-----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, Pql4n/EPt8oyP6+O2Nz0Jcojk7hjXAuU88yzNeV5s50vFyd6LhSUJVg2P4J686/V Aa/MBrnpUvE+R00ueI2O3w== /in/edgar/work/20000707/0000912057-00-031122/0000912057-00-031122.txt : 20000920 0000912057-00-031122.hdr.sgml : 20000920 ACCESSION NUMBER: 0000912057-00-031122 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000808 FILED AS OF DATE: 20000707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON ACOUSTICS INC CENTRAL INDEX KEY: 0000805268 STANDARD INDUSTRIAL CLASSIFICATION: [3651 ] IRS NUMBER: 042662473 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-15193 FILM NUMBER: 669207 BUSINESS ADDRESS: STREET 1: 300 JUBILEE DRIVE STREET 2: P O BOX 6015 CITY: PEABODY STATE: MA ZIP: 01961-6015 BUSINESS PHONE: 5085385000 MAIL ADDRESS: STREET 1: 300 JUBILEE DRIVE STREET 2: P O BOX 6015 CITY: PEABODY STATE: MA ZIP: 01961-6015 DEF 14A 1 def14a.txt DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-12 BOSTON ACOUSTICS, 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)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (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: ------------------------------------------------------------------------ July 7, 2000 BOSTON ACOUSTICS, INC. 300 JUBILEE DRIVE PEABODY, MA 01960 Dear Stockholders: It is my pleasure to invite you to attend the Annual Meeting of Stockholders of Boston Acoustics, Inc. (the "Company"). The Meeting will be held at the Company on Tuesday, August 8, 2000, at 9:00 a.m. The notice of meeting and proxy statement which follow describe the business to be transacted at the Meeting. In addition, we plan to give you a report on the status of the Company's business. Stockholders will have an opportunity to comment and ask questions at the Meeting. It is important that your shares be represented at the Meeting, regardless of the number you may hold. Therefore, regardless of whether you plan to attend, please sign, date and return the proxy card as soon as possible. This will not prevent you from voting your shares in person if you do come to the Meeting. I look forward to seeing you on August 8th. Sincerely yours, ANDREW G. KOTSATOS CHIEF EXECUTIVE OFFICER BOSTON ACOUSTICS, INC. 300 JUBILEE DRIVE PEABODY, MA 01960 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AUGUST 8, 2000, 9:00 A.M. To The Stockholders: You are hereby notified that the Annual Meeting of Stockholders of Boston Acoustics, Inc. (the "Company") will be held on August 8, 2000 at 9:00 a.m. at the offices of the Company, 300 Jubilee Drive, Peabody, Massachusetts, to consider and act upon the following matters: 1. To elect four (4) Directors for the ensuing year. 2. To ratify the action of the Board of Directors in appointing Arthur Andersen LLP as auditors for the Company. 3. To act upon such other business as may properly come before the meeting or any adjournments thereof. Even if you plan to attend the Meeting personally, please be sure to sign, date and return the enclosed proxy in the enclosed envelope to: Fleet National Bank c/o EquiServe, LP P.O. Box 8040 Boston, MA 02266-8040 Only stockholders of record on the books of the Company at the close of business on June 26, 2000 are entitled to receive notice of, and to vote at, the Annual Meeting and at any adjournments thereof. By order of the Board of Directors, WILLIAM E. KELLY ACTING CLERK Peabody, Massachusetts, July 7, 2000 IMPORTANT: IN ORDER TO SECURE A QUORUM AND TO AVOID THE EXPENSE OF ADDITIONAL PROXY SOLICITATION, PLEASE VOTE, DATE AND SIGN YOUR PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED EVEN IF YOU PLAN TO ATTEND THE MEETING PERSONALLY. IF YOU DO ATTEND THE MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON, YOU MAY DO SO. YOUR COOPERATION IS GREATLY APPRECIATED. BOSTON ACOUSTICS, INC. EXECUTIVE OFFICES 300 JUBILEE DRIVE PEABODY, MA 01960 PROXY STATEMENT JULY 7, 2000 SOLICITATION AND VOTING OF PROXIES This Proxy Statement and the accompanying proxy form are being mailed by Boston Acoustics, Inc., a Massachusetts corporation, (the "Company") to the holders of record on June 26, 2000 of the Company's outstanding shares of Common Stock, $.01 par value ("Common Stock"), commencing on or about July 7, 2000. The accompanying proxy is solicited by the Board of Directors of the Company for use at the Annual Meeting of Stockholders to be held on August 8, 2000 (the "Meeting") and any adjournments thereof. The cost of solicitation of proxies will be borne by the Company. Directors, officers and employees may assist in the solicitation of proxies by mail, telephone, telegraph, and personal interview without additional compensation. When a proxy is returned, prior to or at the Meeting, properly signed, the shares represented