994 Stock and Incentive Plan. The
Compensation Committee met four times during fiscal 1997.
The Board of Directors met five times during fiscal 1997. No
director has attended fewer than 75% of the total number of meetings of the
Board and of the Committees of which he was a member during fiscal 1997.
Director Compensation
Those directors who are not employees of the Company receive a
fee of $1,000 for each Board or committee meeting attended, and a fee of $500
for participating in each telephonic meeting of the Board or any committee
thereof.
PROPOSAL 2. Ratification of Independent Public Accountants
The Board of Directors has selected the firm of Arthur Andersen
LLP to serve as independent public accountants for the fiscal year ending March
27, 1998, subject to the ratification of such appointment by the shareholders.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
Unless marked to the contrary, the shares represented by the
enclosed proxy, if properly executed and returned, will be voted FOR the
ratification of the appointment of Arthur Andersen LLP as the independent public
accountants of the Company for the fiscal year ending March 27, 1998.
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the
ownership of Common Stock of the Company as of May 29, 1997 by (i) all
shareholders known by the Company to beneficially own more than five percent of
the Common Stock, (ii) each of the directors and nominees for director, and
(iii) all directors and executive officers as a group.
Amount and
Name of Nature of Beneficial Percent
Beneficial Owner Ownership(1) of Class
- ---------------- -------------------- --------
Directors and
Nominees for Director:
Robert B. Barnhill, Jr. (2). . . . . . . . . . 1,091,392 25.1
Jerome C. Eppler (3) . . . . . . . . . . . . . 30,300 *
Martin L. Grass . . . . . . . . . . . . . . . 30,000 *
Benn R. Konsynski, Ph.D . . . . . . . . . . . 30,000 *
Dennis J. Shaughnessy . . . . . . . . . . . . 23,575 *
Morton F. Zifferer, Jr. . . . . . . . . . . . 30,000 *
All directors and executive officers as a
group (14 persons) (4) . . . . . . . . . . 1,332,798 30.6
Principal Shareholders:
The Northwestern Mutual Life
Insurance Company (5) . . . . . . . . . . 364,300 8.4
GeoCapital Corporation (6) . . . . . . . . . . 475,500 9.3
William Blair & Company, L.L.C. (7) . . . . . 233,791 5.4
- ----------------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise noted, each person exercises sole (or shares with a
spouse or other immediate family member) voting and dispositive power as
to the shares reported. Persons are deemed to beneficially own shares
which they have the right to acquire beneficial ownership of within 60
days. Shares subject to options exercisable with 60 days are deemed
outstanding for computing the percentage of the outstanding shares held
by the person holding such options, but not for computing the percentage
of shares held by any other person.
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(2) Includes 150,000 shares held by Mr. Barnhill's spouse and children;
140,000 shares subject to currently exercisable stock options; and
10,000 shares held by a private charitable foundation of which Mr.
Barnhill and his spouse are the sole directors. Also includes 10,138
shares owned by, and 25,862 shares subject to a currently exercisable
stock option held by, the Company's Retirement Savings Plan, for which
Mr. Barnhill serves as a trustee. Mr. Barnhill disclaims beneficial
ownership over the shares and options held by the foundation and the
Retirement Savings Plan. Mr. Barnhill's address is 34 Loveton Circle,
Sparks, Maryland 21152.
(3) Includes 300 shares held by Mr. Eppler as trustee of a trust for the
benefit of his daughter and 30,000 shares held by a trust under which
Mr. Eppler is sole beneficiary.
(4) Includes (i) 171,255 shares subject to currently exercisable stock
options, and (ii) 25,862 shares subject to a currently exercisable
option held by the Company's Retirement Savings Plan, for which two
executive officers serve as trustees.
