-----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, AZTE8OUzUmI/0xuuf7WL7PZp8aqnl3uPxboF6bkLYfjGTSMFz2bLBwUdpe9rp2oV HwLB7BzX27pDLFS+QvbdOw== 0000927016-98-002630.txt : 19980710 0000927016-98-002630.hdr.sgml : 19980710 ACCESSION NUMBER: 0000927016-98-002630 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980805 FILED AS OF DATE: 19980709 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BE AEROSPACE INC CENTRAL INDEX KEY: 0000861361 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 061209796 STATE OF INCORPORATION: DE FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-18348 FILM NUMBER: 98662960 BUSINESS ADDRESS: STREET 1: 1400 CORPORATE CTR WY CITY: WELLINGTON STATE: FL ZIP: 33414 BUSINESS PHONE: 5617915000 MAIL ADDRESS: STREET 1: 1300 CORPORATE CENTER WAY STREET 2: 1300 CORPORATE CENTER WAY CITY: WELLINGTON STATE: FL ZIP: 33414 FORMER COMPANY: FORMER CONFORMED NAME: BE AVIONICS INC DATE OF NAME CHANGE: 19920608 DEF 14A 1 DEFINITIVE 14A BE AEROSPACE, INC. 1400 CORPORATE CENTER WAY WELLINGTON, FLORIDA 33414 ---------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AUGUST 5, 1998 ---------------- Notice is hereby given that the Annual Meeting of Stockholders of BE Aerospace, Inc. will be held in the Conference Center, 36th Floor, Ropes & Gray, One International Place, Boston, Massachusetts at 10:30 A.M. on Wednesday, August 5, 1998 for the following purposes: 1. To elect three Class I directors; 2. To consider and act upon a proposal to amend the Amended and Restated 1989 Stock Option Plan by increasing the aggregate number of shares available for grant thereunder to 3,700,000; 3. To consider and act upon a proposal to amend the 1991 Directors Stock Option Plan by increasing the aggregate number of shares available for grant thereunder to 300,000; 4. To consider and act upon a proposal to adopt the MacBride Principles; and 5. To transact any other business that may properly come before the meeting, or any adjournment thereof. Stockholders of record at the close of business on June 30, 1998 are entitled to notice of and to vote at the meeting. Whether or not you plan to attend the meeting in person, please sign and date the enclosed proxy and return it promptly in the enclosed envelope. By Order of the Board of Directors, Edmund J. Moriarty Secretary July 10, 1998 BE AEROSPACE, INC. ---------------- ANNUAL MEETING OF STOCKHOLDERS AUGUST 5, 1998 ---------------- PROXY STATEMENT ---------------- The enclosed form of proxy is solicited on behalf of the Board of Directors of BE Aerospace, Inc. (the "Company") to be voted at the Annual Meeting of Stockholders to be held in the Conference Center, 36th Floor, Ropes & Gray, One International Place, Boston, Massachusetts 02110 at 10:30 A.M. on Wednesday, August 5, 1998 or at any adjournment thereof (the "Meeting"). A proxy may be revoked by a stockholder at any time before it is voted (i) by returning to the Company another properly signed proxy bearing a later date; (ii) by otherwise delivering a written revocation to the Secretary of the Company; or (iii) by attending the Meeting and voting the shares represented by the proxy in person. Shares represented by the enclosed form of proxy properly executed and returned, and not revoked, will be voted at the Meeting. This Proxy Statement and the enclosed proxy were first mailed to stockholders on the date of the Notice of Annual Meeting of Stockholders. The expense of soliciting proxies will be borne by the Company. In addition to the solicitation of proxies by use of the mails, the Company may use the services of its officers and regular employees (who will receive no compensation therefor in addition to their regular salaries) to solicit proxies personally and by mail, telephone and telegram from brokerage houses and other shareholders. The Company also has retained Corporate Investor Communications, Inc. to assist in such solicitation for a fee of $5,000 plus expenses. The Company also will reimburse brokers and other persons for their reasonable charges and expenses in forwarding soliciting materials to their principals. In the absence of contrary instructions, the persons named as proxies will vote in accordance with the intentions stated below. The holders of record of shares of the common stock, $0.01 par value, of the Company (the "Common Stock") at the close of business on June 30, 1998 are entitled to receive notice of and to vote at the Meeting. As of that date, the Company had issued and outstanding 23,198,758 shares of Common Stock. Each such share of Common Stock is entitled to one vote on each matter to come before the Meeting. Consistent with Delaware state law and the Company's by-laws, a majority of the shares entitled to be cast on a particular matter, present in person or represented by proxy, constitutes a quorum as to such matter. Votes cast by proxy or in person at the Meeting will be counted by the person appointed by the Company to act as inspector of election for the Meeting. The three nominees for election as directors at the Meeting who receive the greatest number of votes properly cast for the election of directors shall be elected directors. A majority of the shares in attendance at the Meeting, present in person or represented by proxy, is necessary to approve the actions described in each of Proposal Nos. 2, 3 and 4 of the accompanying Notice of Annual Meeting. The inspector of election will count the total number of votes cast "for" approval of Proposal Nos. 2, 3 and 4 for purposes of determining whether sufficient affirmative votes have been cast. The inspector of election will count shares represented by proxies that withhold authority to vote either for the nominees for election as a director or for Proposal Nos. 2, 3 and 4 or that reflect abstentions and broker non-votes only as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum, but neither abstentions nor broker non-votes will have any effect on the outcome of voting on any matter. 