SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to '240.14a-11(c)
or '240.14a-12
Spectrum Control, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
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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:
[ ] Check box if any part of the fee is offset as provided by
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by registration statement number, or the Form or Schedule and the
date of its filing.
[ ] Fee paid previously with preliminary materials.
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4) Date Filed:
<PAGE>
SPECTRUM CONTROL, INC.
6000 West Ridge Road
Erie, Pennsylvania 16506
NOTICE OF ANNUAL SHAREHOLDER MEETING
APRIL 7, 1997
SPECTRUM CONTROL, INC.
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Spectrum Control, Inc. will be held at the Bel-
Aire Hotel, 2800 West Eighth Street, Erie, Pennsylvania 16505, on
Monday, April 7, 1997, at 9:00 a.m., prevailing time, for the
following purposes:
1. To elect one Director to hold office for a term of
three years.
2. To ratify the appointment of Ernst & Young LLP as
independent auditors of the Company.
3. To transact such other business as may come before the
meeting or any adjournment thereof.
Accompanying this Notice is a Form of Proxy and Proxy Statement.
Shareholders of the Company of record at the close of business on
February 20, 1997, are entitled to notice and the right to vote
at the Annual Meeting. Each holder of shares of Common Stock is
entitled to one (1) vote per share.
ALL SHAREHOLDERS ARE URGED TO ATTEND THE MEETING OR TO VOTE BY
PROXY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE.
By Order of the Board of Directors
JAMES F. TOOHEY, Secretary
You are urged, whether you own one or many shares, to mark, date,
sign and promptly mail the enclosed Proxy in the enclosed
envelope in order that your Company receives enough proxy vote
returns to conduct its annual meeting.
<PAGE>
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 7, 1997
Solicitation of Proxy
This Proxy Statement and the accompanying form of proxy will
be mailed to all Shareholders of Spectrum Control, Inc., 6000
West Ridge Road, Erie, Pennsylvania 16506 ("Spectrum", "the
Corporation" or "the Company") by March 3, 1997, and is furnished
in connection with the Directors' solicitation of proxies for the
Annual Meeting of Shareholders to be held on April 7, 1997 at the
time and place and for the purposes set forth in the Notice of
Annual Meeting of Shareholders accompanying this Proxy Statement.
Only holders of Common Stock of record at the close of business
on February 20, 1997, will be entitled to vote. On that date
there were 10,774,233 shares of Common Stock outstanding, the
holders of which will vote together as a class.
Each share of Common Stock entitles the holder thereof to
one (1) vote. With respect to the election of Directors,
Shareholders have the right to vote cumulatively. This means
that each Shareholder may multiply the number of shares he owns
by the number of Directors to be elected and distribute this
number among any number or all of the candidates in any manner he
desires. Cumulative voting enables Shareholders to concentrate
the voting of their shares in favor of the election of a lesser
number of nominees than the total number of Directors being voted
upon; persons holding less than a majority of shares voting may
thereby be able to elect one or more Directors.
Revocation of Proxy
The giving of a proxy does not preclude the right to vote in
person should the person giving the proxy desire, and the person
giving the proxy has the power to revoke the proxy at any time
before it has been exercised. This right of revocation is not
limited nor is it subject to any formal procedure.
Proxy Solicitation Cost
The cost of soliciting proxies in the accompanying form will
be borne by the Company. The officers, directors and employees
of the Company, without additional compensation, may solicit
proxies by mail, facsimile, telephone or personal contact. The
Company does not expect to pay any compensation for the
solicitation of proxies, but will reimburse brokerage firms and
other custodians, nominees and fiduciaries for their expenses in
forwarding proxies and proxy material to the beneficial owners of
its Common Stock.
Annual Report
The Annual Report of the Company for the year ended November
30, 1996, is being mailed to Shareholders concurrently with this
Proxy Statement. The Annual Report is not to be considered a
part of the proxy soliciting materials.