(5) Derived from a Schedule 13G filed by Northwestern Mutual Life Insurance
Company ("Northwestern") on February 6, 1997. Northwestern's address is
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(6) Derived from a Schedule 13G filed by GeoCapital Corporation
("GeoCapital") on February 21, 1996, as amended. GeoCapital's address
is 767 Fifth Avenue, New York, N.Y. 10153.
(7) Derived from a Schedule 13G filed by William Blair & Company, L.L.C.
("Blair") on February 18, 1997, as amended. Blair's address is 222 West
Adams Street, Chicago, Illinois 60606.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table summarizes the compensation awarded or paid
to, or earned by the Company's Chief Executive Officer during fiscal 1995, 1996
and 1997 and the other executive officers for whom such reporting is required
during those fiscal years (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
---------------------------------- ------------
All Other
Name and Principal Fiscal Salary Bonus Options Compensation
Position Year ($) (1)($) (# of Shares) ($)
- ------------------ ------ ------ ------ ------------- ------------
Robert B. Barnhill Jr., 1997 240,000 13,272 40,000 32,474(2)
Chairman of the Board, 1996 240,000 -- 18,000 31,932(2)
President and Chief 1995 240,000 25,387 230,000 32,480(2)
Executive Officer
Gerald T. Garland, 1997 175,000 9,155 3,000 2,332(3)
Treasurer and Chief 1996 146,731 -- 5,000 1,761(3)
Financial Officer 1995 133,654 20,760 30,000 1,067(3)
Richard A. Guipe, 1997 147,739 -- 20,000 --
Group Leader--
Operations
Randolph S. Wilgis, 1997 50,000 71,920 5,000 1,438(3)
Team Leader-- 1996 50,000 53,383 2,000 1,241(3)
Consumables and 1995 50,000 11,166 9,000 918(3)
Support Business Unit
Pierce B. Dunn, 1997 150,763 2,239 -- 721(3)
Group Leader-- 1996 81,731 -- 75,000 --
International Business
Development
- -------------
(1) Represents bonuses paid pursuant to the Company's Value Share Program.
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(2) Includes (i) premiums in the amount of $12,500 for a life insurance policy;
(ii) premiums in the amount of $17,995 for a split-dollar life insurance
policy arrangement with the Company; and (iii) $1,985, $1,437, and $1,979
allocated to Mr. Barnhill's Retirement Savings Plan account in fiscal 1995,
1996, and 1997, respectively. Does not include a contribution of $40,995 by
the Company to a supplemental executive retirement plan for Mr. Barnhill.
See "Employment Agreement."
(3) Represents amounts allocated to the Retirement Savings Plan accounts of
Mssrs. Garland, Wilgis, and Dunn.
Employment Agreement
In March 1994, the Company entered into an employment agreement with
Mr. Barnhill pursuant to which the Company continued his employment as Chairman
of the Board, President and Chief Executive Officer. Pursuant to the employment
agreement, Mr. Barnhill receives a minimum annual base salary of $240,000, and
is entitled to bonuses in accordance with the Company's incentive compensation
plan. The employment agreement has an initial term of three years, and unless
the Board of Directors notifies Mr. Barnhill otherwise prior to the end of any
calendar year, the term of the agreement automatically renews daily for the
succeeding three-year period.
The employment agreement also provides for the establishment of a
supplemental executive retirement plan, which will provide Mr. Barnhill with a
$75,000 annual pension benefit payable on Mr. Barnhill's retirement, termination
of employment for reasons other than cause (as defined in the employment
agreement) or attainment of age 62. The employment agreement also provides for
(i) a $2,000,000 split-dollar life insurance policy on Mr. Barnhill and his
spouse, who serves as the Company's Secretary, and (ii) a long-term disability
policy providing Mr. Barnhill with a benefit equal to not less than 70% of his
annual base salary.
