<PAGE>
UNITED STATES
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 (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 THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ORTEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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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 statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ORTEL CORPORATION
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 25, 1998
----------------------------------
The 1998 Annual Meeting of the Stockholders of Ortel Corporation (the
"Company") will be held at 9:00 a.m., local time, on September 25, 1998, at the
principal executive offices of the Company located at 2015 West Chestnut Street,
Alhambra, California 91803, for the following purposes:
1. To elect two directors to serve for a term of three years or until
their respective successors have been duly elected and qualified or
until they resign, become disqualified, disabled or are otherwise
removed;
2. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants; and
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on August 3, 1998, of
the Company's Common Stock will be entitled to notice of, and to vote at, the
1998 Annual Meeting and any adjournment or postponement thereof.
By order of the Board of Directors,
Nadav Bar-Chaim
Senior Vice President, Operations
and Secretary
Alhambra, California
August 10, 1998
<PAGE>
ORTEL CORPORATION
2015 WEST CHESTNUT STREET
ALHAMBRA, CALIFORNIA 91803
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 25, 1998
----------------------------------
PROXY STATEMENT
----------------------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of
Ortel Corporation (the "Company") for use at the 1998 Annual Meeting of
Stockholders (the "Meeting") to be held at the principal executive offices of
the Company at 2015 West Chestnut Street, Alhambra, California 91803, on
September 25, 1998, at 9:00 a.m., local time, and at any and all adjournments or
postponements thereof.
All shares represented by each properly executed, unrevoked proxy received
in time for the Meeting will be voted in the manner specified therein. If the
manner of voting is not specified in an executed proxy received by the Company,
the proxy will be voted FOR (i) the election of the two nominees listed in the
proxy for election to the Board of Directors, and (ii) the ratification of the
selection of KPMG Peat Marwick LLP as the Company's independent public
accountants.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted. A proxy may be revoked by delivering a written notice of
revocation to the Secretary of the Company at the address set forth above, by
presenting at the Meeting a later-dated proxy executed by the person who
executed the prior proxy, or by attendance at the Meeting and voting in person
by the person who executed the proxy (although attendance at the Meeting will
not in and of itself constitute a revocation of a proxy).
This proxy statement is being mailed to the Company's stockholders on or
about August 10, 1998. The expense of soliciting proxies will be borne by the
Company. Expenses include reimbursement paid to brokerage firms and others for
their expenses incurred in forwarding solicitation material regarding the
Meeting to beneficial owners of the Company's Common Stock. Solicitation of
proxies will be made by mail. Further solicitation of proxies may be made by
telephone or oral communication with stockholders by the Company's regular
employees who will not receive additional compensation for the solicitation.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 11,841,182 shares of Common Stock outstanding
at the close of business on the record date, August 3, 1998, will be entitled to
notice of, and to vote at, the Meeting or any adjournment or postponement
thereof. On each matter to be considered at the Meeting, each stockholder will
be entitled to cast one vote for each share of Common Stock held of record by
such stockholder on August 3, 1998.
In order to constitute a quorum for the conduct of business at the Meeting,
a majority of the outstanding shares of the Common Stock entitled to vote at the
Meeting must be represented at the Meeting. Shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Directors will be elected by a favorable
vote of a plurality of the shares of voting stock present and entitled to vote,
in person or by proxy, at the Meeting. Accordingly, abstentions or broker non-
votes as to the election of directors will not affect the election of the
candidates receiving the plurality of votes. All other proposals to come before
the Meeting require the approval of a majority of the shares of stock having
voting power present. Abstentions as to a particular proposal will have the
same effect as votes against such proposal. Broker non-votes, however, will be
treated as unvoted for purposes of determining approval of such proposal and
will not be counted as votes for or against such proposal.
<PAGE>
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
The following table sets forth as of July 30, 1998, the amount and
percentage of the outstanding shares of the Common Stock which, according to the
information supplied to the Company, are beneficially owned by (i) each of the
directors of the Company (two of whom, Mr. Selders and Dr. Yariv, are also
nominees for re-election as directors of the Company), (ii) each of the Named
Officers (as defined on page 5), (iii) all directors and executive officers of
the Company as a group, and (iv) each person or entity who is known to the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock. Except to the extent indicated in the footnotes to the following table,
each of the persons or entities listed has sole voting and sole investment power
with respect to the shares which are deemed beneficially owned by such person or
entity.
<TABLE>
<CAPTION>
OUTSTANDING AGGREGATE PERCENT OF
OPTIONS OUTSTANDING SHARES OF
OUTSTANDING EXERCISABLE COMMON STOCK COMMON STOCK
NAME OF BENEFICIAL OWNER: COMMON WITHIN BENEFICIALLY BENEFICIALLY
- ------------------------- STOCK(1) 60 DAYS OWNED(1) OWNED
-------------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
Nadav Bar-Chaim(2)........................... 574,685 126,019 700,704 5.9%
Tatsutoku Honda(3)........................... 0 26,234 26,234 *
Anthony J. Iorillo........................... 0 49,884 49,884 *
Raymond H. Kaufman(4)........................ 52,751 26,234 78,985 *
Hal M. Krisbergh............................. 0 31,292 31,292 *
William J. Moore(5).......................... 70,900 67,200 138,100 1.2
Douglas H. Morais............................ 0 14,153 14,153 *
Wim H.J. Selders(6).......................... 250,356 203,364 453,720 3.8
Wayne L. Tyler............................... 12,392 14,234 26,626 *
Israel Ury(7)................................ 565,360 95,519 660,879 5.5
Amnon Yariv(8)............................... 438,775 26,234 465,009 3.9
Ronald L. Young.............................. 102,893 26,234 129,127 1.1
All directors and executive officers as a
group (15 persons).......................... 2,116,120 822,649 2,938,769 23.2
BENEFICIAL OWNERS-5% OR MORE:
Sumitomo Osaka Cement Co., Ltd(9)............ 2,349,964 0 2,349,964 19.9
1 Kanda, Mitoshiro-cho
Chyioda, Tokyo, 101
Japan
FMR Corp.(10)................................ 725,800 0 725,800 6.1
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
___________________________________________
* Represents ownership of less than 1.0%.