1 The Annual Report to Stockholders for the Company's fiscal year ended February 28, 1998 accompanies this proxy statement. This proxy statement and the enclosed proxy are being mailed to stockholders on the same date as the date of the Notice of Annual Meeting. PROPOSAL NO. 1 ELECTION OF DIRECTORS The persons named in the enclosed proxy intend to vote each share as to which a proxy has been properly executed and returned and not revoked in favor of the election as directors of the three nominees named below, each of whom is now a director of the Company, unless authority to vote for the election of any or all of such nominees is withheld by marking the proxy to that effect. Pursuant to the Company's Restated Certificate of Incorporation, the Board of Directors is divided into three classes, each as nearly equal in number as possible, so that each director (in certain circumstances after a transitional period) will serve for three years, with one class of directors being elected each year. The nominees are the three directors currently designated as Class I Directors, whose terms expire at the 1998 Annual Meeting, and until their respective successors are elected and qualify to serve. The enclosed proxy cannot be voted for a greater number of persons than three. If Proposal No.1 is approved, Messrs. Jim C. Cowart, Paul E. Fulchino and Brian H. Rowe will be elected as Class I Directors for a term of three years, expiring at the 2001 Annual Meeting, and until their respective successors are elected and shall qualify to serve. It is expected that Messrs. Cowart, Fulchino and Rowe will be able to serve, but if any is unable to serve, the proxies reserve discretion to vote, or refrain from voting, for a substitute nominee or nominees or to fix the number of directors at a lesser number. 2 NOMINEES
NAME, AGE (AS OF JUNE 25, 1998), BUSINESS EXPERIENCE AND CURRENT DIRECTOR DIRECTORSHIPS SINCE -------------------------------- -------- JIM C. COWART, 46--Mr. Cowart has been a director of the 1989 Company since November 1989. Mr. Cowart is currently an independent investor and has been a principal of Cowart & Co. LLC and EOS Capital, Inc., private capital firms retained from time to time by the Company for strategic planning, competitive analysis, financial relations and other services. From January 1993 to November 1997, Mr. Cowart was the Chairman of the Board of Directors and Chief Executive Officer of Aurora Electronics Inc. From 1987 until 1991, Mr. Cowart was a founding general partner of Capital Resource Partners, a private investment capital manager. Prior to such time, Mr. Cowart held various positions in investment banking and venture capital with Lehman Brothers, Shearson Venture Capital and Kidder, Peabody & Co. PAUL E. FULCHINO, 51--Mr. Fulchino was elected a Director and 1996 President and Chief Operating Officer of the Company effective April 1, 1996. From 1990 to 1996, Mr. Fulchino served as President and Vice Chairman of Mercer Management Consulting, Inc., an international general management consulting firm with over 1,100 employees. In addition to his management responsibilities as President of Mercer, Mr. Fulchino also had responsibility for advising clients throughout the world, particularly with respect to the transportation industry, including a number of major airlines. BRIAN H. ROWE, 67--Mr. Rowe has been a Director of the 1995 Company since July 1995. He is currently Chairman Emeritus of GE Aircraft Engines, a principal business unit of the General Electric Company, where he also served as Chairman from September 1993 through January 1995 and as President from 1979 through 1993. Mr. Rowe is also a Director of the following companies: January 1980-Fifth Third Bank, an Ohio banking corporation; December 1994-Stewart & Stevenson Services, Inc., a custom packager of engine systems; March 1995-Atlas Air, Inc., an air cargo carrier; December 1995- Textron Inc., a manufacturer of aircraft, automobile components, an industrial segment, systems and components for commercial aerospace and defense industries, and financial services; March 1996-Canadian Marconi Company, a manufacturer of aerospace, electronic, communications products and surface transportation electronics systems; and October 1996-Cincinnati Bell Inc., a communications services company. Since January 1996, Mr. Rowe has served as Executive Vice Chairman of American Regional Aircraft Industries. CURRENT DIRECTORS NAME, AGE (AS OF JUNE 25, 1998), BUSINESS EXPERIENCE AND CURRENT DIRECTOR TERM DIRECTORSHIPS SINCE EXPIRES -------------------------------- -------- ------- RICHARD G. HAMERMESH, 50--Dr. Hamermesh has been a Director 1987 2000 of the Company since July 1987. Since August 1987, Dr. Hamermesh has been the Managing Partner of the Center for Executive Development, an independent executive education consulting company, and, from December 1986 to August 1987, Dr. Hamermesh was an independent consultant. Prior to such time, Dr. Hamermesh was on the faculty at the Harvard Business School. Dr. Hamermesh is also a Director of Applied Extrusion Technologies, Inc., a manufacturer of oriented polypropylene films used in consumer products labeling and packaging applications.
3 CURRENT DIRECTORS
NAME, AGE (AS OF JUNE 25, 1998), BUSINESS EXPERIENCE AND CURRENT DIRECTOR TERM DIRECTORSHIPS SINCE EXPIRES -------------------------------- -------- ------- AMIN J. KHOURY, 59--Mr. Khoury has been Chairman of the Board 1987 2000 of the Company since July 1987 and was Chief Executive Offi- cer until April 1, 1996. Since 1986, Mr. Khoury has also been the Managing Director of The K.A.D. Companies, Inc., an investment, venture capital and consulting firm. Mr. Khoury is currently the Chairman of the Board of Directors of Ap- plied Extrusion Technologies, Inc. and a member of the Board of Directors of Brooks Automation, Inc., the leading manu- facturer in the U.S. of vacuum central wafer handling sys- tems for semiconductor manufacturing. Mr. Khoury is the brother of Robert J. Khoury. ROBERT J. KHOURY, 56--Mr. Khoury has been a Director of the 1987 1999 Company since July 1987. Mr. Khoury was elected Vice Chairman and Chief Executive Officer effective April 1, 1996. From July 1987 until that date, Mr. Khoury served as the Company's President and Chief Operating Officer. From 1986 to 1987, Mr. Khoury was Vice President of The K.A.D. Companies, Inc. Mr. Khoury is the brother of Amin J. Khoury. HANSJORG WYSS, 62--Mr. Wyss has been a Director of the 1987 1999 Company since August 1989. Since 1977, Mr. Wyss has served as Director, President and is currently Chairman and Chief Executive Officer of Synthes North America and Synthes Canada, Ltd., manufacturers and distributors of orthopedic implants and instruments. Mr. Wyss formerly held management positions with Monsanto Europe in Belgium, Schappe- Burlington and Chrysler International in Switzerland. Mr. Wyss earned his MBA at Harvard Graduate School of Business and attained a Master of Science from the Swiss Federal Institute of Technology in Zurich. Mr. Wyss presently sits on numerous boards including Harvard Graduate School of Business, Norian Corporation, Boathouse Sports, Southern Utah Wilderness Alliance and the Grand Canyon Trust.
