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 Sec. 240.14a-11(c) or Sec. 240.14a-12
STERLING ELECTRONICS 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
____________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________
(5) Total fee paid:
____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
____________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
____________________________________________________________________
(3) Filing party:
____________________________________________________________________
(4) Date filed:
____________________________________________________________________
<PAGE>
STERLING ELECTRONICS CORPORATION
4201 Southwest Freeway, Houston, Texas 77027
*****
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held On
Tuesday, August 22, 1995
*****
To the Shareholders of STERLING ELECTRONICS CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Sterling
Electronics Corporation, A Nevada corporation, (the "Company") will be held at
the Company's offices, 4201 Southwest Freeway, Houston, Texas, August 22, 1995,
at 3:00 o'clock p.m., Houston time, for the following purposes:
1. To elect six (6) directors of the Company to serve for the ensuing year
and until their successors are duly elected and qualified.
2. To consider and act upon management's recommendation that Ernst & Young
LLP, Certified Public Accountants, be appointed as independent auditors for the
fiscal year ending March 30, 1996.
3. To transact such other business as may properly come before the
meeting.
In accordance with applicable law and the by-laws of the Company, only
shareholders of record at the close of business on July 14, 1995, are entitled
to notice of this meeting and to vote at it or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Leon Webb, Jr., Secretary
July 10, 1995
Houston, Texas
- --------------------------------------------------------------------------------
IMPORTANT
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR CONVENIENCE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. THE PROMPT RETURN OF THE PROXIES
WILL ASSURE A QUORUM AND REDUCE SOLICITATION.
- --------------------------------------------------------------------------------
<PAGE>
STERLING ELECTRONICS CORPORATION
4201 Southwest Freeway, Houston, Texas 77027
*****
Annual Meeting of Shareholders to be held
August 22, 1995
*****
PROXY STATEMENT - 1995
*****
This proxy statement is being first mailed or otherwise delivered to
shareholders commencing about July 19, 1995, for the Annual Meeting of
Shareholders of Sterling Electronics Corporation (the "Company"), to be held at
the Company's principal executive offices, 4201 Southwest Freeway, Houston,
Texas, 77027, at 3:00 o'clock p.m., Houston time, on Tuesday, August 22, 1995,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
RECORD DATE
The close of business on July 14, 1995, has been fixed as the record date
for the determination of shareholders entitled to receive notice of, and to
vote, at the Annual Meeting.
ANNUAL REPORT
A copy of the Company's Annual Report to shareholders for the fiscal year
ended April 1, 1995 is being mailed to you herewith. This Annual Report should
not be considered as part of this Proxy Statement or incorporated herein by
reference. Additional copies of the Annual Report, Notice of Annual meeting,
Proxy Statement and Proxy may be obtained from the offices of the Secretary of
the Company, 4201 Southwest Freeway, Houston, Texas, 77027. Mailing address:
P.O. Box 1229, Houston, Texas 77251-1229, Attention: Leon Webb, Jr.
REVOCATION OF PROXY
Any shareholder executing the Proxy enclosed herewith shall have the power
to revoke the same at any time prior to the voting of the Proxy. The termination
of the Proxy's authority by any shareholder shall be ineffective until written
notice has been given to the Secretary of the Company.
SOLICITATION
THE ENCLOSED PROXY IS BEING FURNISHED AND SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY. In addition to the solicitation by mail,
officers and regular employees of the Company may solicit proxies by telephone,
telegraph, telex, TWX, facsimile transmission, or in person for which no
additional compensation is made. Independent contract labor may be obtained to
assist in the mail-out and solicitation of the proxies for which it will be
reasonably compensated. Brokers and other custodians, nominees and fiduciaries
may be requested to forward solicitation material to the beneficial owners of
the stock registered in the names of such persons and to request authority for
the execution of proxies, and the Company will, upon request, reimburse them for
their reasonable and necessary expenses in doing so. Management is not aware of
any matter coming before this Annual Meeting that will necessitate dissenter
shareholders' rights or appraisals.
