<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
/ / 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
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/ 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:
-------------------------------------------------------------------
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.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[TAB LOGO APPEARS HERE]
TAB PRODUCTS CO.
1400 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 29, 1998
___________
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Tab
Products Co. (the "Company"), which will be held on Thursday, October 29, 1998,
at 2:00 P.M. local time at the Sheraton Palo Alto, 625 El Camino Real, Palo
Alto, California in Justine's Room (Lobby Level), for the following purposes:
1. To elect six (6) members of the Board of Directors to hold
office until the 1999 Annual Meeting of Stockholders and
until their respective successors are elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as the
independent accountants of the Company for the fiscal year
ending May 31, 1999.
3. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on September 4,
1998 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 executive office of Tab Products Co.
By Order of the Board of Directors,
/s/ Robert J. Sexton
ROBERT J. SEXTON
SECRETARY
Palo Alto, California
September 25, 1998
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 OR HER PROXY AND VOTE IN PERSON AT THE MEETING.
<PAGE>
[TAB LOGO APPEARS HERE]
TAB PRODUCTS CO.
1400 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
___________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
___________
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 Thursday, October 29, 1998, at 2:00
P.M. local time, or any adjournment thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting. The date of this Proxy Statement
is September 25, 1998, 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, 1998, is enclosed with this Proxy Statement.
VOTING SECURITIES. Only stockholders of record as of the
close of business on September 4, 1998, will be entitled to vote at the
meeting and any adjournment thereof. As of that date, there were 5,172,514
shares of Common Stock of the Company, par value $.01 per share, issued and
outstanding. Stockholders may vote in person or by 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 delivering to the Secretary of the Company 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 September 4, 1998,
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 current executive officers
named in the Summary Compensation Table, and (iv) all current 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. . . . . . . . . . . . . . . . . . . 595,300(2) 11.5%
One Memorial Drive
Cambridge, MA 02142-1300
Tab Products Co. Pension, Profit Sharing & Tax
Deferred Savings Trusts. . . . . . . . . . . . . . . . . . . . . 522,957 10.1%
1400 Page Mill Road
Palo Alto, CA 94304
T. Rowe Price Associates, Inc. . . . . . . . . . . . . . . . . . 472,000(3) 9.1%
100 E. Pratt Street
Baltimore, MD 21202
Dimensional Fund Advisors Inc. . . . . . . . . . . . . . . . . . 401,200(4) 7.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc. . . . . . . . . . . . . . . . . . . . . 393,200(5) 7.6%
790 North Milwaukee Street
Milwaukee, WI 53202
ROI Capital Management, Inc. . . . . . . . . . . . . . . . . . . 338,500(6) 6.5%
17 E. Sir Francis Drake Boulevard, Suite 225
Larkspur, CA 94939
Philip C. Kantz. . . . . . . . . . . . . . . . . . . . . . . . . 98,106(7) 1.9%
Hans A. Wolf . . . . . . . . . . . . . . . . . . . . . . . . . . 28,250(8) *
Thomas J. Rauscher . . . . . . . . . . . . . . . . . . . . . . . 25,804(9) *
Robert R. Augsburger . . . . . . . . . . . . . . . . . . . . . . 19,575(10) *
Jerry K. Myers . . . . . . . . . . . . . . . . . . . . . . . . . 9,000(11) *
David J. Davis . . . . . . . . . . . . . . . . . . . . . . . . . 7,300(12) *
Robert S. Cecil. . . . . . . . . . . . . . . . . . . . . . . . . 7,000(13) *
Dr. Kathryn S. Hanson. . . . . . . . . . . . . . . . . . . . . . 7,000(14) *
Wendi A. Hill. . . . . . . . . . . . . . . . . . . . . . . . . . 6,875(15) *
Joanne P. Grba . . . . . . . . . . . . . . . . . . . . . . . . . 5,000(16) *
Directors and executive officers as a group (14 persons) . . . . 255,720(17) 4.8%
*Less than 1%
</TABLE>
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/A filed January 20, 1998 by David L. Babson &
Co., Inc. ("Babson & Co."), Babson & Co. is deemed to have beneficial
ownership of 595,300 shares of the Company's Common Stock and has sole
voting power and sole dispositive power as to such shares.