BOARD OF DIRECTORS AND COMMITTEES The Board of Directors held five meetings during the fiscal year ended February 28, 1998 ("Fiscal 1998") and acted pursuant to unanimous written consent on five occasions. Each director attended at least 80% of the aggregate of the total number of Board meetings and meetings of committees of the Board on which he served during Fiscal 1998, except for Mr. Wyss, who attended 60% of all such meetings. The Board of Directors currently has two standing committees, the Audit Committee and the Stock Option and Compensation Committee. The Audit Committee, composed of Messrs. Hamermesh and Rowe, held one meeting during Fiscal 1998. The Audit Committee recommends to the Board of Directors the independent auditors to be engaged by the Company, reviews with management and with the independent auditors the Company's internal accounting procedures and controls and reviews with the independent auditors the scope and results of their audit. The Stock Option and Compensation Committee, currently composed of Messrs. Cowart and Rowe, held no meetings during Fiscal 1998 and acted pursuant to unanimous written consent on seven occasions. The Committee provides recommendations to the Board regarding compensation matters and administers the Company's stock option and compensation plans. 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table and notes thereto set forth certain information with respect to the beneficial ownership of the Company's Common Stock as of June 25, 1998 by (i) each person who is known to the Company to beneficially own more than 5% of the outstanding shares of Common Stock of the Company; (ii) each of the chief executive officer and the four other most highly paid executive officers of the Company in Fiscal 1998 (collectively, the "Named Executive Officers") and each director of the Company; and (iii) all executive officers and directors of the Company as a group. Except as otherwise indicated, each of the stockholders named below has sole voting and investment power with respect to the shares of Common Stock beneficially owned:
COMMON STOCK BENEFICIALLY OWNED ------------------------- PERCENT OF NUMBER OUTSTANDING OF SHARES SHARES(1) --------- ----------- T. Rowe Price Associates............................ 1,469,600 6.12% 100 East Pratt Street Baltimore, MD 21202 Marco C. Lanza+..................................... 174,114(2) ** Hansjorg Wyss*...................................... 146,109(3) ** Amin J. Khoury+*.................................... 132,500(4) ** Paul E. Fulchino+*.................................. 127,255(5) ** Thomas P. McCaffrey+................................ 88,570(6) ** Robert J. Khoury+*.................................. 84,055(7) ** Jim C. Cowart*...................................... 48,000(8) ** Brian H. Rowe*...................................... 30,000(9) ** Richard G. Hamermesh*............................... 17,350(10) ** All Directors and Executive Officers as a group (14 Persons)........................................... 974,337(11) 4.06%
- -------- +Named Executive Officer *Director of the Company **Less than 1 percent (1) The number of shares of Common Stock deemed outstanding includes: (i) 23,198,758 shares of Common Stock outstanding as of June 25, 1998 and (ii) shares of Common Stock subject to outstanding stock options which are exercisable by the named individual or group in the next sixty days (commencing June 25, 1998). (2) Includes 172,500 shares issuable upon the exercise of stock options exercisable in the next sixty days and shares owned through the Company 401(k) plan. Excludes options to purchase 42,500 shares of Common Stock which are not exercisable in the next sixty days. (3) Includes 5,000 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 12,500 shares of Common Stock which are not exercisable in the next sixty days. (4) Includes 132,500 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 157,500 shares of Common Stock which are not exercisable in the next sixty days. (5) Includes 125,000 shares issuable upon the exercise of stock options exercisable in the next sixty days and shares owned through the Company 401(k) plan. Excludes options to purchase 145,000 shares of Common Stock which are not exercisable in the next sixty days. 5 (6) Includes 82,500 shares issuable upon the exercise of stock options exercisable in the next sixty days and shares owned through the Company 401(k) plan. Excludes options to purchase 82,500 shares of Common Stock which are not exercisable in the next sixty days. (7) Includes 82,500 shares issuable upon the exercise of stock options exercisable in the next sixty days and shares owned through the Company 401(k) plan. Excludes options to purchase 107,500 shares of Common Stock which are not exercisable in the next sixty days. (8) Includes 3,000 shares acquired by a profit sharing plan and 45,000 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 15,000 shares of Common Stock which are not exercisable in the next sixty days. (9) Includes 30,000 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 20,000 shares of Common Stock which are not exercisable in the next sixty days. (10) Includes 8,750 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 12,500 shares of Common Stock which are not exercisable in the next sixty days. (11) Includes 799,250 shares issuable upon the exercise of stock options exercisable in the next sixty days. Excludes options to purchase 737,500 shares of Common Stock which are not exercisable in the next sixty days. 6 EXECUTIVE COMPENSATION REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS The Stock Option and Compensation Committee, which is responsible for making recommendations to the Board of Directors on compensation relating to officers of the Company and administering the Company's stock option plans, makes the following report on executive compensation for Fiscal 1998: The Company's executive compensation program is designed to reward and retain executives who are capable of leading the Company in achieving its strategic and financial objectives in the competitive and rapidly changing commercial aircraft cabin interior products industry. The Company relies on three compensation components to motivate executive performance: annual salary, incentive cash bonuses and stock-based incentive compensation. Each of the Named Executive Officers has an employment agreement that establishes an annual base salary at a level the Company believes is competitive for companies in the aerospace and airline industries and in the mid-range for growth companies traded on the Nasdaq National Market. In addition to base salary, each Named Executive Officer may receive an incentive cash bonus at the end of each fiscal year based upon corporate performance and that officer's individual performance. Corporate performance is measured by the Company's strategic and financial performance in that fiscal year, with particular reference to net revenues, operating earnings and working capital management for the year, together with gains in market share for the Company's products. Because the Stock Option and Compensation Committee believes that short-term fluctuations in stock price do not necessarily reflect the underlying strength or future prospects of the Company, the Stock Option and Compensation Committee does not emphasize year-to-year changes in stock price in its evaluation of corporate performance. Individual performance is measured by the strategic and financial performance of the particular officer's operational responsibility in comparison to targeted performance criteria. While skeptical about the significance of short-term fluctuations in stock price, the Stock Option and Compensation Committee believes that long-term stock price appreciation will reflect the Company's achievement of its strategic goals and objectives. Accordingly, the Company seeks to create long- term performance incentives for its key employees through the Company's stock- based incentive compensation program. Stock options are granted to key employees at a price equal to the fair market value on the date of grant, and awards are based on the performance of such employees and anticipated contributions by such employees in helping the Company achieve its strategic goals and objectives. Stock option grants are also made by reference to the number of stock options an employee already holds. The base salary for Mr. Robert J. Khoury, Vice Chairman of the Board and Chief Executive Officer of the Company during Fiscal 1998, for Fiscal 1998 was $521,159. See "Employment Contracts Robert J. Khoury" below. Mr. Khoury was granted a bonus of $550,000 in Fiscal 1998 and received options to purchase 140,000 shares of the Company's Common Stock. In arriving at the cash bonus and option awards for Mr. Khoury, the Committee considered the Company performance criteria described above, as measured by specific targets and performance objectives, and concluded that the Company had made substantial progress during Fiscal 1998 toward achieving such targets and performance objectives. The Committee also considered the Company's progress toward its strategic objective of becoming the industry leader in manufacturing and servicing commercial aircraft cabin interior equipment, and Mr. Khoury's leadership role in achieving such progress. With respect to the above matters, the Stock Option and Compensation Committee submits this report. STOCK OPTION and COMPENSATION COMMITTEE Jim C. Cowart Brian H. Rowe 7 The following tables set forth information with respect to the compensation of the Named Executive Officers in Fiscal 1998: SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM COMPENSATION COMPENSATION ------------------ -------------------------- NAME AND PRINCIPAL ALL OTHER POSITION YEAR(1) SALARY($) BONUS($) OPTIONS(#) COMPENSATION($) ------------------ ------- --------- -------- ---------- --------------- Amin J. Khoury........... 