<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TAB PRODUCTS CO.
(Name of Registrant as Specified In Its Charter)
TAB PRODUCTS CO.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2).
/ / $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 transaction applies:
-----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
-----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / 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:
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4) Date Filed:
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<PAGE>
TAB PRODUCTS CO.
1400 PAGE MILL ROAD
PALO ALTO, CA 94304
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 24, 1995
To the Stockholders of Tab Products Co.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Tab
Products Co., (the "Company") will be held on Tuesday, October 24, 1995, at
10:00 a.m. at Hyatt Rickeys, 4219 El Camino Real, Palo Alto, California in the
Executive Conference Room, for the following purposes:
1. To elect five (5) members of the Board of Directors to hold office
until the 1996 Annual Meeting of Stockholders and until their respective
successors are elected and qualified.
2. To consider a proposal to ratify the appointment of Deloitte & Touche
LLP as the independent accountants of the Company for the fiscal year ending May
31, 1996.
3. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on September 7, 1995 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the stockholders
entitled to vote at the meeting will be available for examination by any
stockholder for any purpose relating to the meeting during ordinary business
hours at the principal office of Tab Products Co.
By Order of the Board of Directors
ROBERT J. SEXTON
SECRETARY
Palo Alto, California
September 13, 1995
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. PROXIES ARE REVOCABLE, AND
ANY STOCKHOLDER MAY WITHDRAW HIS PROXY AND VOTE IN PERSON AT THE MEETING.
<PAGE>
TAB PRODUCTS CO.
1400 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1995
The accompanying proxy is solicited by the Board of Directors of Tab
Products Co., a Delaware corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held October 24, 1995, or any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting. The
date of this Proxy Statement is September 13, 1995, the approximate date on
which this Proxy Statement and the accompanying form of proxy were first sent or
given to stockholders.
GENERAL INFORMATION
ANNUAL REPORT. An annual report for the fiscal year ended May 31, 1995, is
enclosed with this Proxy Statement.
VOTING SECURITIES. Only stockholders of record as of the close of business
on September 7, 1995, will be entitled to vote at the meeting and any
adjournment thereof. As of that date, there were 4,851,951 shares of Common
Stock of the Company, par value $.01 per share, issued and outstanding.
Stockholders may vote in person or in proxy. Each holder of shares of Common
Stock is entitled to one vote for each share of stock held on the proposals
presented in this Proxy Statement. The Company's bylaws provide that a majority
of all of the shares of the stock entitled to vote, whether present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at the meeting.
SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting stockholders by mail through its regular
employees, the Company will request banks and brokers, and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the
Company registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors, and others to solicit proxies, personally or by telephone,
without additional compensation.
VOTING OF PROXIES. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a stockholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A stockholder giving a proxy has the power to revoke his or her
proxy, at any time prior to the time it is voted, by delivery to the Secretary
of the Company of a written instrument revoking the proxy or a duly executed
proxy with a later date, or by attending the meeting and voting in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table sets forth certain information, as of July 31, 1995, with respect to the
beneficial ownership of the Company's Common Stock by (i) all persons known by
the Company to be the beneficial owners of more than 5% of the outstanding
Common Stock of the Company, (ii) each director and director-nominee of the
Company, (iii) each of the executive officers named in the Summary Compensation
Table, and (iv) all directors and executive officers of the Company as a group.