(3) According to a Schedule 13G/A jointly filed February 12, 1998 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 472,000 shares and 400,000 shares, respectively, of the
Company's Common Stock. The 400,000 shares deemed to be beneficially owned
by Price Fund are included in the 472,000 shares deemed to be beneficially
owned by Price Associates. Price Associates has sole voting power as to
47,000 shares and sole dispositive power as to 472,000 shares. Price Fund
has sole voting power as to 400,000 shares.
(4) According to a Schedule 13G filed February 10, 1998 by Dimensional Fund
Advisors Inc. ("Dimensional"), Dimensional is deemed to have beneficial
ownership of 401,200 shares of the Company's Common Stock. Dimensional has
sole voting power as to 306,050 shares and sole dispositive power as to
401,200 shares. Persons who are officers of Dimensional also serve as
officers of DFA Investment Dimensions Group Inc. (the "Fund"), and The DFA
Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these persons vote
42,150 additional shares which are owned by the Fund and 53,000 shares
which are owned by the Trust.
(5) According to a Schedule 13G/A filed February 6, 1998 by Heartland Advisors,
Inc. ("Heartland"), Heartland is deemed to have beneficial ownership of
393,200 shares of the Company's Common Stock. Heartland has sole voting
power as to 360,200 shares and sole dispositive power as to 393,200 shares.
(6) According to a Schedule 13G filed June 19, 1998 by ROI Capital Management,
Inc. ("ROI Capital"), ROI Capital is deemed to have beneficial ownership of
338,500 shares of the Company's Common Stock and has sole voting and sole
dispositive power as to such shares.
(7) Includes 87,500 shares which are subject to options exercisable within 60
days of September 4, 1998. Also includes 1,106 shares allocated to Mr.
Kantz's account under the 401(k) Plan as of May 31, 1998, based upon a
recent quarterly report prepared by the trustee under the 401(k) Plan.
Under certain circumstances, Mr. Kantz 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) Includes 8,250 shares which are subject to options exercisable within
60 days of September 4, 1998.
(9) Includes 25,000 shares which are subject to options exercisable within 60
days of September 4, 1998. Also includes 804 shares allocated to Mr.
Rauscher's account under the 401(k) Plan as of May 31, 1998, based upon a
recent quarterly report prepared by the trustee under the 401(k) Plan.
Under certain circumstances, Mr. Rauscher 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 7,000 shares which are subject to options exercisable within
60 days of September 4, 1998.
(11) Includes 7,000 shares which are subject to options exercisable within
60 days of September 4, 1998.
(12) Includes 5,000 shares which are subject to options exercisable within 60
days of September 4, 1998 and 300 shares held indirectly by Mr. Davis in
his father's name.
(13) Includes 7,000 shares which are subject to options exercisable within
60 days of September 4, 1998.
(14) Includes 7,000 shares which are subject to options exercisable within
60 days of September 4, 1998.
3
<PAGE>
(15) Includes 6,875 shares which are subject to options exercisable within 60
days of September 4, 1998.
(16) Includes 5,000 shares which are subject to options exercisable within 60
days of September 4, 1998.
(17) Includes 184,125 shares which are subject to options exercisable within 60
days of September 4, 1998. Also includes 14,155 shares allocated to
individual executive officer's accounts under the 401(k) Plan as of May 31,
1998, based upon a 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.
ELECTION OF DIRECTORS
The Company's Board of Directors consists of six (6) directors: Robert R.
Augsburger, Robert S. Cecil, Dr. Kathryn S. Hanson, Philip C. Kantz, Jerry K.
Myers and Hans A. Wolf. Management's six (6) 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 or her present
term of office at the 1997 Annual Meeting of Stockholders. 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 elected, the nominees will serve as directors until the Company's 1999 Annual
Meeting of Stockholders, and until their successors are elected and qualified.
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>
NAME POSITION WITH THE COMPANY AGE DIRECTOR SINCE
- - ---- ------------------------- --- --------------
<S> <C> <C> <C>
Robert R. Augsburger Director 72 1976
Robert S. Cecil Director 63 1996
Dr. Kathryn S. Hanson Director 49 1996
Philip C. Kantz Director, President and Chief
Executive Officer 54 1997
Jerry K. Myers Director 57 1996
Hans A. Wolf Chairman of the Board 70 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 at 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.