(1) Except for information based on Schedules 13G, as indicated in the
footnotes hereto, beneficial ownership is stated as of July 30, 1998, and
includes shares exercisable with 60 days after July 30, 1998 held by each
person, as if such shares were outstanding on July 30, 1998.
(2) Includes 2,700 shares owned by Dr. Bar-Chaim's children which Dr. Bar-Chaim
may be deemed to beneficially own.
(3) Excludes 2,349,964 shares beneficially owned by Sumitomo Osaka Cement Co.,
Ltd. ("Sumitomo"). See footnote (9). Dr. Honda was originally nominated
to the Company's Board of Directors by Sumitomo and currently serves as
Managing Director of Sumitomo's Optoelectronic and Electronics Division.
Dr. Honda has no voting or investment power with respect to Sumitomo's
shares.
2
<PAGE>
(4) Includes 35,000 shares held by a limited partnership, of which Dr. Kaufman
is a limited partner with shared voting and investment power.
(5) The outstanding shares are held in a family trust of which Mr. Moore is a
trustee with shared voting and investment power.
(6) The outstanding shares are held in the Wim and Ella Selders Trust dated
February 12, 1992, of which Mr. Selders is a trustee with shared voting and
investment power. Excludes 40,000 shares owned by The Selders Foundation,
a California nonprofit public benefit corporation. Mr. Selders is the
president of The Selders Foundation and shares voting and investment power.
(7) The outstanding shares are held in a family trust of which Dr. Ury is a
trustee with shared voting and investment power.
(8) Includes 13,500 shares held in a family trust of which Dr. Yariv is a
trustee with sole voting and investment power.
(9) According to Schedule 13G filed by Sumitomo Osaka Cement Co., Ltd. on April
24, 1995.
(10) According to Schedule 13G filed by FMR Corp. on February 11, 1998. Each of
Edward C. Johnson III and Abigail Johnson, through their affiliation with,
as Chairman and Director, respectively, and ownership interests in, FMR
Corp., are deemed to beneficially own all 725,800 shares of the Company's
Common Stock. Fidelity Select Electronics Portfolio ("Fidelity") owns
709,700 of these shares. Mr. Johnson and FMR Corp. have sole power to
dispose of the Fidelity shares, and have sole power to vote and dispose of
the remaining 16,100 shares owned by various institutional accounts.
3
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and titles of the executive
officers of the Company as of August 3, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Wim H.J. Selders 58 President and Chief Executive Officer
Nadav Bar-Chaim 52 Senior Vice President, Operations and Secretary
Lyle Boarts 55 Vice President, Administration
George B. Holmes 35 Vice President, Worldwide Sales
William J. Moore 50 Vice President and General Manager, Broadband Business Group
Douglas H. Morais 55 President, Wireless Group
Israel Ury 42 Chief Technology Officer
Stephen K. Workman 47 Vice President, Finance, Chief Financial Officer and Treasurer
</TABLE>
Set forth below are descriptions of the backgrounds of the executive
officers of the Company and their principal occupations for the past five years.
For a description of the background of Mr. Selders and Drs. Ury and Bar-Chaim,
see "Proposal 1 - Election Of Directors." The Company is not aware of any
family relationships among any of its directors and executive officers.
Mr. Boarts has served as the Company's Vice President, Administration since
March 1998. Prior to his service with the Company, Mr. Boarts served as Vice
President, Human Resources of Santa Fe Pacific Pipelines Inc., a transporter of
refined petroleum products and storage facilities, from June 1989 to March 1998
and as its Director of Human Resources from 1986 to 1989. Prior to 1986, Mr.
Boarts held various senior management positions at Amdahl Communications Systems
Division, Hamilton/Avnet Electronics, and TRW. Mr. Boarts received his B.S. in
Business and Industrial Management from San Jose State University.
Mr. Holmes has served as the Company's Vice President, Worldwide Sales
since November 1997 and was promoted to an executive officer in June 1998. From
July 1997 to November 1997, Mr. Holmes served as the Company's Vice President of
Broadband Sales. Prior to his service with the Company, Mr. Holmes was the Vice
President of Worldwide Sales for Aval Communications, a wireless base station
company, from November 1996 to June 1997. From August 1994 to November 1996,
Mr. Holmes was the Vice President of Worldwide Sales for Level One
Communications, a communications and semiconductor company. Prior to 1994, Mr.
Holmes held various sales, marketing, operations and finance positions with
SymmetriCom, with his last position being Assistant Vice President of Business
Development. Mr. Holmes holds a B.A. in Business from the University of Puget
Sound and a diploma in International Business from Nijenrode University in The
Netherlands.
Mr. Moore has served as the Company's Vice President and General Manager of
the Broadband Business Group since January 1998. From September 1990 to January
1998, Mr. Moore served as the Company's Vice President, Sales. From September
1988 to September 1990, Mr. Moore served as Director of Sales for the Company.
Prior to September 1988, Mr. Moore held various sales and marketing positions,
with his last position being Corporate Marketing Manager at Hewlett-Packard. Mr.
Moore holds B.S.E.E. and M.S. Operations Management degrees from Northrop
University.
4
<PAGE>
Dr. Morais has served as the President of the Company's Wireless Group
since March 1998, and as Executive Vice President from January 1997 to March
1998. From February 1993 to December 1996, Dr. Morais served in various
management capacities at California Microwave, Inc., a telecommunications
equipment company, most recently as Executive Vice President, Business
Development and Technology. From October 1992 to February 1993, Dr. Morais was
engaged in private telecommunications business development and investment.
