-----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, PJ+IJ3C8FoFhFgjs8CrynXNyqJBvubHbTOujbOlvf06gmZ0cvbsqZexlIbuKPLRE U/Zdvhq3/Y26JPL7cifOxg== 0000950005-99-000514.txt : 19990624 0000950005-99-000514.hdr.sgml : 19990624 ACCESSION NUMBER: 0000950005-99-000514 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990623 FILED AS OF DATE: 19990528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANFORD TELECOMMUNICATIONS INC CENTRAL INDEX KEY: 0000725727 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 942207636 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-11473 FILM NUMBER: 99636486 BUSINESS ADDRESS: STREET 1: 1221 CROSSMAN AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087450818 MAIL ADDRESS: STREET 1: 221 CROSSMAN AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94088-3733 DEF 14A 1 DEF 14A [STANFORD TELECOM LETTERHEAD] May 28, 1999 Dear Stockholder: You are cordially invited to attend the Annual Meeting of Stockholders of Stanford Telecommunications, Inc., which will be held Wednesday, June 23, 1999, at 6:00 p.m. local time, at the Sunnyvale Hilton, 1250 Lakeside Drive, Sunnyvale, California 94086. The formal notice of the Annual Meeting and the Proxy Statement has been made a part of this invitation. To assure that your shares are represented, please read the Proxy Statement and promptly mark, date, sign and return the enclosed Proxy in the prepaid envelope provided. The Board of Directors and management look forward to seeing you at the meeting. Sincerely, /s/James J. Spilker, Jr. ------------------------------- Dr. James J. Spilker, Jr. Chairman of the Board [STANFORD TELECOM FACILITIES ADDRESSES] SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment no. 1) 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 [X] Definitive Proxy Statement Commission Only (as permitted by [ ] Definitive Additional Materials Rule 14a-6(e)(2)) [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 STANFORD TELECOMMUNICATIONS, INC. ------------------------------------------------ (Name of Registrant as Specified in Its Charter) ------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of filing fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transactions applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transactions applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. - -------------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing party: - -------------------------------------------------------------------------------- (4) Date filed: - -------------------------------------------------------------------------------- STANFORD TELECOMMUNICATIONS, INC. Notice of Annual Meeting of Stockholders To Be Held June 23, 1999 The Annual Meeting of the Stockholders of Stanford Telecommunications, Inc. (the "Company") will be held at the Sunnyvale Hilton, 1250 Lakeside Drive, Sunnyvale, California 94086, on Wednesday, June 23, 1999, at 6:00 p.m. local time, for the following purposes: 1. To elect seven Directors to serve for the ensuing year as set forth in the attached Proxy Statement. 2. To ratify the selection of Arthur Andersen LLP as the Company's independent public accountants for the current fiscal year. 3. To transact such other business as may properly come before the meeting and any adjournment thereof. The Board of Directors has fixed the close of business on May 4, 1999 as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. In accordance with Delaware law, a complete list of stockholders entitled to notice of and to vote at the meeting will be available at the Company's executive offices, 1221 Crossman Avenue, Sunnyvale, California 94089, for ten days prior to the meeting. TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. By order of the Board of Directors, s/s Jerome F. Klajbor ----------------------------------- JAMES F. KLAJBOR Secretary Sunnyvale, California May 28, 1999 STANFORD TELECOMMUNICATIONS, INC. 1221 Crossman Avenue Sunnyvale, California 94089 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Stanford Telecommunications, Inc., a Delaware corporation (the "Company"), of proxies in the accompanying form to be used at the Annual Meeting of Stockholders to be held at the Sunnyvale Hilton, 1250 Lakeside Drive, Sunnyvale, California 94086, on June 23, 1999 at 6:00 p.m. local time and any adjournment thereof. Proxies may be revoked at any time before they are voted by filing with the Secretary of the Company a written notice of revocation or by duly executing a proxy bearing a later date. A proxy may also be revoked before it is voted by any stockholder present at the meeting who expresses a desire to vote his or her shares of common stock, par value $.01 per share, of the Company ("Common Stock") in person. Subject to any such revocation, all shares of Common Stock represented by properly executed proxies will be voted in accordance with the specifications on the enclosed proxy. If no choice is so specified, the shares will be voted FOR the election of the seven nominees for Director listed in this Proxy Statement and FOR the ratification of Arthur Andersen LLP as the Company's independent public accountants. The close of business on May 4, 1999 has been fixed as the record date for determining the holders of Common Stock entitled to notice of and