ROBERT S. CECIL. Mr. Cecil has served as a director of the Company since
April 1996. Mr. Cecil is Chairman of the Board and Chief Executive Officer of
Plantronics, Inc., a manufacturer and marketer of telecommunications accessories
products. Mr. Cecil has been with Plantronics, Inc. since 1992. Prior to that,
Mr. Cecil spent six years with Lin Broadcasting Corporation, where his last
position was President, Cellular Group. Mr. Cecil is also a director of Xylan
Corp. and GT Group Telecom Inc.
DR. KATHRYN S. HANSON. Dr. Hanson has been a director of the Company since
April 1996. Dr. Hanson is the Chairperson and Founder of CustomerCast, Inc., a
software company specializing in state-of-the-art internet technology, which was
started in January 1997. Previously, Dr. Hanson was a management consultant at
The Hanson Group, a strategic management and marketing consulting practice which
she founded in 1988. Prior to
4
<PAGE>
that, she spent three years with Convergent, Inc., where her last position was
Director of Marketing, Cluster Systems Division.
PHILIP C. KANTZ. Mr. Kantz has been President, Chief Executive Officer and
a director of the Company since January 1997. He served as President, Chief
Operating Officer and a director of Trans Ocean Ltd., a privately held
transportation equipment leasing company, from October 1995 to October 1996. In
1995, he served as President and Chief Executive Officer of The Sandros
Enterprise, a private consulting firm. From February 1994 to January 1995, he
served as President, Chief Executive Officer and a director of Transcisco
Industries, Inc., an industrial services company. From October 1992 through
September 1993, Mr. Kantz served as President and Chief Executive Officer of
Genetrix, Inc., a biotechnology services business. Mr. Kantz also serves as a
director of 3Com Corporation and Franklin Ophthalmic Instruments Co.
JERRY K. MYERS. Mr. Myers has been a director of the Company since April
1996. Since December 1995 he has been chairman of Medcor, Inc., a workers'
compensation managed care firm. Since January 1995 Mr. Myers has been a partner
in the healthcare investment firm of CroBern Management Partnership. From 1990
to 1994 he served as President, Chief Executive Officer and a director of
Steelcase, Inc. From 1986 through 1990 he was employed by TRW, Inc. serving as
general manager of the automotive sector. Mr. Myers is also a director of APS
Holding Corporation and DigiTrace Care Services, Inc.
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
1993, and was the Chief Administrative Officer at Syntex from October 1985 to
February 1992. Mr. Wolf is also chairman of Network Equipment Technologies,
Inc. and a director of Hyal Pharmaceutical Corporation.
BOARD MEETINGS. During fiscal 1998, the Board held seven (7) meetings. No
director serving on the Board during fiscal 1998 attended fewer than 75% of such
meetings of the Board and the Committees on which he or she serves, except for
Jerry K. Myers, who attended 71% of the meetings held.
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.