1998 $521,159 $550,000 140,000 $ 36,847(3) Chairman 1997 445,046 550,000 150,000 6,188 1996 403,211 0 0 3,990 Robert J. Khoury......... 1998 $521,159 $550,000 140,000 $ 32,866(3) Vice Chairman and 1997 434,084 400,000 50,000 15,079 Chief Executive Officer 1996 256,000 0 0 5,137 Paul E. Fulchino (2)..... 1998 $478,461 $465,000 120,000 $375,783(4) President and Chief 1997 398,084 350,000 250,000 29,407 Operating Officer Thomas P. McCaffrey...... 1998 $238,680 $230,000 90,000 $ 18,748(3) Corporate Senior 1997 229,326 305,000 60,000 23,760 Vice President of 1996 195,000 0 0 5,515 Administration, Chief Financial Officer and Assistant Secretary Marco C. Lanza........... 1998 $254,608 $125,000 60,000 $ 4,719(3) Executive Vice 1997 244,614 125,000 60,000 9,600 President Marketing and 1996 202,500 0 0 4,666 Product Development
- -------- (1) The periods covered by this table are the fiscal years ended in February 1998, 1997, and 1996. (2) Mr. Fulchino commenced his employment with the Company as of April 1, 1996. (3) Includes employee benefit plan matching contributions. (4) Includes employee benefit plan matching contributions and relocation expense of $342,645. 8 OPTION GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS
POTENTIAL REALIZABLE VALUE AT ASSUMED RATES OF % OF TOTAL STOCK PRICE OPTIONS APPRECIATION FOR GRANTED TO OPTION TERM(3) OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------- NAME GRANTED (1)(#) FISCAL YEAR(2) PRICE($/SH) DATE 5% 10% ---- -------------- -------------- ----------- ---------- ---------- ---------- Amin J. Khoury.......... 90,000 6.94 $29.88 8/18/07 $1,691,223 $4,285,892 50,000 3.85 $21.50 12/18/07 $ 676,062 $1,713,273 Robert J. Khoury........ 90,000 6.94 $29.88 8/18/07 $1,691,223 $4,285,892 50,000 3.85 $21.50 12/18/07 $ 676,062 $1,713,273 Paul E. Fulchino........ 80,000 6.17 $29.88 8/18/07 $1,503,310 $3,809,682 40,000 3.08 $21.50 12/18/07 $ 540,849 $1,370,619 Thomas P. McCaffrey..... 60,000 4.63 $29.88 8/18/07 $1,127,482 $2,857,261 30,000 2.31 $21.50 12/18/07 $ 405,637 $1,027,964 Marco C. Lanza.......... 40,000 3.08 $29.88 8/18/07 $ 751,655 $1,904,841 20,000 1.54 $21.50 12/18/07 $ 270,425 $ 685,309
- -------- (1) All of the above stock option awards are vested over a three year period (25% on the date of grant and 25% on the three succeeding grant annual anniversary dates). The exercise prices were based on the fair market value (as determined in accordance with the 1989 Stock Option Plan) of the shares of Common Stock at the time the options were granted. Payments of the exercise price may be in cash or by any other lawful means authorized by the Board of Directors. Options terminate ten years after the date of grant or three months following termination of the optionee's employment, whichever occurs earlier. (2) During Fiscal 1998, the Company granted to its employees options covering 1,279,069 shares of Common Stock. (3) The dollar amounts under these columns are the result of calculations at the 5% and 10% rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of the stock price of the Company. If the Company's stock price were in fact to appreciate at the assumed 5% or 10% annual rate for the ten year term of these options, a $1,000 investment in the Common Stock of the Company would be worth $1,629 and $2,594 respectively, at the end of the term. 9 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS AT FY-END FY-END --------------- ------------------ SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE(1) ---- --------------- ---------- --------------- ------------------ Amin J. Khoury.......... 257,800 $5,186,702 110,000/180,000 $ 585,156/783,594 Robert J. Khoury........ 110,000 2,750,938 60,000/130,000 360,156/558,594 Paul E. Fulchino........ 50,000 1,169,043 55,000/215,000 340,313/2,417,813 Thomas P. McCaffrey..... 40,000 838,250 67,500/97,500 785,469/491,719 Marco C. Lanza.......... 60,000 1,571,875 162,500/52,500 3,115,469/197,344
- -------- (1) The closing price for the Company's Common Stock on the Nasdaq National Market on February 27, 1998, the last trading day of the fiscal year, was $29.4375 per share. DEFINED BENEFIT ARRANGEMENT Pursuant to the employment agreements between the Company and each of Mr. Amin J. Khoury and Mr. Robert J. Khoury (each, an "Executive"), upon the earlier of May 28, 2003 or the Executive's termination of his employment as a result of death, incapacity or a change of control (as defined), the Executive, or his designee, as the case may be, shall be entitled to receive annual retirement compensation payments (the "Retirement Compensation") equal to the Executive's highest annual salary paid to him during his employment by the Company for a number of years equal to the number of years of service provided by him to the Company. Pursuant to the employment agreements between the Company and each of Mr. Fulchino and Mr. McCaffrey (each, an "Officer"), if the Officer's employment is terminated for any reason other than cause after March 31, 2006 in the case of Mr. Fulchino or after April 30, 2003 in the case of Mr. McCaffrey, then the Company shall provide a retirement benefit to such Officer, or his designee, for 10 years after such termination in an annual sum equal to one-half his average annual salary for the three fiscal years most recently completed immediately preceding such termination. COMPENSATION OF DIRECTORS Directors who are employees of the Company receive no additional compensation for serving on the Company's Board of Directors. Directors who are not employees of the Company (the "Eligible Directors") receive compensation of $2,500 per calendar quarter and are entitled to participate in the Company's 1991 Directors' Stock Option Plan, as from time to time in effect (the "Directors' Plan"). Under the Directors' Plan, each Eligible Director is awarded a grant of options for 5,000 shares of Common Stock on December 15 of each year the plan is in effect, provided he or she is an Eligible Director on that date. In addition, each Eligible Director, excluding those individuals who are currently directors of the Company, is awarded an initial option grant for 35,000 shares of Common Stock as of the date of his or her first election as a director. The exercise price of all options granted under the Directors' Plan may not be less than 100% of the fair market value of the Common Stock on the date of the grant. Options expire 10 years after the date of grant and become exercisable, subject to certain conditions which accelerate vesting, as follows: 25% on the first anniversary of the date of grant and an additional 25% each calendar year thereafter. On December 15, 1997, each of the following directors was awarded an option to purchase 5,000 shares of Common Stock at a price of $25.8125 per share: Jim C. Cowart, Richard G. Hamermesh, Brian H. Rowe and Hansjorg Wyss. 10 EMPLOYMENT CONTRACTS Amin J. Khoury. Mr. Khoury and the Company have entered into an employment agreement dated as of January 1, 1992, as amended as of August 1, 1992, April 1, 1996, May 30, 1997 and May 29, 1998, which extends through May 28, 2003 (the "Expiration Date"). Under the employment agreement, Mr. Khoury receives a base salary of $650,000 per year, subject to increases as determined from time to time by the Board of Directors and subject to cost of living increases. Mr. Khoury is also entitled to receive bonuses from the Company when, as and if determined from time to time by the Board of Directors. In the event of Mr. Khoury's death, his designee will receive an amount equal to the salary that would have been due to Mr. Khoury from the date of his death until the Expiration Date, provided however, that in no event shall the aggregate amount payable upon Mr. Khoury's death be less than an amount which is determined by multiplying the sum of the years worked and the number of years remaining under his existing contract by the highest annual salary paid over the period. The Company has purchased a life insurance policy which would fully pay the death benefit due upon Mr. Khoury's death. In the event of Mr. Khoury's incapacity, Mr. Khoury will continue to receive his then current