<PAGE>
<TABLE>
<CAPTION>
SHARES OWNED (1)
-----------------------
NAME AND ADDRESS OF NUMBER PERCENTAGE
BENEFICIAL OWNERS OF SHARES OF CLASS
------------------- --------- ----------
<S> <C> <C>
David L. Babson & Co., Inc.. . . . . . . . . . . . . 518,700(2) 10.69%
One Memorial Drive
Cambridge, MA 02142-1300
Tab Products Co. Pension, Profit Sharing & Tax
Deferred Savings Trusts. . . . . . . . . . . . . . . 517,004 10.66%
1400 Page Mill Road
Palo Alto, CA 94304
Quest Advisory Corp. . . . . . . . . . . . . . . . . 450,800(3) 9.29%
1414 Avenue of the Americas
New York, NY 10019
T. Rowe Price Associates, Inc. . . . . . . . . . . . 370,000(4) 7.63%
100 E. Pratt Street
Baltimore, MD 21202
Dimensional Fund Advisors Inc. . . . . . . . . . . . 351,000(5) 7.23%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Reich & Tang Asset Management, L.P.. . . . . . . . . 299,100(6) 6.16%
600 Fifth Avenue,
New York, NY 10020
Robert R. Augsburger . . . . . . . . . . . . . . . 12,575 *
Dr. William E. Ayer . . . . . . . . . . . . . . . . 2,000 *
Michael A. Dering . . . . . . . . . . . . . . . . . 8,021(7) *
John L. Doyle . . . . . . . . . . . . . . . . . . . 3,000 *
John W. Peth . . . . . . . . . . . . . . . . . . . 12,173(8) *
Hans A. Wolf . . . . . . . . . . . . . . . . . . . 1,000 *
James A. Ayre . . . . . . . . . . . . . . . . . . . 0 *
Kenneth L. Disselkoen . . . . . . . . . . . . . . . 79,490(9) 1.61%
Patricia J. Robitaille . . . . . . . . . . . . . . . 0 *
Directors and executive officers
as a group (15 persons) . . . . . . . . . . . . . . 144,337(10) 2.93%
<FN>
----------------------------------
* Less than 1%
2
<PAGE>
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, subject to
community property laws, where applicable.
(2) According to a Schedule 13G filed February 13, 1995 by David L. Babson &
Co., Inc., David L. Babson & Co., Inc. is deemed to have beneficial
ownership of 518,700 shares of Tab Products Co. common stock. David L.
Babson & Co., Inc. has sole voting power as to 388,800 shares, shared
voting power as to 129,900 shares and sole dispositive power as to
518,700 shares.
(3) According to a Schedule 13G jointly filed February 14, 1995 by Quest
Advisory Corp. ("Quest") and Quest Management Company ("QMC"), such
persons are deemed to be a group and may be deemed to have beneficial
ownership of 450,800 shares of Tab Products Co. common stock. Quest has
sole voting and dispositive power as to 441,100 shares and QMC has sole
voting and dispositive power as to 9,700 shares. Also, according to the
same Schedule 13G jointly filed February 14, 1995 by Quest and QMC,
Charles M. Royce may be deemed to be a controlling person of Quest and
QMC, and as such may be deemed to beneficially own the shares of common
stock of the Company beneficially owned by Quest and QMC. As stated in
the Schedule 13G, Mr. Royce does not own any shares outside of Quest and
QMC, and disclaims beneficial ownership of the shares held by Quest and
QMC.
(4) According to a Schedule 13G jointly filed February 14, 1995 by T. Rowe
Price Associates, Inc. ("Price Associates") and T. Rowe Price Small Cap
Value Fund, Inc. ("Price Fund"), such persons are deemed to have
beneficial ownership of 370,000 shares and 325,000 shares, respectively,
of Tab Products Co. common stock. The 325,000 shares deemed to be
beneficially owned by Price Fund are included in the 370,000 shares
deemed to be beneficially owned by Price Associates. Price Associates
has sole voting power as to 45,000 shares and sole dispositive power as
to 370,000 shares. Price Fund has sole voting power as to 325,000
shares.
(5) According to a Schedule 13G filed February 16, 1995 by Dimensional Fund
Advisors Inc., Dimensional Fund Advisors Inc. is deemed to have
beneficial ownership of 351,000 shares of Tab Products Co. common stock.
Dimensional Fund Advisors Inc. has sole voting power as to 259,950 shares
and sole dispositive power as to 351,000 shares. Persons who are
officers of Dimensional Fund Advisors Inc. also serve as officers of DFA
Investment Dimensions Group Inc., (the "Fund") and The Investment Trust
Company (the "Trust"), each an open-end investment company registered
under the Investment Company Act of 1940. In their capacity as officers
of the Fund and the Trust, these persons vote 71,350 additional shares
which are owned by the Fund and 19,700 shares which are owned by the
Trust.
(6) According to a Schedule 13G filed February 27, 1995 by Reich & Tang Asset
Management, L.P., Reich & Tang Asset Management, L.P. is deemed to have
beneficial ownership of 299,100 shares of Tab Products Co. common stock.
Reich & Tang Asset Management, L.P. has shared voting power as to 299,100
shares of Tab Products Co. common stock and shared dispositive power as
to 299,100 shares of Tab Products Co. common stock.