Prior to October 1992, Dr. Morais held various management positions at Harris
Corporation and Digital Microwave Corporation, both telecommunications equipment
companies, with his last position being President and Chief Operating Officer of
Digital Microwave Corporation. Dr. Morais received a B.S. in Electrical
Engineering from the University of Edinburgh in Scotland and an M.S. and Ph.D.,
also in Electrical Engineering, from the University of California at Berkeley
and the University of Ottawa, respectively. He is a senior member of the
Institute of Electrical and Electronic Engineers.
Mr. Workman has served as the Company's Vice President, Finance and Chief
Financial Officer since November 1989 and the Company's Treasurer since
September 1995. From November 1982 to November 1989, Mr. Workman held various
positions at Ibis Systems, a disk drive manufacturing company, most recently as
Controller. Prior to November 1982, Mr. Workman held various finance-related
positions with Ford Motor Company, Parsons Company, an engineering construction
company, and Tiger International, a transportation company. He holds a B.S.
degree in Engineering Science and an M.S. in Industrial Administration from
Purdue University.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended April 30, 1998, 1997, and 1996 of those persons who were
either (i) the chief executive officer during the last completed fiscal year,
(ii) one of the other four most highly compensated executive officers of the
Company as of the end of the last completed fiscal year whose annual salary and
bonuses exceeded $100,000, or (iii) any other executive officer who would have
qualified under sections (i) or (ii) of this paragraph but for the fact that the
individual was not serving as an executive officer of the Company at the end of
the 1998 fiscal year (collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AWARDS LONG-TERM
COMPENSATION
---------------------------------------------------- AWARDS OF STOCK
NAME AND FISCAL OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY(2) BONUS(3) COMPENSATION(4) (SHARES) COMPENSATION(5)
- --------------------- ------ ---------- ----------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Wim H.J. Selders, 1998 $235,108 $ 25,000 -- 24,793 $ 14,364
President and Chief 1997 224,494 110,000 -- 20,833 11,139
Executive Officer 1996 218,380 130,000 -- 29,000 10,643
Douglas H. Morais,(6) 1998 225,000 9,000 -- 6,612 184,795(7)
President, Wireless Group 1997 64,038 -- -- 100,000 11,561(7)
1996 -- -- -- -- --
William J. Moore, 1998 198,638 14,000 -- 11,752 8,023
Vice President and General 1997 170,710 20,000 -- 9,875 7,248
Manager, Broadband 1996 180,472 20,000 -- 13,700 5,830
Business Group
Nadav Bar-Chaim, 1998 158,362 12,500 -- 14,876 7,962
Senior Vice President, 1997 152,502 55,000 -- 12,500 7,874
Operations and Secretary 1996 147,108 64,000 -- 17,400 9,073
Israel Ury, 1998 158,362 10,000 -- 14,876 6,977
Chief Technology Officer 1997 152,502 55,000 -- 12,500 6,757
1996 147,108 64,000 -- 17,400 8,103
</TABLE>
5
<PAGE>
_______________________
(1) Excludes Mr. Holmes, the Company's Vice President, Worldwide Sales, since he
became an executive officer in June 1998 after the end of the 1998 fiscal
year.
(2) Amounts include commission-based compensation.
(3) Represents bonuses earned during the fiscal year.
(4) Amounts of other annual compensation are not applicable because such
compensation did not exceed the lesser of $50,000 or 10% of the total salary
and bonus of the Named Officer.
(5) For fiscal year 1998, represents matching contributions paid by the Company
under the Company's 401(k) plan of $4,820, $1,731, $4,797, $5,053, and
$4,797, and reimbursements of life insurance premiums of $9,544, $3,075,
$3,165, $2,970, and $2,180 for Mr. Selders, Dr. Morais, Dr. Bar-Chaim, Mr.
Moore, and Dr. Ury, respectively. For fiscal year 1997, represents matching
contributions paid by the Company under the Company's 401(k) plan of $4,798,
$4,929, $4,513, and $4,782, and reimbursements of life insurance premiums of
$6,341, $2,945, $2,735, and $1,975 for Mr. Selders, Dr. Bar-Chaim, Mr.
Moore, and Dr. Ury, respectively. For fiscal year 1996 represents matching
contributions paid by the Company under the Company's 401(k) plan of $4,666,
$6,128, $3,095, and $6,128 and reimbursements of life insurance premiums of
$5,977, $1,975, $2,945, and $2,735 for Mr. Selders, Dr. Bar-Chaim, Mr.
Moore, and Dr. Ury, respectively.
(6) Dr. Morais commenced employment with the Company in January 1997.
(7) Includes tax gross-up of relocation expenses in fiscal years 1998 and 1997.
The following table sets forth certain information with respect to grants
of options to purchase shares of Common Stock under the Company's 1994 Equity
Participation Plan (the "1994 Plan") to the Named Officers during fiscal year
1998.
OPTION GRANTS IN FISCAL YEAR 1998(1)
<TABLE>
<CAPTION>
TOTAL OPTIONS
GRANTED TO EXERCISE OR AT ASSUMED ANNUAL RATES
OPTIONS EMPLOYEES BASE OF STOCK PRICE
GRANTED IN FISCAL PRICE PER EXPIRATION APPRECIATION
NAME (SHARES) YEAR SHARE DATE FOR OPTION TERM(2)
- ---- ----------- ---------- ----------- ------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Wim H.J. Selders 24,793 1.9% $15.13 06/06/07 $235,832 $597,644
Douglas H. Morais 6,612 0.5 15.13 06/06/07 62,894 159,385
Nadav Bar-Chaim 14,876 1.1 15.13 06/06/07 141,501 358,591
William J. Moore 11,752 0.9 15.13 06/06/07 111,785 283,286
Israel Ury 14,876 1.1 15.13 06/06/07 141,501 358,591
</TABLE>
_____________________________
(1) All options were granted under the 1994 Plan and become exercisable in four
equal annual installments beginning on the first anniversary date of grant.
Under the terms of the 1994 Plan, the Stock Option Committee retains
discretion, subject to certain restrictions, to modify the terms of
outstanding options and to reprice outstanding options. Options are granted
for a term of ten years, subject to earlier termination in certain events.