<PAGE>
Corporate Governance
The By-Laws of the Corporation provide that the business
shall be managed by a Board of Directors, up to eleven (11) in
number, who need not be residents of Pennsylvania or Shareholders
of the Corporation, and who normally serve for terms of three (3)
years each. The Company presently has six (6) Directors.
During the past fiscal year, the Board of Directors met nine
(9) times. All Directors attended more than 90% of the Board of
Directors and Committee Meetings they were scheduled to attend.
Because of the multitude of matters requiring Board
consideration, the Board of Directors has established a number of
committees to devote attention to specific subjects, as further
described below.
Committees of the Board
Acquisition, Divestiture, and Major New Business
Development Committee: This committee reviews and
recommends to the Board matters involving acquisition of
companies and product lines, and divestiture of plant and/or
product lines. The current members of this committee are
Gerald A. Ryan, Chairman; Edwin R. Bindseil; John P.
Freeman; and Melvin Kutchin. It met three (3) times in
1996.
Audit Committee: The Audit Committee recommends to the
Board the engagement of independent public accountants to
audit the financial statements of the Company. It also
recommends the fee to be paid by the Company to the Auditors
for audit and non-audit services. Its responsibility
further includes reviewing the proposed scope and results of
the audit, as well as the scope, adequacy and results of the
Company's internal audit and control procedures. The
current members of the Audit Committee are: John M.
Petersen, Chairman; and Gerald A. Ryan. It met four (4)
times in 1996.
Compensation Committee: The Compensation Committee
shall review and make recommendations to the Board on
salary, incentive compensation practices and benefit
programs for the compensation of the President and other key
employees; recommend to the Board the amount and method of
compensation of Board members; and review annually the
operation and performance of incentive compensation plans
that apply to the President and other key employees of the
Company. The current members of this committee are James F.
Toohey, Chairman; Edwin R. Bindseil; John M. Petersen and
Gerald A. Ryan. It met four (4) times in 1996.
Executive Committee: As a result of the untimely death
on December 27, 1996 of President and Chief Executive
Officer John L. Johnston, the Board of Directors has created
an Executive Committee to act in lieu of, and to exercise
all of the powers of the President and Chief Executive
Officer until a successor has been appointed. The members
<PAGE>
of this Committee are John P. Freeman, Chairman; Joseph J.
Gaynor, Vice President and General Manager of Spectrum
Control Technology, Inc.; Gerald A. Ryan; and Richard A.
Southworth, Vice President and General Manager of Filter
Products Group.
Finance Committee: The Finance Committee of the Board
of Directors has the responsibility of analysis of the
financial condition and trends of the Company. The
Committee reports the information to the full Board for
possible resolution or action. Included as specific
responsibilities of this Committee are: ratifying and
approving all financial projections, forecasts and
expectations that are intended for submission to banks,
financial institutions or the public. The current members
of this Committee are John P. Freeman, Chairman; Edwin R.
Bindseil; John M. Petersen; and Gerald A. Ryan. It met nine
(9) times in 1996.
Nominating Committee: This Committee has the
responsibility for recommending to the Board of Directors
nominees to fill Board vacancies. The Nominating Committee
also has the responsibility for providing the evaluation of
director performance, bringing to the Board recommendations
for the membership of the Committees of the Board, and
recommending to the Board a successor to the Chief Executive
Officer when a vacancy occurs through retirement or
otherwise. The Committee will consider Board nominees
recommended by management or shareholders, and such
recommendations, together with appropriate biographical
information, may be delivered in writing to the attention of
the Nominating Committee Chairman at the Company's principal
executive offices. The current members of this Committee
are James F. Toohey, Chairman; and Melvin Kutchin. It met
two (2) times in 1996.
Election of Directors
The Company presently has six (6) Directors. It is intended
that the proxies given to Directors will be used to elect the
nominee named below, who is now a member of the Board of
Directors and whose present term expires at the time of this
meeting.