(7) Also includes 7,021 shares allocated to Mr. Dering's account under the
Company's Tax Deferred Savings Plan ("401(k) Plan") as of May 31, 1995,
based upon the most recent quarterly report prepared by the trustee under
the 401(k) Plan. Under certain circumstances, Mr. Dering may be deemed
to have sole dispositive power over such shares pursuant to the terms of
the 401(k) Plan. Such shares are also included in the number of shares
shown as beneficially owned by Tab Products Co. Pension, Profit Sharing
and Tax Deferred Savings Trusts.
(8) Also includes 4,173 shares allocated to Mr. Peth's account under the
401(k) Plan as of May 31, 1995, based upon the most recent quarterly
report prepared by the trustee under the 401(k) Plan. Under certain
circumstances, Mr. Peth may be deemed to have sole dispositive power over
such
3
<PAGE>
shares pursuant to the terms of the 401(k) Plan. Such shares are also
included in the number of shares shown as beneficially owned by Tab
Products Co. Pension, Profit Sharing and Tax Deferred Savings Trusts.
(9) Includes 75,000 shares which are subject to options exercisable within 60
days of July 31, 1995. Also includes 3,490 shares allocated to Mr.
Disselkoen's account under the 401(k) Plan as of May 31, 1995, based upon
the most recent quarterly report prepared by the trustee under the 401(k)
Plan. Under certain circumstances, Mr. Disselkoen may be deemed to have
sole dispositive power over such shares pursuant to the terms of the
401(k) Plan. Such shares are also included in the number of shares shown
as beneficially owned by Tab Products Co. Pension, Profit Sharing and Tax
Deferred Savings Trusts.
(10) Includes 75,000 shares which are subject to options exercisable within 60
days of July 31, 1995. Also includes 27,321 shares allocated to
individual executive officer's accounts under the 401(k) Plan as of May
31, 1995, based upon the most recent quarterly report prepared by the
trustee under the 401(k) Plan. Under certain circumstances, such
executive officers may be deemed to have sole dispositive power over such
shares pursuant to the terms of the 401(k) Plan. Such shares are also
included in the number of shares shown as beneficially owned by Tab
Products Co. Pension, Profit Sharing and Tax Deferred Savings Trusts.
</TABLE>
4
<PAGE>
ELECTION OF DIRECTORS
Five (5) directors are to be elected at the Annual Meeting. If elected, the
nominees will serve as directors until the Company's Annual Meeting of
Stockholders in 1996, and until their successors are elected and qualified.
John L. Doyle's term as director expires immediately prior to the time of the
1995 Annual Meeting of Stockholders, and Mr. Doyle is not standing for re-
election. Effective immediately prior to the 1995 Annual Meeting, the
authorized number of directors of the Company shall be reduced from six (6) to
five (5), and the Board of Directors shall consist of five (5) directors.
Management's nominees for election to the Board of Directors and certain
information with respect to their age and background are set forth below. Each
of the nominees was elected to his present term of office at the 1994 Annual
Meeting. Management knows of no reason why any nominee should be unable or
unwilling to serve. However, if any nominee(s) should for any reason be unable
or unwilling to serve, the proxies will be voted for such substitute nominees as
Management may designate.
If a quorum is present and voting, the nominees for directors receiving the
highest number of votes will be elected as directors. Abstentions and shares
held by brokers that are present, but not voted because the brokers were
prohibited from exercising discretionary authority, i.e., "broker non-votes"
will be counted as present for purposes of determining if a quorum is present.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
---- ------------------------- --- --------
<S> <C> <C> <C>
Robert R. Augsburger Director 69 1976
Dr. William E. Ayer Director 73 1991
Michael A. Dering Director, President and 44 1991
Chief Executive Officer
John W. Peth Director, Executive Vice President, 46 1991
Chief Operating Officer and
President, Tab U.S.
Hans A. Wolf Chairman of the Board 67 1992
--------------------------
</TABLE>
ROBERT R. AUGSBURGER. Mr. Augsburger has been a director of the Company
since September 1976. Mr. Augsburger is also a consultant. Mr. Augsburger was
a Lecturer in Management at the Graduate School of Business of Stanford
University from April 1986 to December 1994, and from 1978 to January 1987 he
was Executive Director of Peninsula Open Space Trust, a non-profit land
conservation organization.
DR. WILLIAM E. AYER. Dr. Ayer has served as a director of the Company
since December 1991. Dr. Ayer has been a venture investor and corporate
director since February 1968. Dr. Ayer is also a director of California Water
Service Company.