thereby will be voted by the proxies named in accordance with the stockholder's instructions indicated on the proxy card. You are urged to specify your choices on the enclosed proxy card. If the proxy is signed and returned without specifying choices, the shares will be voted FOR the election of Directors as set forth in this Proxy Statement, FOR proposal 2 and in the discretion of the proxies as to other matters that may properly come before the Meeting or any adjournments thereof. SENDING IN A PROXY WILL NOT AFFECT A STOCKHOLDER'S RIGHT TO ATTEND THE MEETING AND VOTE IN PERSON. A proxy may be revoked by notice in writing delivered to the Clerk of the Company at any time prior to its use, by a duly-executed proxy bearing a later date, or by voting in person by ballot at the Meeting. A stockholder's attendance at the Meeting will not by itself revoke a proxy. VOTING SECURITIES AND RECORD DATE The Company has one class of Common Stock outstanding. Each share of Common Stock is entitled to one vote. The Board of Directors has fixed June 26, 2000 as the record date for the Meeting. Only holders of record of the Company's Common Stock on the record date are entitled to notice of and to vote at the Meeting. On August 17, 1998, the stockholders approved a 3-for-2 split of the Company's common stock. This stock split was effected in the form of a stock dividend. The effect of the stock split has been retroactively reflected in the numbers contained in this proxy statement. On the record date, there were 4,908,245 shares of Common Stock issued and outstanding. Under Massachusetts law and the Company's By-laws, the presence of holders of a majority in interest of the issued and outstanding Common Stock entitled to vote at the Meeting, represented in person or by proxy, shall constitute a quorum. Election of directors is by plurality of the votes cast at the Meeting. Ratification of the appointment of Arthur Andersen LLP as the Company's auditors requires a vote of the majority of the Common Stock represented in person or by proxy at the Meeting and voting thereon. With regard to the election of directors, votes may be left blank, cast in favor or withheld; votes that are left blank will be excluded entirely from the vote and will have no effect. Votes that are withheld will have the effect of a negative vote. Abstentions may be specified on all proposals (other than the election of directors) and will be counted as present for purposes of the proposal on which the abstention is noted. Because the proposal to ratify the appointment of Arthur Andersen LLP as the Company's auditors requires the approval of a 1 majority of the votes properly cast at the Meeting, either in person or by proxy, abstentions will have the effect of a negative vote. Broker non-votes (i.e., shares held by a broker or nominee which are represented at the Meeting, but with respect to which the broker or nominee is not empowered to vote on a particular proposal) will be counted in determining a quorum for each proposal. However, broker non-votes will be treated as unvoted shares and, accordingly, will not be counted in determining the outcome of any proposal which requires the affirmative vote of a majority of the votes cast. The Board of Directors knows of no other matters to be presented at the Meeting. If any other matter should be presented at the Meeting upon which a vote may be taken, shares represented by all proxies received by the Company will be voted in accordance with the judgement of the persons named as proxies. The Company's Annual Report to Stockholders, including financial statements for the fiscal year ended March 25, 2000, is being mailed to stockholders of record of the Company concurrently with this Proxy Statement. The Annual Report to Stockholders is not, however, a part of the proxy soliciting materials. This Proxy Statement is first being mailed on July 7, 2000. PROPOSAL NO. 1--ELECTION OF DIRECTORS One of the purposes of the Meeting is to elect four (4) directors to serve until the next annual meeting of stockholders and until their successors shall have been duly elected and qualified. It is intended that the proxies solicited by the Board of Directors will be voted in favor of the four (4) nominees named below, unless otherwise specified on the proxy card. All the nominees are presently directors of the Company and all of the nominees have consented to be named and to serve if reelected. Andrew G. Kotsatos, George J. Markos, and Lisa M. Mooney were previously elected by the stockholders. Moses A. Gabbay was elected as director by the Board of Directors to fill a vacancy in May 2000. The Board knows of no reason why any of the nominees will be unavailable or unable to serve as a director, but in such event, proxies solicited hereby will be voted for the election of another person or persons to be designated by the Board of Directors. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW. The following are summaries of the background and business experience and descriptions of the principal occupations of the nominees: Andrew G. Kotsatos (age 60) has been a Director and Assistant Clerk since co-founding the Company in February 1979. He served as Executive Vice President of the Company from its inception until April 1986 and as President until November 1996, when he became Chief Executive Officer and Treasurer. Mr. Kotsatos previously held positions with two other audio manufacturers, KLH Research and Development Corporation and Advent Corporation. His last position at Advent was Audio Products Manager and Chief Speaker Designer. Moses A. Gabbay (age 55) has been Chief Operating Officer of the Company since April 2000 and was elected as a Director in May 2000. He served as Vice President--Engineering since joining the Company in 1981. Mr. Gabbay was previously Director of Engineering at Avid Corporation and an acoustic engineer for Teledyne Acoustic Research. George J. Markos (age 51) has been a Director of the Company since August 1996. Mr. Markos has been Senior Vice President and General Counsel of Yell-O-Glow Corporation, a produce distributor, since 1991. Between 1988 and 1991, Mr. Markos was Senior Counsel and Assistant Secretary of Norton Company, Inc., a manufacturer of abrasive products and industrial ceramics. Lisa M. Mooney, formerly Lisa M. Reed, (age 34) has been a Director of the Company since May 1996. She was Director of Corporate Planning of the Company from January 1994 to June 1996. Previously, Mrs. Mooney was a lending officer in the Global Banking unit of the Bank of Boston. Mrs. Mooney holds an undergraduate degree from the University of Pennsylvania and a MBA from Boston University. Mrs. Mooney is the sister of Paul F. Reed, an executive officer. 2 BOARD OF DIRECTORS MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES The Board of Directors met four times during the fiscal year ended March 25, 2000. The Board of Directors has standing Audit and Compensation Committees. The Board has no nominating committee. All of the directors attended at least 75% or more of the meetings of the Board and of the Board committees on which they served during the fiscal year ended March 25, 2000. The Compensation Committee is responsible for evaluating compensation plans for employees, management and directors, and making recommendations on compensation to the Board. It currently consists of George J. Markos, and Lisa M. Mooney. The Compensation Committee met once during the fiscal year ended March 25, 2000. The Audit Committee, which currently consists of George J. Markos and Lisa M. Mooney oversees the accounting and audit functions of the Company, including matters relating to the appointment and activities of the Company's auditors. The Audit Committee met once during the fiscal year ended March 25, 2000. COMPENSATION OF DIRECTORS Each Director who is not an officer of the Company is entitled to an annual fee of $6,000, and an additional annual fee of $1,500 for service on the Audit Committee and an additional annual fee of $1,000 for service on the Compensation Committee on which he or she serves. Directors of the Company are entitled to non-employee stock option grants under the 1997 Stock Plan. During Fiscal 2000 there were no non-employee options granted to any of the Company's directors. PRINCIPAL AND MANAGEMENT STOCKHOLDERS The following table reflects the number of shares of the Company's Common Stock beneficially owned as of July 3, 2000 (i) by each person who is known by the Company to own beneficially more than 5% of the Company's Common Stock, (ii) by each of the Directors and nominees for Director, (iii) by each of the executive officers named in the Summary Compensation Table in this Proxy Statement and (iv) by all Directors, nominees for director and executive officers as a group. In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, for purposes of this table, of any shares of Common Stock if he or she has or shares voting power or investment power with respect to such security or has the right to acquire beneficial ownership at any time within sixty days of July 3, 2000. As used herein "voting power" is the power to vote or direct the voting of shares, and "investment power" is the power to dispose of or direct the disposition of shares. Except as indicated in the notes following the table below, each person named has sole voting and investment power with respect to the shares listed as being beneficially owned by such individual.