The exercise price is equal to the closing price of the Common Stock on The
Nasdaq National Market on the date of grant.
6
<PAGE>
(2) Potential gains are net of the exercise price, but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The assumed 5% and 10% rates of stock price appreciation are provided
in accordance with the rules of the Securities and Exchange Commission and
do not represent the Company's estimate or projection of the future Common
Stock price. Actual gains, if any, on stock option exercises are dependent
upon the future financial performance of the Company, overall market
conditions and the option holders' continued employment through the vesting
period. This table does not take into account any appreciation in the price
of the Common Stock from the date of grant to the date of this Proxy
Statement other than the columns reflecting assumed rates of appreciation of
5% and 10%.
The table below sets forth certain information with respect to the
exercise of stock options during fiscal 1998 and the unexercised options to
purchase shares of Common Stock held by the Named Officers as of April 30, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AS OF IN-THE-MONEY OPTIONS AS OF
ACQUIRED APRIL 30, 1998 APRIL 30, 1998(2)
ON EXERCISE VALUE -------------------------------- ---------------------------
(SHARES) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ----------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wim H.J. Selders -- -- 169,708 69,918 $1,254,375 $ 83,438
Douglas H. Morais -- -- 25,000 81,612 32,031 96,094
Nadav Bar-Chaim -- -- 104,325 47,951 830,531 107,438
William J. Moore -- -- 51,168 35,909 367,791 73,069
Israel Ury 5,000 $55,625 72,700 44,576 514,617 88,664
</TABLE>
_____________________________
(1) Market value of underlying securities at exercise date minus the exercise
price.
(2) Based on the closing price of Common Stock on the Nasdaq National Market on
April 30, 1998 ($13.56) minus the exercise price of the option.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements, dated September 14,
1990, with Wim H.J. Selders, Israel Ury, and Nadav Bar-Chaim, providing for
annual salaries that are subject to annual review by the Company's Board of
Directors and an annual increase not less than the Consumer Price Index of the
Bureau of Labor Statistics in return for their services as President and Chief
Executive Officer, Chief Technology Officer, and Senior Vice President,
Operations of the Company, respectively. Other benefits include an automobile
and, with respect to Mr. Selders, gross-up payments for taxes due upon exercise
of certain non-qualified stock options. Subject to certain limitations, each of
these employment agreements is automatically extended for an additional year
beyond the remaining year on September 1 of each year unless the Company has
given notice by March 1 of that year that it does not wish to extend the
agreement. Each of Mr. Selders', Dr. Ury's, and Dr. Bar-Chaim's agreement also
contains a covenant to nominate them to the Board of Directors.
Each of Mr. Selders', Dr. Ury's, and Dr. Bar-Chaim's employment agreement
provides that such executive officer may be terminated by the Company for gross
misconduct, willful neglect of duties, or disability. The agreements may be
terminated with three months notice to the Company by such executive officers,
in the event of constructive termination or within six months of a change in
control of the Company. In the event that any of such executive officers'
employment is constructively terminated or terminated within six months of a
change in control of the Company, the officers may elect to be paid their
current salary and benefits for two years or to receive a lump sum payment of
85% of such amount. Additionally, such agreements provide for gross-up payments
to such executive officers in the event any parachute payment excise taxes under
the Internal Revenue Code of 1986, as amended, are levied upon the amounts paid
to such officers on termination.
7
<PAGE>
Each of the Company's key employees, including Mr. Moore and Dr. Morais,
entered into a letter agreement with the Company upon commencement of
employment, providing generally for base salary, relocation expenses, commission
compensation (if applicable), stock option awards, fringe benefits, and
conflicts of interest and confidentiality agreements. In addition, Dr. Morais
has an agreement with the Company entitling him to certain incentive payments
tied to his service as President of the Company's Wireless Group.
The Company has entered into separate severance agreements with Mr.
Workman, Dr. Morais, and Mr. Boarts which, in each case, provide that in the
event Mr. Workman, Dr. Morais, or Mr. Boarts are terminated within six months of
a change in control of the Company, Mr. Workman, Dr. Morais, or Mr. Boarts, as
applicable, may elect to be paid their current salary and benefits for two years
or to receive a lump sum payment of 85% of such amount. The agreements also
provide for gross-up payments to Mr. Workman, Dr. Morais, and Mr. Boarts in the
event any parachute payment excise taxes under the Internal Revenue Code of
1986, as amended, are levied upon the amounts paid to Mr. Workman, Dr. Morais,
or Mr. Boarts on termination.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
TO: OUR STOCKHOLDERS
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of directors who have never served as officers of the Company.
The Committee provides guidance and overview for all executive compensation and
benefit programs, including basic strategies and policies. The Committee
evaluates the performance of the executive officers and determines their
compensation levels in terms of salary, bonuses, stock options, and other
benefits, all subject to approval of the Board of Directors.
COMPENSATION PHILOSOPHY
At the direction of the Board of Directors and pursuant to the charter of
the Compensation Committee, the Committee endeavors to ensure that the
compensation programs for executive officers of the Company are effective in
attracting and retaining key executives responsible for the success of the
Company, and are administered to support the long-term interests of the Company
and its shareholders. The Committee seeks to align total compensation for
senior management with corporate performance. Committee actions related to the
compensation of the Chief Executive Officer of the Company are submitted to the
full Board of Directors for ratification.
The Committee has established a number of objectives which serve as
guidelines in making all compensation decisions, including:
. Integrate compensations programs with the Company's strategic directions in
order to achieve its long term strategic objectives;
. Reward annual financial performance through bonus incentives that reflect
Company profitability and team and individual performance, reinforcing the
Company's unique corporate culture;
. Encourage consistent long-term enhancement of stockholder value by providing
multi-year performance incentives through equity ownership using stock
options; and
. Provide a competitive total compensation program which enables the Company to
attract and retain high caliber people, and reward performance.