MICHAEL A. DERING. Mr. Dering has been a director, President and Chief
Executive Officer of the Company since February 1991. He served as Executive
Vice President and Chief Operating Officer of the Company from December 1989 to
February 1991; and as Senior Vice President, Sales and Marketing from May 1989
to December 1989.
5
<PAGE>
JOHN W. PETH. Mr. Peth has served as director, Executive Vice President
and Chief Operating Officer of the Company since March 1991 and as President,
Tab U.S. since July 1994. He served as the Company's Chief Financial Officer
from July 1991 to July 1994. Prior to that time, Mr. Peth was the Office
Managing Partner, San Jose Region, at Deloitte & Touche from December 1989 to
March 1991 and Partner-in-Charge, San Jose Office, at Deloitte Haskins & Sells
from August 1985 to December 1989. Mr. Peth is also a director of Aspect
Telecommunications and Business Resource Group.
HANS A. WOLF. Mr. Wolf has served as a director of the Company since
February 1992 and as Chairman of the Board since February 1995. Mr. Wolf was
the Vice Chairman of Syntex Corporation ("Syntex") from October 1985 to December
1992, and was the Chief Administrative Officer at Syntex from October 1985 to
February 1992. Mr. Wolf is also a director of Network Equipment Technologies,
Inc. and Hyal Pharmaceutical Corporation.
BOARD MEETINGS. During the fiscal year ended May 31, 1995, the Board held
four meetings. No director serving on the Board in fiscal year 1995 attended
fewer than 75% of such meetings of the Board and the Committees on which he
serves.
COMMITTEES OF THE BOARD. The Company has an Audit Committee, a
Compensation Committee and a Nominating Committee.
The Audit Committee's function is to review with the Company's independent
accountants and management the annual financial statements and independent
accountants' opinion, review the scope and results of the examination of the
Company's financial statements by the independent accountants, approve all
professional services and related fees performed by the independent accountants,
recommend the retention of the independent accountants to the Board, subject to
ratification by the stockholders, and periodically review the Company's
accounting policies and internal accounting and financial controls. The members
of the Audit Committee during the fiscal year ended May 31, 1995 were Messrs.
Augsburger, Wolf and Dr. Ayer. During the fiscal year ended May 31, 1995, the
Audit Committee held two meetings.
The Compensation Committee's function is to review and recommend salary
levels for executive officers and certain other management employees and stock
option grants. The members of the Compensation Committee from June 1994 through
January 1995 were Messrs. Augsburger and Wolf. In February 1995 Mr. Wolf
resigned from his position on the Compensation Committee and Dr. Ayer and
Mr. Doyle became members of the Committee. During the fiscal year ended May 31,
1995, the Compensation Committee held one meeting. For additional information
concerning the Compensation Committee, see "REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION."
The Nominating Committee interviews and recommends action to the Board
regarding any potential member of the Board of Directors. Messrs. Augsburger,
Dering and Doyle were members of the Nominating Committee during fiscal year
ended May 31, 1995. During fiscal year ended May 31, 1995, the Nominating
Committee held one meeting.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and the other executive officers of
the Company as of May 31, 1995 whose total salary and bonus for the year ended
May 31, 1995 exceeded $100,000, for services in all capacities to the Company
and its subsidiaries, during the fiscal years ended May 31, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- -------------
OTHER
ANNUAL
COMPEN- AWARDS
SATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) (SHARES) COMPENSATION(1)
--------------------------- ---------- ----------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Dering 1995 $285,000 $0 (2) -- $4,926
President and Chief 1994 $285,000 $0 (2) -- $4,803
Executive Officer 1993 $285,000 $0 (2) -- $4,845
John W. Peth 1995 $250,000 $0 (2) -- $5,142
Executive Vice President, 1994 $250,000 $0 (2) -- $5,019
Chief Operating Officer and 1993 $250,000 $0 (2) -- $5,306
President, Tab U.S.