to vote at the meeting. On such date, there were 13,136,948 shares of Common Stock outstanding and entitled to vote. Each outstanding share of Common Stock is entitled to one vote on all matters, including the election of Directors whose names have been placed in nomination. A majority of the outstanding shares will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum. The seven nominees receiving the highest number of votes will be elected as the Directors of the Company. Abstentions will be counted in tabulations of the votes cast for the ratification of the selection of Arthur Andersen LLP, as the Company's independent public accountant and, as a result, will have the same effect as negative votes. Broker non-votes will not be deemed eligible to vote for the ratification of the selection of Arthur Andersen LLP, as the Company's independent public accountant and, as a result, will have no effect. A copy of the Company's 1999 Annual Report to Stockholders containing financial statements for fiscal year 1999 accompanies this Proxy Statement. The Company's fiscal year 1999 was composed of one 14-week quarter (quarter ended June 30, 1998) and three 13-week quarters, each of which ended on the Thursday closest to the corresponding calendar quarter end. Fiscal year 1999 ended on April 1, 1999. This Proxy Statement and the accompanying form of proxy are first being sent to stockholders on or about May 28, 1999. The expense of printing and mailing proxy material will be borne by the Company. The Company will reimburse brokers and nominees for their reasonable out-of-pocket expenses in forwarding soliciting material to beneficial owners of shares held of record by such brokers and nominees. In addition to the solicitation of proxies by mail, solicitation may be made by certain Directors, officers and other employees of the Company by personal interview, telephone or telefax; no additional compensation will be paid for such solicitation. -1- PROPOSAL 1 ELECTION OF DIRECTORS Seven directors are to be elected to serve until the next Annual Meeting of Stockholders and until their respective successors are duly elected. Each of the nominees named below is presently a Director of the Company. In the event that any nominee becomes unable or declines to serve for any reason, proxies may be voted for the election of the balance of those nominees named and for such other person or persons as the proxy holders or the present Board of Directors (the "Board") may select, or the size of the Board may be reduced in accordance with the By-laws of the Company. The Board has no reason to believe that any of the nominees named will be unable or unwilling to serve. Information With Respect to Nominees and Directors Set forth below are the names and ages of the nominees and Directors, their principal occupations at present and for the past five years, certain directorships held by certain of the nominees and the year in which each became a Director of the Company.
Name and Principal Occupation at Present Director and for the Past Five Years; Directorships Since Age ------------------------------------------ ----- --- James J. Spilker, Jr............................................................ 1973 65 Dr. Spilker, a cofounder of the Company, has been Chairman of the Board since 1973 and Principal Scientist since June 1995. He served as President and Chief Executive Officer of the Company from August 1981 to June 1995. Val P. Peline................................................................... 1985 68 Dr. Peline was elected as a Director of the Company in October 1985. Dr. Peline joined the Company as its President and Chief Executive Officer effective June 5, 1995. Dr. Peline served as President of the Electronic Systems Group, a division of Lockheed Corp., from 1987 until he retired from such position in March 1995. Dr. Peline had been President of the Lockheed Space Division from 1984 to March 1987. Michael Berberian............................................................... 1989 65 Mr. Berberian, a private investor, was appointed to fill a vacancy on the Board of Directors in December 1989. From 1973 to 1990, he served on the Board of Directors of Lockheed Corp. Leonard Schuchman............................................................... 1985 62 Mr. Schuchman was elected as a Director of the Company in April 1985. Mr. Schuchman joined the Company in January 1976 and became Vice President in February 1977. He is responsible for directing the Company's Communication Systems Integration group. -2- John W. Brownie................................................................. 1973 65 Mr. Brownie, a cofounder of the Company, served as Executive Vice President of the Company from June 1982 and as General Manager from July 1981 until his retirement in January 1985. He has been a Director of the Company since the Company's organization in May 1973. C. Jerome Waylan................................................................ 