First Term
Elected to
Name Age Director Term End
Gerald A. Ryan 61 1968 3 yrs. 2000
The terms of the following five (5) Directors extend beyond the
time of this meeting:
First Term
Elected to
Name Age Director Term End
Edwin R. Bindseil 66 1991 3 yrs. 1999
John P. Freeman 42 1991 3 yrs. 1999
Melvin Kutchin 71 1994 3 yrs. 1998
John M. Petersen 68 1970 3 yrs. 1998
James F. Toohey 62 1968 3 yrs. 1998
<PAGE>
Directors of the Company
Edwin R. Bindseil obtained his undergraduate degree in
Chemical Engineering from the University of Detroit and an MBA
from Harvard University. In 1989, Mr. Bindseil retired from AMSCO
after 31 years of service, 22 years of which he served in senior
executive management positions, including general management,
marketing, operations, research and development, acquisitions and
corporate strategic planning. Since 1990, Mr. Bindseil has been
an independent businessman, consultant and entrepreneur. He also
serves as a Director of a number of privately held companies.
John P. Freeman is a graduate of Gannon University in
Accounting and is a Certified Public Accountant and Certified
Management Accountant. He joined the Company in 1988 as
Controller. Prior to that time, he was a principal in a public
accounting firm. In January of 1990, he was named Vice President
and Chief Financial Officer. In December of 1996, he was named
Chairman of the Company's Executive Committee.
Melvin Kutchin is a graduate of the University of
Pennsylvania and was appointed a Director of the Company in
October of 1994. He served as President of Kitchen and Kutchin,
Inc., manufacturer's representative of electronic components,
from 1961 through January 1994 when he became Chairman of the
Board. From 1980 through 1990, he was President of JBM
Electronics, manufacturer of delay lines and other magnetic
devices.
John M. Petersen is a graduate of the University of
Pittsburgh. He is the retired President and Chief Executive
Officer of Erie Family Life Insurance Company, Erie Indemnity
Company, Erie Insurance Company and Flagship City Insurance
Company, comprising the Erie Insurance Group, and serves as a
Director of each of these Companies. Since 1995, he has been an
investment consultant. Mr. Petersen is a founder and has served
as a Director of Spectrum since 1970.
Gerald A. Ryan is a graduate of the Massachusetts Institute
of Technology and has been a Director of the Company since its
inception and Chairman since 1991. Mr. Ryan is a principal with
Erie Business Management Corporation, Erie, Pennsylvania, which
invests in and manages various businesses. Mr. Ryan serves as
Chairman of the Board of Automated Industrial Systems, Inc. and
Rent-Way, Inc. a company listed on NASDAQ in the rental-purchase
business and is Chairman and Chief Executive Officer of Skinner
Engine Company which manufactures and rebuilds mixers for use in
the rubber industry.
James F. Toohey is a graduate of Gannon University and
Dickinson School of Law and is a practicing member of the Erie
County Bar Association. He is a member of the law firm of Quinn,
Buseck, Leemhuis, Toohey & Kroto, Inc., general counsel to the
Company, and has been a Director and Secretary of the Company
since its organization.
<PAGE>
Compensation of Directors
Directors who are not full-time employees are compensated
for services as Directors as authorized and approved by the full
Board of Directors. In 1996, the Directors received annual
compensation, paid monthly, as follows:
Board of Directors Annual Retainer . . . . . . . $8,000
Attendance at each Board Meeting. . . . . . . . 500
Attendance at each Committee Meeting. . . . . . 250
Chairman at each Committee Meeting. . . . . . . 50
Secretary . . . . . . . . . . . . . . . . . . . 2,100
<PAGE>
Securities Ownership
The following table sets forth, as of February 20, 1997, the
securities beneficially owned by each Director of the Company and
all Officers and Directors of the Company as a group. To the
knowledge of the Company, no other person is the beneficial owner
of 5% or more of the Common Stock. Except as otherwise indicated,
all Shareholders listed below have record and beneficial
ownership of, and sole voting and dispositive power over, the
securities listed.