Messrs. Augsburger and Wolf were members of the Audit Committee during fiscal
1998. During fiscal 1998, the Audit Committee held two (2) meetings.
The Compensation Committee's function is to review and grant stock options
and recommend salary levels for executive officers and certain other management
employees. Each of Messrs. Augsburger and Cecil and Dr. Hanson were members of
the Compensation Committee during fiscal 1998. During fiscal 1998, the
Compensation Committee held five (5) meetings. 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
and Wolf were members of the Nominating Committee during fiscal 1998. During
fiscal 1998, the Nominating Committee held one (1) meeting.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION. The following table sets forth information
concerning the compensation of the Chief Executive Officer of the Company and
the four other most highly compensated executive officers of the Company as of
May 31, 1998 whose total salary and bonus for the fiscal year ended May 31, 1998
exceeded $100,000, for services in all capacities to the Company and its
subsidiaries, during the fiscal years ended May 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------------- --------------------------------------
NAME AND PRINCIPAL SECURITIES ALL OTHER
POSITION UNDERLYING COMPENSA-
YEAR SALARY BONUS OPTIONS TION(4)
- - -------------------------------- ------------ -------------------- --------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Philip C. Kantz(1) 1998 $ 300,000 $ 150,000 0 $ 4,200
Director, President and 1997 $ 105,437 $ 50,000 250,000 $ 1,500
Chief Executive Officer 1996 $ -- $ -- -- $ --
Thomas J. Rauscher 1998 $ 169,105 $ 51,917 0 $ 2,411
Vice President, 1997 $ 162,398 $ 18,750 0 $ 3,314
Manufacturing & 1996 $ 60,872 $ 30,000 50,000 $ 933
Distribution
David J. Davis(2) 1998 $ 155,177 $ 66,000 20,000 $ 20,528(5)
Senior Vice President, 1997 $ -- $ -- -- $ --
Operations, and Chief 1996 $ -- $ -- -- $ --
Financial Officer
Joanne P. Grba(3) 1998 $ 134,244 $ 60,000 20,000 $ 165
Vice President, 1997 $ -- $ -- -- $ --
Marketing 1996 $ -- $ -- -- $ --
Wendi A. Hill 1998 $ 110,000 $ 33,000 0 $ 308
Vice President, Human 1997 $ 110,000 $ 15,625 7,500 $ 198
Resources 1996 $ 99,629 $ 30,000 20,000 $ 115
</TABLE>
(1) Mr. Kantz was appointed President, Chief Executive Officer and a director
of the Company in January 1997.
(2) Mr. Davis was appointed Senior Vice President, Operations of the Company in
June 1997 and Chief Financial Officer in May 1998. During the fiscal year
ended May 31, 1998, there was outstanding to Mr. Davis a non-interest
bearing note payable to the Company. See "EXECUTIVE COMPENSATION AND OTHER
MATTERS - Certain Relationships and Related Transactions."
(3) Ms. Grba was appointed Vice President, Marketing of the Company in July,
1997.
(4) Includes amounts deferred in the Company's Tax Deferred Savings Plan
("401(k) Plan") for Messrs. Kantz and Rauscher in the amounts of $3,000 and
$2,411, respectively, during the fiscal year ended May 31,
6
<PAGE>
1998. Also includes annual premiums paid by the Company for life insurance
policies for Messrs. Kantz and Davis, Ms. Grba and Ms. Hill in the amounts
of $1,200, $333, $165 and $308, respectively.
(5) Includes $20,195 in relocation expenses paid to Mr. Davis during fiscal
1998.
STOCK OPTIONS GRANTED DURING FISCAL 1998. The following table provides the
specified information concerning grants of options to purchase the Company's
Common Stock made during the fiscal year ended May 31, 1998 to the persons named
in the Summary Compensation Table with the exception of Philip C. Kantz, Thomas
J. Rauscher and Wendi A. Hill who did not receive any option grants for fiscal
1998.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS IN FISCAL 1998 FOR OPTION TERM (5)
-------------------------------------------------------------- ------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE OR
UNDERLYING GRANTED TO BASE
OPTIONS EMPLOYEES IN Price (4) EXPIRATION
NAME GRANTED(3) FISCAL YEAR ($/Sh) DATE 5% ($) 10%($)
- - ---------------- ------------ -------------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David J. Davis(1) 20,000 29% $ 9.125 6/23/07 $ 114,773 $ 290,858
Joanne P. Grba(2) 20,000 29% $ 9.50 7/22/07 $ 119,490 $ 302,811
</TABLE>
(1) Mr. Davis was appointed Senior Vice President, Operations of the Company in
June 1997 and Chief Financial Officer in May 1998.
(2) Ms. Grba was appointed Vice President, Marketing of the Company in July
1997.
(3) Options granted under the Company's 1991 Stock Option Plan (the "Option
Plan") vest, in general, at a rate of 25% per year over four years. Under
the Option Plan, the Board of Directors retains discretion to modify the
terms of outstanding options.
(4) All options were granted at fair market value on the date of grant.
