-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CsYq5jGM0Y/X5daBgc3er7IV4nCDK5gGZ+AeAQ831ODlkdfxzARSxXfsriqGSE9T 3LoGfMFPDcLvgWEHTBHUWw== 0000950124-95-004146.txt : 19951218 0000950124-95-004146.hdr.sgml : 19951218 ACCESSION NUMBER: 0000950124-95-004146 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960207 FILED AS OF DATE: 19951215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANDREW CORP CENTRAL INDEX KEY: 0000317093 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 362092797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-09514 FILM NUMBER: 95601867 BUSINESS ADDRESS: STREET 1: 10500 W 153RD ST CITY: ORLAND PARK STATE: IL ZIP: 60462 BUSINESS PHONE: 7083493300 MAIL ADDRESS: STREET 1: 10500 WEST 153RD ST CITY: ORLANDO PARK STATE: IL ZIP: 60462 DEF 14A 1 NOTICE & PROXY STATEMENT / PROXY CARD 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [X] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 ANDREW CORPORATION - ------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) ANDREW CORPORATION - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): [X] $125 per Exchange Act Rule 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 transactions 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: ------------------------------------------------------------------------ [ ] 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 registrations statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: ------------------------------------------------------------------------ (2) Form, schedule or registration statement no.: ------------------------------------------------------------------------ (3) Filing party: ------------------------------------------------------------------------ (4) Date filed: ------------------------------------------------------------------------ (1) Set forth the amount on which the filing fee is calculated and state how it was determined. 2 [ANDREW LOGO] - -------------------------------------------------------------------------------- ANDREW CORPORATION 10500 West 153rd Street Orland Park, Illinois U.S.A. 60462 Phone (708) 349-3300 December 29, 1995 Dear Stockholder: You are cordially invited to attend the next regular Andrew Corporation Annual Meeting of Stockholders, to be held at 10:00 A.M., Wednesday, February 7, 1996 at the Drury Lane, Oakbrook Terrace, Illinois. A map showing the location of the Drury Lane is on the back cover of this Proxy Statement. This meeting will be our forty-eighth annual stockholders meeting and our sixteenth as a publicly owned company. You will have an opportunity to discuss each item of business described in the Notice of Annual Meeting and Proxy Statement and to ask questions about the Company and its operations. To make certain your shares are represented at the meeting, whether or not you plan to attend, please sign and return the enclosed proxy card, using the envelope provided. If you attend the meeting, you may vote your shares in person, even though you have previously signed and returned your proxy. Sincerely, [SIG.] Floyd L. English Chairman, President and Chief Executive Officer 3 ANDREW CORPORATION 10500 WEST 153RD STREET ORLAND PARK, ILLINOIS 60462 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 7, 1996 The Annual Meeting of Stockholders of Andrew Corporation will be held at 10:00 A.M., Wednesday, February 7, 1996, at the Drury Lane, Oakbrook Terrace, Illinois, for the following purposes: 1. To elect eight Directors for the ensuing year; 2. To ratify the appointment of Ernst & Young as independent public auditors for fiscal 1996; and 3. To transact such other business as may properly come before the meeting or any adjournment thereof. The close of business on December 13, 1995 has been fixed as the record date for the determination of stockholders entitled to notice of and to vote at the meeting and any adjournment thereof. A copy of the Andrew Corporation Annual Report for the fiscal year ended September 30, 1995 is being mailed to stockholders with this Proxy Statement. By Order of the Board of Directors, James F. Petelle Secretary December 29, 1995 ------------------------ WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE ACCOMPANYING PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN THOUGH YOU HAVE PREVIOUSLY SIGNED AND RETURNED YOUR PROXY. 4 ANDREW CORPORATION 10500 WEST 153RD STREET ORLAND PARK, ILLINOIS 60462 PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 7, 1996 This proxy statement is furnished in connection with the solicitation by the Board of Directors of Andrew Corporation (the "Company" or "Andrew") of proxies to be voted at the Annual Meeting of Stockholders of the Company to be held on February 7, 1996, at the Drury Lane, Oakbrook Terrace, Illinois, and at any adjournment thereof. This proxy statement and the proxies solicited hereby are first being sent or delivered to stockholders on or about December 29, 1995. VOTING A proxy may be revoked by a stockholder at any time prior to its use. If it is signed properly by the stockholder and is not revoked, it will be voted at the meeting. If a stockholder specifies how the proxy is to be voted with