[LOGO OF ALDILA]
April 9, 1999
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Aldila, Inc., to be held Wednesday,
May 5, 1999, at 9:00 a.m. at the Rancho Bernardo Inn, 17550 Bernardo Oaks
Drive, San Diego, California 92128. The formal notice and proxy statement
for the Annual Meeting are attached to this letter.
It is important that you sign, date and return your proxy card in the
enclosed envelope as soon as possible, even if you currently plan to attend
the Annual Meeting. By doing so, you will ensure that your shares are
represented and voted at the meeting. If you decide to attend, you can
still vote your shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation
and I look forward to seeing you on May 5th.
Very truly yours,
/s/ Gary T. Barbera
------------------------------
Gary T. Barbera
Chairman of the Board
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
TO THE STOCKHOLDERS OF ALDILA, INC.
Notice is hereby given that the Annual Meeting of Stockholders of
Aldila, Inc. (the "Company") will be held at the Rancho Bernardo Inn, 17550
Bernardo Oaks Drive, San Diego, California 92128, on Wednesday, May 5,
1999, at 9:00 a.m., Pacific time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect by vote of the holders of Common
Stock a total of nine persons to the Board of Directors to serve
until the next Annual Meeting of Stockholders and until their
successors are elected and have qualified. The Board of
Directors' nominees are:
Gary T. Barbera Donald C. Klosterman
Peter E. Bennett Wm. Brian Little
Thomas A. Brand Peter R. Mathewson
Marvin M. Giles, III Chapin Nolen
John J. Henry
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent accountants for the fiscal year
ending December 31, 1999.
3. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting.
Only stockholders of record at the close of business on March 19, 1999
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
----------------------------------
Robert J. Cierzan
Secretary
Dated: April 9, 1999
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY
AS POSSIBLE. YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL
MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
(619) 513-1801
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999
GENERAL
This proxy statement is furnished to stockholders of Aldila, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board" or "Board
of Directors") for use at the Annual Meeting of Stockholders to be held at
9:00 a.m., Pacific time, on Wednesday, May 5, 1999, at the Rancho Bernardo
Inn, 17550 Bernardo Oaks Drive, San Diego, California 92128, and any
adjournments thereof (the "Annual Meeting" or "Meeting").
Common stockholders of record as of the close of business on March 19,
1999, will be entitled to vote at the Meeting or any adjournments thereof.
As of the record date, the Company had outstanding 15,462,204 shares of
Common Stock, each entitled to one vote on all matters to be voted upon.
This proxy statement, the accompanying form of proxy and the Company's
annual report to stockholders for the fiscal year ended December 31, 1998
are being mailed on or about April 9, 1999, to each stockholder entitled to
vote at the Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is executed and returned in time and not
revoked, all shares represented thereby will be voted. Each proxy will be
voted in accordance with the stockholder's instructions. If no such
instructions are specified, the proxies will be voted FOR the election of
each person nominated for election as a director and FOR the ratification
of the Board's selection of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending December 31, 1999.
Assuming a quorum is present, the affirmative vote by the holders of a
plurality of the votes cast at the Meeting will be required for the
election of directors; the affirmative vote of a majority of the votes cast
at the Meeting will be required for the ratification of the Board's
selection of Deloitte & Touche LLP as the Company's independent
accountants; and the affirmative vote of a majority of the votes cast at
the Meeting will be required to act on all other matters to come before the
Annual Meeting. An automated system administered by the Company's transfer
agent tabulates the votes. For purposes of determining the number of votes
cast with respect to any voting matter, only those cast "for" or "against"
are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the Meeting. With
respect to all matters (other than the election of directors), abstentions
and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority of the votes cast.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is
voted by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy
will not prevent you from voting in person at the Annual Meeting should you
be present and wish to do so.