Kenneth L. Disselkoen (3) 1995 $182,000 $0 (2) -- $4,162
Senior Vice President, Sales 1994 $182,000 $0 (2) -- $4,109
and Marketing 1993 $179,960 $0 $48,814(4) -- $4,169
James A. Ayre 1995 $132,397 $0 (2) -- $598
Vice President, Canadian 1994 $ 82,689(5) $25,200 (2) 40,000 $456
and Australian Operations 1993 -- -- -- -- --
Patricia J. Robitaille 1995 $120,000 $0 (2) -- $243
Vice President, Information 1994 $ 30,500(6) $0 (2) 15,000 --
and Business Systems 1993 -- -- -- -- --
<FN>
--------------------------------------
(1) Includes amounts deferred in the Company's Tax Deferred Savings Plan
("401(k) Plan") for Messrs. Dering, Peth, Disselkoen, Ayre and
Ms. Robitaille in the amounts of $4,620, $4,620, $3,640, $0 and $0,
respectively, during fiscal year ended May 31, 1995. Also includes annual
premiums paid by the Company for life insurance policies for Messrs.
Dering, Peth, Disselkoen, Ayre and Ms. Robitaille in the amounts of $306,
$522, $522, $598 and $243, respectively.
(2) Total amount of personal benefits paid to this executive officer during the
fiscal year was less than the lesser of (i) $50,000 or (ii) 10% of the
officer's total reported salary and bonus.
(3) Mr. Disselkoen terminated his employment as an executive officer of the
Company May 31, 1995.
(4) Includes $40,902 in relocation expenses incurred by Mr. Disselkoen in
connection with his acceptance of employment with the Company, $1,912 in
executive supplemental medical insurance provided by the Company and $6,000
in an auto allowance.
7
<PAGE>
(5) Mr. Ayre commenced his employment with the Company October 8, 1993.
(6) Ms. Robitaille commenced her employment with the Company March 4, 1994.
</TABLE>
STOCK OPTIONS GRANTED DURING THE FISCAL YEAR ENDED MAY 31, 1995.
During the fiscal year ended May 31, 1995, there were no options to
purchase the Company's Common Stock granted to the persons named in the Summary
Compensation Table.
OPTION EXERCISES AND YEAR-END VALUES FOR THE FISCAL YEAR ENDED MAY 31, 1995.
The following table provides the specified information concerning exercises
of options to purchase the Company's Common Stock during the fiscal year ended
May 31, 1995, and unexercised options held as of May 31, 1995, by the persons
named in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES(1) IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT 5/31/95 MONEY OPTIONS AT 5/31/95(2)
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael A. Dering 230,000 5,000 0 0
John W. Peth 215,000 5,000 0 0
Kenneth L. Disselkoen 56,250 18,750 0 0
James A. Ayre 10,000 30,000 0 0
Patricia J. Robitaille 3,750 11,250 0 0
<FN>
------------------------------
(1) There were no option exercises during fiscal 1995.
(2) Valuation based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on May 31, 1995 (which was
$6.375 per share, based on the closing trade price of the stock on the
American Stock Exchange).
</TABLE>
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
Messrs. Dering and Peth each have agreements with the Company pursuant to
which each is entitled to certain severance benefits if their employment is
terminated without good cause or is terminated due to a resignation for good
reason during the two years following a "change of control" (as defined in the
agreement). Change of control events include (a) the acquisition of 20% or more
of the Company's outstanding common stock by a person or group, (b) a merger or
sale of the assets of the Company or the liquidation or dissolution of the
Company, unless in the case of a merger, continuing outside directors constitute
at least two-thirds of the outside directors of the surviving corporation
following such merger or consolidation, (c) the continuing outside directors no
longer constitute at least
8
<PAGE>
two-thirds of the outside directors, or (d) the determination by at least
two-thirds of the outside directors that an action constitutes a change in
control.
Upon a termination without good cause or due to a resignation for good
reason during the two-year period following a change in control, each of Messrs.
Dering and Peth are entitled to a cash payment equal to two times the
compensation earned in the preceding fiscal year less compensation paid
following a change in control, continuation of fringe benefits until another
employer provides similar benefits but not longer than two years following the
date of termination of employment and a pension plan supplement based on the
benefits they would have received if their employment had continued two years
following the date of termination or until they are employed by another
employer. Each of Messrs. Dering and Peth are subject to confidentiality
obligations and are also bound by covenants not to solicit Company employees for
a period of two years after the change in control or one year following the date
of termination of employment.
Options granted under the Company's 1991 Stock Option Plan (the "Option
Plan") contain provisions pursuant to which unexercised options become
immediately exercisable upon a "transfer of control" as defined under the Option
Plan and terminate to the extent they are not exercised as of consummation of
the transfer of control.