NUMBER OF SHARES PERCENT OF NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK ------------------------ ------------------ ------------ Andrew G. Kotsatos.......................................... 1,428,161(1) 28.9 Wellington Management Company, LLP.......................... 497,000(2) 10.1 Capital Management Group 75 State Street Boston, MA 02109 Lisa M. Mooney.............................................. 160,761 3.3
3
NUMBER OF SHARES PERCENT OF NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK ------------------------ ------------------ ------------ Moses A. Gabbay............................................. 86,178(3) 1.7 Robert L. Spaner............................................ 29,498(4) * Fred E. Faulkner, Jr........................................ 8,400(5) * Martin J. Harding........................................... 6,648(6) * George J. Markos............................................ 0 * All Directors and Executive Officers as a group (11 1,797,819(7) 35.6 persons)..................................................
- ------------------------ * Indicates less than 1% ownership. (1) Includes (a) 369,728 shares owned by Mr. Kotsatos' wife, individually and as trustee for the benefit of their children, as to which beneficial ownership is disclaimed and (b) 34,800 shares issuable upon exercise of certain options which are currently exercisable or become exercisable within 60 days of July 3, 2000 ("Currently Exercisable Options"). (2) According to a letter dated March 10, 2000 from Brian P. Hillery, Assistant Vice President of Wellington Management Company, LLP ("Wellington Management"), Wellington Management has shared voting power for 273,000 shares and shared dispositive power for 497,000 shares. These securities are owned by various individual and institutional investors which Wellington Management serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, as amended, Wellington Management is deemed to be a beneficial owner of such securities; however, Wellington Management expressly disclaims that it is, in fact, the beneficial owner of such securities. (3) Includes (a) 11,317 shares jointly owned by Mr. Gabbay and his son and 11,319 shares jointly owned by Mr. Gabbay and his daughter and (b) 32,498 shares issuable upon exercise of Currently Exercisable Options. (4) Includes 29,498 shares issuable upon exercise of Currently Exercisable Options. (5) Includes (a) 600 shares held by Mr. Faulkner's wife as custodian for their children as to which beneficial ownership is disclaimed. Mr. Faulkner, Jr. resigned as President and Chief Operating Officer effective April 3, 2000. (6) Includes 6,333 shares issuable upon exercise of Currently Exercisable Options. (7) Includes (a) 370,328 shares as to which the Directors and named executive officers disclaimed beneficial ownership as described above and (b) 142,337 shares issuable upon exercise of Currently Exercisable Options. See footnotes 1, 3, 4 and 6. 4 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following tables and notes present the compensation received by the Company's Chief Executive Officer and the four most highly paid executive officers other than the Chief Executive Officer for each of the last three fiscal years.
ANNUAL COMPENSATION ------------------------------------------------------------ SECURITIES UNDERLYING OPTIONS OTHER ANNUAL (#) ALL OTHER NAME AND FISCAL SALARY BONUS COMPENSATION LONG-TERM COMPENSATION PRINCIPAL POSITION YEAR(1) ($) ($) ($)(2) COMPENSATION ($) ------------------ -------- -------- -------- ------------ ------------ ------------ Andrew G. Kotsatos................... 2000 350,000 42,000 -- 18,000 100,961(3) (Chief Executive Officer & 1999 350,000 39,000 14,023 -- 101,053 Treasurer 1998 250,000 91,875 16,436 18,000 36,858 Fred E. Faulkner, Jr................. 2000 250,000 30,000 -- 18,000 2,625(5) (Chief Operating Officer & 1999 250,000 90,000 -- -- 5,000 & President)(4) 1998 250,000 175,688 -- 168,000 105,000 Moses A. Gabbay...................... 2000 221,875 103,669 14,100 28,000 2,375(5) (Chief Operating Officer)(4) 1999 200,000 70,450 3,525 10,000 2,375 1998 195,000 48,379 -- 18,000 2,203 Robert L. Spaner..................... 2000 201,154 37,435 -- 20,000 2,182(5) (Vice President-Sales) 1999 182,885 36,302 -- 5,000 2,223 1998 131,154 48,454 -- 15,000 1,582 Martin J. Harding.................... 2000 122,500 20,153 -- 8,000 -- (Vice President-Marketing)(6) 1999 118,000 9,680 3,200 5,000 -- 1998 105,000 6,300 3,200 3,000 --