<TABLE>
<CAPTION>
Total
Beneficial Approximate
Ownership of Percentage of
Shares of Common Stock Common Stock Common Stock
Common Stock Options Outstanding Outstanding
Name Owned Owned(1) (1) (1)
<S> <C> <C> <C> <C>
Edwin R.
Bindseil 97,600 - 97,600 .90%
John P.
Freeman (2) 34,363 28,333 62,696 .58%
Melvin
Kutchin 10,000 - 10,000 .09%
John M.
Petersen 341,935 - 341,935 3.16%
Gerald A.
Ryan 165,340 - 165,340 1.53%
James F.
Toohey (3) 340,394 - 340,394 3.14%
All Officers
and Directors
as a Group
(10 persons) 1,033,873 56,998 1,090,871 10.07%
<FN>
(1) Includes only Common Stock Options exercisable within sixty days of
the date of this Proxy Statement, which securities are deemed for
purposes of the Securities Act of 1933 to be owned beneficially (but
not of record) by their respective holders. The shares underlying
these securities are deemed to be outstanding for purposes of
determining the percent of class with respect to each Holder and all
Directors and Officers as a group.
(2) Includes 5,550 shares of Common Stock held by Mr. Freeman in the
Company's 401(k) Profit Sharing Plan.
<PAGE>
(3) Mr. Toohey is a member of the law firm of Quinn, Buseck, Leemhuis,
Toohey and Kroto, Inc. which holds 339,310 shares of Common Stock in
its Profit Sharing Plan. Of this amount, 197,385 shares are included
in the table above for Mr. Toohey. Mr. Toohey disclaims beneficial
ownership as to all other shares held by such firm and does not have
voting or dispositive power with respect thereto.
</FN>
</TABLE>
EXECUTIVE COMPENSATION
The Securities and Exchange Commission ("SEC") has issued
regulations regarding the disclosure of executive officer
compensation. The SEC's goal is to ensure that stockholders
receive information about executive compensation that is
understandable and relevant to proxy voting and investment
decisions. The Company has prepared this proxy statement in
accordance with a specifically prescribed format under the SEC
regulations. The reporting format consists of the following
tables which are designed and intended to simplify the disclosure
of executive compensation.
Summary Compensation Table. The following table shows the
compensation paid to the President and Chief Executive Officer
and each of the next four most highly compensated executive
officers of the Company who served as executive officers at the
end of the 1996 fiscal year, for services rendered to the Company
and its subsidiaries during fiscal year 1996. The table also
includes details relating to the fiscal years 1994 and 1995.
Inapplicable column headings have been omitted.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
All Other
Other Annual Compen-
Name and Salary Bonus Compensation sation
Principal Position Year ($)(1) ($)(2) ($)(3) Options(#)($)(4)
<S> <C> <C> <C> <C> <C> <C>
John L. Johnston 1996 207,500 123,240 21,711 20,000 4,750
Former President, 1995 194,500 -- 11,101 20,000 3,850
Chief Executive 1994 186,576 69,300 2,286 30,000 4,971
Officer
Richard A. Southworth 1996 141,154 46,800 -- 20,000 4,699
Vice President, 1995 123,500 -- -- -- 3,088
Gen. Mgr. of Filter 1994 117,924 26,036 -- 20,000 3,174
Products Group
Joseph J. Gaynor 1996 113,000 33,000 -- 15,000 1,460
Vice President, 1995 108,673 -- -- -- 1,274
Gen. Mgr., of 1994 104,615 17,969 -- 20,000 2,891
Spectrum Control
Technology, Inc.
John P. Freeman 1996 92,304 34,445 21,711 10,000 3,169
Vice President, 1995 88,769 -- 11,101 10,000 2,219
Chief Financial 1994 85,268 18,454 2,286 -- 2,271
Officer
Richard E. Zaday 1996 95,002 34,827 -- 10,000 1,426
Vice President 1995 93,185 -- -- -- 238
of Sales 1994 90,626 -- -- 27,000 --
</TABLE>
<PAGE>
(1) Includes amounts deferred pursuant to Section 401(k) of the
Internal Revenue Code.