OUTSTANDING STOCK
On June 1, 1995, the Company had outstanding 6,583,435 shares of Common
Stock. Each shareholder will be entitled to cast one vote in person or by Proxy
for each share of Common Stock held by him. No cumulative voting is permitted.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table of director nominees sets forth the Common Stock of Sterling
Electronics Corporation owned by each such nominee as of June 1, 1995. The
following table sets forth as of such date the information indicated concerning
the security ownership of the Company by the only known persons to own
beneficially 5% or more of the Company's outstanding equity securities, each of
the non-director nominee named executive officers, and all directors and
executive officers of the Company as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
Edward C. Johnson 3D 462,700 7.0%
FMR CORP.
82 Devon Street
Boston, MA 02109
Granahan Investment 351,800 5.3%
Management, Inc.
303 Wyman Street, Suite 310
Waltham, MA 02154
R. Barnard 21,372(b) *
4201 Southwest Freeway
Houston, TX 77027
J.V. McConkey 15,703(b) *
4201 Southwest Freeway
Houston, TX 77027
T.D. McGinty 32,532 *
4201 Southwest Freeway
Houston, TX 77027
All Directors & 448,733(a) 6.8%
Executive Officers as
a group (14 persons) * Less than 1%
(a) Includes 113,500 shares which may be acquired from the Company within
60 days upon exercise of options pursuant to the Sterling Electronics
Corporation 1992 Incentive Stock Option Plan (the "1992 Plan"), non-qualified
stock option grants and the 1993 Directors' Non-Qualified Stock Option Plan (the
"1993 Plan").
(b) Includes 5,000 shares for Mr. Barnard and 5,000 shares for Mr.
McConkey which may be acquired from the Company within 60 days upon exercise of
options pursuant to the 1992 Plan.
ELECTION OF DIRECTORS
In accordance with the provisions of the by-laws of the Company, six (6)
directors will be elected at the Annual Meeting, each to serve for one year or
until his successor is elected and qualified. It is intended that unless
otherwise directed, the enclosed Proxy will be voted in favor of the election of
the nominees named in the following table.
Certain information concerning the nominees, each of whom has agreed to
stand for election, is set forth below. Each of the named nominees listed in the
following table is currently a director of the Company and was elected to his
present term of office at the Annual Meeting of Shareholders on August 23, 1994.
3
<PAGE>
Shares of Common Stock
of the Company Beneficially
Owned and Percent of
Name, Age and Outstanding shares as of
Tenure Of Nominee Position With Company June 1, 1995(a)
----------------- --------------------- -------------------------
JAY H. GOLDING Director 26,512 *
50 Years
Director since 1992
S.M. LAMBERT, Ph.D. Director 7,000 *
63 Years
Director since 1974
HERSCHEL G. MALTZ Director 7,929 *
64 Years
Director since 1965
DAVID A . SPOLANE Executive Vice President 104,330 (1.5%)
40 Years & Director (b)
Director since 1994
RONALD S. SPOLANE Chairman of the Board, 105,841 (1.6%)
40 Years Chief Executive Officer &
Director since 1992 President (b)
DAVID R. TOOMIM Director 13,256 *
75 Years
Director since 1976
* Less than 1%
(a) Includes shares which may be acquired from the company within 60 days
upon exercise of options as follows: Jay H. Golding - 6,000 shares, S.M. Lambert
- - 6,000 shares, Herschel G. Maltz - 6,000 shares, D.A. Spolane - 13,500 shares,
R.S. Spolane - 40,000 shares and David R. Toomim - 6,000 shares.
(b) Mr. David A. Spolane and Mr. Ronald S. Spolane are brothers.