Each executive receives an annual performance appraisal based on
performance factors and the achievement of specific goals. The key performance
factors for executives include:
. Contributions to the Company's growth and profitability;
. Meeting the operating criteria of the executive's primary function, including
satisfaction of external and internal customers;
8
<PAGE>
. Contributions to the corporate culture, including cross-functional teamwork,
care, respect, training, empowerment, and actions to continually improve
individual and team performance; and
. Longer-term contributions, including meeting quarterly and annual goals,
implementing infrastructure for growth, contributing to the five-year plan,
and overall excellence.
Base Salaries. The Company's basic compensation policy is to pay salaries
that are at the mean level of the Company's industry group and size of firm, and
to provide variable performance-based incentive compensation through bonuses and
stock options. The Committee obtains current industry executive salary surveys
each year. The salaries are reviewed annually, and adjusted to reflect industry
changes and sustained individual performance.
Annual Bonuses. The Board of Directors establishes an annual bonus pool as
a percentage of pretax profits. The Company then pays supplemental cash bonuses
from this bonus pool based on individual performance. Thus, employees have both
a team incentive to increase profits and reduce costs which increases the total
bonus pool, and an individual incentive to perform at the highest level. The
Committee obtains current industry surveys on executive bonuses.
Stock Options. The Company uses stock options to provide long-term
incentives for the performance of the Company and key employees. Stock options
are not only a tool to optimize the Company's performance, but are also
essential to attract and maintain dynamic, talented professionals and managers
in a rapidly evolving company without a defined pension plan. Stock options
provide the strong incentive to work hard, be creative, and be personally
concerned about the Company's sustained success.
The Company has established basic stock option grade levels for managers
and professionals, with target dollar amounts of stock options for each level.
The options are vested over a specified period, normally four to five years, and
the number of shares and price per share are determined by the closing price on
the Nasdaq National Market on the designated date of grant. The Committee
oversees the specific grants to individuals.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing the fiscal 1999 compensation for the Company's Chief
Executive Officer and President, Mr. Wim H.J. Selders, the Committee followed
its established compensation philosophy and process described above. The
Committee noted the Company's results for fiscal year 1998. They also noted his
several initiatives to focus and adapt the Company's strengths to the very
dynamic market conditions of fiscal year 1998. These included a continued delay
in the ramp-up of domestic spending for the broadband industry, and a sudden
downturn in the Asian economies that adversely impacted the Company's
international sales. The continued investment in research and development,
roll-out of new broadband products, improvements in the international marketing
and sales structure, and new strategic partnerships should position the Company
for a strong market position in high bandwidth analog and digital communications
links for the broadband cable television and telecommunications industries. He
focused corporate development on the Company's core strengths as a technological
leader in innovative products. The Company performed well compared to its peer
group of manufacturers.
Based on these and other objectives pre-established for the year, the
Committee evaluated Mr. Selders' personal performance and applied an appropriate
performance multiplier to this industry average bonus factor and the Board of
Directors established fiscal year 1998 bonus pool (approximately 29% of the
fiscal year 1997 bonus pool) to determine his bonus. Mr. Selders' fiscal year
1998 bonus, paid after the end of the fiscal year, was $25,000 or 10.6% of his
base salary, compared to $110,000 and 48.4% last year. The Company contributed
$4,820 to Mr. Selders' 401(k) account, or 2.1% of his base salary.
9
<PAGE>
Based on the Company's above policy on base salaries, the Committee
increased Mr. Selders' base salary in fiscal year 1999 by 12.1%, bringing his
salary approximately to the industry mean found in the executive salary survey.
Date: August 3, 1998 Compensation Committee:
Anthony J. Iorillo
Wayne L. Tyler
Ronald L. Young
The above report of the Compensation Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates the same by
reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, which is responsible for the compensation
policies of the Company with respect to its executive officers, is comprised of
Mr. Iorillo and Drs. Tyler, and Young, none of whom is an employee of the
Company.
PERFORMANCE GRAPH(1)
The following line graph compares the quarterly cumulative total
stockholder return on the Common Stock against the Nasdaq Broad Market Index and
the Radio and Television Communications Equipment Industry Index for the period
from October 20, 1994 (the date of the Company's initial public offering) to
April 30, 1998.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Radio and
Television
Communications NASDAQ
Equipment Broad
Measurement Period Ortel Industry Market
(Fiscal Year Covered) Corporation Index Index
- --------------------- ----------- -------------- -------
<S> <C> <C> <C>
Measurement Pt- 10/21/94 $100 $100 $100
FYE 4/28/95 $109.62 $ 99.54 $102.95
FYE 4/30/96 $119.23 $111.85 $143.70
FYE 4/30/97 $100.00 $ 97.51 $153.17
FYE 4/30/98 $104.31 $109.25 $227.51
</TABLE>
______________________
(1) Assumes $100 invested on October 20, 1994 and reinvestment of all
dividends. Also assumes the Company's initial public offering price was
the closing price on the day immediately prior to the Company's initial
public offering.
10
<PAGE>
CERTAIN TRANSACTIONS
As of July 30, 1998, the Company had outstanding loan balances of $150,000,
$416,000, and $214,535 with executive officers Messrs. Selders, Moore, and
Workman, respectively, each related to the exercise of stock options and
alternative minimum taxes thereon. The loans are payable in full from April 19,
1999 to April 1, 2003, with interest payable annually at rates ranging from
5.07% to 7.34% according to IRS guidelines for such loans at the time they were
extended. The loans are full recourse and are secured by the underlying shares
of Common Stock resulting from such exercise totaling 31,756, 76,900, and 44,008
shares for Messrs. Selders, Moore and Workman, respectively.
Pursuant to a consulting agreement between the Company and Dr. Yariv, which
is no longer in effect, in fiscal year 1998, the Company paid Dr. Yariv $134,171
for his services as a consultant to the Company. See "Proposal 1 -- Election of
Directors -- Director Compensation." The Company is currently paying Dr. Yariv
approximately $100,000 per year for certain consulting services on an "at will"
basis.