The employment agreement provides that in the event of the termination
of Mr. Barnhill's employment for certain reasons, including death, disability or
a termination resulting from a change in control of the Company (as defined in
the employment agreement), Mr. Barnhill would be paid, when and as due, the
total salary payable to him for the next three years, plus bonuses to which he
would have been entitled had he remained in the employ of the Company during the
three-year period. In addition, Mr. Barnhill would be entitled to receive the
employee benefits he would have received during such three-year period, or an
after-tax payment in an amount equal to the value of such benefits.
In addition, in January 1996, the Company adopted a stock compensation
program under the 1994 Plan for the Chief Executive Officer, pursuant to which
Mr. Barnhill will receive a grant of options to purchase 10,000 shares of Common
Stock at the end of the second month of each calendar quarter, all of which will
be subject to a performance-based vesting schedule based upon the market value
of the Company's Common Stock meeting or exceeding certain predetermined
cumulative appreciation measures. The options awarded to Mr. Barnhill become
fully exercisable after eight years, provided that Mr. Barnhill is still
employed by the Company. Awards under this program are also subject to the other
terms and conditions typically contained in the 1994 Plan. See "Compensation
Committee Report on Executive Compensation."
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Retirement Savings Plan
The Company maintains the Retirement Savings Plan, a profit-sharing
plan qualified under Section 401(k) of the Internal Revenue Code (the "Plan"),
that covers substantially all employees. Under the Plan, participants are
permitted to make salary reduction contributions equal to a percentage of annual
salary with matching contributions made by the Company on a discretionary basis.
The Company may make additional discretionary profit-sharing contributions. The
Company's contributions to the plan during fiscal 1997 totaled $87,000.
Stock Based Compensation Plans
In addition to the 1994 Plan, the Company maintains the Employee
Incentive Stock Option Plan, as amended (the "1984 Plan"), which provides for
the grant of options to purchase up to an aggregate of 401,250 shares of Common
Stock. As of May 29, 1997, options to purchase 667,517 shares were outstanding
at exercise prices ranging from $3.00 to $36.50. There are no shares available
for grant under the 1984 Plan.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------------- Potential Realizable
Value at Assumed
Percent of Total Annual Rate of Stock Price
Number of Options Granted to Exercise or Appreciation for Term(1)
Securities Underlying Employees in Base Price --------------------------
Name Options Granted (#) Fiscal 1997 ($/Share) Expiration Date 5% 10%
- ---- ------------------- ----------- --------- --------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Barnhill, Jr. 10,000(2) 7.9 $36.50 May 30, 2006 229,547 581,716
10,000(2) 7.9 $35.00 August 30, 2006 220,113 557,810
10,000(2) 7.9 $36.00 November 29, 2006 226,402 573,747
10,000(2) 7.9 $33.25 February 27, 2007 209,107 529,919
Gerald T. Garland 3,000(2) 2.4 $26.25 April 29, 2006 49,525 125,507
Richard A. Guipe 20,000(2) 15.8 $34.00 July 15, 2006 427,648 1,083,745
Randolph S. Wilgis 5,000(2) 4.0 $26.25 April 29, 2006 82,542 209,179
</TABLE>
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- --------------
(1) Value represents gains before income taxes. The dollar amounts
represented are the result of calculations at the 5% and 10% rates set by
the Securities and Exchange Commission ("SEC") and therefore are not
intended to forecast possible future appreciation, if any, of the
Common Stock.
(2) These options, which were issued under the 1994 Plan, will become
exercisable according to a performance-based vesting schedule on or after
the second anniversary of date of grant only if the Common Stock has
achieved certain predetermined cumulative increases in market value.
Notwithstanding, each option will become exercisable eight years after
the date of grant, as long as the recipient is still associated with the
Company.