1994 57 Dr. Waylan was appointed to fill a vacancy on the Board of Directors in May 1994. Dr. Waylan served as President of GTE Spacenet Corporation from 1985 to 1993 and as Executive Vice President of GTE Mobilnet from 1993 until his retirement in April 1996. From May 1996 to September 1997, Dr. Waylan served as Executive Vice President of NextWave Telecom, Inc. Dr. Waylan has been a Director of Globecomm Systems, Inc. since February 1997. Dr. Waylan is currently the Chief Executive Officer of Constellation Communications Inc. Robert Calafell................................................................. 1999 58 Mr. Calafell was appointed to the Board of Directors in January 1999. Mr. Calafell retired as Senior Vice President of GTE after 32 years of service in December 1998. He held several key management positions in GTE, including President of GTE's Airfone, Vice President of Video Services, Vice President and General Manager of GTE South, Vice President of Business Planning and Development for GTE Sprint, and Senior Vice President of Planning and Business Development for GTE Corporation. Mr. Calafell serves as a Director for Pacific Gateway Exchange Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE. -3- BOARD OF DIRECTOR'S MEETINGS AND COMMITTEES The Company's Board held six meetings during fiscal year 1999 and acted on three matters by unanimous written consent. Each Director attended at least 75% of the meetings of the Board and of the committees of the Board on which he serves. The Board has a Compensation Committee, an Audit Committee and a Stock Plans Committee. There is no nominating committee or any committee performing a similar function. The Compensation Committee held three meetings in fiscal year 1999 and acted on one matter by unanimous written consent. Its function is to determine or review and pass upon management's recommendations with respect to executive compensation and incentive bonuses. The members of the Compensation Committee during fiscal year 1999 were Dr. C. Jerome Waylan and Messrs. Michael Berberian and John W. Brownie. The Audit Committee held three meetings in fiscal year 1999. Its functions are to monitor the effectiveness of the audit effort, to monitor the Company's financial and accounting organization and financial reporting and to select a firm of independent public accountants, whose duty it is to audit the books and accounts of the Company. The members of the Audit Committee during fiscal year 1999 were Dr. Waylan and Messrs. Berberian and Brownie. The Stock Plans Committee held two meetings in fiscal year 1999 and acted on one matter by unanimous written consent. Its functions are to supervise and manage the Company's Employee Stock Purchase Plan and the 1991 Stock Option Plan. The members of the Stock Plans Committee during fiscal year 1999 were Dr. Waylan and Messrs. Berberian and Brownie. DIRECTORS' FEES Each non-employee Director of the Company receives an annual fee of $15,000 and is entitled to reimbursement for reasonable travel costs associated with his attendance at meetings of the Board and committees of the Board on which he serves. -4- EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table provides certain summary information concerning compensation paid for fiscal years 1997, 1998 and 1999 to the Company's Chief Executive Officer and to each of the other five most highly compensated executive officers (collectively, the "Named Executive Officers").
Long-Term Compensation Annual Compensation Awards --------------------------------- ----------------- Securities Name and Fiscal Underlying All Other Principal Position Year Salary (1) Bonus (2) Options Compensation (3) - -------------------------------- --------- --------------- --------------- ----------------- --------------------- Val P. Peline 1999 $400,180 $0 29,000 $ 9,350 Chief Executive Officer 1998 $381,642 $105,579 10,000 $10,110 and President 1997 $351,931 $103,576 100,000 $10,057 James J. Spilker, Jr.(4) 1999 $282,463 $0 4,000 $5,550 Chairman of the Board 1998 $270,386 $64,327 5,000 $6,750 1997 $257,309 $66,003 0 $6,000 Gary S. Wolf 1999 $221,654 $0 21,500 $6,081 Executive Vice President 1998 $207,996 $45,083 5,000 $6,281 1997 $180,331 $44,279 59,000 $6,264 Leonard Schuchman 1999 $218,069 $0 9,500 $7,206 Vice President and 1998 $203,752 $28,878 3,500 $13,936 Director 1997 $192,523 $40,264 6,000 $10,255 John E. Ohlson 1999 $202,478 $0 9,500 $7,025 Vice President 1998 $190,389 $35,678 3,500 $8,136 1997 $178,388 $36,960 6,000 $5,004 Ernest L. Dickens, Jr. 1999 $193,278 $0 15,000 $4,800 Vice President 1998 $173,261 $40,099 3,500 $6,291 1997 $160,396 $32,564 11,000 $7,264 (1) Fiscal year 1999 consisted of 27 pay periods; fiscal years 1998 and 1997 each consisted of 26 pay periods. (2) Represents incentive bonuses paid during the fiscal year for prior year's performance pursuant to the Management Incentive Plan. See "Compensation and Stock Plans Committees' Report on Executive Compensation". (3) Fiscal year 1999, other compensation consists of (i) the Company's contribution to the Pension and Profit Sharing portions of the Stanford Telecommunications, Inc. Employee Retirement Program of $4,800 for each officer; (ii) Company-paid life insurance premiums as follows: Val P. Peline, $4,550; Gary S. Wolf, $281; Leonard Schuchman, $906; John E. Ohlson, $725; (iii) patent awards of $1,500 each for Leonard Schuchman and John E. Ohlson, and $750 for James J. Spilker, Jr. and (iv) longevity award of $1,000 for Gary S. Wolf. (4) Since June 1995, Dr. Spilker has served as Principal Scientist for the Company.