SUMITOMO COMMON STOCK PURCHASE AGREEMENT AND RELATED AGREEMENTS
Pursuant to certain agreements entered into in connection with the purchase
of 2,349,964 shares of Common Stock by Sumitomo in March 1990, and as amended in
July 1995, the Company granted to Sumitomo certain rights including (i) the
exclusive right to distribute Ortel standard products in Japan, subject to
meeting certain required targets, and (ii) if the Company chooses to engage a
manufacturing partner, the right of first refusal to participate in the
establishment of any manufacturing facility in Japan, Taiwan, Singapore, Korea,
Hong Kong, Australia, Indonesia, Thailand, Vietnam, Cambodia, China, India, the
Philippines or New Zealand and to be the majority joint venture partner in any
manufacturing facility in Japan. In addition, the Company agreed to treat
Sumitomo as a prime supplier, but not a sole supplier, if Sumitomo is
competitive with other Ortel vendors regarding price, performance and other
factors. The Company also agreed to reasonably consider joint development
projects with and paid for by Sumitomo, and support, to the extent that the
Company's resources are sufficient and capable of doing so, the sale of Sumitomo
products in the United States and Canada. These rights terminate if Sumitomo
holds less than 10% of the outstanding equity of the Company excluding certain
issuances of shares in which Sumitomo is not offered the right to participate or
sells any of its Common Stock of the Company to a competitor of the Company. In
addition, Sumitomo's rights terminate three years after a merger of the Company
or other such change of control. Dr. Honda, a director of the Company, is an
executive officer of Sumitomo.
In connection with Sumitomo's investment in the Company, Sumitomo and Wim
H.J. Selders, Amnon Yariv, Nadav Bar-Chaim, and Israel Ury, all of whom are
directors or executive officers of the Company, have agreed not to acquire
additional shares of the Company's equity securities such that any such
stockholder would be able to elect a majority of the Board or would hold more
than 40% of the outstanding equity of the Company unless such stockholder
offered to purchase all of the outstanding equity securities of the Company at
either a price approved or accepted by the holders of at least two-thirds of the
outstanding equity of the Company or a price equal to, or in excess of, the fair
market value of such securities, provided that such price was at least equal to,
or greater than, the greater of $6.00 per share or three times the book value of
such securities. The agreement terminates upon agreement of Sumitomo and the
stockholders party to such agreement.
COMPLIANCE WITH SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten (10)
percent of a registered class of the Company's equity securities (collectively,
"Insiders"), to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "Commission") and The
Nasdaq National Market. Insiders are required by regulation of the Commission
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that its Insiders complied with all Section 16(a)
filing requirements, except that Dr. Ury failed to timely file a Form 4
reporting the exempt exercise of stock options.
11
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
The Company's Bylaws provide that the Board of Directors will consist of a
minimum of seven and maximum of eleven directors, divided into three classes.
One class is elected each year for a three-year term, expiring at the Annual
Meeting. The foregoing notwithstanding, directors will serve until their
successors have been duly elected and qualified, unless they resign, become
disqualified, disabled, or are otherwise removed.
In July 1998, the Board of Directors accepted Raymond H. Kaufman's
retirement from service as a member of the Board of Directors. Dr. Kaufman's
retirement is effective at the end of his current term on September 25, 1998.
Although the Board of Directors desires to fill the vacancy left by Dr.
Kaufman's impending retirement, the Board of Directors has not yet found a
suitable replacement. As a result, the Board of Directors by unanimous written
consent reduced the authorized number of directors to nine, effective as of
September 25, 1998. Accordingly, one class of directors will be comprised of
four directors, one class will be comprised of three directors and one class
will be comprised of two directors. When the Board of Directors identifies and
nominates a candidate to fill Dr. Kaufman's vacancy, the Board of Directors
intends to again reconstitute the Board of Directors and fix the authorized
number of directors at ten, with two classes comprised of three directors and
one class comprised of four directors.
Each of the Company's two nominees for election to the Board of Directors
is currently serving as a director of the Company and was elected to his present
term of office by the stockholders of the Company. Directors will be elected by
a favorable vote of a plurality of the shares of voting stock present and
entitled to vote, in person or by proxy, at the Meeting. Accordingly,
abstentions or broker non-votes as to the election of directors will not affect
the election of the candidates receiving the plurality of votes. Unless
instructed to the contrary, the shares represented by the proxies will be voted
FOR the election of the two nominees named herein as directors. Although it is
anticipated that each nominee will be able to serve as a director, should any
nominee become unavailable to serve, the proxies will be voted for such other
person or persons as may be designated by the Company's Board of Directors.
Set forth below are the names and descriptions of the backgrounds of the
directors of the Company (including the nominees) and their principal
occupations for the past five years. Each of the nominees first became a
director of the Company in the year set forth below and has continually served
as a director of the Company since that date.
NOMINEES FOR ELECTION TO SERVE UNTIL 2001
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Wim H.J. Selders 58 Director, President and Chief Executive Officer
Amnon Yariv 68 Chairman of the Board
</TABLE>
Mr. Selders, a member of the Board of Directors of the Company since
September 1985, has served as the Company's Chief Executive Officer since
September 1985, and the Company's President since August 1986. From 1977 to
September 1986, Mr. Selders occupied various management positions at TEC
Incorporated, a manufacturer of computer peripherals and electronic components,
with his last position being Executive Vice President/General Manager. Mr.
Selders was educated in the Netherlands and holds degrees in computer
automation, business administration, and economics from AMBI, Praehep College,
and RRR College, respectively.
Dr. Yariv has served as Chairman of the Board of Directors of the Company
since co-founding the Company in April 1980. In 1964, Dr. Yariv joined the
California Institute of Technology, and currently holds the position of the
Martin and Eileen Summerfield Professor of Applied Physics and Professor of
Electrical Engineering. He formerly held the position of the Thomas G. Myers
Professor of Electrical Engineering and Applied Physics at the California
Institute of Technology. Dr. Yariv is one of the founders of the field of
optoelectronics and is a member of the National Academy of Engineering as well
as the National Academy of Sciences. He holds B.S., M.S., and Ph.D. degrees in
Electrical Engineering from the University of California, Berkeley.