Mr. Golding has been a private investor as President & Chief Executive
Officer of Port Chester Industries since 1989. Prior to 1989, Mr. Golding
was CEO of Hi-Port Industries, a public company engaged in the packaging of
consumer products. Mr. Golding also serves as Chairman of the Board of
Bogan Aerotech, Inc., a privately held company engaged in aerospace
engineering and manufacturing. Mr. Golding also serves as a director of
Falcon Oil and Gas, a public company engaged in oil and gas exploration and
development.
Dr. Lambert is an independent management consultant. For more than five
years prior to 1986, Dr. Lambert was the Senior Vice President of Corporate
Planning for LTV Corporation, a public company engaged in a variety of
businesses including steel, shipping, energy, defense and aerospace. Prior to
joining LTV Corporation, he was an executive with Shell Oil Company in Houston,
Texas.
Mr. Maltz is Chairman of the Company's Compensation Committee. Though
primarily a private investor, since 1993, he has been Chairman of the Board
and Chief Executive Officer of IPS Systems, Inc. a privately held company
engaged in the distribution of products for apartment maintenance. During
1992, Mr. Maltz was President of Petrolon, Inc., a privately held company
engaged in the marketing and distribution of engine additives. Prior to
joining Petrolon, he was a private investor for two years. He was previously
President and a Director of Century Papers, Inc., a public company engaged in
the wholesale distribution of paper products. Mr. Maltz is also a director
of Charter Bancshares, Inc., a publicly held bank holding company.
4
<PAGE>
Mr. D. A. Spolane became Executive Vice President with senior
responsibility for sales and marketing in the distribution operations in
March 1994. From 1987 through March 1994, he was a Vice President with
responsibility for the Company's semiconductor marketing program. Mr.
Spolane has been an employee of the Company in various sales and marketing
capacities since 1976.
Mr. R. S. Spolane has been Chairman of the Company's Board of Directors
and Chief Executive Officer since January 1994. In August 1993, he became
President and Chief Operating Officer. From 1991 through August 1993, Mr.
Spolane held the position of Executive Vice President with senior
responsibility for sales and marketing in the distribution operations. He
has been an employee of the Company since 1976 and has held various positions
in computer services, financial administration, sales and marketing.
Mr. Toomim is Chairman of the Company's Audit Committee. Since 1981,
he has been an attorney with Schlanger, Mills, Mayer & Grossberg, L.L.P., a
Houston law firm. Mr. Toomim is a retired partner of Deloitte & Touche, a
public accounting firm. Schlanger, Mills, Mayer & Grossberg, L.L.P. provides
legal services for the company. During fiscal 1995 the Company paid
Schlanger, Mills, Mayer & Grossberg, L.L.P. approximately $5,200 for legal
services.
Should any one or more of the foregoing nominees not be a candidate for
director when the election is held, it is the intention of the persons named in
the enclosed Proxy to vote for the election of a substitute nominee proposed by
the management. However, the Management has no reason to believe that the
nominees will be unable to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
EXECUTIVE OFFICERS
In addition to Messrs. D.A. Spolane and R.S. Spolane, the Company has
the following executive officers:
Name Age Position(s) with the Company
-------------- --- ----------------------------
Ronald Barnard 53 Senior Vice President
David Goforth 37 Senior Vice President
Jack K. Killoren 43 Senior Vice President
J.V. McConkey, III 53 Senior Vice President
Thomas D. McGinty 55 Senior Vice President
Byron Turner 61 Senior Vice President
Mac McConnell 41 Vice President-Finance and
Chief Financial Officer
Leon Webb, Jr. 51 Vice President-Secretary
and Treasurer
Mr. Barnard became a Senior Vice President with senior responsibility for
Sterling's northeast region in March 1994. From March 1991 through March 1994
Mr. Barnard was a Vice President with responsibility for Sterling's northeast
region. From 1986 through 1991, Mr. Barnard was the general manager of
Sterling's Boston sales office.
Mr. Goforth became a Senior Vice President with senior responsibility for
Sterling's connector marketing program in March 1994. For the previous six years
Mr. Goforth was a Vice President with responsibility for Sterling's connector
marketing program.