-5- OPTION GRANTS IN LAST FISCAL YEAR The following table provides information on options granted in fiscal year 1999 to the Named Executive Officers.
Percent of Total Potential Realizable Value at Number of Options Assumed Annual Rates of Stock Securities Granted to Price Appreciation for Option Underlying Employees Exercise Term (2) Options in Fiscal Price Per Expiration --------------------------------- Name Granted (1) Year Share Date 5% 10% - ------------------------- -------------- ----------- ----------- ----------- -------------- --------------- Val P. Peline 4,000 0.7% $16.00 4/9/08 $40,249 $101,100 25,000 4.5 14.25 3/30/09 224,044 567,771 James J. Spilker, Jr. 4,000 0.7 16.00 4/9/08 40,249 101,100 Gary S. Wolf 4,000 0.7 16.00 4/9/08 40,249 101,100 17,500 3.1 14.25 3/30/09 156,831 397,440 Leonard Schuchman 3,500 0.6 16.00 4/9/08 35,218 89,250 6,000 1.1 14.25 3/30/09 53,770 136,265 John E. Ohlson 3,500 0.6 16.00 4/9/08 35,218 89,250 6,000 1.1 14.25 3/30/09 53,770 136,265 Ernest L. Dickens, Jr. 5,000 0.9 16.00 4/9/08 50,312 127,499 10,000 1.8 14.25 3/30/09 89,617 227,108 (1) All options granted in fiscal year 1999 were granted pursuant to the 1991 Stock Option Plan (the "Option Plan"). The Option Plan provides for granting either incentive or non-qualified stock options. All options granted in fiscal year 1999 were non-qualified stock options granted at 100% of the fair market value of the Common Stock on the date of grant. The options generally expire ten years from date of grant, unless earlier terminated in certain events related to termination of employment. The options vest 25% per year on each of the first four anniversaries of the option grant date, except those granted to Dr. Peline which vest 100% after one year, but vesting ceases when the optionee terminates employment. All options granted under the Option Plan which have been held for at least one year will vest in full in the event of the sale, dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving corporation or becomes the subsidiary of another entity, or an offer to all stockholders of the Company to purchase more than 50% of the Company's outstanding shares. (2) The 5% and the 10% assumed rates of appreciation applied to the option exercise price over the option term are prescribed by the rules of the SEC and do not represent the Company's estimate or projection of the future price of its Common Stock. If the Common Stock does not appreciate above the exercise price, the Named Executive Officers will receive no benefit from the options.
-6- AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table shows the options exercised by the Named Executive Officers during fiscal year 1999 and the number of shares of Common Stock underlying outstanding stock options held by each of the Named Executive Officers as of the end of fiscal year 1999. On such date, the closing price of the Common Stock on the Nasdaq National Market was $15.125 per share.
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options at Fiscal Options at Fiscal Year-End Year-End Shares Acquired on Value Exercisable/ Exercisable/ Name Exercise Realized (1) Unexercisable Unexercisable ---- -------- ------------ ------------- ------------- Val P. Peline 0 Shares n/a 330,000/29,000 $1,708,750/$21,875 Common Stock Common Stock James J. Spilker, Jr. 0 shares n/a 24,375/9,725 $198,569/$15,306 Common Stock Common Stock Gary S. Wolf 0 shares n/a 76,485/56,075 $429,766/$64,206 Common Stock Common Stock Leonard Schuchman 4,900 shares $45,319 67,808/15,756 $481,110/$17,672 Common Stock Common Stock John E. Ohlson 6,720 shares $49,560 15,337/15,633 $100,509/$16,718 Common Stock Common Stock Ernest L. Dickens 0 shares n/a 11,073/23,365 $29,024/$18,141 Common Stock Common Stock (1) Based on the market price of the purchased shares on the exercise date less the option exercise price paid for such shares.