respect to any of the proposals for which a choice is provided, the proxy will be voted in accordance with such specifications. If a stockholder fails to so specify with respect to such proposals, the proxy will be voted FOR items 1 and 2. Only stockholders of record at the close of business on December 13, 1995 will be entitled to vote at the meeting. The Common Stock of the Company, $.01 par value ("Common Stock"), is the only authorized class of stock, and as of December 13, 1995, there were 39,035,020 shares of Common Stock of the Company issued, outstanding and entitled to one vote each. ELECTION OF DIRECTORS Eight directors are to be elected at the Annual Meeting to serve until the earlier of the next Annual Meeting of Stockholders or until their respective successors have been elected and qualified. Directors are elected by a plurality of the votes of the shares of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting. Consequently, any shares not voted (whether by abstention, broker non-vote or votes withheld) will have no effect on the election of directors. If any nominee for election as director is unable to serve, which the Board of Directors does not anticipate, the persons named in the proxy may vote for another person in accordance with their judgment. Except for Mr. Jere D. Fluno, all of the nominees have served as directors of the Company since the last Annual Meeting of Stockholders held February 8, 1995. Mr. Fluno has been nominated to fill the seat which has been held by Mr. Donald N. Frey, who will retire as a director effective at the February 7, 1996 Annual Meeting. The names and ages of the nominees, their principal occupations or employment during the past five years and other data regarding them as of September 30, 1995, based upon information received from them, are as follows: 5 NOMINEES FOR DIRECTORSHIPS [PHOTO OF JOHN G. BOLLINGER, 60 JOHN G. (Director since 1984) BOLLINGER] Dr. Bollinger is Bascom Professor of Engineering and Dean of the College of Engineering at the University of Wisconsin at Madison. He is also a director of Kohler Corporation and EFORM Corporation. Dr. Bollinger is a member of the Audit and Compensation Committees. [PHOTO OF JON L. BOYES, 74 JON L. (Director since 1989) BOYES] Admiral Boyes, Ph.D., is an international telecommunications consultant and Chairman of SAMA Corporation, a government and military consultant principally in the area of command, control and communication. He was President, Armed Forces Communications and Electronics Association for over ten years and President of the National Science Center Foundation. He had 34 years of experience in the Department of Defense, serving on Navy, Joint and NATO staffs, and in submarines and destroyers before retiring in 1977. Admiral Boyes is Chairman of the Human Resources Committee. [PHOTO OF GEORGE N. BUTZOW, 66 GEORGE N. (Director since 1980) BUTZOW] Mr. Butzow is Founder and Chairman Emeritus of MTS Systems Corporation, which designs and manufactures dynamic testing and service simulation systems, industrial controls, and systems for intelligent processing of materials. He served as President of MTS Systems Corporation from 1971 through 1987. Mr. Butzow is also a director of Pentair, Inc. He is a member of the Audit and Human Resources Committees. [PHOTO OF KENNETH J. DOUGLAS, 73 KENNETH J. (Director since 1989) DOUGLAS] Mr. Douglas retired in 1992 as Vice Chairman of the Board of Dean Foods Company, a diversified food processing business, having served as Vice Chairman since January 1988 and as Chairman prior to that time since 1970. He is also a director of American National Bank and Trust Co., American National Corporation and Richardson Electronics, Ltd. and serves as Chairman of the Board of West Suburban Hospital Medical Center. Mr. Douglas is a member of the Compensation and Human Resources Committees. 2 6 [PHOTO OF FLOYD L. ENGLISH, 61 FLOYD L. (Director since 1982) ENGLISH] Dr. English was elected Chairman of Andrew in 1994, having served as President and Chief Executive Officer since 1983, and as President and Chief Operating Officer since 1982. Dr. English joined Andrew in 1980 as Vice President, Corporate Development and became Vice President, U.S. Operations in February 1981. Dr. English is a member of the boards of the Executives Club of Chicago, the International Engineering Consortium and the Illinois Math and Science Academy. [PHOTO OF JERE D. FLUNO, 54 JERE D. (Newly slated) FLUNO] Mr. Fluno is Vice Chairman of W. W. Grainger, Inc., a leading nationwide distributor of maintenance, repair and operating supplies and related information. He has spent 26 years with Grainger in numerous positions, and has been Vice Chairman since 1984. Mr. Fluno is a governor of the Chicago Stock Exchange and a director of Midwest Clearing Corporation, Midwest Securities Trust Company, and Securities Trust Company of New Jersey. He is a trustee of the Museum of Science and Industry, a member of the University of Wisconsin School of Business Dean's Advisory Board, and a director of the University of Wisconsin Foundation, as well as other not-for-profit boards. [PHOTO OF