ELECTION OF DIRECTORS
The Company's Restated Bylaws give the Board the power to set the
number of directors at no less than one nor more than twenty-one. The size
of the Company's Board is currently set at ten. On May 5, 1999, Vincent T.
Gorguze's term as a member of the Board of Directors will expire. He will
not be nominated for reelection to the Board of Directors at the May 5,
1999 Annual Meeting. Directors hold office until the next annual meeting of
stockholders and until their successors are elected and have qualified.
Unless otherwise directed, proxies in the accompanying form will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will
be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may
be unable to serve or will or may withdraw from nomination. All of the
following nominees are current directors of the Company whose terms end at
the 1999 Annual Meeting. Information concerning the nominees for directors
is set forth below.
Prior to the Company's initial public offering in June 1993 (the "June
Offering"), there were only three directors of the Company, all of whom
were general partners of an affiliate of the Company's then majority
stockholder. On April 23, 1993, each director of Aldila Golf Corp., the
Company's sole direct subsidiary as of that date, was elected to serve as a
director of the Company. Accordingly, reference to service with the Company
through April 23, 1993 means only service with Aldila Golf Corp. and the
predecessor company to Aldila Golf Corp.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTORS'
NOMINEES FOR DIRECTORS TO BE ELECTED BY THE HOLDERS OF COMMON STOCK.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
GARY T. BARBERA has been Chairman of the Board of the Company since
January 1, 1996. He has been Chief Executive Officer of the Company since
June 1992 and a director of the Company since September 1988. Mr. Barbera
was President and Chief Operating Officer from September 1988 to December
31, 1995. From December 1986 to January 1988, Mr. Barbera was President and
Chief Operating Officer at Dickey-John Corp., a company specializing in
electronic controls and agricultural manufacturing. Previously, Mr. Barbera
was Group Vice President for Bourns, Inc. a private electronics
manufacturer. From 1979 to 1985, Mr. Barbera was Chief Executive Officer of
Oak Technology, Inc., a subsidiary of Oak Industries, which produced
laminates for a variety of products. Age: 61.
THOMAS A. BRAND has been a director of the Company since November 3,
1997. Since January 1994, Mr. Brand has been an instructor at the
University of Phoenix and a consultant to the composite materials industry.
From 1983 to 1992, he was Senior Vice President/General Manager of Fiberite
Advanced Materials, a business unit of ICI-PLC. From 1964 to 1983, Mr.
Brand served as Vice President/General Manager, Fiberite West Coast Corp.,
which is a division of Fiberite Corporation. Age: 65.
PETER E. BENNETT has been a director of the Company since November
1994. Mr. Bennett has been the President and a Senior Partner of Liberty
Partners L.P. since September 1992. He is a director of Datamax Corp.,
Norwood Promotional Products, Inc., PlayPower, Inc., Polaris Pool Systems,
PADCOM, Inc., and Regulus Group, LLC. Age: 57.
MARVIN M. GILES, III has been a director of the Company since October
1993. He has been President of Pros, Incorporated ("Pros") since he
co-founded that company in 1973. Pros is a business management firm that
specializes in representing professional athletes, particularly golfers
including Davis Love III, Tom Kite and Lanny Wadkins. Mr. Giles is also an
accomplished golfer. He was the 1972 U.S. Amateur Champion and the 1975
British Amateur Champion. Mr. Giles was the 1993 U.S. Walker Cup Captain
and played on four Walker Cup teams from 1969 to 1975. Age: 56.
JOHN J. HENRY has been a director of the Company since November 1994.
Mr. Henry has been the Vice Chairman of Sinclair & Rush since September
1978. Mr. Henry previously held various executive positions with Rockwell
International Corp. from 1967 to 1978, including Sr. Vice President and
President of the Admiral Corporation. He is a director of PlayPower, Inc.
and Duquesne University. Age 72.