-7- COMPENSATION AND STOCK PLANS COMMITTEES' REPORT ON EXECUTIVE COMPENSATION Executive Compensation The Compensation Committee of the Board of Directors is responsible for developing and recommending to the Board policies on compensation of the Company's senior executives. The Stock Plans Committee of the Board of Directors administers the Company's stock option plans and recommends to the Board policies on stock options and other equity-based incentives. Set forth below, in accordance with the rules of the Securities and Exchange Commission ("SEC"), is a joint report of the Compensation and Stock Plans Committees concerning those policies and how they were applied to the fiscal year 1999 compensation to Dr. Val P. Peline, President and Chief Executive Officer, and to all other executive officers of the Company. General Executive Compensation Policies The Company's compensation program is designed to attract and retain qualified executives and to ensure that their efforts are directed toward the long-term interests of the Company and its stockholders. To that end, the Company strives to pay competitive base salaries and to provide incentives to its executives by linking individual compensation to Company and business unit performance through an annual incentive bonus plan, and linking executive and stockholder interests through a stock option plan. Each of the Compensation and Stock Plans Committees annually review salaries, incentive compensation and stock options, and other aspects of executive compensation. In general, the purpose of such reviews is to ensure that the Company's overall executive compensation program remains competitive with other companies that are similar in revenues, profitability, asset size and markets served and that executive pay reflects both the individual's performance and the overall performance of the Company. Salary survey information from Western Management Group and Radford Associates for companies designated as "high technology companies," many of which are included in the S&P High Technology Index (the "Comparable Companies"), as well as other publicly available sources are used in the evaluation to determine the competitiveness of the executive compensation program. The Compensation Committee attempts to establish base salaries for the Company's executive officers in the median range of the Comparable Companies. The target for incentive compensation is mid-range for Comparable Companies. This approach reflects the Compensation Committee's aim to be competitive in the market for executive talent, without lowering its performance expectations. In determining fiscal year 1999 compensation for the executive officers, the Compensation Committee reviewed the Company's financial results for fiscal year 1998, together with a comparison against plan and results achieved during prior fiscal years. The Compensation Committee evaluates company performance based primarily on profitability, with consideration also given to revenue growth as well as individual performance. For fiscal year 1998, revenues decreased by 8% from fiscal year 1997. Net income for fiscal year 1998 decreased to $5,216,000 from $8,011,000 in fiscal year 1997. Summary of Fiscal Year 1999 Compensation Programs For fiscal year 1999, the executive compensation program consisted of base salary and eligibility for participation in the Management Incentive Plan and the Management Option Incentive Program. Base Salary The Compensation Committee determines the base salaries of the Company's executive officers based on the Company's revenues and profitability for the prior year, as well as its assessment of individual performance, and the comparability considerations described above. The average base salary for executive officers during fiscal year 1999 increased 2.6% from fiscal 1998. -8- Management Incentive Plan Under the Management Incentive Plan which was adopted during fiscal year 1996, executive officers as well as other key management and technical personnel may receive incentive compensation based upon the Company and participants achieving mutually agreed upon measurable objectives. The Management Incentive Plan contemplates that, each year, the Board will establish the Company objectives, and the Company objectives will become the objectives of the President and the Chairman of the Board. The President then will establish individual objectives for the executive officers who report directly to him, and each of such executive officers then will establish objectives for those persons who participate in the Management Incentive Plan and report to him. The President will review and approve the objectives for all participants to assure that the individual objectives collectively will serve the Company in achieving the objectives set by the Board. At the end of each fiscal year, each participant will become eligible for an award under the Management Incentive Plan based on the Company achieving the objectives set forth by the Board and the participant's performance and accomplishment toward the objectives set forth for such participant. Awards to executive officers are determined by the Compensation Committee after the Company evaluation and bonus pools are established by the Board. The Board establishes the bonus pool by a formula based on the performance of the Company and of each of the participants. In March 1999, the Board of Directors evaluated the Company's performance against stated objectives and established a bonus pool. In April of 1999, in accordance with the Management Incentive Plan the Compensation Committee determined individual bonuses for the Executive Officers based on the achievements of the stated objectives. Stock Options; Management Option Incentive Program The Compensation and Stock Plans Committees view stock options as a means of linking executive and stockholder interests. Each year, the Stock Plans Committee considers and may approve stock option grants, determining such aspects as grant size, vesting schedules and plan participants. In May 1993, the Board of Directors adopted an Officers' Option Incentive Program to establish a policy governing annual options grants to eligible officers. During fiscal year 1996, the Board of Directors revised the Officer's Option Incentive Program to expand