CAROLE M. HOWARD, 50 CAROLE M. (Director since 1993) HOWARD] Mrs. Howard retired in 1995 from The Reader's Digest Association, Inc., a global publisher and direct marketer. Prior to her retirement, she had been Vice-President--Public Relations and Communications Policy since 1985, and also was a member of that company's management committee and President of the Reader's Digest Foundation. Previously she worked for AT&T for 18 years in a variety of management positions in public relations, advertising and marketing. An author and frequent speaker on marketing, management and communications, Mrs. Howard serves on several editorial, professional and non-profit boards and is on the summer faculty of the Stanford University Professional Publishing Course. She is a member of the Compensation and Human Resources Committees. [PHOTO OF ORMAND J. WADE, 56 ORMAND J. (Director since 1993) WADE] Mr. Wade retired in 1992 as Vice Chairman of Ameritech Corporation, a regional provider of telecommunications services, a position he had held since 1989. He previously served as president of Ameritech Bell Group since 1987 and president and CEO of Illinois Bell from 1982-1987. Mr. Wade began his career with AT&T in 1961, and first became a vice-president of AT&T in 1978. He is currently a director of Illinois Tool Works Inc., Westell, Inc., NBD Bancorp, National Bank of Detroit, Northwestern Memorial Hospital and Local Initiative Support Corporation. Mr. Wade is also a trustee of the University of Chicago. He is Chairman of the Audit Committee. 3 7 SECURITY OWNERSHIP The following table sets forth information regarding ownership of the Company's Common Stock as of September 30, 1995 by nominees for Directors, by each of the named Executive Officers and by all Executive Officers and Directors as a group:
AMOUNT OF BENEFICIAL OWNERSHIP -------------------------------------------------------- DIRECT PERCENT OF CLASS ---------------------------- BENEFICIALLY OWNED NO. OF SHARES EXERCISABLE -------------------- OWNED OPTIONS(1) INDIRECT(2) TOTAL DIRECT INDIRECT ------------- ----------- ----------- --------- ------ -------- DIRECTORS - ------------------------- John G. Bollinger........ -0- 17,550 -0- 17,550 * -0- Jon L. Boyes............. 4,125 7,650 -0- 11,775 * -0- George N. Butzow......... 4,500 22,050 -0- 26,550 * -0- Kenneth J. Douglas....... 4,275 13,500 -0- 17,775 * -0- Jere D. Fluno............ 500 -0- -0- 500 * -0- Carole M. Howard......... 750 2,250 -0- 3,000 * -0- Ormand J. Wade........... 450 6,750 -0- 7,200 * -0-
NAMED EXECUTIVE OFFICERS - ------------------------- Floyd L. English......... 163,310 6,750 2,199,914 2,369,974 0.4% 5.7% Thomas E. Charlton....... 65,531 22,050 2,196,562 2,284,143 0.2% 5.7% Charles R. Nicholas...... 56,893 4,500 2,196,562 2,257,955 0.2% 5.7% John B. Scott............ 47,708 4,500 2,196,562 2,248,770 0.1% 5.7% William L. Shockley...... 3,202 33,750 2,196,562 2,233,514 0.1% 5.7% All Executive Officers and Directors as a group (13 persons)..... 352,744 141,300 2,199,914 2,693,958 1.2% 5.7%
- ------------ *Less than .1% of class. (1) Refers to the number of shares covered by options exercisable within 60 days of September 30, 1995. (2) Indirectly owned shares include 2,196,562 shares owned by the Andrew Profit Sharing Trust, of which Messrs. English, Charlton, Nicholas, Scott and Shockley are trustees, and as to which such individuals share voting and investment powers. In the case of Dr. English, indirectly owned shares also include 3,352 shares owned by his wife. As of September 30, 1995, the following entity is known to be the beneficial owner of more than 5% of the Company's Common Stock:
AMOUNT OF NAME AND ADDRESS BENEFICIAL PERCENT OF BENEFICIAL OWNER OWNERSHIP OF CLASS ---------------------------------------------- --------- -------- Andrew Profit Sharing Trust.......................... 2,196,562 5.7% 10500 West 153rd Street Orland Park, Illinois 60462
4 8 COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors has standing Audit, Compensation and Human Resources Committees. AUDIT COMMITTEE: The committee met three times during fiscal 1995. The committee recommends the independent auditors to the Board and reviews and approves the scope of the audit, the financial statements, the independent auditors' letter of comments and management's responses thereto and the fees charged for audit and tax services and any special assignments. COMPENSATION COMMITTEE: The committee met three times during fiscal 1995. The committee establishes the compensation programs for officers of the Company and reviews overall compensation and benefit programs of the Company. The committee also administers and selects participants for the Management Incentive Program and the Executive Severance Benefit Plan, and administers the Employee Stock Purchase Plan. HUMAN RESOURCES COMMITTEE: The committee met three times during fiscal 1995. The committee reviews management development and identifies and recommends candidates for membership on the Board of Directors and for corporate officer positions. Stockholders wishing to suggest nominees for membership on the Board may do so by letter addressed