(2) Management Incentive Plan awards paid in 1996 and 1994
attributable to 1995 and 1993, respectively, including
amounts deferred pursuant to Section 401(k) of the Internal
Revenue Code.
(3) Amounts earned under the Company's Directors' Performance
Incentive Plan.
(4) Matching contributions made by the Company to the Spectrum
Control, Inc. 401(k) Profit Sharing Plan on behalf of the
named executive officers.
1996 OPTION GRANTS
The following table shows information regarding grants of stock
options in fiscal year 1996 to the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term (3)(4)
% of Total
Options
Granted to
Options Employees Exercise
Granted in 1996 Price Expiration
Name (#)(1) Fiscal Year(2) ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
John L. Johnston 20,000 19.80 3.00 12/15/00 -- --
Richard A.
Southworth 20,000 19.80 3.00 12/15/00 16,577 36,631
Joseph J. Gaynor 15,000 14.85 3.00 12/15/00 12,433 27,473
John P. Freeman 10,000 9.90 3.00 12/15/00 8,288 18,315
Richard E. Zaday 10,000 9.90 3.00 12/15/00 8,288 18,315
</TABLE>
(1) Such options were all granted under the Company's Non-
Qualified Stock Option Plan. Options are exercisable in
three equal annual installments commencing two years from
the date of grant. All unexercised options expire five
years from the date of grant.
(2) The Company granted options representing 101,000 shares to
employees during fiscal year 1996.
<PAGE>
(3) The dollar amounts under these columns are the result of
calculations at 5% and 10% annual rates of appreciation as
prescribed by the Securities and Exchange Commission. The
dollar amounts are not intended to forecast possible future
appreciation, if any, of the stock price. The Company did
not use an alternative formula for a grant date valuation,
as it is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown
or volatile factors.
(4) In accordance with the terms of the Company's Non-Qualified
Stock Option Plan, the stock options granted to Mr. Johnston
in fiscal year 1996 were canceled as a result of his death
on December 27, 1996. Accordingly, these options have no
potential realizable value.
Option Exercises and 1996 Fiscal Year End Values Table. The
following sets forth information with respect to the named
executive officers concerning the exercise of options during the
fiscal year ended November 30, 1996 and unexercised options held
as of November 30, 1996.
<TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
<CAPTION>
Number of Unexer- Value of Unexercised
Shares cised Options at In-the-Money Options
Acquired Fiscal YE (#) at Fiscal YE ($)(2)
On Value
Exercise Realized Exercis- Unexercis- Exercis- Unexercis-
Name (#) ($) (1) able able able able
<S> <C> <C> <C> <C> <C> <C>
John L. -- -- 10,000 60,000 -- 27,500
Johnson
Richard A. 80,000 160,000 6,666 33,334 -- 2,500
Southworth
Joseph J. 40,000 114,375 6,666 28,334 -- 1,875
Gaynor
John P. -- -- 16,666 28,334 -- 13,750
Freeman
Richard E. 8,333 12,500 666 28,001 -- 11,667
Zaday
</TABLE>
(1) Market value of underlying securities on date of exercise,
minus the exercise price.
(2) Total value of options (market value minus exercise price)
based on a per share fair market value of Company Common
Stock of $3.125 at November 30, 1996.
Compensation Committee Interlocks and Insider Participation
As discussed above, the members of the Compensation
Committee during 1996 were Messrs. Bindseil, Petersen, Ryan and
Toohey. All four members are non-management or outside
directors. None of the executive officers of the Company has
served on the Board of Directors or Compensation Committee of any
other entity of which any member of the Spectrum Board is in any
way affiliated.
<PAGE>
Compensation Committee Report
The Company's Compensation Committee is charged with the
responsibility of recommending an executive compensation program,
plans and policies to the Board of Directors.
The Compensation Committee is committed to compensating the
key executives in such a manner as to encourage them to develop
business strategies to capitalize on Spectrum's position in the
electronic filter business and to grow in new technology markets.