DONALD C. KLOSTERMAN has been a director of the Company since March
1994. Mr. Klosterman was the Chairman of the Board of NTN Communications,
Inc. ("NTN Communications") from April 1983 until September 1994. Since
September 1994, he has been a Director of NTN Communications. NTN
Communications is a satellite broadcasting company that provides
interactive entertainment programming. From July 1994 to November 1995, Mr.
Klosterman served as President of Pacific Casino Management Inc., a casino
operator. Age: 69.
WM. BRIAN LITTLE has been a director of the Company since January
1992. Since January 1995 he has been a private investor. From January 1994
to December 1994, he was a Special Limited Partner of FLC Partnership, the
General Partner of Forstmann Little & Co. He is a director of The Topps
Company, Inc. and Department 56, Inc. Age: 57.
PETER R. MATHEWSON has been a director of the Company since January
1997 and has been a Vice President of the Company since 1990. Since January
1997, Mr. Mathewson has also served as President and Chief Operating
Officer of Aldila Golf Corp., the Company's operating subsidiary that
conducts its core golf operations. Mr. Mathewson has been with the Company
since September 1973 and has held various positions, including: plant
manager, production manager, shipping and receiving supervisor, and
purchasing agent. Age: 48.
CHAPIN NOLEN has been a director of the Company since November 1994.
Mr. Nolen has been a director and was President of Combe, Incorporated from
1970 to 1995 and is currently serving as Vice Chairman of its Board of
Directors. He is a director of Santa Barbara Olive Company and the Cosmetic
Toiletry and Fragrance Association. Age: 66.
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company, as provided by Delaware law, and
conducts its business through meetings of the Board and four standing
committees: Executive, Audit, Compensation and Stock Option. In addition,
from time to time, special committees may be established under the
direction of the Board when necessary to address specific issues. The
Company has no nominating or similar committee.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held four meetings in fiscal
1998. Each director attended 75% or more of the aggregate of (i) meetings
of the Board held during the period for which he served as a director and
(ii) meetings of all committees held during the period for which he served
on those committees.
The EXECUTIVE COMMITTEE of the Board has the authority, between
meetings of the Board of Directors, to exercise all powers and authority of
the Board in the management of the business and affairs of the Company that
may be lawfully delegated to it under Delaware law. The Committee will be
chaired by Vincent T. Gorguze until his term as a member of the Board of
Directors expires on May 5, 1999. The remaining members will be Gary T.
Barbera and Wm. Brian Little. The Executive Committee had no meetings in
fiscal 1998.
The AUDIT COMMITTEE's principal functions are to (i) review the
adequacy of the Company's system of internal control, (ii) review the
independent auditor's proposed audit scope and approach, (iii) conduct a
post-audit review of the financial statements and audit findings including
any significant suggestions for improvements provided to management by the
independent auditors, (iv) review the performance and fee arrangements of
the independent auditors and (v) recommend the appointment of the
independent auditors. The Audit Committee reports to the Board, and has
lines of communication with management and the independent auditors
(including private meetings). The Audit Committee is currently comprised of
John J. Henry, as chairman, Peter E. Bennett and Chapin Nolen. The Audit
Committee held four meetings in fiscal 1998.
The COMPENSATION COMMITTEE is charged with the responsibility of
supervising and administering the Company's compensation policies,
management awards, reviewing salaries, approving significant changes in
salaried employee benefits, and recommending to the Board such other forms
of remuneration as it deems appropriate. The Compensation Committee is
currently comprised of Mr. Little, as chairman, and Peter E. Bennett and
Donald C. Klosterman. The Compensation Committee had no meetings in fiscal
1998.
The STOCK OPTION COMMITTEE's principal functions are to determine
individuals to whom stock options will be granted under the Company's 1994
Stock Incentive Plan, the terms on which such options will be granted, and
to administer the 1994 Stock Incentive Plan. The Stock Option Committee is
currently comprised of Mr. Little, who is the chairman, Mr. Klosterman and
Marvin M. Giles, who are independent, "non-employee directors" (within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act")). The Stock Option Committee also retains administrative
responsibility over the Company's 1992 Stock Option Plan. The Stock Option
Committee held two meetings in fiscal 1998.