to the Company in care of James F. Petelle, Secretary, and received at the Company by August 30, 1996. DIRECTOR COMPENSATION During fiscal 1995, the Board of Directors met on four occasions. All Directors attended at least 75% of the meetings of the Board and the committees on which they sat. Andrew paid its non-employee directors an annual fee of $19,600 and a fee of $1,000 per meeting for each meeting called during fiscal 1995. Under a plan adopted as of October 1, 1984, a non-employee Director may defer up to 100% of director fees until he or she leaves the Board. In lieu of cash payment, the Director is credited with equivalent shares equal to the value of the Common Stock at the time of deferral. When the Director leaves the Board, the deferred amount will be paid in cash, based on the then current value of the Common Stock. Such cash payment may be made either in a lump sum or in equal annual installments over five years or less at the Director's election. The Andrew Corporation Stock Option Plan for Non-Employee Directors (the "Plan") was approved by the stockholders on February 4, 1988 and amended on February 5, 1992. Those directors who have not been officers or employees of the Company or its subsidiaries or affiliates within the past three years are eligible to participate. Under the Plan, each eligible director was automatically granted an option to purchase 11,250* shares of Common Stock, at an exercise price of $38.50 per share, at the Board of Directors' meeting following the annual stockholders' meeting on February 8, 1995. The aggregate number of shares of Common Stock issuable under the Plan is 450,000*, subject to certain adjustments. The option price must be 100% of the fair market value of the Common Stock on the date of grant. Options are for 10 years and are not exercisable during the first 12 months following grant. Thereafter, they may be exercised at a cumulative rate of 20% per year until the end of five years when they are exercisable in full. Options must be exercised within 10 years of the date of grant. *These numbers and corresponding per-share prices, as with other references in this Proxy Statement, have been adjusted, where appropriate, for the 3-for-2 split in the Company's stock paid in March 1995, for the 3-for-2 split paid in March, 1994, and for the 2-for-1 split paid in March, 1993. 5 9 EXECUTIVE COMPENSATION The following table summarizes the compensation of the Chief Executive Officer and the four other most highly compensated executive officers of the Company for the fiscal year ended September 30, 1995 and for the Company's two previous fiscal years. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION --------------------------------- ANNUAL COMPENSATION AWARDS ------------------------------------- ----------------------- PAYOUTS OTHER RESTRICTED SECURITIES ------- NAME AND ANNUAL STOCK UNDERLYING LTIP ALL OTHER PRINCIPAL SALARY BONUS(1) COMPENSATION(2) AWARDS OPTIONS/ PAYOUTS COMPENSATION(3) POSITION YEAR ($) ($) ($) ($) SARS(#) ($) ($) - ------------------------ ---- ------- --------- --------------- ---------- ---------- ------- --------------- Floyd L. English 1995 405,000 1,325,455 8,744 -0- 37,500 366,406 18,243 Chairman, President and 1994 405,000 1,122,955 11,975 -0- 33,750 -0- 25,909 Chief Executive Officer 1993 387,600 209,950 11,915 -0- -0- 320,724 20,640 Thomas E. Charlton 1995 232,916 389,285 4,576 -0- 15,000 152,290 18,243 Group President, 1994 187,807 286,787 4,142 -0- 22,500 -0- 25,909 Communication Products 1993 161,100 72,862 1,940 -0- 22,500 96,713 17,683 Charles R. Nicholas 1995 212,160 396,530 4,126 -0- 15,000 148,853 18,243 Exec.Vice-President, 1994 204,000 382,908 3,999 -0- 22,500 -0- 25,909 Chief Financial 1993 192,000 82,790 3,270 -0- -0- 128,290 20,640 Officer John B. Scott 1995 220,080 288,525 1,574 -0- 15,000 156,079 18,243 Vice President, 1994 213,600 267,534 970 -0- 22,500 -0- 25,909 Corporate R&D and 1993 204,000 70,666 2,030 -0- -0- 129,422 20,640 Marketing William L. Shockley 1995 201,599 283,450 3,920 -0- 15,000 132,661 18,243 Group President, 1994 179,057 274,762 4,040 -0- 22,500 -0- 25,909 Communication Systems 1993 152,400 56,266 4,010 -0- -0- 96,968 19,867
- ------------ (1) Annual bonus amounts are earned and accrued during the fiscal years indicated, and paid subsequent to the end of each fiscal year. (2) Consists of the value of personal use of Company automobiles, an annual Christmas bonus (in which all employees participate) based on years of service and, in the case of Dr. English, tax-planning services provided at Company expense. (3) These amounts represent contributions by the Company to the Andrew Profit Sharing Trust on behalf of the named individuals. OPTION GRANTS IN LAST FISCAL YEAR The following table shows information with respect to grants of options to the Chief Executive Officer and the four other named executives in fiscal year 1995. As required by the Securities and Exchange Commission, the calculation of potential realizable values shown for such awards is based on assumed annualized rates of stock price appreciation of 5% and 10% over the full five-year term of the options.