- ------------------------ (1) The Company's fiscal year ends on the last Saturday of March. (2) Reflects car allowances provided by the Company. (3) Includes $98,586 paid in premiums for three life insurance policies, each with split dollar arrangements, one covering the life of Mr. Kotsatos and two policies covering the survivor of Mr. Kotsatos and his spouse. The Company, Mr. Kotsatos and Mr. Kotsatos' spouse entered into agreements concerning the life insurance policies pursuant to which the Company will receive, in the event of the insureds' deaths, an amount equal to the aggregate amount of its premium payments under the respective policies and the beneficiary of the policies will receive the excess. Also includes $2,375 contributed by the Company under a defined contribution plan established under Section 401(k) of the Internal Revenue Code, as amended (the Code). (4) Effective April 3, 2000, Mr. Faulkner, Jr. resigned as Chief Operating Officer and President. On April 25, 2000, Mr. Moses Gabbay was appointed Chief Operating Officer. During Fiscal 1998 and Fiscal 1999, Mr. Gabbay was Vice President--Engineering. 5 (5) Reflects Company contributions under a defined contribution plan established under Section 401(k) of the Code. (6) During the period November 1996 through April 30, 1999, Mr. Harding was a consultant to the Company and was compensated in the form of consulting fees during that time. Mr. Harding has performed the function of Vice President--Marketing since November 1998 and subsequently on May 1, 1999, he became an employee of the Company. OPTION GRANTS IN THE LAST FISCAL YEAR The following table sets forth certain information concerning grants of stock options made during the fiscal year ended March 25, 2000 to the named executive officers:
INDIVIDUAL GRANTS ------------------------------------------------ POTENTIAL REALIZABLE PERCENT VALUE AT ASSUMED NUMBER OF OF TOTAL ANNUAL RATES OF SECURITIES OPTIONS EXERCISE STOCK PRICE UNDERLYING GRANTED TO OR BASE APPRECIATION FOR OPTIONS EMPLOYEES PRICE PER OPTION TERM (2) GRANTED IN FISCAL SHARE EXPIRATION ---------------------- NAME (#) 2000 ($/SH)(1) DATE 5% ($) 10% ($) ---- ---------- ---------- --------- ---------- --------- ---------- Andrew G. Kotsatos.............. 18,000(3) 14.1 12.79 10/22/03 63,593.11 140,524.14 Fred E. Faulkner, Jr............ 18,000(4) 14.1 11.63 (4) -- -- Moses A. Gabbay................. 28,000(5) 22.0 11.63 10/9/05 89,929.65 198,721.01 Robert L. Spaner................ 20,000(6) 15.7 11.63 10/9/07 64,235.46 141,943.58 Martin J. Harding............... 8,000(7) 6.3 11.63 10/9/03 25,694.19 56,777.43
- ------------------------ (1) All options, except the options granted to Mr. Kotsatos, were granted at an exercise price equal to market value of the Company's Common Stock on the date of grant as determined by the closing price of the Common Stock on the NASDAQ National Market. The options granted to Mr. Kotsatos were granted at an exercise price equal to 110% of market value of the Company's Common Stock on the date of grant as determined by the closing price of the Common Stock on the NASDAQ National Market. (2) The 5% and 10% assumed annual compound rates of stock price appreciation are mandated by rules of the Securities and Exchange Commission and do not represent the Company's estimate or projection of future Common Stock prices. (3) So long as Mr. Kotsatos remains an employee of the Company, options for the purchase of shares of Common Stock are exercisable in annual installments equal to one fifth of the total number of shares underlying such options on each of October 22, 1999, 2000, 2001, 2002, and 2003. (4) Mr. Faulkner, Jr.'s options for the purchase of shares of Common Stock expired on July 3, 2000 as a consequence of Mr. Faulkner's resignation. (5) So long as Mr. Gabbay remains an employee of the Company, options for the purchase of shares of Common Stock are exercisable in annual installments equal to one fifth of the total number of shares underlying such options on each of October 22, 1999, 2000, 2001, 2002, and 2003. Mr. Gabbay also has options for the purchase of shares of Common Stock exercisable in annual installments equal to one 6 ninth of the total number of shares underlying such options on each of October 22, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, and 2007. (6) So long as Mr. Spaner remains an employee of the Company, options for the purchase of shares of Common Stock are exercisable in annual installments equal to one fifth of the total number of shares underlying such options on each of October 22, 1999, 2000, 2001, 2002, and 2003. Mr. Spaner also has options for the purchase of shares of Common Stock exercisable in annual installments equal to one ninth of the total number of shares underlying such options on each of October 22, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, and 2007. (7) So long as Mr. Harding remains an employee of the Company, options for the purchase of shares of Common Stock are exercisable in annual installments equal to one third of the total number of shares underlying such options on each of October 22, 1999, 2000, and 2001. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES The following table sets forth information with respect to the named executive officers concerning the exercise of options during the last fiscal year and unexercised options held as of the end of the fiscal year.