5
Mr. Killoren became Senior Vice President with senior responsibility for
marketing in March 1994. For the seven previous years Mr. Killoren was Vice
President with responsibility for passive and electro-mechanical product
marketing.
Mr. McConkey has been a Senior Vice President with senior
responsibility for Sterling's southwest region for over five years.
Mr. McGinty has been a Senior Vice President with senior responsibility
for materials management for over five years.
Mr. Turner has been a Senior Vice President with senior responsibility
for Sterling's south central region for over five years.
Mr. McConnell, CPA, became Vice President-Finance and Chief Financial
Officer in December, 1992. From June 1990 to December 1992 he was Vice
President-Finance of Interpak Holdings, Inc. (a public company) and
Chemtrusion, Inc. and Finance Director of Bamberger Polymers, Inc. (a public
company), affiliated companies involved in trading, distributing, packaging,
warehousing and compounding
thermoplastic resins. From 1987 through 1990, Mr. McConnell was a partner of
Ernst & Young, a public accounting firm.
Mr. Webb has been the Vice President-Secretary and Treasurer for over
five years.
Officers serve at the discretion of the Board.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Sterling maintains an audit committee consisting of Messrs. Golding, Maltz
and Toomim. This committee met two times during the prior year at which times
all members of the committee were present. This committee's primary functions
are to review the scope and results of audits by Sterling's independent
auditors, internal accounting controls, the extent of other services performed
by the independent auditors and the cost of all accounting and financial
services.
The Company's Compensation committee consists of Messrs. Lambert and
Maltz. This committee met two times during the prior fiscal year. This
committee's responsibilities include approving (i) all remuneration of senior
management and directors, (ii) the granting of stock options and (iii) other
benefits for senior management and directors.
The Company does not have a nominating committee.
During the prior fiscal year, the Board of Directors met five times. All
directors attended 75% or more of the meetings.
DIRECTORS COMPENSATION
Directors who are not employees of the Company each receive an annual fee
of $12,000 and $1,000 for attendance at each Board of Director's meeting.
Additionally, on March 10, 1994 each non-employee director received a
non-qualified stock option, issued pursuant to the 1993 Plan, to purchase 3,000
shares of common stock at $11.50 per share.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth a summary of the compensation paid during
the past three fiscal years for services rendered in all capacities to the
Company and its subsidiaries by the Chief Executive Officer and the four other
most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
Long-Term All Other
Name and Fiscal Annual Compensation Compensation Compensa-
Principal Position Year Salary Bonus(1) Stock Options(#) tion(2)
- ------------------ ------ ------------------- ---------------- ---------
R.S. SPOLANE 1995 $227,692 $216,000 10,000
Chairman of the Board 1994 $112,480 $300,056 55,000
Chief Executive 1993 $ 90,000 $146,341 10,000
Officer & President
D.A. SPOLANE 1995 $130,000 $175,884 7,000 $1,875
Executive Vice 1994 $ 80,000 $250,047 15,000 $1,875
President and 1993 $ 72,308 $121,951 6,000
Director
R. BARNARD 1995 $105,118 $232,696 5,000 $3,167
Senior Vice President 1994 $ 95,134 $191,423 $2,458
Northeast Area 1993 $ 91,000 $105,702 5,000
Manager
J.V. MCCONKEY, III 1995 $124,115 $171,906 5,000
Senior Vice President 1994 $116,809 $199,877
Southwest Area 1993 $110,000 $104,186 5,000
Manager
T.D. MCGINTY 1995 $120,000 $175,884 5,000
Senior Vice President 1994 $ 84,145 $300,056
Materials Management 1993 $ 75,400 $146,341 6,000
______________________
(1) Includes amounts paid in the Company's common stock pursuant to the
Company's Incentive Bonus Plan. For fiscal years 1995, 1994 and 1993, 20%, 20%
and 15%, respectively, of the bonuses for the named executive officers were paid
in the Company's common stock.