The following table sets forth information with respect to option
exercises by and year-end values during fiscal 1997 for the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options in-the-money Options
at Fiscal Year-End at Fiscal Year-End
------------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable (#) Unexercisable ($)(1)
- ---- --------------- ------------ ----------------- --------------------
<S> <C> <C> <C> <C>
Robert B. Barnhill, Jr. 30,000 434,100 140,000/148,000(2) 886,000/580,200
Gerald T. Garland 18,745 246,793 16,255/18,000(2) 105,658/77,500
Richard A. Guipe -- -- --/20,000 --/--
Randolph S. Wilgis 3,000 19,500 3,000/10,000 19,500/24,500
Pierce B. Dunn -- -- --/75,000 --/187,500
</TABLE>
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- ---------------
(1) Value is based on the difference between the stock option exercise price
and the closing price of the Company's Common Stock on the Nasdaq National
Market on March 28, 1997 of $18.50 per share.
(2) Does not include options to purchase 25,862 shares of Common Stock held by
the Company's Retirement Savings Plan, for which Messrs. Barnhill and
Garland serve as trustees.
Compensation Committee Report on Executive Compensation
The Board of Directors has delegated to the Compensation Committee
responsibility for developing and administering programs for compensating the
Company's executive officers. The Committee's compensation recommendations with
respect to salaries and bonuses of executive officers are also approved by the
entire Board. The Committee, which consists of Messrs. Grass, Shaughnessy and
Zifferer, who are not officers or employees of the Company, believes that the
Company's success is attributable in large part to the management and leadership
efforts of its executive officers. The Company's management team has substantial
experience in the distribution industry in general and the wireless
communications industry in particular. Mr. Barnhill, the Chairman of the Board,
President and Chief Executive Officer of the Company, has been instrumental in
the Company's business success and in the success of the Company's initial
public offering in September 1994. The Company and the Compensation Committee
intend to maintain compensation policies, plans and programs that will attract
and retain executive officers who can enhance shareholder value. Generally
speaking, the Compensation Comimttee seeks to use the same policies and
guidelines in determining the compensation to be paid to its executive officers
as it employs for the Company's other employees, its consultants and other key
contributors to the Company's success.
The Company seeks to design a compensation package which will achieve
the following principal objectives:
o provide the Company's executives with total compensation that is
sufficiently competitive to attract and retain high quality people.
In general, this involves establishing an individual's base salary
in light of that individual's responsibilities, experience, personal
performance and contribution to the Company's overall performance.
The base salary and performance-based incentives are designed to
establish an individual's total compensation at a level that
competes favorably with the overall pay levels of companies
comparable in size and with similar business operations to the
Company (such companies are referred to as "comparable companies"),
and to reward outstanding performance.
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o link a significant portion of annual compensation to performance-
based incentives. This is done primarily pursuant to the Company's
Value Share Program and the grant of stock options with
performance-based vesting and exercise features. All stock options
granted during fiscal 1997 condition vesting during the first eight
years on the achievement of certain predetermined cumulative
increases in the market value of the Common Stock. The Board of
Directors, upon the recommendation of the Committee, has determined
to continue such performance-based and market-driven practices in
the future in order for an option to vest in whole or in part during
the first eight years after grant. All options will vest after eight
years and will remain exercisable until expiration, which is ten
years after the grant date, provided that the individual remains
employed by, or associated with, the Company.
o provide long-term incentives which are consistent with the
Company's strategic goals and the creation of shareholder value.
This is done through the grant of stock options.
o structure the compensation program to be viewed favorably by the
Company's shareholders, employees, the financial community, and the
general public.
The Revenue Reconciliation Act of 1993 placed limits on the amount of
non-performance-based compensation paid to executive officers that may be
deducted by the Company for federal income tax purposes. The Company intends to
structure compensation programs to minimize the portion of any executive
compensation that is not deductible for federal income tax purposes.
The Committee annually reviews each executive officer's compensation,
including the compensation levels of the Company's Chairman, President and Chief
Executive Officer. When reviewing compensation, the Committee considers
individual and corporate performance, levels of responsibility, prior
experience, breadth of knowledge and competitive pay practices with respect to
salary. The Company's Chief Executive Officer's base compensation level is
determined pursuant to an employment agreement between the Company and the Chief
Executive Officer, effective as of April 1994. Under the employment agreement,
the Chief Executive Officer's base salary was set at $240,000 for fiscal 1995,
1996 and 1997, which the Committee believes to be slightly less than base
salaries paid by comparable companies to their chief executive officers.