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT SHARES OPTIONS AT FY-END FY-END ($)(2) ACQUIRED VALUE --------------------------- --------------------------- NAME ON EXERCISE REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ----------- --------------- ----------- ------------- ----------- ------------- Andrew G. Kotsatos.......... -- -- 34,800 37,200(3) (70,954) (97,270) Fred E. Faulkner, Jr........ -- -- --(4) --(4) -- -- Moses A. Gabbay............. -- -- 32,498 61,002(5) (23,704) (121,933) Robert L. Spaner............ -- -- 29,498 40,502(6) (12,640) (84,461) Martin B. Harding........... -- -- 6,333 9,667(7) (23,328) (29,172)
- ------------------------ (1) Value realized equals fair market value on the date of exercise, less the exercise price, times the number of shares acquired without deducting taxes or commissions paid by employee. (2) Value of unexercised options equals fair market value of the shares underlying in-the-money options on March 24, 2000 ($12.25 per share), which was the last trading day of the Company's fiscal year, less exercise price, times the number of options outstanding. (3) The exercise prices of these options are $12.79, $12.83 and $19.89 per share. (4) Mr. Faulkner, Jr.'s options for the purchase of shares of Common Stock expired on July 3, 2000 as a consequence of Mr. Faulkner's resignation. (5) The exercise prices of these options are $11.63, $11.67, $18.08 and $20.25 per share. (6) The exercise prices of these options are $11.63, $11.67, $18.08 and $20.25 per share. (7) The exercise prices of these options are $11.63, $18.08 and $20.25 per share. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Lisa M. Mooney, a member of the Compensation Committee of the Board of Directors during the fiscal year ended March 25, 2000, is the sister of Paul F. Reed, an executive officer. Lisa M. Mooney and 7 Paul F. Reed were the daughter and son of Francis L. Reed, the former Chief Executive Officer and Treasurer of the Company, who died on November 16, 1996, and Dorothea T. Reed, a former director of the Company, who died on January 5, 1997. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE STOCK PERFORMANCE GRAPH CONTAINED ELSEWHERE HEREIN SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS NOR SHALL THEY BE DEEMED TO BE SOLICITING MATERIAL OR DEEMED FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. REPORT OF THE COMPENSATION COMMITTEE During the fiscal year ended March 25, 2000, the Compensation Committee of the Board of Directors was responsible for establishing and administering the compensation policies which govern annual salary, bonuses, and stock-based incentives (currently stock options) for directors and officers. The Compensation Committee met once during the fiscal year and was attended by all members. OVERVIEW The Company has historically established levels of executive compensation that provide for a base salary intended to allow the Company to hire and retain qualified management. The Company has also provided annual cash incentive bonuses based on the Company's performance during the fiscal year to reward executives for their contributions to the Company's achievements. From time to time the Company has also granted stock options to executives and key employees to keep the management focused on the stockholders' interests. The Compensation Committee believes that the Company's past and present executive compensation practices provide an overall level of compensation that is competitive with companies of similar size, complexity and financial performance and that its executive compensation practices have allowed it to retain key personnel whose contribution has maintained and increased the Company's profitability. The Compensation Committee determines the compensation of the executive officers of the Company and sets policies for and reviews the compensation awarded to the other officers of the Company. This is designed to ensure consistency throughout the officer compensation programs. In reviewing the individual performances of the executive officers (other than the Chief Executive Officer and President) the Compensation Committee takes into account the views of the Chief Executive Officer and the President. In Fiscal 2000, the Compensation Committee determined the base salary and bonus for executive officers, other than for the Chief Executive Officer and the President, based largely on recommendations by the Company's Chief Executive Officer and President. The Compensation Committee expects to review annually the annual and long-term compensation of all the Company's executives and employees to assure that all of the Company's executives and employees continue to be properly motivated to serve the interests of the Company's stockholders. EXECUTIVE COMPENSATION BASE SALARY. Base salary is generally set within the ranges of salaries of executive officers with comparable qualifications, experience and responsibilities at other