NUMBER OF SECURITIES % OF TOTAL UNDERLYING OPTIONS GRANTED EXERCISE OR POTENTIAL OPTIONS TO EMPLOYEES BASE EXPIRATION REALIZABLE VALUE NAME GRANTED(1) IN FY 95 PRICE/SHARE(2) DATE 5% 10% - ---------------------- ---------- --------------- -------------- ---------- ----------------- Floyd L. English...... 37,500 12.5% $34.33 11/16/99 $355,500/786,000 Thomas E. Charlton.... 15,000 5% $34.33 11/16/99 $142,200/314,400 Charles R. Nicholas... 15,000 5% $34.33 11/16/99 $142,200/314,400 John B. Scott......... 15,000 5% $34.33 11/16/99 $142,200/314,400 William L. Shockley... 15,000 5% $34.33 11/16/99 $142,200/314,400
- ------------ (1) These options are exercisable as follows: 20% on or after November 16, 1996; 60% on or after November 16, 1997; 100% on or after November 16, 1998 through November 16, 1999. (2) Exercise price is based upon fair market value on the date of the award. 6 10 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT SEPTEMBER 30, 1995 This table sets forth information regarding exercise of options during fiscal year 1995 by the Chief Executive Officer and the other four named executives. The "value realized" is based on the market price on the date of exercise, while the "value of unexercised in-the-money options at September 30, 1995" is based on the market price on that date.
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS ON VALUE OPTIONS AT SEPT. 30, 1995 AT SEPT. 30, 1995($) NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE - ---------------------- ----------- ----------- ------------------------- ------------------------- Floyd L. English...... 337,500 15,560,461 0/71,250 0/2,539,033 Thomas E. Charlton.... 33,750 1,857,657 8,550/55,500 463,374/2,355,991 Charles R. Nicholas... 135,000 6,078,701 0/37,500 0/1,424,739 John B. Scott......... 54,000 1,662,750 0/37,500 0/1,424,739 William L. Shockley... -0- -0- 11,250/73,500 603,907/3,287,242
LONG-TERM PERFORMANCE CASH AWARDS The current long-term performance cash award program covers the three Company fiscal years 1995 through 1997. Certain executives of the Company are eligible for target payouts ranging from 15% to 100% of their average annual salary during the three year period if performance goals established for the plan are met. Performance goals for the current program include aggregate, three-year (1995, 1996 and 1997) earnings per share and a specific revenue target for fiscal year 1997. Thresholds for earnings per share and revenue must be met to trigger payments of 75% of target. If neither threshold is achieved, no payment is made. If maximum earnings per share and revenue are achieved for the three-year period then payouts are limited to two times the target bonus amounts. A range of estimated payouts which could be made early in fiscal 1998 to the Chief Executive Officer and the other four named executives is shown in the following table:
ESTIMATED FUTURE PAYOUTS UNDER LONG-TERM INCENTIVE PLAN TARGETED PERFORMANCE ---------------------------------------- NAME AWARD PERIOD THRESHOLD $ TARGET $ MAXIMUM $ - --------------------------------- ----------------- --------------- ----------- -------- --------- Floyd L. English................. 100% of Average Oct. 1,1994 332,640 443,520 887,040 1995-1997 Salary Sept. 30, 1997 Thomas E. Charlton............... 70% of Average Oct. 1, 1994 148,837 198,450 396,900 1995-1997 Salary Sept. 30, 1997 Charles R. Nicholas.............. 70% of Average Oct. 1, 1994 133,391 177,855 355,710 1995-1997 Salary Sept. 30, 1997 John B. Scott.................... 70% of Average Oct. 1, 1994 124,892 166,522 333,044 1995-1997 Salary Sept. 30, 1997 William L. Shockley.............. 70% of Average Oct. 1, 1994 121,716 162,288 324,576 1995-1997 Salary Sept. 30, 1997
7 11 EXECUTIVE SEVERANCE BENEFIT PLAN The Company has an Executive Severance Benefit Plan which provides benefits to certain key executives, as selected by the Compensation Committee, in the event of termination of employment following a change in control, as defined in the Plan. Upon termination of employment for any reason other than death, disability, retirement or cause; or upon a resignation because of a material reduction in compensation or duties, relocation requirements or breach of the plan within one year of a change in control; the Company is obligated to pay each affected participant an amount equivalent to the sum of: (i) 36 months of salary, bonus, Company profit sharing and matching contributions; (ii) the aggregate spread between the option price and fair market value of the Common Stock on the severance date for all of the participant's outstanding stock options; and (iii) up to 36 months of medical, life and similar insurance benefits. If termination or resignation occurs more than one year after a change in control, the benefits are reduced proportionately. If a participant terminates employment due to death, disability, retirement or cause, or resigns for reasons