salary as well as benefits until the Expiration Date. In the event there is a change of control (as defined) prior to the Expiration Date as a result of which Mr. Khoury's employment is terminated or he resigns, Mr. Khoury will receive a lump sum payment equal to the sum of the balance of compensation which would otherwise have been due pursuant to his employment agreement through the Expiration Date, a two year severance benefit plus his then current salary until the Expiration Date. See "Defined Benefit Arrangement" above. Robert J. Khoury. Mr. Khoury and the Company have entered into an employment agreement dated as of March 1, 1992, as amended as of August 1, 1992, April 1, 1996, May 30, 1997 and May 29, 1998, which extends through May 28, 2003 (the "Expiration Date"). Under the employment agreement, Mr. Khoury receives a base salary of $600,000 per year, subject to increases as determined from time to time by the Board of Directors and subject to cost of living increases. Mr. Khoury is entitled to receive an annual incentive bonus when, as and if determined by the Board of Directors. In all other respects, Mr. Khoury's employment agreement contains similar provisions to those in Mr. Amin J. Khoury's employment agreement as described above. Paul E. Fulchino. Mr. Fulchino and the Company have entered into an employment agreement dated as of April 1, 1996, as amended as of May 30, 1997 and May 29, 1998 which extends through May 28, 2003. Thereafter, the agreement extends automatically for one year periods until either Mr. Fulchino or the Company gives the other 90 days' written notice prior to May 28, 2003 or the end of each subsequent twelve month period (the "Expiration Date" being the date as of which Mr. Fulchino's employment is so terminated). Under the employment agreement, Mr. Fulchino receives a base salary of $500,000 per year, subject to increases as determined from time to time by the Board of Directors and subject to cost of living increases. Mr. Fulchino also is entitled to receive an annual incentive bonus as determined by the Board of Directors, which shall not exceed 100% of his then current salary. In the event of Mr. Fulchino's death, his designee will receive an amount equal to the salary that would have been due to Mr. Fulchino from the date of his death until the Expiration Date. In the event of Mr. Fulchino's incapacity, Mr. Fulchino will continue to receive his then current salary as well as benefits until the Expiration Date. If there is a change of control (as defined) prior to the Expiration Date as a result of which Mr. Fulchino's employment is terminated or he resigns because of a change in his position, powers, duties, salary or benefits, Mr. Fulchino will receive a lump sum amount equal to two times his then current salary and will continue to receive salary and benefits through the Expiration Date, and will receive for a period (not to exceed ten years) equal to the number of years of employment with the Company (commencing April 1, 1996 through the termination date) an annual amount equal to one-half of Mr. Fulchino's annual salary in effect as of the termination date. See "Defined Benefit Arrangement" above. Mr. Fulchino is also entitled to retirement compensation in the event his employment is terminated other than for cause after March 31, 2006. See "Defined Benefit Arrangement" above. 11 Thomas P. McCaffrey. Mr. McCaffrey and the Company have entered into an employment agreement dated as of May 1, 1993, as amended as of January 1, 1996 and May 29, 1998, which extends through May 28, 2003. Thereafter, the agreement extends automatically for one-year periods until either Mr. McCaffrey or the Company gives the other at least 90 days' written notice prior to May 28, 2003 or to the end of each subsequent twelve month period (the "Expiration Date" being the date as of which Mr. McCaffrey's employment is so terminated). Under the employment agreement, Mr. McCaffrey receives a base salary of $293,000 per year subject to increases as determined from time to time by the Board of Directors and subject to cost of living increases. Mr. McCaffrey is entitled to receive an annual incentive bonus when, as and if determined by the Board of Directors which shall not exceed 100% of his then current salary. In all other material respects, Mr. McCaffrey's employment agreement contains provisions similar to those in Mr. Fulchino's employment agreement described above. Marco C. Lanza. Mr. Lanza and the Company have entered into an employment agreement dated as of March 1, 1992, as amended as of January 1, 1996 which extends through December 31, 1999, unless sooner terminated. Thereafter, the agreement extends automatically for consecutive one-year periods until either Mr. Lanza or the Company gives the other at least 90 days' written notice prior to the end of the next calendar year (the "Expiration Date" being the date as of which Mr. Lanza's employment is so terminated). Under the employment agreement, Mr. Lanza receives a base salary of $240,000 per year, subject to adjustment from time to time by the Board of Directors. Mr. Lanza is entitled to receive an annual incentive bonus when, as and if determined by the Board of Directors, which shall not exceed 100% of his then current salary. In the event of Mr. Lanza's death, his designee will receive an amount equal to the salary that would have been due to Mr. Lanza from the date of his death until the Expiration Date. In the event of Mr. Lanza's incapacity, Mr. Lanza will continue to receive his then current salary as well as benefits until the Expiration Date. In the event there is a change of control (as defined) prior to the Expiration Date as a result of which Mr. Lanza's employment is terminated or he resigns because of a change in his position, powers, duties, salary or benefits, Mr. Lanza will receive (i) a lump sum amount equal to his then current salary and (ii) salary and benefits through the Expiration Date. Mr. Lanza does not have a provision in his employment agreement for retirement benefits. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In 1990, the Company adopted a formal policy whereby all transactions between the Company and its officers, directors, principal stockholders or other affiliates must be on terms no less favorable to the Company than could be obtained from unaffiliated third parties on an arm's-length basis, and such transactions will be approved by a majority of the Company's independent and disinterested directors. The Company had a supply agreement with Applied Extrusion Technologies, Inc. ("AET"), a related party by way of common management. Under this agreement, which was terminated in September 1997, the Company agreed to purchase its requirements for certain component parts through March 1998 at a price that resulted in a 33 1/3% gross margin to AET. The Company's purchases under this contract for the year ended February 28, 1998 amounted to $1,743,000. Mr. Amin J. Khoury is a director and significant stockholder of AET and serves as Chairman of its Board of Directors. Mr. Hamermesh, a director of the Company, also is a director of AET. 12 PERFORMANCE GRAPHS The following graphs compare the yearly percentage change in the Company's cumulative total shareholder return on its Common Stock with the cumulative total return on the Nasdaq National Market Index, the Dow Jones Airlines Index and the Dow Jones Aerospace and Defense Index from April 24, 1990, the date of the Company's initial public offering and from February 26, 1993, respectively, through February 27, 1998, the last trading day of Fiscal 1998, based upon an assumed $100 investment in the Company's Common Stock and in the stocks comprising each such index as of each respective starting date. [GRAPH APPEARS HERE] COMPARISON OF 91 MONTH CUMULATIVE TOTAL RETURN* AMONG BE AEROSPACE, INC., THE NASDAQ STOCK MARKET-US INDEX, THE DOW JONES AIRLINES INDEX AND THE DOW JONES AEROSPACE & DEFENSE INDEX
4/90 7/91 2/92 2/93 2/94 2/95 2/96 2/97 2/98 BE Aerospace, Inc. $100 200 200 143 164 79 186 371 421 DJ Airlines Index 100 94 106 94 109 92 146 142 233 DJ Aerospace & Defense Index 100 114 121 127 178 200 352 440 520 - ---------------------------------------------------------------------------------------------------------- Nasdaq National Market-US 100 122 158 169 197 202 287 343 460 *$100 INVESTED ON 4/24/90 IN STOCK OR IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
13 [GRAPH APPEARS HERE] COMPARISON OF 60 MONTH CUMULATIVE TOTAL RETURN* AMONG BE AEROSPACE, INC., THE NASDAQ STOCK MARKET-US INDEX, THE DOW JONES AIRLINES INDEX AND THE DOW JONES AEROSPACE & DEFENSE INDEX
- -------------------------------------------------------------------------------- 2/93 2/94 2/95 2/96 2/97 2/98 - -------------------------------------------------------------------------------- BE Aerospace, Inc. $100 $115 $55 $130 $260 $294 - -------------------------------------------------------------------------------- DJ Airlines Index 100 115 98 155 151 247 - -------------------------------------------------------------------------------- DJ Aerospace & Defense Index 100 140 157 277 346 409 - -------------------------------------------------------------------------------- Nasdaq National Market -- US 100 117 120 170 203 273 - --------------------------------------------------------------------------------