The Committee is dedicated to attracting and retaining the best
executive talent available to achieve its aggressive strategy.
Accordingly, in 1993 the Committee retained the services of
the Wyatt Company, compensation consultants, to prepare an
executive compensation study. This was completed and submitted
to the Committee in September of 1993 and adopted by the Board of
Directors in October of 1993. The study addressed the following
matters:
Base Salary
The Committee's goal was to establish base salaries which
are fair, reasonable and competitive with similar industrial
companies. With this in mind, the Committee reviewed and
analyzed the consultant's report and determined to establish base
salaries within plus or minus 20% of the estimated average
compensation levels of similar companies as indicated in the
report.
Annual Cash Awards
The Company's executive officers are eligible for annual
cash awards under the Company's Management Incentive Plan (the
"MIP"). The purpose of the Plan is to provide strong incentive
for key employees to properly motivate individuals under their
direction, thereby obtaining for the shareholders the best
financial results possible under the prevailing circumstances.
The MIP generally provides for cash awards commencing upon
attainment of 90% of the Annual Operating Plan. Based upon these
factors, aggregate awards of $272,000 were earned for the fiscal
year 1996. In accordance with the terms of the MIP, these
amounts will be paid in 1997.
Long-Term Performance Based Incentive
In recognition that an overall compensation package should
include rewards for efforts which impact on the value of the
company stock, the Committee has recommended and the Board has
adopted a policy to award competitive amounts, not to exceed 1%
of the total outstanding shares, of annual stock options to the
key executives of Spectrum priced at 100% of fair market value as
of the date of grant. The grant of these options shall be
consistent with the adoption of the Annual Operating Plan.
<PAGE>
The Company currently utilizes the Stock Option Plan of 1995
to provide the annual grant of stock options.
1996 Chief Executive Officer Compensation
The annual review of the Chief Executive Officer was
completed after the Wyatt study was finalized and pursuant to the
information provided by the Wyatt Company, the Compensation
Committee recommended and the Board approved an annual salary
effective April 1, 1993 of $180,000. Since that time, the Chief
Executive Officer salary has been reviewed and adjusted annually
with the current salary set at $210,000. The Management
Incentive Plan for 1996 provided for an award to Mr. Johnston not
to exceed 65% of his annualized salary. This award is calculated
and paid upon completion of the year end audit and is
arithmetically determined based upon performance, achievement to
budget, and attainment of specifically provided objectives.
Based upon these factors, an award of $105,000 was earned for
performance in fiscal year 1996. With the death of Mr. Johnston
on December 27, 1996, this award will be paid in 1997 to his
surviving spouse.
EMPLOYEE 401(k) PROFIT SHARING PLAN
The Company maintains a Qualified Employee 401(k) Profit
Sharing Plan. The Company makes annual profit sharing
contributions to the Plan in an amount determined by the Board of
Directors. The assets of the Plan are held in trust and invested
in various mutual funds under the direction of the Plan
participants. All employees with at least one year of service
are automatically eligible for participation in the Plan. The
annual allocation to each Employee's Profit Sharing Account is
based upon the actual compensation paid to the Participant.
A participant becomes fully vested in his Profit Sharing
Account balance on the earliest of the following dates: (i) upon
the completion of seven years of service; (ii) upon attaining
normal retirement age of 65; (iii) upon incurring total
disability; or (iv) on the date of the Participant's death. A
Participant may not receive a distribution from the Employee
Profit Sharing Account prior to the earliest of the following
dates: (i) termination of employment with the Company; (ii)
retirement or (iii) death. The Plan provides that distribution
of the Participant's entire interest in the Plan must begin no
later than the taxable year in which the Participant attains age
seventy and one-half (70-2) or, if later, the year the
Participant retires and terminates employment with the Employer.
The Plan includes a tax deferred employee savings plan
pursuant to Section 401(k) of the Internal Revenue Code. The
Company matches an employee's contribution to the savings plan at
a rate determined by the Board of Directors. The Company's
matching contribution to the 401(k) plan is not subject to any
vesting requirements.