(2) Amount contributed by the Company as 401(k) Plan matching
contributions.
7
<PAGE>
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information on option grants during fiscal
1995 to the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rates
Underlying Granted to Exercise of Stock Price
Options Employees or Base Appreciation for
Granted in Fiscal Price Expiration Option Term (3)
Name in (#) (1) Year ($)(Sh)(2) Date 5% 10%
- ------------ ---------- -------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
R.S. SPOLANE 10,000 4.2% $11.50 03/09/00 $31,740 $70,265
D.A. SPOLANE 7,000 2.9% $11.50 03/09/00 $22,218 $49,185
R. BARNARD 5,000 2.1% $11.50 03/09/00 $15,870 $35,132
J.V. MCCONKEY 5,000 2.1% $11.50 03/09/00 $15,870 $35,132
T.D. MCGINTY 5,000 2.1% $11.50 03/09/00 $15,870 $35,132
</TABLE>
- ------------
(1) All options become exercisable in two annual installments beginning
one year after the date of grant. Options will terminate three months after
termination or one year after death or disability.
(2) Exercise price is equal to the current market value at the date of
grant.
(3) Represents gain that would be realized assuming the options were held
for the entire five year period and the stock price increased at compounded
rates of 5% and 10%. These amounts represent assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and common stock holdings will
be dependent on overall market conditions and on the future performance of the
Company and its common stock. There can be no assurance that the amounts
reflected in this table will be achieved.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
The following table provides information relating to the exercise of stock
options by the named executive officers during the last fiscal year, and the
number and value of unexercised stock options held by such officers at April 1,
1995.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at Fiscal at Fiscal
Shares Year-End Year-End
Acquired Value Unexercisable(U) Unexercisable(U)
Name on Exercise Realized(1) Exercisable(E) Exercisable(E)(2)
- ------------ ----------- ----------- -------------- ------------------
R.S. SPOLANE 0 0 40,000 U $113,750 U
40,000 E $178,750 E
D.A. SPOLANE 0 0 14,500 U $10,125 U
13,500 E $48,750 E
R. BARNARD 0 0 5,000 U $1,875 U
5,000 E $34,375 E
J.V. MCCONKEY 0 0 5,000 U $1,875 U
5,000 E $34,375 E
T.D. McGINTY 6,000 $39,000 5,000 U $1,875 U
0 E $0 E
- ------------
1) Computed as the difference between the option exercise price and the
market value of the Common Stock at the date of exercise.
2) Computed as the difference between the option exercise prices and
$11.875 (the closing price of the Common Stock at fiscal year-end).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
As members of the Compensation Committee (the "Committee") it is our duty
to oversee compensation practices for the Company's senior executive officers.
The Committee's responsibilities include the review of salaries, benefits, and
other compensation of the Company's senior managers and making recommendations
to the full Board of Directors with respect to these matters. The Committee is
comprised entirely of Board members who are independent, non-employee directors
of the Company.
The Committee's primary objective in establishing compensation programs
and levels for the Company's executive officers is to support the Company's goal
of maximizing the value of shareholders' interests in the Company. To achieve
this objective, the Committee believes it is necessary to:
- Set levels of base compensation that will attract and retain superior
executives in a highly competitive environment. The compensation philosophy is
to pay a moderate to low base salary and to provide attractive incentives to
earn additional income based on operating results.
- Encourage long-term decision making that enhances shareholder value. The
Committee believes that this objective is promoted by emphasizing grants of
stock options and paying a portion of annual incentives in common stock, thereby
creating a direct link between shareholder value creation and executive
compensation.
- Provide incentive compensation that varies directly with both Company
performance and individual contribution to that performance.
9
BASE SALARY
The Committee annually reviews each executive officer's base salary. The
factors which influence Committee determinations regarding base salary include:
job performance, level of responsibilities, comparable levels of pay among
executives at regional and national market competitors (with a special emphasis
placed on salaries paid by companies that constitute the Peer Group Index),
internal compensation equity considerations, prior experience, and breadth of
knowledge.