Salaries for the other Named Executive Officers are established based on the
principles discussed with respect to the Chief Executive Officer.
The bonuses paid to the Named Executive Officers, including the Chief
Executive Officer, are determined pursuant to the Company's Value Share Program.
This program is designed to provide rewards based upon the improvement in the
Company's earnings and other measures. The Value Share Program provides for
specific budgets and goals in several performance areas. A portion of the
bonuses are withheld each quarter and are reduced or eliminated in the event
that future performance does not meet certain budget or goal parameters.
15
<PAGE>
The Company adopted a stock compensation program for the Chief Executive
Officer under the Company's 1994 Stock and Incentive Plan. This program provides
for quarterly grants of options to purchase 10,000 shares of Common Stock to Mr.
Barnhill beginning on February 29, 1996. The options are granted pursuant to the
1994 Plan at an exercise price equal to at least the fair market value of the
Common Stock on the date of grant and are subject to the other terms and
conditions typically contained in the 1994 Plan. Each option will become vested
and exercisable only if the market price of the Common Stock achieves certain
predetermined cumulative increases in value, commencing two years from the date
of grant. The Committee believes that this program is in the best interests of
the Company because it combines the attributes of a traditional stock option
plan with those of a long-term incentive plan. The program provides such
incentives by conditioning vesting within the first eight years after an option
is granted on attainment of significant stock price appreciation.
In addition to salary and Value Share awards, under the stock
compensation program, Mr. Barnhill received, in fiscal 1997, awards of options
for 40,000 shares at exercise prices ranging from $33.25 to $36.50 per share
which equaled or exceeded the fair market value of a share of Common Stock on
the date of each grant. Any vesting of these options occurs over time and,
during the first eight years after the date of the grant, is conditioned upon
the achievement of certain predetermined cumulative increases in the market
value of the Common Stock. Each option, however, becomes fully excercisable
without regard to market value after eight years, as long as Mr. Barnhill
remains associated with the Company.
During fiscal 1997, the Committee also granted options to purchase
86,500 shares of Common Stock to other executive officers, all of which
contained performance-based vesting provisions. The awards made to the other
executive officers also was granted to provide further incentives to increase
shareholder value and were deemed by the Committee to be appropriate in light of
the Company's performance during fiscal 1997. The Committee has noted that
revenues have increased by an average of 31% from fiscal 1993 to fiscal 1997,
with net income increasing by 69% to $4.2 million from fiscal 1995 to fiscal
1997. The Committee intends to continue to recommend stock-based compensation
awards as a significant part of the Company's overall compensation program.
Compensation Committee
Dennis J. Shaughnessy Martin L. Grass Morton F. Zifferer, Jr.
16
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The chart set forth below shows the value of an investment of $100 on
September 28, 1994 in each of the Company's Common Stock, the Russell 2000 index
and a peer group index for the period September 28, 1994 to March 28, 1997. All
values assume reinvestment of the pre-tax value of dividends.
Comparison of Cumulative Total Return
Value of Investment of $100 on September 28, 1994
[GRAPHIC OMITTED]
TESSCO Russell 2000 Peers
------ ------------ -----
9/28/94 100.0000 100.0000 100.0000
12/31/94 136.4583 98.4119 124.4149
3/31/95 145.8333 102.5039 128.0465
6/30/95 151.0417 111.4898 138.0658
9/30/95 216.6667 122.0047 152.9318
12/31/95 237.5000 123.4237 140.9496
3/31/96 239.5833 130.0197 151.2117
6/30/96 304.1667 136.2461 152.6471
9/30/96 347.9167 136.1596 158.9417
12/31/96 306.2500 142.5354 201.6332
3/31/97 154.1667 137.1659 176.5529
The peer group consists of the following companies engaged in retail
and/or wholesale product distribution: Premier Industrial Corporation, Fastenal
Co., Cellstar Corporation, Brightpoint, Inc., Andrew Corporation, Viking Office
Products, Inc. and Micro Warehouse, Inc. All of these companies were publicly
traded as of March 28, 1997.