other than those described above within two years of a change in control, the Company is obligated to pay him one-half of the amounts and rights referred to above. The Plan also provides for adjustment in benefits payable if any payment is considered an "excess parachute payment" under the Internal Revenue Code. If there had been a change in control and termination of employment, the executives named in the Summary Compensation Table would have been entitled to the following payments at September 30, 1995: Floyd L. English, $3,539,000; Thomas E. Charlton, $1,179,300; Charles R. Nicholas, $1,390,600; John B. Scott, $1,197,600; William L. Shockley, $1,035,900. In addition, the Company entered into an agreement in November, 1991 pursuant to which the Company would retain Mr. Scott as an advisor to the Company for two years after his termination of employment, for a retainer fee of $100,000, a per diem rate of $500 and reimbursement of expenses. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS The Compensation Committee ("Committee") of the Board of Directors establishes the general compensation policies of the Company and establishes the specific compensation plans, performance goals and compensation levels for executive officers. The Committee also administers and selects participants for the Management Incentive Program and the Executive Severance Benefit Plan, and administers the Employee Stock Purchase Plan. The Committee is composed of four independent, non-employee directors who have no interlocking relationships. COMPENSATION PHILOSOPHY The principal objective of the Committee's approach to executive compensation is to align such compensation with stockholder value. The Committee seeks to accomplish this objective by setting base salaries below the median for similar positions at comparable companies, while linking the two remaining variable components of cash compensation (annual bonus and long term performance cash award) to aggressive performance factors which enhance stockholder value. Stock options are used as a vehicle to further align long-term executive performance with stockholder value. In this way, above-average total compensation is achieved only for outstanding Company performance. The Committee has used essentially this approach to executive compensation for at least the last eight years. 8 12 BASE SALARY The Committee establishes the salary of the Chief Executive Officer ("CEO") by comparison to the salaries of other CEOs of comparable companies. The Committee's practice is to obtain salary data from its consultant which includes data from a group of comparably-sized technology-based companies deemed similar to the Company, some (but not all) of which companies are members of the S&P Communications Equipment Manufacturers Index used in the Performance Graph. Using this information, the Committee established the CEO's salary for fiscal years 1994 and 1995 below the median for companies perceived to be comparable to the Company. The Committee did not grant a salary increase to the CEO for fiscal year 1995, to further emphasize the incentive components of his compensation package. For other executive officers, the Committee uses salary survey data supplied by outside consultants on the same basis as the CEO, and establishes base salaries that are below the median of salaries for persons holding similarly-responsible positions at companies in the survey. In addition, the Committee considers other factors including relative company performance, the individual's past performance and his or her future potential. ANNUAL BONUS For a number of years, the CEO's annual cash bonus has been established as a direct function of growth in the Company's earnings per share (EPS) during the most recent fiscal year. The Committee annually establishes a minimum target for EPS, and the CEO's bonus for the fiscal year is a strict function of the amount by which the minimum EPS target is exceeded during the fiscal year. In December 1995, a cash bonus of $1,325,455 was paid to the CEO based on fiscal year 1995 EPS of $1.73, which was substantially in excess of the targeted amount. For fiscal year 1996, a target and formula have been established in a similar fashion. The annual cash bonus for executives other than the CEO is determined based on four factors: (i) growth in the Company's EPS (using the same formula as for the CEO); (ii) the operating results of the businesses or functions reporting to the executive; (iii) achievement of specified, measurable objectives related to the executive's area of responsibilities and (iv) a small subjective factor based on the executive's performance. LONG TERM PERFORMANCE CASH AWARD The long-term performance cash award program for senior executives of the Company also is tied directly to objective measurements of performance with the emphasis on long-term results. The most recent program covered fiscal years 1993 