Mr. R.S. Spolane's annual base salary at the beginning of fiscal 1994
was $90,000. This base salary was increased to $125,000 in August 1994 upon
being named President of the Company. In connection with becoming Chairman
of the Board in January 1994, his annual base salary was increased
to $225,000 beginning April 1, 1994.
ANNUAL INCENTIVES
Certain employees of the Company, including Mr. R.S. Spolane, Mr. D.A.
Spolane, Mr. R. Barnard, Mr. McConkey and Mr. McGinty participate in an
incentive bonus plan whereby the employee earns as a bonus a certain
percentage of the operating income, in excess of an established baseline
amount, of the operations under the employee's supervision. Pursuant to the
Incentive Bonus Plan approved by the shareholders at the August 27, 1991
Annual Meeting, 20% of the fiscal 1995 bonuses were paid in the Company's
common stock valued at $14.025 per share (the average closing
price of the common stock for the five trading days prior to May 23, 1995,
the date the bonus was paid). The percentage of operating income and the
baseline amount for each employee and the percentage to be paid in common
stock are approved by the Board of Directors at the beginning of the fiscal
year.
The fiscal 1995 bonus formula for Mr. R.S. Spolane was set at the
beginning of the year as 2% of earnings before income taxes, if earnings
before income taxes equaled or exceeded $8,640,000. Under the formula, the
bonus as a percentage of earnings would decline as earnings before income
taxes declined below $8,640,000. The maximum bonus under the formula was 2%
of $10,800,000 or $216,000. As a result of the Company achieving record
earnings in fiscal 1995, Mr. R. S. Spolane earned the maximum bonus.
LONG-TERM INCENTIVES
The Company reinforces the importance of producing satisfactory returns to
shareholders over the long-term by granting stock options. Stock option awards
provide executives with the opportunity to acquire an equity interest in the
Company and align the executives' interests with those of the shareholders to
create shareholder value as reflected by increases in the price of the Company's
common stock.
Option exercise prices are equal to 100% of the fair market value of the
Company's shares on the date of option grant and become exercisable in annual
installments. This ensures that participants will derive benefits only as
shareholders realize corresponding gains over an extended time period.
During fiscal 1995 the Committee granted stock options to each of the
executive officers of the Company. These stock option awards are designed to
serve as incentives based upon the Company's financial performance and
shareholder returns over time.
Compensation Committee:
S.M. Lambert & Herschel G. Maltz
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the performance of Sterling Electronics
Corporation for the periods indicated with the performance of the Standard &
Poor's 500 Stock Index and the average performance of a group consisting of the
Company's peer corporations on a line-of-business basis. The corporations making
up the Peer Group Index are Arrow Electronics, Inc., Avnet, Inc., Bell
Industries, Inc., Jaco Electronics, Inc., Kent Electronics Corp., Marshall
Industries, Milgray Electronics, Inc., Nu Horizons Electronics, Corp.,
Pioneer-Standard Electronics, Inc., Western Micro Technology, Inc., Wyle
laboratories, and Zing Technologies, Inc. (formerly Zeus Components, Inc.).
Total return indices reflect reinvested dividends and are weighted on a market
capitalization basis at the beginning of each measurement period.
TOTAL RETURN TO SHAREHOLDERS
(Performance results from March 31, 1990 through March 31, 1995)
Reinvested Dividends
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
At March 31
--------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ------- ------- ------- ------- -------
Sterling $100 $124.63 $225.52 $272.99 $587.53 $563.79
S&P 500 $100 $114.41 $127.05 $146.39 $148.55 $171.68
Peer Group $100 $103.24 $104.64 $150.76 $185.12 $210.52
Assumes $100 invested on March 31, 1990 in Sterling Electronics
Corporation, S&P 500 and Peer Group.