companies of similar size, complexity and profitability taking into account the position involved and the level of the executive's experience. In addition, consideration is given to other factors, including an officer's contribution to the Company as a 8 whole. Since Fiscal 1999, the base salary for the named executive officers, other than the Chief Executive Officer and the President, increased on average approximately $14,881. The Compensation Committee awarded such increases to keep the Company a competitive employer and to allow for increases in the cost of living. ANNUAL BONUS COMPENSATION. Over the past five fiscal years, the Company has awarded cash bonuses to its executive officers on a discretionary basis. In determining bonus awards, the Compensation Committee considers the financial and nonfinancial achievements of the Company, including revenue growth, profitability, expansion of the Company's markets and new product introductions. In Fiscal 2000, the Compensation Committee maintained relatively even bonus levels of the executive officers, generally in proportion to increases in base compensation; however, the Committee awarded an additional bonus to the V.P. Engineering during the fiscal year. The Compensation Committee believes that bonuses are necessary to keep total compensation of the Company's executives competitive with executive compensation at similarly situated companies. It is expected that bonus compensation will continue to move in parallel with increases in base salary until such time as the Company's financial results, the individual performance of the executive or the job market for key executives, warrants a change in the percentage of total compensation which is comprised of bonuses. LONG TERM INCENTIVES. Currently, stock options are the Company's primary long-term incentive vehicle. Stock option awards have been made from time to time to persons who currently serve as middle and upper level managers, including the Chief Executive Officer and other executive officers named in the Summary Compensation Table. The size of awards has historically been based on position, responsibilities, and individual performance. The compensation Committee believes that the long-term incentives awarded by the Company in Fiscal 1995 and 1996 were generally below the levels found at the comparable companies. In Fiscal 1997, 1998, 1999 and 2000, the Company made awards to middle and upper level managers in an effort to improve this aspect of the Company's compensation program and will continue to monitor this aspect of compensation. The Compensation Committee is aware that the Company's grants of stock options are less frequent and smaller in size than the grants of many comparable companies, although the Board believes that the overall mix of compensation components has been adequate. The Compensation Committee believes that this aspect of compensation must receive more emphasis in the future to assure that all of the Company's key employees continue to focus on the profitability of the Company and, thus, the interests of the Company's stockholders. Accordingly, the Compensation Committee has recommended to the Board of Directors the authorization of additional stock options for employees. CHIEF EXECUTIVE OFFICER COMPENSATION. In determining the compensation of the Company's Chief Executive Officer, the Compensation Committee considered the demonstrated leadership he has brought to the Company and the excellent performance of the Company during Fiscal 1997 and 1998. Mr. Kotsatos' salary did not increase during Fiscal 1997 as a result of his assuming the role of Chief Executive Officer and Treasurer. However, Mr. Kotsatos was awarded options to purchase 60,000 shares of Common Stock in 1997, 18,000 shares in 1998, and 18,000 shares in 2000 in recognition of his additional responsibilities. On April 1, 1998 the Compensation Committee approved an increased in Mr. Kotsatos' salary to $350,000 annually. Respectfully Submitted by the Compensation Committee, George J. Markos Lisa M. Mooney 9 STOCK PERFORMANCE GRAPH Set forth below is a line graph comparing the cumulative total return over a five-year period beginning March 25, 1995 and ending March 25, 2000 of the Company's Common Stock to the cumulative total return on the Center for Research in Securities Price ("CRSP") Total Return Index for the NASDAQ Stock Market (U.S. Companies) ("NASDAQ Market-U.S. Index") and a Company-selected peer group index that includes: Harmon Industries, Inc., Phoenix Gold Int'l, Inc., Koss Corporation, and Recoton Corp. (the "Peer Group Index") The Peer Group Index was formed on a weighted average basis based on market capitalizations, adjusted at the end of each year. Cumulative total return is measured assuming an initial investment of $100 on March 31, 1995 and reinvestment of dividends. Polk Audio, Inc., a former member of the peer group index, has been eliminated from the peer group for the fiscal year ended March 25, 2000 due to the fact that it is no longer operated as a public entity. Accordingly, it has been replaced with Phoenix Gold, Int'l, Inc., and Koss Corporation as members of the Company's peer group index. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MAR-95 MAR-96 MAR-97 MAR-98 MAR-99 MAR-00 BOSTON ACOUSTICS, INC. 100 102.5 143.89 181.54 144.87 93.46 NEW PEER GROUP 100 108.05 91.43 129.86 99.32 145.65 OLD PEER GROUP 100 108.62 91.52 132.88 100.63 148.88 NASDAQ STOCK MARKET (U.S.) 100 135.79 150.95 228.88 309.19 574.68