through 1995 with a payment of $366,406 made to the CEO in December 1995. Seventy percent of the target bonus was based on achievement of specified levels of growth in aggregate three-year earnings per share (1993 through 1995). The remaining 30% was based on the achievement of a specified sales goal in fiscal year 1995. In each case, minimum, target and maximum performance goals were established to qualify for the minimum, target and maximum long-term incentive payment, respectively. For the long-term performance cash award program covering fiscal years 1995 through 1997, 60% of the target bonus will be based on specified levels of growth in aggregate three-year EPS. The other 40% will be determined by the achievement of a specified sales goal in fiscal year 1997. In addition to meeting minimum EPS and sales goals, the Company must maintain a minimum return on equity and return on sales during the three year period. Payments under this program will likely be made in December 1997, subsequent to the close of the Company's 1997 fiscal year. 9 13 OPTIONS Stock options are an important component of the compensation package for the CEO and other executives because they directly focus management's attention on the interests of stockholders. The Committee makes periodic grants of stock options to executive officers and other key employees to foster a commitment to increasing long-term stockholder value. The Committee granted the CEO options on 45,000 shares at its meeting on November 15, 1995. It granted options on 15,000 shares to Mr. Scott and on 20,000 shares to each of the other named executive officers on that date. The Company's grants of options are always at fair market value on the date of grant. DEDUCTIBILITY OF EXECUTIVE COMPENSATION The Committee believes that its compensation programs have been structured in a manner to preserve full deductibility to the Company of executive compensation for Federal Income Tax purposes. Donald N. Frey, Chairman John G. Bollinger, Member Compensation Committee Kenneth J. Douglas, Member Carole M. Howard, Member 10 14 COMPANY PERFORMANCE The following graph shows a five-year comparison of cumulative total returns for Andrew Corporation, the S&P 500 Composite Index and the S&P Communications Equipment Manufacturers Index. Since Andrew is a company within the Standard & Poor's ("S&P") 500 Stock Index, the SEC proxy rules require the use of that Index. Under those rules, the second index used for comparison may be a published industry or line-of-business index. In Andrew's case, the S&P Communications Equipment Manufacturers Index (which includes Andrew Corporation), shown below, is such an index. The graph assumes $100 invested on September 30, 1990 in Andrew Common Stock and $100 invested at that time in each of the S&P indices. The comparison assumes that all dividends are reinvested. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG ANDREW CORPORATION, THE S&P COMMUNICATIONS EQUIPMENT MANUFACTURERS INDEX AND THE S&P 500 INDEX
MEASUREMENT PERIOD ANDREW S&P 500 IN- S&P COMM. (FISCAL YEAR COVERED) CORPORATION DEX EQUIP. 09/90 100 100 100 09/91 176 161 131 09/92 194 143 146 09/93 428 166 165 09/94 835 193 171 09/95 1528 320 221
CUMULATIVE TOTAL RETURN ------------------------------------------------- 9/90 9/91 9/92 9/93 9/94 9/95 ---- ---- ---- ---- ---- ---- Andrew Corp....................................... 100 176 194 428 835 1528 S&P Communications Equipment Manufacturers........ 100 161 143 166 193 320 S&P 500 Index..................................... 100 131 146 165 171 221
11 15 EXECUTIVE OFFICERS Set forth below is certain information concerning the executive officers of Andrew during fiscal year 1995, based on data furnished by them:
NAME AGE POSITION SINCE - ----------------------- --- ------------------------------------------------------- ----- Floyd L. English....... 61 Chairman; President; Chief Executive Officer 1994 Thomas E. Charlton..... 59 Group President, Communication Products 1995 Charles R. Nicholas.... 49 Executive Vice President, Chief Financial Officer 1995 Alan J. Rossi.......... 47 Group President, Andrew Telecom 1995 John B. Scott.......... 54 Vice President, Corporate R&D and Marketing 1995 William L. Shockley.... 64 Group President, Communications Systems 1995