*$100 INVESTED ON 02/26/93 IN STOCK OR IN INDEX -- INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING FEBRUARY 28, 1998. - -------- (1) The stock prices on the Performance Graphs are not necessarily indicative of future stock price performance. Each of the Report of the Compensation Committee of the Board of Directors and the information under "Performance Graphs" shall not be deemed incorporated by reference by any general statement incorporating this proxy statement into any filing under the Securities Act of 1933, as from time to time in effect, or under the Securities Exchange Act of 1934, as from time to time in effect, except to the extent that the Company specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts. 14 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 persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission (the "Commission") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater-than-ten- percent shareholders are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and, with respect to its officers and directors, written representations that no other reports were required, during Fiscal 1998, all Section 16(a) filing requirements applicable to its officers, directors and greater-than-ten-percent beneficial owners were complied with except for (i) Mr. Schwartz who failed to report an exercise of options on a Form 4 on a timely basis, which transaction was reported the month following the date of the transaction; and (ii) due to a clerical error, each of Messrs. Cowart and Wyss failed to file a Form 5 to report Directors' Stock Options granted on December 15, 1997. In making the above statements, the Company has relied on the written representations of its directors and officers and copies of the reports that have been filed with the Commission. PROPOSAL NO. 2 APPROVAL OF AMENDMENT OF AMENDED AND RESTATED 1989 STOCK OPTION PLAN The Board of Directors has unanimously approved, subject to stockholder approval, an increase in the number of shares available for grants of options under the Amended and Restated 1989 Stock Option Plan to 3,700,000. In July 1989, the Company's Board of Directors and stockholders approved the 1989 Stock Option Plan. An amendment and restatement of the 1989 Stock Option Plan was approved by the stockholders of the Company at the Annual Meeting of Stockholders held on December 5, 1991 and it was further amended by action of the stockholders at the Annual Meetings of Stockholders held on July 15, 1992, July 26, 1995, July 23, 1996 and August 6, 1997 (the 1989 Stock Option Plan as amended and restated is referred to herein as the "1989 Plan"). The 1989 Plan is administered by the Stock Option and Compensation Committee and provides for the grant of incentive stock options and non-statutory stock options to employees, consultants or advisers of the Company. Directors who are also employees, consultants or advisers are also eligible to participate in the 1989 Plan. The exercise price of all options granted under the 1989 Plan may not be less than 100% (110% for owners of more than 10% of the Common Stock in the case of incentive stock options) of the fair market value of the Common Stock on the date of grant. Options expire 10 years after the date of grant (5 years after the date of grant for owners of more than 10% of the Common Stock in the case of incentive stock options) or three months following termination of optionee's employment whichever occurs earlier. Options generally become exercisable as follows: 25% upon grant and an additional 25% each calendar year thereafter. Effective August 15, 1996, options granted under the 1989 Plan may not be repriced. A total of 3,250,000 shares of Common Stock has been reserved under the 1989 Plan. As of June 25, 1998, 238,937 options were available for grant under the 1989 Plan. During the fiscal year ended February 28, 1998 15 the Company granted options under the 1989 Plan to purchase an aggregate of 720,000 shares of Common Stock at a weighted average exercise price of $27.26 per share. All of such options were granted at an exercise price equal to the fair market value of the Common Stock on the date of grant. Federal Tax Effects. The following general summary of certain federal income tax consequences, based on the law as currently in effect, does not purport to cover federal employment tax or other federal tax aspects of the 1989 Plan. Moreover, the following summary does not discuss possible foreign, state, estate or other tax consequences. Incentive Stock Options. Neither the grant nor, in general, the exercise of an incentive stock option produces taxable ordinary income to the employee or a deduction to the Company. However, upon exercise of an incentive stock option the participant's "alternative minimum taxable income" will be increased, generally by the excess of the fair market value of the shares at time of exercise over the option price, and the employee may be required to pay the alternative minimum tax ("AMT"). Any AMT attributable to the exercise of an incentive stock option may be applied as a credit against the participant's regular tax liability in subsequent years, subject to certain limitations. If the participant does not dispose of stock received upon the exercise of an incentive stock option within two years from the date the option was granted nor within one year after the date of exercise, any later sale of the shares will result in a long-term capital gain or loss. However, if shares received upon exercise of an incentive stock option are disposed of before these holding-period requirements have been satisfied (a "disqualifying disposition"), the participant will realize ordinary income, equal in general to the difference between the option price and the value of the shares on the date of exercise. In addition, a participant may have additional gain on a disqualifying disposition that is a sale if shares are sold for more than the value of the shares on the date of exercise. Moreover, in certain cases, a participant may be treated as making a disqualified disposition of shares acquired pursuant to the exercise of an incentive stock option even though the participant has not sold the shares (for example, if the participant makes a gift of the shares other than to a spouse). In the case of a disqualifying disposition that is a sale with respect to which loss (if sustained) would be recognized, the amount of ordinary income will not exceed the excess of the amount realized in such sale over the adjusted basis for the stock. A disqualifying disposition of shares acquired upon exercise of an incentive stock option that occurs in the same taxable year of the participant as the date his or her AMT income was increased by reason of such exercise will eliminate the AMT effect, if any, of such exercise. Incentive Stock Options. Neither the grant nor, in general, the exercise of an incentive stock option produces taxable ordinary income to the employee or a deduction to the Company. However, upon exercise of an incentive stock option the participant's "alternative minimum taxable income" will be increased, generally by the excess of the fair market value of the shares at time of exercise over the option price, and the employee may be required to pay the alternative minimum tax ("AMT"). Any AMT attributable to the exercise of an incentive stock option may be applied as a credit against the participant's regular tax liability in subsequent years, subject to certain limitations. If the participant does not dispose of stock received upon the exercise of an incentive stock option within two years from the date the option was granted nor within one year after the date of exercise, any later sale of the shares will result in a long-term capital gain or loss. However, if shares received upon exercise of an incentive stock option are disposed of before these holding-period requirements have been satisfied (a "disqualifying disposition"), the participant will realize ordinary income, equal in general to the difference between the option price and the value of the shares on the date of exercise. In addition, a participant may have additional gain on a disqualifying disposition that is a sale if shares are sold for more than the value of the shares on the date of 16 exercise. Moreover, in certain cases, a participant may be treated as making a disqualified disposition of shares acquired pursuant to the exercise of an incentive stock option even though the participant has not sold the shares (for example, if the participant makes a gift of the shares other than to a spouse). In the case of a disqualifying disposition that is a sale with respect to which loss (if sustained) would be recognized, the amount of ordinary income