COMPENSATION OF DIRECTORS
The Company pays each of its outside directors $10,000 per year, plus an
additional $500 for each Board and Committee meeting attended, in compensation
for their services as members of the Board of Directors of the Company. The
Chairman of the Board receives an additional $50,000 per year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1988, the Company loaned Mr. Dering $200,000, as a
non-interest bearing note. The note, secured by a deed of trust, is payable
upon demand, or in 2001 if the note has not been called by that time.
Previously, the note was payable upon demand, or in 1996 if the note had not
been called by that time. The entire amount of the note is currently
outstanding.
In July 1995, the Company loaned Ms. Robitaille $200,000, as a non-interest
bearing note. The note, secured by a deed of trust, is payable upon demand, or
in 2000 if the note has not been called by that time. The entire amount of the
note is currently outstanding.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of three outside directors of the
Board of Directors and is responsible for setting and monitoring policies
governing compensation of executive officers. The Compensation Committee
reviews the performance and compensation levels for executive officers, and sets
salary and bonus levels and option grants under the Option Plan. The objectives
of the Committee are to correlate executive compensation with the Company's
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term success of
the Company.
SALARY
Salaries for executive officers are based on a review of salaries for
similar positions requiring similar qualifications. In determining executive
officer salaries, the Compensation Committee reviews recommendations from
management which include information from salary surveys.
The Compensation Committee annually assesses the performance and sets the
salary of the Company's President and Chief Executive Officer, Michael A.
Dering. Mr. Dering annually assesses the performance of all other executive
officers and recommends salary increases which are reviewed and approved by the
Compensation Committee.
In addition to reviewing performance evaluations the Compensation Committee
also reviews the financial condition of the Company in setting salaries. The
Compensation Committee did not increase Mr. Dering's salary during fiscal 1995
because the Company did not meet all of its financial goals.
BONUSES
The Compensation Committee administers a bonus plan to provide additional
incentives to executives who meet established performance goals for the Company.
In consultation with the Chief Executive Officer, the Compensation Committee
annually determines the total amount of cash bonuses available for executive
officers and certain other management employees. In fiscal 1995, awards under
this bonus plan were contingent upon the Company's attainment of revenue and
operating profit targets, set by the Compensation Committee in consultation with
the Chief Executive Officer. The target amount of the bonus for the Chief
Executive Officer and more senior executive officers was set by the Compensation
Committee; the amount of individual bonuses for the remaining executive officers
and other management were proposed by the Chief Executive Officer, subject to
approval by the Compensation Committee. Awards are weighted so that
proportionately higher awards are received when the Company's performance
reaches maximum targets, proportionately smaller awards are received when the
Company's performance reaches minimum targets and no awards are made when the
Company does not meet minimum performance targets. Because revenue and
profitability levels of the Company in fiscal 1995 did not meet the minimum
target goals, no cash bonuses were paid to Mr. Dering or to any other executive
officer set forth in the Summary Compensation Table included in this Proxy
Statement.
STOCK OPTIONS
The Compensation Committee believes that employee equity ownership provides
significant motivation to executive officers to maximize value for the Company's
stockholders and, therefore, periodically recommends to the Board of Directors
grants of stock options under the Option Plan. Stock options are granted by the
Board of Directors, based on the recommendation of the Compensation Committee,
at the current market price and will only have value if the Company's stock
price increases over the exercise price.
10
<PAGE>
The Compensation Committee makes recommendations to the Board of Directors
concerning the size and frequency of option grants for executive officers, after
consideration of recommendations from the Chief Executive Officer.
Recommendations for options are based upon the relative position and
responsibilities of each executive officer, previous and expected contributions
of each officer to the Company and previous option grants to such executive
officers. Generally, option grants vest over four years with the life of the
option ten years. No options were granted to any executive officer during
fiscal 1995.
REPRICING OF STOCK OPTIONS FOLLOWING THE END OF FISCAL 1995
In June 1995, the Compensation Committee considered the options held by the
Company's executive officers, other than Messrs. Dering and Peth, and employees
and the fact that a broad decline in the price of the Common Stock of the
Company had resulted in a substantial number of stock options granted pursuant
to the Option Plan having exercise prices well above the recent historical
trading prices for the Common Stock. The Committee was advised by management
that management believed that key employee turnover was likely to increase in
part because the Company's total compensation package for long-term employees,
which included substantial options with exercise prices well above the current
trading price, was less attractive than compensation offered by other companies
in the same geographic location, because options granted to new hires at other
companies would be granted at current trading prices, providing more opportunity
for appreciation than the Company's options.