Except as discussed below, all of these officers of Andrew have held executive positions with Andrew for more than five years. Dr. English was elected Chairman in 1994, having served as President and Chief Executive Officer since 1983, and as President and Chief Operating Officer since 1982. Dr. English joined Andrew in 1980 as Vice President, Corporate Development and became Vice President, U.S. Operations in February 1981. Dr. Charlton became Group President, Communication Products in September 1995, having most recently served as Group Vice President, Communication Products since 1992. He previously served as Vice President, Antenna Products after first becoming a Vice President in 1986. Mr. Nicholas became Executive Vice President, Chief Financial Officer in September 1995, having served as Vice President, Finance and Administration and CFO since 1992, as Vice-President and CFO since 1986 and as Vice-President, Finance since 1982. Mr. Nicholas joined Andrew in 1980 as Treasurer. Mr. Rossi became Group President, Andrew Telecom, in September 1995. He joined the Company as Group Vice President, Andrew Telecom in December 1994. Mr. Rossi was Vice-President and General Manager of Sprint International a provider of international communications services, from 1992-1994, having previously been an independent management consultant in the field of telecommunications. Mr. Scott became Vice President, Corporate R&D and Marketing in 1995, having served as Group Vice President, Network Group and Corporate Marketing since 1992, and Vice President, Network Products since 1987. He founded and was President of Scott Communications, Inc., a data communications business, from 1984 until it was acquired by Andrew in 1987. Mr. Shockley became Group President, Communications Systems in September 1995, having served as Group Vice President, Telecommunications Systems since August, 1991, and previously as President, Andrew SciComm Inc. and General Manager, Government Electronics Group since 1990. Mr. Shockley held various executive positions with ADC Telecommunications, Inc. from 1986 to 1990. Officers serve at the pleasure of the Board or until their successors are elected and qualified. APPOINTMENT OF INDEPENDENT PUBLIC AUDITORS Upon the recommendation of the Audit Committee and subject to ratification by the stockholders, the Board of Directors appointed Ernst & Young, independent public auditors, to serve for the fiscal year ending September 30, 1996. 12 16 Ernst & Young has informed management that it will send representatives to the annual meeting to make a statement, if they desire to do so, and that such representatives will be available to answer any questions that might arise in connection with Ernst & Young's audit of the Company and its subsidiaries. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT. DEADLINE FOR STOCKHOLDER PROPOSALS Proposals of stockholders intended to be presented at the following Annual Meeting (February 1997) must be received by the Company not later than August 30, 1996, for inclusion in its Proxy Statement and form of proxy relating to that meeting. The Company will bear the cost of solicitation of proxies and will reimburse brokers, custodians, nominees and fiduciaries for their reasonable expenses in sending solicitation material to the beneficial owners of the Company's shares. In addition to soliciting proxies through the mails, proxies may also be solicited by officers and employees of the Company by telephone or otherwise. The Company has also employed Morrow & Company, Inc., 345 Hudson St., New York, New York 10014, which will be paid approximately $4,500 in fees, plus reasonable expenses, to solicit proxies on behalf of the Company. 13 17 ANDREW CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned Stockholder of ANDREW COROPORATION appoints Floyd L. English and James F. Petelle, or either of them, proxies, with full power of substitution, to vote at the Annual Meeting of Stockholders of the Company to be held at the Drury Lane, Oakbrook Terrace, Illinois at 10:00 A.M., Wednesday, February 7, 1996, and any adjournment or adjournments thereof, the shares of Common Stock of ANDREW CORPORATION which the undersigned is entitled to vote, on all matters that may properly come before the Meeting. YOU ARE URGED TO CAST YOUR VOTE BY MARKING THE APPROPRIATE BOXES. PLEASE NOTE THAT, UNLESS A CONTRARY DISPOSITION IS INDICATED, PROXY WILL BE VOTED FOR ITEMS 1 AND 2. CONTINUED AND TO BE SIGNED ON REVERSE SIDE 18 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / X / [ ] For all For Withheld Except nominee(s) written below. 1. The election of eight Directors / / / / / / _____________________________________________________________ for the ensuing year. Nominees: John G. Bollinger, Jon L. Boyes, 2. To ratify the appointment of Ernst For Against Abstain George N. Butzow, Kenneth J. Douglas, & Young as independent public / / / / / / Floyd L. English, Jere D. Fluno, auditors for fiscal 1996. Carole M. Howard and Ormand J. Wade. 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. _____________________________________________________________ (Signature) _____________________________________________________________ (Signature) Dated: ________________________________________________, 1996 IMPORTANT: Please sign your name or names exactly as shown hereon and date your proxy in the blank space provided above. For joint accounts, each joint owner must sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer.
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