11
EXECUTIVE SALARY CONTINUATION PROGRAM
In 1976, the Company established an Executive Salary Continuation Program
for selected key employees to be funded through life insurance. The program is
voluntary (approximately 21 active employees as of June 1, 1995 participate in
the program) with each participating employee contributing to the program. The
annual benefits, beginning at age 65, depend upon the employee's age and health
at the time of joining the program and the amount of the employee's monthly
contribution to the program. The Company is the owner and beneficiary of each
participant's insurance policy in this program and is contractually obligated to
pay death or salary continuation benefits.
The benefits under this program shall be paid in 120 equal monthly
installments beginning when the participant attains the age of 65 years.
Messrs. McConkey, R.S. Spolane and McGinty are participants in the program,
with annual benefit payments beginning at age 65 of $40,100, $81,840 and
$25,207, respectively. Mr. D.A. Spolane and Mr. Barnard are not participants
in the program.
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as independent
auditors for the Company for the year ending March 30, 1996, which appointment
will be submitted for ratification at the Annual Meeting.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and to have the opportunity to make a statement should they
desire to do so and to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT AUTHORITY BE GRANTED TO APPOINT ERNST &
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
QUORUM
The by-laws of the Company provide that the holders of more than one-half
the issued and outstanding voting shares of the Company shall constitute a
quorum at any meeting of the shareholders. The by-laws also provide that the act
of a majority of the shares at any meeting at which a quorum is present shall be
the act of the shareholders' meeting. In the absence of a quorum at the meeting,
either in person or by proxy, the meeting may be adjourned from time to time
without notice other than announcement at the meeting until a quorum shall be
formed.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Shareholder proposals for the 1996 Annual Meeting must be received by the
Secretary of the Company no later than March 21, 1996 for inclusion in the 1996
proxy statement and form of proxy.
OTHER BUSINESS AND REPORTS
Management knows of no business to come before the Annual Meeting other
than as stated in the Notice of this meeting. Should any unexpected business
properly come before the meeting, it is the intention of the persons named in
the accompanying Proxy to vote thereon in accordance with their best judgment in
the interest of the Company.
By Order of the Board of Directors
Leon Webb, Jr., Secretary
<PAGE>
STERLING ELECTRONICS CORPORATION
4201 SOUTHWEST FREEWAY, HOUSTON, TEXAS
JULY 10, 1995
Dear Shareholder,
On behalf of the Board of Directors and Management, you are cordially invited
to attend the Annual Meeting of Shareholders to be held at 3:00 p.m. local time
on Tuesday, August 22, 1995, at the Sterling Electronics Corporate Headquarters,
4201 Southwest Freeway, Houston, Texas. The formal notice of the Annual Meeting
of Shareholders and Proxy Statement are enclosed.
Your vote is important regardless of the number of shares you own. Please be
sure you are represented at the meeting, whether or not you plan to attend, by
signing, dating and mailing the proxy card promptly. A postage-paid return
envelope is enclosed for your convenience. If you are not able to attend the
meeting and wish to vote in person, you may withdraw your proxy at that time.
Sincerely,
Ronald S. Spolane
Chairman and Chief Executive Officer
PROXY STERLING ELECTRONICS CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R.S. Spolane and D.A. Spolane as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote as designated on the reverse side, all the shares of
common stock of Sterling Electronics held on record by the undersigned on July
14, 1995 at the annual meeting of shareholders to be held on August 22, 1995 or
any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2.
1. ELECTION OF DIRECTORS
R.S. Spolane, David R. Toomin, Jay H. Golding, S.M. Lambert, Ph.D.,
Herschel C. Maltz, D.A. Spolane
[ ] FOR all nominees [ ] WITHHOLD
listed to the right for all nominees
(except as marked listed to the right
to the contrary)
2. Proposal to approve the appointment of Ernst & Young as the independent
public accountants of the corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: ________________________________, 1995
______________________________________
Signature
______________________________________
Signature if held jointly
Please sign exactly as name appears
heron. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK. SIGN, AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