10 PROPOSAL NO. 2--RATIFICATION OF APPOINTMENT OF AUDITORS The Board of Directors of the Company has appointed Arthur Andersen LLP as auditors of the Company for the fiscal year ending March 31, 2001 and further directed that management submit the selection of auditors for ratification by the stockholders. Arthur Andersen LLP were the Company's auditors for the fiscal year ended March 25, 2000. Representatives of Arthur Andersen LLP are expected to be present at the Meeting, with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE CHOICE OF ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires directors, executive officers and persons who own more than 10% of the outstanding shares of Common Stock of the Company to file with the Securities and Exchange Commission and The Nasdaq Stock Market reports of ownership and changes in ownership of voting securities of the Company and to furnish copies of such reports to the Company. Based solely on a review of copies of such reports furnished to the Company or written representations from certain persons that no reports were required for those persons, the Company believes that all Section 16(a) filing requirements were complied with during the fiscal year ended March 25, 2000, except that, through inadvertence Andrew G. Kotsatos, Fred E. Faulkner, Jr., Moses A. Gabbay, Robert L. Spaner, Martin J. Harding, Debra A. Ricker-Rosato, Michael B. Chass, and Paul F. Reed, executive officers, all made one late filing on Form 5. STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING Any stockholder proposal intended to be presented for consideration at the Company's 2001 Annual Meeting of Stockholders, and included in the Company's proxy statement must be received by the Company not later than March 13, 2001. Any stockholder desiring to submit a proposal should consult applicable regulations of the Securities and Exchange Commission. OTHER MATTERS As of the date of this Proxy Statement, management of the Company knows of no matter not specifically referred to above as to which any action is expected to be taken at the Meeting of Stockholders. It is intended, however, that the persons named as proxies will vote the proxies, insofar as the same are not limited to the contrary, in regard to such other matters and the transaction of such other business as may properly be brought before the Meeting, as seems to them to be in the best interests of the Company and its stockholders. 11 BSA60B DETACH HERE PROXY BOSTON ACOUSTICS, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS - AUGUST 8, 2000 The undersigned hereby appoints Andrew G. Kotsatos and Moses A. Gabbay, or either of them, with full power of substitution, as proxies of the undersigned to represent and vote all shares of stock of BOSTON ACOUSTICS, INC. which the undersigned would be entitled to vote if personally present, at the Annual Meeting of Stockholders of said Corporation, to be held at the Company's offices at 300 Jubilee Drive, Peabody, Massachusetts on August 8, 2000 at 9:00 a.m., and at any adjournments thereof, as directed below, on all matters coming before said meeting. This proxy when properly executed will be voted as directed on the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE REVERSE SIDE, FOR PROPOSAL 2 AND IN THE DISCRETION OF THE PROXIES ON ITEM 3. The undersigned hereby revokes all proxies heretofore given by the undersigned to vote at said meeting or any adjournments thereof. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE SIDE BSA60A DETACH HERE /X/ PLEASE MARK VOTES AS IN THIS EXAMPLE. 1. To elect four directors for the ensuing year. NOMINEES: (01) Andrew G. Kotsatos, (02) Moses A. Gabbay (03) George J. Markos, (04) Lisa M. Mooney FOR WITHHELD ALL / / / / FROM ALL NOMINEES NOMINEES / / ___________________________ For all nominees except as noted above FOR AGAINST ABSTAIN 2. To ratify the action of the Directors on selecting Arthur Andersen LLP to / / / / / / serve as auditors for the Company for the ensuing fiscal year. 3. To transact such other business as may properly come before the meeting or any adjournments thereof. MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / / MARK HERE FOR COMMENTS / / NOTE: If shares are registered in more than one name, signatures of all such persons are required. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. 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