the number of management personnel eligible for option grants under the program and renamed the program the Management Option Incentive Program, to be effective beginning in fiscal year 1997. Under the Management Option Incentive Program, management personnel who participate in the Company's Management Incentive Plan will be considered for a stock option grant under the revised program. The number of options already held by the eligible participants is not a factor in determining whether an otherwise eligible officer will receive an option grant. It is anticipated that annual option grants will be made to certain officers of the Company, including the Named Executive Officers; however, the Compensation and Stock Plans Committees may exclude certain officers from receiving options as they deem appropriate. Options proposed under this program are subject to the Stock Plans Committee's discretion under the provisions of the Company's 1991 Stock Option Plan. On April 9, 1998 a total of 215,750 options were granted pursuant to the Management Option Incentive Program for fiscal year 1998 and on March 30, 1999 a total of 342,600 options were granted for fiscal year 1999 of which the Named Executive Officers received an aggregate of 33,000 and 84,000 options for fiscal years 1998 and 1999, respectively. -9- Dr. Peline's Fiscal Year 1999 Compensation The Compensation and Stock Plans Committees annually review Dr. Peline's performance to determine his base salary, incentive compensation and stock option grants. The purpose of this review is to ensure that Dr. Peline's compensation package remains competitive with chief executives of other companies similar to the Company in revenues, profitability, asset size and markets served. Salary survey information from Western Management Group and Radford Associates as well as other publicly available sources are used to determine the competitiveness of Dr. Peline's overall compensation. The Compensation Committee has determined that the President's base salary should be competitive with those companies contained in the salary surveys and tied to the Company's financial performance. Given the Company's financial performance in fiscal year 1998, Dr. Peline's salary was not increased from the prior year salary of $385,000. The Stock Plan Committee approved an option grant of 4,000 shares to Dr. Peline for fiscal year 1998 and an option grant of 25,000 shares for fiscal year 1999. Policy with Respect to Deductibility of Compensation Section 162(m) of the Internal Revenue Code, as amended, generally disallows tax deductions by a company for compensation paid to certain of such company's executive officers in excess of $1,000,000 per person during the fiscal year. Final regulations under Section 162(m) (the "Final Rules") were issued by the Internal Revenue Service in December 1995 and include an exemption from the deduction limitation for compensation that is "performance-based" within the meaning of Section 162(m) and the Final Rules. The Compensation and Stock Plans Committees intend to include performance-based compensation in the executive compensation program to the extent reasonably necessary in order to minimize the effects of Section 162(m). However, in light of the Company's intent to remain competitive in its compensation of executives and other employees, the Company might pay compensation that is not performance-based and that would not be tax deductible. COMPENSATION COMMITTEE C. Jerome Waylan Michael Berberian John Brownie STOCK PLANS COMMITTEE Michael Berberian John Brownie C. Jerome Waylan -10- COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The SEC requires disclosure where an executive officer of a company served or serves as a director or on the compensation committee of another entity and an executive officer of such other entity served or serves as a director or on the compensation committee of the Company. The Company does not have any such interlocks. Decisions as to executive compensation are made by the Compensation Committee and the Stock Plans Committee. During fiscal year 1999, the Compensation and Stock Plans Committees were comprised entirely of non-employee Directors. Mr. Brownie, who serves as a member of both such committees, was a former officer of the Company. Mr. Brownie retired from the Company in 1985. STOCK PERFORMANCE GRAPH Set forth below is a line graph comparing the percentage change in the cumulative total stockholder return on the Company's Common Stock against the cumulative total return of the S&P High Technology Composite Index and the S&P 500 Composite Index for a period of five fiscal years ended March 31, 1999. "Total return," for the purpose of this graph, assumes reinvestment of all dividends. [The following descriptive data is supplied in accordance with Rule 304(d) of Regulation S-T.] Comparison of Cumulative Total Return Stanford Telecommunications, Inc. Common Stock S & P High Technology Composite Index and S & P 500 Composite Index
1994 1995 1996 1997 1998 1999 - ------------------------------------------------------------------------------------------------------------------- Stanford Telecom 100.00 96.13 186.06 207.76 209.32 192.26 - ------------------------------------------------------------------------------------------------------------------- S & P High Technology 100.00 126.54 170.85 230.96 349.06 559.93 - ------------------------------------------------------------------------------------------------------------------- S & P 500 100.00 115.57 152.67 182.93 270.74 320.72 - -------------------------------------------------------------------------------------------------------------------
-11- STOCK OWNERSHIP The following table sets forth, as of March 31, 1999, the names and addresses of all persons who beneficially owned, to the knowledge of the Company, more than 5% of the outstanding shares of Common Stock, and the number of shares beneficially owned by each Director and nominee, each Named Executive Officer and all Directors and executive officers as a group. Except as otherwise indicated and subject to community property laws where applicable, each person has sole investment and voting power with respect to the shares shown. Ownership information is based upon information furnished by the respective persons.