will not exceed the excess of the amount realized in such sale over the adjusted basis for the stock. A disqualifying disposition of shares acquired upon exercise of an incentive stock option that occurs in the same taxable year of the participant as the date his or her AMT income was increased by reason of such exercise will eliminate the AMT effect, if any, of such exercise. In the event a participant pays the option price of an incentive stock option by surrendering shares of previously owned stock, the surrender will not, in general, result in the recognition of gain. However, the exercise of an incentive stock option by the surrender of shares which were themselves acquired by the participant upon exercise of an incentive stock option will be a disqualifying disposition of the surrendered shares if it takes place within two years after the grant or one year after the exercise of the incentive stock option pursuant to which the surrendered shares were acquired. Incentive stock options granted pursuant to the 1989 Plan are treated for tax purposes as nonstatutory options (see below) to the extent that the aggregate fair market value of Common Stock with respect to which such options are exercisable for the first time by an individual during any calendar year exceeds $100,000. For purposes of the preceding sentence, incentive stock options under all option plans of the Company and its subsidiaries are aggregated, and fair market value is determined as of the time of grant of the option. The rules described above for incentive stock options assume that a participant exercises the option while an employee of the Company or within three months following termination of employment (one year, if termination occurred by reason of total and permanent disability). Non-Statutory Stock Options. The grant of a non-statutory stock option does not produce taxable income to the employee or a deduction to the Company. When a participant exercises a non-statutory stock option, he or she realizes, for federal income tax purposes, ordinary income, subject to withholding, in the amount of the difference between the option price and the then-market value of the shares. The tax is due regardless of whether or not the optionee sells the stock acquired upon exercise of the option. Any subsequent sale of stock purchased under a non-statutory stock option generally will result in capital gain or loss, provided the shares are held as a capital asset by the participant. If a participant exercises a non-statutory stock option in whole or in part by surrendering previously acquired stock (whether acquired upon exercise of an incentive or non-statutory stock option or otherwise), no gain or loss is recognized on the exchange of the previously acquired shares for an equivalent number of new shares. Tax Consequences to the Company. The employer will generally be entitled to claim a deduction equal to the amount of ordinary income, if any, recognized by a participant in connection with the exercise of a non-statutory option or the disqualifying disposition of shares acquired pursuant to an incentive stock option. No deduction is allowed to the employer in connection with an incentive stock option, except in the case of a disqualifying disposition of shares acquired under an incentive stock option. The Internal Revenue Code generally requires that the amounts be included in the participant's gross income in order to claim the deduction. The employer's ability to claim a deduction with respect to awards may also be limited in certain cases, including special rules applicable to compensation payable in connection with a change in control and compensation to key officers in excess of $1 million. 17 The affirmative vote of a majority of the shares present, in person or by proxy, and entitled to vote at the Meeting is required to approve the amendment of the 1989 Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL. PROPOSAL NO. 3 APPROVAL OF AMENDMENT OF 1991 DIRECTORS' STOCK OPTION PLAN The Board of Directors has unanimously approved, subject to stockholder approval, an increase in the number of shares available for grants of options under the 1991 Directors Stock Option Plan to 300,000. In December 1991, the Company's Board of Directors and stockholders approved the 1991 Directors' Stock Option Plan (the "Directors' Plan"). The Directors' Plan is administered by the Stock Option and Compensation Committee and provides for the grant of stock options to directors who are not employees of the Company ("Eligible Directors"). Under the Directors' Plan, each Eligible Director is awarded an option for 5,000 shares of Common Stock on December 15 of each year that the plan is in effect, provided he or she is an Eligible Director on that date. In addition, each Eligible Director, excluding those individuals who are currently directors of the Company, is awarded an initial grant for 35,000 shares of Common Stock as of the date of his or her first election as a director. The exercise price of all options granted under the Directors' Plan may not be less than 100% of the fair market value of the Common Stock on the date of the grant. Options expire 10 years after the date of the grant subject to certain circumstances which accelerate vesting, or three months following the date on which the director ceases to serve as a director. Options generally become exercisable as follows: 25% upon grant and an additional 25% on each calendar year thereafter. A total of 200,000 shares of Common Stock have been reserved under the Directors' Plan. As of June 25, 1998, 35,000 options were available for grant under the Directors' Plan. Under the Directors' Plan, on December 15, 1997, the Company granted to each of Messrs. Cowart, Hamermesh, Rowe and Wyss options to purchase 5,000 shares of Common Stock at a price of $25.8125 per share, the fair market value of the Common Stock on the date of grant. Options granted pursuant to the Directors' Plan are subject to the same federal income tax consequences described with respect to the 1989 Plan under "Federal Tax Effects Non-Statutory Stock Options" above, except that income realized by an Eligible Director upon exercise is not subject to withholding. PROPOSAL NO. 4 CONSIDERATION OF THE MACBRIDE PRINCIPLES The following resolution is submitted by New York City Comptroller Alan G. Hevesi, Municipal Building, 1 Centre Street, New York, New York 10007, on behalf of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Fire Department Pension Fund and the New York City Police Pension Fund which state in a letter dated January 13, 1998, that they own an aggregate of 114,300 shares of the Common Stock of the Company and have requested that the Company offer the resolution set forth below for stockholders to consider at the Meeting. 18 Whereas, BE Aerospace, Inc. operates a wholly-owned subsidiary in Northern Ireland, Aircraft Furnishing Limited; Whereas, the on-going peace process in Northern Ireland encourages us to search for non-violent means for establishing justice and equality; Whereas, employment discrimination in Northern Ireland has been cited by the International Commission of Jurists as one of the major causes of conflict in that country; Whereas, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace laureate, has proposed several equal opportunity employment principles to serve as guidelines for corporations in Northern Ireland. These include: 1. Increasing the representation of individuals from under represented religious groups in the workforce including managerial, supervisory, administrative, clerical and technical jobs. 2. Adequate security for the protection of minority employees both at the workplace and while traveling to and from work. 3. The banning of provocative religious or political emblems from the workplace. 4. All job openings should be publicly advertised and special recruitment efforts should be made to attract applicants from under represented religious groups. 5. Layoff, recall, and termination procedures should not in practice, favor particular religious groupings. 6. The abolition of job reservations, apprenticeship restrictions and differential employment criteria, which discriminate on the basis of religion or ethnic origin. 7. The development of training programs that will prepare substantial numbers of current minority employees for skilled jobs, including the expansion of existing programs and the creation of new programs to train, upgrade, and improve the skills of minority employees. 8. The establishment of procedures to assess, identify and actively recruit minority employees with potential for further advancement. 9. The appointment of a senior management staff member to oversee the company's affirmative action efforts and the setting up of timetables to carry out affirmative action principles. RESOLVED, Shareholders request the Board of Directors to: 1. Make all possible lawful efforts to implement and/or increase activity on each of the nine MacBride Principles. 