12
<PAGE>
DIRECTORS CONTINUING TO SERVE UNTIL 1999
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ---- --------
<S> <C> <C>
Tatsutoku Honda 58 Director
Hal M. Krisbergh 51 Director
Israel Ury 42 Director, Chief Technology Officer
Ronald Young 59 Director
</TABLE>
Dr. Honda has served as a member of the Board of Directors of the Company
since September 1990. Since June 1990, Dr. Honda has served as the Director and
General Manager of New Business Development at Sumitomo Osaka Cement Co., Ltd.,
a Japanese manufacturer of cement and related products. From October 1987 to
June 1990, Dr. Honda served as General Manager of the Optoelectronics
Development Department at Sumitomo Cement Co., Ltd. From February 1984 to
January 1987, Dr. Honda served as General Manager of the Development Department
of OITDA. Dr. Honda holds B.E. and Ph.D. degrees in Electrical Engineering from
Nihon University, Tokyo.
Mr. Krisbergh has served as a member of the Board of Directors of the
Company since August 1995. Since March 1995, Mr. Krisbergh has served as
Chairman and Chief Executive Officer of WorldGate Communications, Inc., a
supplier of Internet access equipment. From 1981 until 1994, Mr. Krisbergh held
various positions at General Instrument Corporation, the world's largest
supplier of broadband telecommunications equipment for the cable television,
satellite, and telephone industries, his last position being that of Corporate
Vice President. Mr. Krisbergh holds a Master's Degree in Business
Administration with honors from Boston University and an undergraduate degree in
Electrical Engineering from The City College of New York. Mr. Krisbergh also
serves on the boards of Digital Cable Radio, General Instrument, Inc., and AM
Communications.
Dr. Ury, a member of the Board of Directors of the Company since co-
founding the Company in April 1980, has served as the Company's Chief Technology
Officer since September 1985. From April 1980 to August 1986, Dr. Ury served as
the Company's President and Chief Financial Officer. Prior to co-founding the
Company, Dr. Ury was a Research Assistant in Applied Physics at the California
Institute of Technology. Dr. Ury holds a Ph.D. in Applied Physics from the
California Institute of Technology and M.S. and B.S. degrees in Engineering from
the University of California, Los Angeles.
Dr. Young has served as a member of the Board of Directors of the Company
since December 1981. Since 1975, Dr. Young has served as an Associate Professor
at Baylor College of Medicine. Dr. Young holds M.D. degrees from Baylor College
of Medicine and the University of Basel, Switzerland, and degrees from the
University of Rhode Island and Cornell University.
DIRECTORS CONTINUING TO SERVE UNTIL 2000
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Nadav Bar-Chaim 52 Director, Senior Vice President, Operations and Secretary
Anthony J. Iorillo 59 Director
Wayne L. Tyler 60 Director
</TABLE>
Dr. Bar-Chaim, a member of the Board of Directors of the Company since co-
founding the Company in April 1980, has served as the Company's Senior Vice
President, Operations and Secretary since June 1998. Prior to serving in his
current position, Dr. Bar-Chaim served as the Company's Vice President, Device
Structures and Materials, and Corporate Secretary since July 1980. Prior to co-
founding the Company, Dr. Bar-Chaim was a Research Fellow in Applied Physics at
the California Institute of Technology and an Electronics Instructor and
Teaching Assistant in Physics at Tel-Aviv University. Dr. Bar-Chaim holds a
Ph.D. in Electrical Engineering and an M.S. degree in Physics (solid state) from
Tel-Aviv University, and a B.S. in Mathematics and Physics from the Hebrew
University of Jerusalem.
13
<PAGE>
Mr. Iorillo has served as a member of the Board of Directors of the Company
since April 1993. From July 1991 to May 1994, Mr. Iorillo served as a Senior
Vice President and President of the Telecommunications and Space Sector of
Hughes Aircraft Company. From 1986 to July 1991, Mr. Iorillo served as a Vice
President of Hughes. Mr. Iorillo joined Hughes in 1959 as a Hughes Masters
Fellow. He has also served as Chairman of the Board of Directors of American
Mobile Satellite Corporation, a satellite communications company, from April
1994 to August 1996. Mr. Iorillo was Director of Electromagnetic Sciences
Corporation from 1995 to 1998. Mr. Iorillo holds a B.S. degree in Mechanical
Engineering and an M.S. in Aeronautics from the California Institute of
Technology.
Dr. Tyler has served as a member of the Board of Directors of the Company
since October 1989. Dr. Tyler is co-owner of MESA Company, a consulting firm in
technology programs, and has served as senior engineer of MESA Company since
1985. From June 1981 to October 1984, Dr. Tyler served as Colonel and Chief
Executive of Advanced Technology Programs at the U.S. Air Force Weapons
Laboratory. Dr. Tyler served in many senior and staff positions in Air Force
units at several United States, European, and Far Eastern locations from 1958 to
1984. Dr. Tyler holds M.S. and Ph.D. degrees in Industrial Engineering from
Stanford University, and a B.S. degree in Chemical Engineering from the
University of Wisconsin.
The Company is not aware of any family relationships among any of the
foregoing directors and its executive officers. The Certificate of
Incorporation and Bylaws of the Company contain provisions eliminating or
limiting the personal liability of directors for violations of a director's
fiduciary duty to the extent permitted by the Delaware General Corporation Law.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held five meetings during the fiscal year ended
April 30, 1998. Except for Drs. Kaufman and Honda, each director attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors held during fiscal 1998 and the total number of meetings held during
fiscal 1998 by all committees of the Board of Directors on which that director
served.
The Company has standing Audit, Compensation and Nominating Committees.