(5) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, in accordance with the Securities and Exchange Commission's rules.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, overall market conditions and the
optionholder's continued employment through the vesting period. The
amounts reflected in this table may not necessarily be achieved. Shares of
stock purchased at $9.125 and $9.50 per share in fiscal 1998 would yield
profits of approximately $5.74 and $5.97 per share, respectively, at 5%
appreciation over ten years, or approximately $14.54 and $15.14 per share,
respectively, at 10% appreciation over the same period.
OPTION EXERCISES AND FISCAL 1998 YEAR-END VALUES. The following table
provides the specified information concerning exercises of options to purchase
the Company's Common Stock during the fiscal year ended May 31, 1998, and
unexercised options held as of May 31, 1998, by the persons named in the Summary
Compensation Table.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 5/31/98 OPTIONS AT 5/31/98(3)
------------------------------ --------------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------- -------------- ------------- ------------ ---------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Kantz 0 $ 0 62,500 187,500 $ 335,937 $ 1,007,812
Thomas J. Rauscher 0 $ 0 25,000 25,000 $ 203,125 $ 203,125
David J. Davis(1) 0 $ 0 0 20,000 $ 0 $ 110,000
Joanne P. Grba(2) 0 $ 0 0 20,000 $ 0 $ 102,500
Wendi A. Hill 11,875 $ 63,316 0 15,625 $ 0 $ 127,891
</TABLE>
(1) Mr. Davis was appointed Senior Vice President, Operations of the Company in
June 1997 and Chief Financial Officer in May 1998.
(2) Ms. Grba was appointed Vice President, Marketing of the Company in July
1997.
(3) Valuation based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on May 31, 1998 (which was
$14.625 per share, based on the closing trade price of the stock on the
American Stock Exchange).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS. The Company has entered into an employment agreement with
Philip C. Kantz, the Company's President and Chief Executive Officer. Pursuant
to Mr. Kantz's employment agreement, he is to receive an annual salary of
$300,000. In connection with his employment agreement, Mr. Kantz received an
incentive bonus for fiscal 1998 of $150,000. Mr. Kantz is eligible to receive
annual bonuses in the future based upon the Company's achievement of various
financial and/or other goals established by the Board of Directors of the
Company for up to 100% of his then current annual base salary, with a target
bonus equal to 60% of his then current annual base salary for fiscal 1999. In
the event of a Transfer of Control, as defined under the agreement, all such
options will become fully vested and exercisable as of the date ten days prior
to the consummation of such Transfer of Control. In the event that Mr. Kantz is
terminated by the Company without cause or in the event that Mr. Kantz resigns
from his position with the Company for "Good Reason," as defined in the
agreement, Mr. Kantz will be entitled to receive severance payments at his final
base salary and target bonus rate, less applicable withholding, for a period of
two years following the date of termination.
In addition, the Company has entered into a form of change of control
agreement with certain of its current executive officers. In general, the
agreements provide that if within one month prior to or twelve months following
a Change of Control of the Company, as defined in the agreement, such executive
officer's employment is terminated as a result of Involuntary Termination, as
defined in the agreement, such executive officer will continue to receive 100%
of his or her annual base salary at the time of such termination, the full
amount of his or her annual bonus for the fiscal year in which he or she is
terminated and reimbursement for up to twelve months of COBRA premiums paid by
him or her for continued group health insurance coverage. Such severance rights
terminate upon the earlier of (i) twelve months from the date of such executive
officer's termination or (ii) upon commencement of new employment by such
executive officer.
8
<PAGE>
Options granted under the Company's 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 the consummation of the Transfer of Control.
COMPENSATION OF DIRECTORS. The Company pays each of its outside directors
$15,000 per year, plus an additional $1,000 for each Board and Committee meeting
attended, as compensation for their services as members of the Board of
Directors of the Company. An additional $500 is paid to each Committee Chairman
for each committee meeting attended. During the fiscal year ended May 31, 1998,
the Chairman of the Board received an additional $30,000 for his services to the
Company in that capacity. In addition, the Company's 1996 Outside Directors
Stock Option Plan (the "Directors Plan") provides for initial grants of options
to purchase 10,000 shares of the Common Stock of the Company to non-employee
directors at the fair market value on the date of grant. The Directors Plan
further provides for the automatic annual grant of an additional option to
purchase 2,000 shares of the Common Stock of the Company on the date of each
annual meeting of stockholders after adoption of the plan to each non-employee
director of the Company remaining a member of the Board of Directors of the
Company. Each of Messrs. Augsburger, Cecil, Myers and Wolf and Dr. Hanson will
be automatically granted an annual option to purchase 2,000 shares of the Common
Stock of the Company on the date of the 1998 Annual Meeting of Stockholders.