<PAGE>
Directors' Long-Term Incentive Plan
The Board of Directors has adopted a Directors' Performance
Incentive Plan (the "DPIP") which provides for an annual cash
payment to each Director of an amount equal to the price
appreciation of 5,224 common shares. Price appreciation is
measured over a five-year period, ending on June 30 of the
current year, and is subject in all cases of adjustments for
stock splits, combinations and similar transactions. Aggregate
amounts of $145,000 in 1996, $89,000 in 1995 and $16,000 in 1994
were paid under the DPIP. No payments were made under the DPIP
during the preceding two fiscal years. In connection with the
adoption of the 1996 Non-Employee Directors Stock Option Plan,
the Board of Directors amended the DPIP to terminate effective
July 1, 2000.
The 1996 Non-Employee Directors Stock Option Plan (the
"Plan") was approved by the Corporation's stockholders on April
1, 1996. The Plan is designed to promote the long-term success
of the Corporation by creating a mutuality of interests between
the non-employee directors and the stockholders. Under the terms
of the Plan, stock options to purchase 7,500 shares of Common
Stock are granted annually to all qualified non-employee
Directors. The option exercise price is equal to the market
price of the Company's Common Stock on the date of the option
grant. The options become exercisable at varying dates and
expire five years from the date of grant. In 1996, aggregate
options to purchase 37,500 shares of Common Stock were granted to
non-employee Directors, at an exercise price of $3.50 per share.
Stock Price Performance Graph
The following graph shows the Company's total return to
shareholders compared to the S&P 500 Index and the NASDAQ
Electronic Components Stock Index over the five year period from
1992 though 1996. The graph assumes that $100 was invested on
December 1, 1991, in the Company's Common Stock and in each of
the other indices.
1991 1992 1993 1994 1995 1996
Spectrum 100 235 406 188 306 294
S&P 500 100 112 127 131 177 221
NASDAQ Electronic
Components Stock Index 100 157 241 271 501 613
<PAGE>
Appointment of the Company's Auditors for the Fiscal Year 1997
Upon recommendation of the Audit Committee, the Board of
Directors has resolved to appoint Ernst & Young LLP as the
Company's auditors for the fiscal year ended November 30, 1997,
subject only to ratification by the Shareholders.
Representatives of Ernst & Young LLP will be present at the
meeting with the opportunity to make a statement, if they desire
to do so, and such representatives will be available to respond
to appropriate questions. All services of the auditors were
reviewed by the Audit Committee and approved by the Board of
Directors prior to commencement. No relationship exits other
than the usual relationship between independent public accountant
and client.
General Matters
The Directors know of no matter, other than those referred
to in this Proxy Statement, which will be presented at the
meeting. However, if other matters properly come before the
meeting or any of its adjournments, the person or persons voting
the proxies will vote them in accordance with their judgment in
such matters. Should any Nominee for the office of Director
become unable to accept nomination or election, the persons named
in the proxy will vote it for the election of such other person,
if any, as the Board of Directors may recommend. The Board of
Directors is not aware that any Nominee named herein will be
unable or unwilling to accept nomination or election.
You are advised that the deadline for submitting Shareholder
proposals for consideration at the next annual meeting is
December 12, 1997.
The cost of soliciting proxies will be borne by the Company.
Regular employees of the Company may solicit proxies personally
or by telephone. In addition to solicitation by mail and regular
employees as aforesaid, arrangements may be made with brokerage
houses and other custodians, nominees and fiduciaries to send
proxies and proxy soliciting material to their principals, and
the Company may reimburse them for their expense in so doing.
You are urged to sign and return your proxy promptly to make
certain your shares will be voted at the meeting. You may revoke
the proxy at any time before it is voted, and if you attend the
meeting, as we hope you will, you may vote your shares in person.
For your convenience, a return envelope is enclosed, requiring no
additional postage if mailed in the United States.
JAMES F. TOOHEY, Secretary
Dated: March 3, 1997