During fiscal 1998, Drs. Tyler and Kaufman comprised the Audit Committee. The
Audit Committee met four times during the fiscal year ended April 30, 1998. The
Audit Committee's responsibilities include recommending the selection of the
Company's independent public accountants to the Board of Directors, reviewing
the plans and results of the audit engagement with the independent public
accountants and management, approving professional services provided by the
independent public accountants, reviewing the adequacy of the Company's internal
accounting controls, reviewing the independence of the independent public
accountants, and considering the range of audit and non-audit fees charged by
the independent public accountants. During fiscal 1998, Mr. Iorillo and Drs.
Tyler and Young comprised the Compensation Committee. The Compensation Committee
met two times during fiscal 1998. The Compensation Committee's responsibilities
include reviewing and approving the compensation of the Company's directors,
officers, and employees, and administering the Company's Stock Option Plans.
The Nominating Committee, comprised of Messrs. Selders and Iorillo and Dr.
Yariv, met once during fiscal 1998. The Nominating Committee's responsibilities
include nominating and screening candidates for the Board of Directors, training
and orienting members of the Board of Directors, evaluating the performance of
the Board of Directors, and overseeing general coordination of the Board of
Directors' agenda and meeting schedules and committee membership. In order to
continue to monitor the Company's technical leadership, the Company intends to
establish a Scientific Advisory Board during fiscal 1999, with Dr. Yariv as
Chairman.
14
<PAGE>
DIRECTOR COMPENSATION
Each non-employee director of the Company, except Dr. Yariv, is entitled to
receive compensation of $500 for each Board of Directors meeting attended. Drs.
Tyler and Iorillo and Mr. Krisbergh are each entitled to receive on an annual
basis $13,000 for serving on the Company's Board of Directors. Each member of
the Audit and Compensation Committees is entitled to receive $500 for each
committee meeting attended on a day the Board of Directors is not otherwise
meeting. Each director is reimbursed for certain expenses incurred in
connection with attendance at Board of Directors and committee meetings.
Pursuant to the terms of the Company's 1994 Plan, each non-employee director
receives an annual grant of non-qualified stock options to purchase a number
shares of the Company's Common Stock equal to the quotient of $40,000 divided by
the closing price of the Company's Common Stock on the date of each annual
meeting. Currently, Messrs. Krisbergh and Iorillo and Drs. Yariv, Honda, Young,
and Tyler are eligible to receive grants under the 1994 Plan.
Pursuant to a consulting agreement between the Company and Dr. Yariv, which
is no longer in effect, in fiscal year 1998, the Company paid Dr. Yariv $134,171
for his services as a consultant to the Company. The Company is currently
paying Dr. Yariv approximately $100,000 per year for certain consulting services
on an "at will" basis.
In addition, certain of the Company's directors who are also employees of
the Company are party to employment agreements with the Company. See "Executive
Compensation--Employment Agreements."
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP, the Company's independent public
accountants for the fiscal year ended April 30, 1998, was selected by the Board
of Directors, upon recommendation of the Audit Committee, to act in the same
capacity for the fiscal year ending April 30, 1999, subject to ratification by
the stockholders by an affirmative vote of a majority of the outstanding shares
of the Company's Common Stock present or represented at the Meeting. Neither
the firm nor any of its members has any relationship with the Company or any of
its affiliates, except in the firm's capacity as the Company's independent
public accountants.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting and will have the opportunity to make statements if they so desire and
respond to appropriate questions from the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Company expects to hold the 1999 Annual Meeting of Stockholders on
September 24, 1999. New Securities and Exchange Commission rules regarding
shareholder proposals became effective on June 29, 1998. Pursuant to these new
rules, if the Company has not received notice on or before June 26, 1999 of any
matter a stockholder intends to propose for a vote at the 1999 Annual Meeting of
Stockholders, then a proxy solicited by the Board of Directors may be voted on
such matter in the discretion of the proxy holder, without discussion of the
matter in the proxy statement soliciting such proxy and without such matter
appearing as a separate item on the proxy card.
15
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters which may be presented for consideration at the Meeting. However,
if any other matter is presented properly for consideration and action at the
Meeting, or any adjournment or postponement thereof, it is intended that the
proxies will be voted with respect thereto in accordance with the best judgment
and in the discretion of the proxy holders.
By Order of the Board of Directors,
Nadav Bar-Chaim
Senior Vice President, Operations
and Secretary
Dated: August 10, 1998
16
<PAGE>
ORTEL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 25, 1998
The undersigned hereby appoints Wim H. J. Selders and Nadav Bar-Chaim
and each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes either of them to act and vote at the annual meeting of
stockholders of Ortel Corporation ("Ortel") to be held on September 25, 1998,
and at any adjournments or postponements thereof, as indicated upon all matters
referred to on this proxy card and described in the Proxy Statement for the
meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
Shares represented by all properly executed proxies will be voted in
accordance with the instructions appearing on this proxy card and in the
discretion of the proxy holders as to any other matter that may properly come
before the meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE
VOTED FOR ITEMS 1 AND 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ORTEL CORPORATION
SEPTEMBER 25, 1998
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
WITHHOLD
FOR ALL AUTHORITY
NOMINEES FOR ALL NOMINEES
1 Elect members [_] [_] NOMINEES: Wim H.J. Selders
of the Ortel Amnon Yariv
Board of
Directors.
(Instruction: To WITHHOLD AUTHORITY to vote for any
individual nominees, draw a line through (or otherwise
strike out the nominee's name in the list at right.)
FOR AGAINST ABSTAIN
2 Approval of the selection of KPMG Peat [_] [_] [_]
Marwick LLP as Ortel's independent
public accountants.
Signature(s)____________________________________ Date: ________________________
NOTE: Please sign as name(s) appears on this proxy card, and date this proxy
card. If a joint account, each joint owner must sign. If signing for a
corporation or a partnership as agent, attorney or fiduciary, indicate the
capacity in which you are signing.