19 BOARD OF DIRECTORS RECOMMENDATION Your Board of Directors believes that adoption of this proposal is not in the best interests of stockholders and unanimously recommends that stockholders vote against it. The Company already has taken the steps necessary to provide equal employment opportunity in Northern Ireland, regardless of religious affiliation. The Company adheres to both the letter and the spirit of the "Fair Employment (Northern Ireland) Act of 1989" as well as the "Code of Practice" promulgated by the Act. The Company is also registered with the Fair Employment Commission. When the Comptroller's proposal was submitted in connection with the 1995 annual meeting, the Company initially decided to exclude it from the proxy statement in reliance on Rule 14a-8(c)(7) and other provisions of the proxy rules of the Securities and Exchange Commission (the "SEC"). That Rule permits exclusion of proposals that relate to an issuer's ordinary business operations, since such matters are properly within the domain of the board of directors and not the stockholders. The Company followed the proxy rules by notifying the Comptroller and the SEC of its intention to omit the proposal. Following a series of letters to the SEC, including correspondence from the Comptroller in which it expressed its own views, the SEC staff issued to the company a "no-action" letter stating that the SEC staff agreed with the Company that the proposal could properly be omitted from the proxy statement pursuant to Rule 14a-8(c)(7). Two weeks before mailing of the proxy materials, however, the Comptroller's office informed the Company that, if the Company did not agree within 24 hours to include the proposal in its proxy materials, the Comptroller's office would bring litigation, including a demand for an injunction, against the Company. The Company had complied fully with the proxy rules in determining to omit the proposal and was confident it would have prevailed in any litigation with the Comptroller's office. Nevertheless, after due consideration of the cost involved in litigation of what it believed to be a settled matter, management determined that the potential cost to the Company and its stockholders of the threatened litigation outweighed the cost of submitting the proposal to our stockholders for their vote. The Comptroller's proposal received the support of well less than 5% of our stockholders at the 1995 annual meeting. Nonetheless, he resubmitted it for inclusion in the 1996 proxy materials at which meeting the proposal received the support of 6.5% of our stockholders. Once again, the Comptroller has requested his proposal to be included in the proxy material for this year's annual meeting. Based upon our prior experiences with the Comptroller, and to avoid further waste of corporate assets, management is submitting his proposal to the stockholders once again, despite its continuing belief that this is not legally required and that the issue which he purports to raise is irrelevant in the case of the Company. The Company's policy and practice worldwide is to provide equal opportunity employment in all locations without regard to race, color, religious belief, gender, age, national origin, citizenship status, marital status, sexual orientation or disability. Northern Ireland is no exception. Through its established equal employment opportunity program, the Northern Ireland operation essentially complies with the practices outlined in the MacBride Principles. The Company is an equal opportunity employer in all job advertisements, and hiring procedures are based on the experience and qualifications needed to satisfy individual job requirements. Equal opportunity is observed for all employees in training, advancement, layoff and recall procedures. The display of potentially offensive or intimidating religious emblems at the Company's facilities is not permitted. The Company provides security for all employees at work. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL. 20 NEW YORK CITY COMPTROLLER'S SUPPORTING STATEMENT Continued discrimination and worsening employment opportunities have been cited as contributing to support for a violent solution to Northern Ireland's problems. In May, 1986, a United States District Court ruled on the legality of the MacBride Principles under the Fair Employment (Northern Ireland) Act of 1976, and granted a preliminary injunction requiring that American Brands include a MacBride Principles shareholder proposal in its proxy materials, stating that "all nine of the MacBride Principles could be legally implemented by management in its Northern Ireland facility." NYCERS v. American Brands, 634F. Supp. 1382 (S.D.N.Y., May 12, 1986). The Employment (Northern Ireland) Act was amended in 1989. An endorsement of the MacBride Principles by BE Aerospace, Inc. will demonstrate the company's concern for human rights and equality of opportunity in its international operations. Please vote your proxy FOR these concerns. AUDIT MATTERS Deloitte & Touche has been selected to audit the financial statements of the Company for the fiscal year ending February 27, 1999 and to report the results of their examination. A representative of Deloitte & Touche is expected to be present at the Meeting and will be afforded the opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from stockholders. STOCKHOLDER PROPOSALS Proposals of stockholders submitted for consideration at the Annual Meeting of Stockholders to be held in 1999 must be received by the Company no later than March 12, 1999. OTHER BUSINESS The Board of Directors knows of no business that will come before the meeting for action other than as described in the accompanying Notice of Meeting. However, as to any such business, the persons designated as proxies will have discretionary authority to act in their best judgment. FORM 10-K A copy of the Company's annual report on Form 10-K filed with the Securities and Exchange Commission is available without charge by writing to: BE Aerospace, Inc., Attention: Treasurer, 1400 Corporate Center Way, Wellington, Florida 33414. 21 DETACH HERE PROXY PROXY ANNUAL MEETING OF BE AEROSPACE, INC. AUGUST 5, 1998 The undersigned hereby constitutes and appoints Messrs. Robert J. Khoury and Thomas P. McCaffrey, or either of them, with full power of substitution to each, proxies to vote and act at the Annual Meeting of Stockholders of BE Aerospace, Inc. (the "Company") to be held on August 5, 1998 in the Conference Center, 36th Floor, Ropes & Gray, One International Place, Boston, Massachusetts at 10:30 a.m., and at any adjournments thereof (the "Meeting"), upon and with respect to the number of shares of Common Stock, par value $0.01 per share, that the undersigned would be entitled to vote if personally present. The undersigned hereby instructs such proxies, or their substitutes, to vote on those matters appearing on the reverse side hereof as specified by the undersigned and in such manner as they may determine on any other matters which may come before the Meeting, all as indicated in the accompanying Notice of Meeting and Proxy Statement, receipt of which is hereby acknowledged. All proxies heretofore given by the undersigned in respect of the Meeting are hereby revoked. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. Unless otherwise specified in the boxes provided on the reverse side hereof, this Proxy will be voted FOR all nominees for Director, a vote FOR proposal 2, a vote FOR proposal 3, a vote AGAINST proposal 4, and in the discretion of the named proxies as to any other matter that may properly come before the Meeting. CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEE REVERSE SIDE] [SEE REVERSE SIDE] DETACH HERE Please mark [X] votes as in this example PLEASE DO NOT FOLD THIS PROXY The Board unanimously recommends a vote FOR Proposals 1, 2 and 3. 1. Election of three Class I Directors: Nominees: Jim C. Cowart, Paul E. Fulchino and Brian H. Rowe FOR WITHHELD ALL [ ] [ ] FROM ALL NOMINEES NOMINEES MARK HERE [ ]_____________________________ FOR ADDRESS [ ] To withhold authority to vote CHANGE AND for any nominee(s) print that NOTE BELOW nominee's name in the space provided above. FOR AGAINST ABSTAIN 2. Amend the 1989 Stock Option Plan. [ ] [ ] [ ] FOR AGAINST ABSTAIN 3. Amend the 1991 Directors' Stock [ ] [ ] [ ] Option Plan. - -------------------------------------------------------------------------------- The Board unanimously recommends a vote AGAINST Proposal 4. - -------------------------------------------------------------------------------- 4. Proposal to adopt the MacBride FOR AGAINST ABSTAIN Principles. [ ] [ ] [ ] - -------------------------------------------------------------------------------- Please sign exactly as name(s) appear hereon. When signing as attorney, executor, administrator, trustee, or guardian, please give your full title as such. Each joint owner should sign. Signature:________________________________________ Date:______________________ Signature:________________________________________ Date:______________________ -----END PRIVACY-ENHANCED MESSAGE-----