17
<PAGE>
ADDITIONAL INFORMATION
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and provide the Company with copies of such reports.
The Company has reviewed such reports received by it and written
representations from directors and executive officers. Based solely on such
review, the Company believes that during fiscal year 1997 all filing
requirements were complied with.
Shareholder Proposals for the 1997 Annual Meeting
Any shareholder proposal intended for inclusion in the proxy material
for the 1997 Annual Meeting of Shareholders must be received in writing by the
Company, at the address set forth on the first page of this Proxy Statement, on
or before March 31, 1998.
Any such proposal will be subject to Exchange Act Rule 14a-8.
Other Matters
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other business which will be presented for consideration at
the Annual Meeting. Execution of a proxy, however, confers on the designated
proxyholders discretionary authority to vote the shares in accordance with their
best judgment on such other business, if any, that may properly come before the
Annual Meeting or any adjournments thereof.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON RECEIVING THIS
PROXY STATEMENT, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE FISCAL YEAR ENDED MARCH 28, 1997. WRITTEN REQUESTS FOR A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE DIRECTED TO JANET W.
BARNHILL, SECRETARY, 34 LOVETON CIRCLE, SPARKS, MARYLAND 21152-5100.
By Order of the Board of Directors
Janet W. Barnhill
Secretary
June 30, 1997
18
<PAGE>
TESSCO Technologies Incorporated
ANNUAL MEETING OF STOCKHOLDERS, JULY 15, 1997
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints MARTIN L. GRASS and MORTON F. ZIFFERER, JR. and
each of them, with full power of substitution to each, as proxy, to vote all
shares which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of TESSCO Technologies Incorporated to be held Tuesday, July 15,
1997 at 11:00 a.m., at the TESSCO Technologies Incorporated Headquarters, 34
Loveton Circle, Sparks, Maryland 21152 and at any adjournments thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT MAY BE REVOKED
AT ANY TIME PRIOR TO ITS EXERCISE BY SENDING WRITTEN NOTICE TO THE SECRETARY OF
THE COMPANY, BY DELIVERING TO THE COMPANY A DULY EXECUTED PROXY BEARING A LATER
DATE OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE PERSON SIGNING IT.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES INDICATED AND FOR THE OTHER PROPOSALS.
1. To elect two (2) directors to a three (3) year term ending in 2000
Martin L Grass and Morton F. Zifferer, Jr.
(To withhold aurthority to vote for an individual nominee, strike
a line through the nominee's name).
FOR the election of all nominees listed WITHHOLD AUTHORITY to vote for
(except as marked to the contrary all nominees listed
to the right to the right
[ ] [ ]
2. To ratify the selection of Arthur Andersen LLP as the Company's
independent public accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To act upon any other matter which may properly come before the Annual
Meeting or any adjournment thereof.
<PAGE>
Receipt of notice of the meeting and proxy statement is hereby acknowledged, and
the terms of the notice and statement are hereby incorporated by reference into
this proxy. The undersigned hereby revokes all proxies heretofore given for said
meeting or any adjournment or adjournments thereof.
(Please sign exactly as your name appears hereon. Executors, administrators,
guardians, officers signing for corporations, trustees and attorneys should give
full title. For joint owners, both owners should sign.)
Date: ___________________, 1997
__________________________(SEAL)
__________________________(SEAL)
Please sign, date and promptly return this proxy in the enclosed envelope. No
postage is required if mailed in the United States.