The following table provides the specified information concerning all
compensation paid to persons who were directors of the Company at the end of
fiscal 1998, who are not named in the Summary Compensation Table.
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
<TABLE>
<CAPTION>
CASH COMPENSATION SECURITY GRANTS
-------------------------------------- ------------------------
ANNUAL NUMBER OF SECURITIES
NAME RETAINER FEES MEETING FEES UNDERLYING OPTIONS
- - ----------------------------- ------------------- ----------------- ------------------------
<S> <C> <C> <C>
Robert R. Augsburger $ 15,000 $ 12,000 2,000
Robert S. Cecil $ 15,000 $ 8,000 2,000
Dr. Kathryn S. Hanson $ 15,000 $ 10,000 2,000
Jerry K. Myers $ 15,000 $ 4,500 2,000
Hans A. Wolf $ 45,000(1) $ 9,500 2,000
</TABLE>
(1) Includes $30,000 paid to Mr. Wolf in compensation for his services to the
Company as Chairman of the Board of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. In September 1997, the
Company lent Mr. Davis $100,000, as a non-interest bearing note. The note,
secured by a deed of trust, is payable upon demand, or in 2002 if the note has
not been called by that time. The entire amount of the note is currently
outstanding.
9
<PAGE>
COMPARISON OF STOCKHOLDER RETURN (1)
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 & Supplies
Index for the period commencing on June 1, 1993 and ending on May 31, 1998.
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------------------
5/93 5/94 5/95 5/96 5/97 5/98
<S> <C> <C> <C> <C> <C> <C>
Tab Products Co. 100 90 58 73 94 148
Russell 2000 100 109 120 163 174 215
S & P Office Equipment & Supplies 100 119 134 190 259 325
</TABLE>
(1) Assumes that $100.00 was invested on May 31, 1993 in the Company's Common
Stock and in each index, and that all dividends were reinvested.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is currently comprised of three (3) outside
members of the Board of Directors and is responsible for setting and monitoring
policies governing the compensation of executive officers. The Compensation
Committee reviews the performance and compensation levels for executive officers
and sets salary and incentive 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. The Compensation Committee also seeks to establish
compensation policies that allow the Company flexibility to respond to changes
in its business environment.
SALARY. Salaries for executive officers are based on a review of salaries
for similar positions requiring similar qualifications in similar industries.
In determining executive officer salaries, the Compensation Committee has
approved the use by management of information from salary surveys.
The Compensation Committee annually assesses the performance and recommends
to the Board of Directors the salary and overall compensation for the Company's
President and Chief Executive Officer. The President and Chief Executive
Officer annually assesses the performance of all other executive officers and
recommends salary increases to the Compensation Committee based on a number of
factors such as performance evaluations, comparative data and other relevant
factors. The Compensation Committee then reviews and approves the increases for
any person with total compensation over $100,000.
In addition to reviewing performance evaluations, the Compensation
Committee also reviews the financial condition of the Company in setting
salaries.
The compensation for the current President and Chief Executive Officer
appointed in January 1997 was reached on the basis of arm's length negotiation
between the Company and such President and Chief Executive Officer and was
approved by the Compensation Committee. The Compensation Committee confirmed
with an independent compensation consultant at the time of these negotiations
that the salary approved by the Compensation Committee was appropriate for a
President and Chief Executive Officer in the Company's size, geographic location
and industry. There were no increases in salary during fiscal 1998 for the
President and Chief Executive Officer.
ANNUAL INCENTIVE. The Compensation Committee administers an incentive plan
to provide additional compensation 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.
For fiscal 1998, 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 bonuses for the Chief Executive Officer and senior executive officers was set
by the Compensation Committee; the amount of individual bonuses for the
remaining executive officers and other management was proposed by the Chief
Executive Officer and is subject to approval by the Compensation Committee.