The Committee believed that the Company's success in the future would
depend in large part on its ability to retain a number of its highly skilled
technical, managerial and marketing personnel and the loss of key employees
could have a significant adverse impact on the Company's business. The
Committee also believed that unless an adjustment was made in option prices,
longer term employees holding options would perceive a substantial inequity in
comparison to newer employees granted stock options with exercise prices set at
the current, lower fair market value of the Company's Common Stock and that
employee morale would suffer as a consequence. The Committee concluded that it
was important and cost-effective to provide equity incentives to employees and
executive officers of the Company to improve the Company's performance and the
value of the Company for its stockholders. The Committee considered granting
new options selectively to current key employees at fair market value, but
recognized that the size of the option grants required to offset the decline in
market price would result in significant additional dilution to stockholders.
The Committee recognized that an exchange of existing options with exercise
prices higher than fair market value for options at fair market value would
provide additional incentives to employees because of the increased potential
for appreciation. The Committee also recognized that it could require restarted
vesting in the exchange options so that optionees participating in the exchange
would have incentives to remain with the Company. Considering these factors,
the Committee determined that it was in the best interests of the Company and
its stockholders to restore the incentives for employees and executive officers
to remain as employees of the Company and to exert their maximum efforts on
behalf of the Company by granting replacement stock options under the Option
Plan at the optionee's request for those options with exercise prices above
recent trading prices, with restarted vesting and exercise prices equal to the
higher of $6.00 or the closing sales price of the Company's Common Stock on the
date of the Committee's approval of the repricing.
Accordingly, in June 1995, the Committee approved an offer to all employees
of the Company, including executive officers with the exception of Messrs.
Dering and Peth whom the Committee considered separately, to exchange
outstanding options with exercise prices above the then current trading price
for options with an exercise price equal to the higher of $6.00 or the closing
sales price of the Company's Common Stock on the date of the Committee's
approval of the repricing, with vesting commencing on the date of the exchange.
The Committee approved new vesting for exchanged options as follows: 50% on the
first anniversary of the grant, and 25% on each of the second and third
anniversary, respectively. All exchanged options will terminate no later than
ten (10) years from the date of the exchange. Accordingly, optionees who
participated in the exchange received a lower exercise price in exchange for
their forfeiting accrued vesting on their exchanged options. The offer to
exchange options
11
<PAGE>
was completed in July 1995; in total options for 598,500 shares with
exercise prices ranging from $6.125 per share to $13.50 per share have been
exchanged for options for an equal number of shares at an exercise price of
$6.00 per share, the higher of $6.00 per share or the closing price of the
Company's common stock on June 9, 1995, the date of the Committee's approval
of the repricing.
The Compensation Committee separately considered options outstanding for
Michael Dering and John Peth and the fact that a broad decline in the price of
the Company's Common Stock had resulted in all of the stock options granted to
Messrs. Dering and Peth having exercise prices well above the recent historical
trading prices for the Common Stock. The Committee believed that such options
were not likely to serve the purposes of retaining and motivating Messrs. Dering
and Peth, that their contributions were important to the Company's future
success, and it would be prudent and cost effective to provide equity incentives
to Messrs. Dering and Peth to improve the Company's performance and the value of
the Company for its stockholders. The Committee noted that Mr. Dering had
options outstanding for 235,000 shares of the Company's Common Stock, with
175,000 shares at an exercise price of $10.00 per share and the remaining shares
at prices ranging between $11.875 and $13.50 per share and that Mr. Peth had
options outstanding for 200,000 shares at an exercise price of $10.00 per share
and 20,000 shares at an exercise price of $12.375. The Committee noted that the
options held by Messrs. Dering and Peth were together larger than options for
all other employees combined and that the cancellation of options for 200,000
shares would permit the Committee to redistribute those options to other
employees and limit potential dilution to stockholders. Considering these
factors, the Committee concluded that it would be in the best interests of the
Company's stockholders to condition the repricing of Messrs. Dering and Peth's
options on the same terms as the exchange approved for the other employees on
their surrender of options for 100,000 shares each.
Accordingly, in June 1995, the Committee approved an offer to Messrs.
Dering and Peth to exchange their outstanding options for new stock options to
purchase 100,000 fewer shares than the aggregate number of shares which each of
Messrs. Dering and Peth had a right to purchase prior to the exchange, on the
same terms as the exchange approved for other employees. Mr. Dering and
Mr. Peth each accepted the offer of repricing and were issued options for
135,000 and 120,000 shares, respectively.