Beneficial Ownership of Common Stock ------------------------------------- Number of Percent Shares of Class ---------------- ---------------- Directors and Executive Officers: James J. Spilker, Jr. (1) .................................................... 1,279,539 9.8% 1221 Crossman Avenue Sunnyvale, California 94089 Michael Berberian ........................................................... 822,850 6.3% 5200 North Palm, Suite 203 Fresno, California 93704 Val P. Peline (2)............................................................. 336,500 2.6% Leonard Schuchman (3)......................................................... 296,558 2.3% John E. Ohlson (4)............................................................ 168,781 1.3% Gary S. Wolf (5).............................................................. 142,617 1.1% John W. Brownie (6)........................................................... 44,950 * Ernest L. Dickens (7)......................................................... 13,823 * C. Jerome Waylan ............................................................. 1,000 * All Directors and executive officers as a group (12 persons) (8).............................................................. 3,169,599 24.3% 5% Stockholder: Kopp Investment Advisors, Inc.; Leroy C. Kopp (9)............................. 2,404,665 18.4% 7701 France Avenue South, Suite 500 Edina, Minnesota 55435 *Less than 1% Footnotes appear on the following page. -12- - ---------- (1) Includes 26,625 shares subject to options exercisable within 60 days after March 31, 1999 and 20,000 shares held by Dr. Spilker's wife. (2) Includes 334,000 shares subject to options exercisable within 60 days after March 31, 1999. (3) Includes 70,183 shares subject to options exercisable within 60 days after March 31, 1999. (4) Includes 17,712 shares subject to options exercisable within 60 days after March 31, 1999. (5) Includes 80,985 shares subject to options exercisable within 60 days after March 31, 1999 and 3,000 shares held by Mr. Wolf's minor daughter. (6) Consists of shares held in trust for John W. and Alice Brownie. (7) Consists of shares subject to options exercisable within 60 days after March 31, 1999. (8) Includes an aggregate of 596,107 shares subject to options exercisable within 60 days after March 31, 1999. (9) According to Schedule 13G filed March 4, 1999 (the "Schedule 13G") filed with the SEC by (i) Kopp Investment Advisors, Inc., a Minnesota corporation ("KIA") and a registered investment advisor, (ii) Kopp Holding Company, a Minnesota corporation and the parent corporation of KIA ("KHC"), and (iii) LeRoy C. Kopp, the sole stockholder of KHC ("Kopp" and collectively with KIA and KHC, the "reporting persons"), KIA beneficially owns 2,226,665 shares of Common Stock and Kopp beneficially owns 2,404,665 shares of Common Stock (including the shares beneficially owned by KIA). KHC, as the parent corporation of KIA reports indirect ownership of the Common Stock beneficially owned by KIA. KIA reports shared investment power with respect to all of the shares of Common Stock it beneficially owns (by virtue of limited powers of attorney and/or investment advisory agreements) and reports sole voting power with respect to 36,000 shares. Kopp reports sole voting and sole investment power with respect to 178,000 shares of Common Stock he beneficially owns. All of the reporting persons have the same business address.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's Directors and executive officers and holders of more than 10% of the outstanding Common Stock ("insiders") to file with the SEC reports of ownership and changes in ownership of Common Stock and other equity securities of the Company. Insiders also are required to furnish the Company with a copy of all reports that they file with the SEC pursuant to Section 16(a). Based solely on its review of such reports or written representations with respect to Section 16(a) reports by insiders, the Company believes that during fiscal year 1998, each of the insiders complied with all applicable filing requirements under Section 16(a). -13- PROPOSAL 2 RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS The Board has selected Arthur Andersen LLP to serve as the Company's independent public accountants for fiscal year 2000. While it is not required to do so, the Board is submitting to the stockholders the selection of that firm for ratification in order to ascertain the stockholders' views. If such selection is not ratified by the affirmative vote of a majority of the shares of Common Stock present or represented at the meeting and entitled to vote, the Board will reconsider its selection. Representatives of Arthur Andersen LLP are expected to be present at the meeting and available to respond to appropriate questions. Such representatives will have the opportunity to make a statement if they desire to do so. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP. STOCKHOLDER PROPOSALS To be considered for presentation at the 2000 Annual Meeting of Stockholders, a stockholder proposal must be received at the offices of the Company not later than January 28, 2000. In addition, the proxy solicited by management of the Company for the 2000 Annual Meeting of Stockholders will confer discretionary authority to vote on any shareholder proposal presented at that meeting, unless the Company is provided with notice of such proposal on or prior to April 13, 2000. OTHER MATTERS Management knows of no other business which will be presented for consideration at the meeting. If any other business is properly brought before the meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgment of the persons voting the proxies. Whether or not you intend to be present at this meeting, you are urged to return your proxy promptly. By order of the Board of Directors, /s/ Jerome F. Klajbor ----------------------------------- JEROME F. KLAJBOR Secretary -14- Appendix A - -------------------------------------------------------------------------------- PROXY STANFORD TELECOMMUNICATIONS, INC. PROXY PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 23, 1999 James J. Spilker, Jr. and Jerome F. Klajbor, or either of them each with the power of substitution, are hereby authorized to represent and vote as designated on the reverse side the shares of the undersigned at the Annual Meeting of Stockholders of Stanford Telecommunications, Inc. to be held on Wednesday, June 23, 1999, or at any adjournment of the Annual Meeting. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL MEETING. The undersigned hereby revokes any proxy or proxies heretofore given to vote such shares, and acknowledges receipt of the Notice of Annual Meeting and Proxy Statement relating to the June 23, 1999 Annual Meeting of Stockholders. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the proxies will have the authority to vote "FOR" the election of each of the nominees for director and "FOR" Item 2 ratification of the appointment of the Company's independent auditors. PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE. CONTINUED AND TO BE SIGNED ON REVERSE SIDE - -------------------------------------------------------------------------------- ^ FOLD AND DETACH HERE ^ ATTENTION: PLEASE NOTE THAT THIS BOX WILL NOT BE PRINTED. IT IS TO SHOW THE TEXT POSITION ON THE FRONT OF THIS PROXY CARD - -------------------------------------------------------------------------------- [X] Please mark votes as in this example 1. Election of Directors. WITHHOLD Nominees: Michael Berberian, FOR AUTHORITY John W. Brownie, Val P. Peline, Leonard Schuchman, [ ] [ ] James J. Spilker, Jr., C. Jerome Waylan, Robert Calafell. [ ] _________________________________________ For all nominees except as noted above 2. Ratification of the appointment of Arthur FOR AGAINST ABSTAIN Andersen LLP as the Company's independent [ ] [ ] [ ] auditors for the current fiscal year. 3. Upon any other matters which might properly come before this meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR AND "FOR" ITEM 2. MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ] Signature(s) ___________________________________________________________________ Dated ____________________________________,1999 Please sign exactly as your name appears on this proxy. If signing for executor, trust, or corporation, title and capacity should be stated. If shares are held jointly, each holder should sign. - -------------------------------------------------------------------------------- ^ FOLD AND DETACH HERE ^ ATTENTION: PLEASE NOTE THAT THIS BOX WILL NOT BE PRINTED. IT IS TO SHOW THE TEXT POSITION ON THE BACK OF THIS PROXY CARD 1920-PS-99 -----END PRIVACY-ENHANCED MESSAGE-----