Awards are weighted so that higher awards are received when the Company's
performance reaches maximum targets and 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. After the total eligible
bonus pool is determined, annual incentives are paid to executive officers,
based on their individual performance as determined by the Company's President
and Chief Executive Officer. The Compensation Committee approved the
distribution of annual bonuses for the Company's eligible executive officers,
other than the Company's Chief Executive Officer and President, based 50% upon
the Company's achievement of certain revenue and operating profit goals and 50%
upon individual achievement during fiscal 1998. The portion of the annual
bonuses paid to executive officers during fiscal 1998 based upon Company
objectives was set at approximately the mid-point of the maximum distribution
and was based upon the Compensation Committee's determinatioon of the Company's
performance. The Company's President and Chief Executive Officer received
$150,000 in bonus, or 50% of his then current base salary, based upon the
Company's achievement of certain revenue and operating profit goals. During
fiscal 1998, the Company's President and Chief
11
<PAGE>
Executive Officer was eligible under his employment agreement to receive a
bonus of up to 100% of his then current base salary, with a target bonus equal
to 50%. Consistent with the Company's objective of aligning compensation with
performance, the Company anticipates that future bonus payments will be based on
specific targets and performance.
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 grants stock
options under the Option Plan at the current market price. Stock options will
only have value if the Company's stock price increases over the exercise price.
The Compensation Committee grants options to executive officers after
consideration of recommendations from the Chief Executive Officer.
Recommendations for options are based upon the relative position,
responsibilities of each executive officer, previous and expected contributions
of each officer to the Company, previous option grants to such executive
officers and customary levels of option grants for the respective position in
other comparable companies. Generally, option grants vest over four years with
the life of the option ten years. No grant of options was made to the Company's
President and Chief Executive Officer during fiscal 1998 and only limited grants
were made to certain other executive officers of the Company upon commencement
of their employment with the Company. Consistent with the Company's objective
of aligning compensation with performance, the Company anticipates that future
grants to incumbent executive officers will be based on specific targets and
performance.
COMPENSATION COMMITTEE
Robert R. Augsburger, Chair
Robert S. Cecil
Dr. Kathryn S. Hanson
12
<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, 1999. 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 such representative desires
to do so. Such representative 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. Abstentions and broker non-votes will each have the same
effect as a negative vote on this 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, 1999.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
The Company has an advance notice provision under its bylaws for
stockholder business to be presented at meetings of stockholders. Such
provision states that in order for stockholder business to be properly brought
before a meeting by a stockholder, such stockholder must have given timely
notice thereof in writing to the Secretary of the Company. A stockholder
proposal to be timely must be received at the Company's principal executive
offices not less than 120 calendar days in advance of the one year anniversary
of the date the Company's proxy statement was released to stockholders in
connection with the previous year's annual meeting of stockholders; except that
(i) if no annual meeting was held in the previous year, (ii) if the date of the
annual meeting has been changed by more than thirty calendar days from the date
contemplated at the time of the previous year's proxy statement or (iii) in the
event of a special meeting, then notice must be received not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure of the meeting date was made.
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of 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 28, 1999, 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.
13
<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,
/s/ Robert J. Sexton
ROBERT J. SEXTON
SECRETARY
September 25, 1998
14
<PAGE>
TAB PRODUCTS CO.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Philip C. Kantz 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 Company to be held at the Sheraton Palo Alto, 625 El Camino Real, Palo
Alto, California in Justine's Room (Lobby Level) on Thursday, October 29,
1998, at 2:00 P.M. local time, and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed below and as more
particularly described in the Company'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, 1998.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
PLEASE MARK YOUR VOTES AS
INDICATED IN THIS EXAMPLE [X]
1. Election of the following directors:
[ ] FOR the nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below
(INSTRUCTION: To withhold authority to vote for a nominee, strike a line
through the nominee's name.)
Robert R. Augsburger
Robert S. Cecil
Dr. Kathryn S. Hanson
Philip C. Kantz
Jerry K. Myers
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, 1999.
[ ] 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.
Signature(s) ______________________________ Dated: ___________, 1998
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