COMPENSATION COMMITTEE
Robert R. Augsburger
William E. Ayer
John L. Doyle
12
<PAGE>
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Russell 2000 Index and the S&P Office Equipment & Supply
Index for the period commencing on June 1, 1990 and ending on May 31, 1995.
Research Data Group Total Return -- Data Summary
TBP
<TABLE>
<CAPTION>
Cumulative Total Return
---------------------------------------
5/90 5/91 5/92 5/93 5/94 5/95 D555GTBP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAB PRODS CO TBP 100 74 63 77 69 45 07/26/95
RUSSELL 2000 IR20 100 108 122 146 158 175 05555R20
S & P OFFICE EQUIP & SUPL IOFE 100 118 133 152 180 203 05555OFE
<FN>
(1) Assumes that $100.00 was invested on May 31, 1990 in the Company's Common
Stock and each index, and that all dividends were reinvested. Stockholder
returns over the indicated period should not be considered indicative of
future stockholder returns.
</TABLE>
13
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche LLP as
independent accountants to audit the financial statements of the Company for the
fiscal year ending May 31, 1996. Deloitte & Touche LLP has acted in such
capacity since its appointment during the fiscal year ended May 31, 1992. A
representative of Deloitte & Touche LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if the representative desires
to do so, and is expected to be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Stockholders, at which a quorum representing a majority of all outstanding
shares of Common Stock of the Company is present and voting, either in person or
by proxy, is required for approval of this proposal. Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum, but will not be counted as having been voted on the
proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING MAY 31, 1996.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next Annual
Meeting of the Stockholders of the Company must be received by the Company at
its offices at 1400 Page Mill Road, Palo Alto, California, 94304, not later than
May 16, 1996, and satisfy the conditions established by the Securities and
Exchange Commission for stockholder proposals to be included in the Company's
proxy statement for that meeting.
14
<PAGE>
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
By Order of the Board of Directors
ROBERT J. SEXTON
SECRETARY
September 13, 1995
15
<PAGE>
TAB PRODUCTS CO.
Proxy for Annual Meeting of Stockholders
Solicited by the Board of Directors
The undersigned hereby appoints Michael A. Dering and Robert
J. Sexton, and each of them, with full power
of substitution to represent the undersigned and to vote all the
shares of the stock of Tab Products Co. which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Corporation to be held at Hyatt Rickeys,
4219 El Camino Real, Palo Alto, California in the Executive
Conference Room on Tuesday, October 24, 1995 at 10:00
a.m. local time, and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed below and as
more particularly described in the Corporation's Proxy Statement
and (2) in their discretion upon such other
matters as may properly come before the meeting.
The undersigned hereby acknowledges receipt of: (1) Notice
of Annual Meeting of Stockholders of the
Company, (2) accompanying Proxy Statement, and (3) Annual Report
of the Company for the fiscal year ended May
31, 1995.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY.
1. Election of the following directors:
[ ] FOR the nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for the
as marked to the nominees listed
contrary below.) below.
(INSTRUCTION: To withhold authority to vote for a nominee,
strike a line through the nominee's name.)
Robert R. Augsburger
Dr. William E. Ayer
Michael A. Dering
John W. Peth
Hans A. Wolf
2. To ratify the appointment of Deloitte & Touche LLP as
independent accountants of the Company
for the fiscal year ending May 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Whether or not you plan to attend the meeting in person, you are
urged to sign and promptly mail this proxy
in the return envelope so that your stock may be represented at
the meeting.
The shares represented hereby shall be voted as specified. If no
specification is made, such shares shall be
voted FOR proposals 1 and 2.
[ ] CHECK HERE FOR ADDRESS CHANGE AND NOTE BELOW.
[ ] CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
Sign exactly as your name(s) appears on your stock certificate.
If shares of stock stand of record in the names of
two or more persons or in the name of husband and wife, whether
as joint tenants or otherwise, both or all of such
persons should sign the above Proxy. If shares of stock are held
of record by a corporation, the Proxy should be
executed by the President or Vice President and the Secretary or
Assistant Secretary, and the corporate seal
should be affixed thereto. Executors or administrators or other
fiduciaries who execute the above Proxy for a
deceased stockholder should give their full title. Please date
the Proxy.
Dated:---------------------------------, 1995
Signature(s):
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