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the accounting firm of Deloitte & Touche LLP to
audit the Company's financial statements for, and otherwise act as the
Company's independent accountants with respect to, the fiscal year ending
December 31, 1999. Deloitte & Touche LLP has acted as independent
accountants for the Company since the fiscal year ended December 31, 1991.
In accordance with the Board's resolution, its selection of Deloitte &
Touche LLP as the Company's independent accountants for the current fiscal
year is being presented to stockholders for ratification at the Annual
Meeting. The Company knows of no direct or material indirect financial
interest of Deloitte & Touche LLP in the Company or any connection of that
firm with the Company in the capacity of promoter, underwriter, voting
trustee, officer or employee.
Members of Deloitte & Touche LLP will be present at the Meeting, will
have an opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
shares of Common Stock beneficially owned as of March 19, 1999 by (a) each
person or entity who, insofar as the Company has been able to ascertain,
beneficially owned more than 5% of the Company's Common Stock as of such
date, (b) each of the directors of the Company (all nominees for election
as director are current members of the Board), (c) the Company's Chief
Executive Officer and the four other most highly compensated executive
officers of the Company for the fiscal year ended December 31, 1998 (the
"Named Executive Officers") and (d) all current directors and executive
officers of the Company as a group (13 persons). Except as otherwise
indicated the business address for each person is c/o Aldila, Inc., 12140
Community Road, Poway, California 92064.
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME OWNED(1) SHARES(1)
-------------------------------------- ------------------- -----------
Heartland Advisors, Inc.(2)............. 975,600 6.3%
Royce & Associates, Inc. and
Royce Management Company(3)........... 1,001,600 6.5%
Gary T. Barbera(4)...................... 518,803 3.3%
Peter E. Bennett(5)..................... 66,313 *
Thomas A. Brand(6)...................... 8,771 *
Robert J. Cierzan(7).................... 225,807 1.4%
Jon B. DeVault(8)....................... 0 0%
Marvin M. Giles, III(9)................. 51,313 *
Vincent T. Gorguze(10).................. 605,752 3.9%
John J. Henry(11)....................... 54,513 *
Donald C. Klosterman(12)................ 51,313 *
Wm. Brian Little(13).................... 379,904 2.4%
Peter R. Mathewson(14).................. 244,297 1.6%
Chapin Nolen(15)........................ 86,313 *
Michael J. Rossi(16).................... 35,199 *
All directors and executive officers
as a group (13 persons)(17)........ 2,328,298 14.1%
- -------------------------
* The percentage of shares of Common Stock beneficially owned does not
exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire within 60 days following March 19,
1999. For purposes of computing the percentage of outstanding shares
of Common Stock held by each person or group of persons named above,
any security which such person or persons has or have the right to
acquire within 60 days following March 19, 1999 is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) As reported in a filing on Schedule 13G, dated January 13, 1999 (the
"Heartland Schedule 13G"), by Heartland Advisors, Inc., which is an
investment adviser ("Heartland"). According to the Heartland Schedule
13G, Heartland has sole voting power over 13,300 and sole dispositive
power over all of such shares. The address of Heartland's principal
business office is 790 N. Milwaukee Street, Milwaukee, WI 53203.
(3) As reported in a joint filing on Schedule 13G, dated February 9, 1999
(the "Royce Schedule 13G"), by Royce & Associates, Inc. ("Royce"),
Royce Management Company ("RMC"), and Charles M. Royce. According to
the Royce Schedule 13G, Royce has sole voting and dispositive power
over 993,600 of such shares, RMC has sole voting and dispositive power
over 8,000 of such shares, and Mr. Royce may be deemed to be a
controlling person of Royce and RMC and, as such, may be deemed to
beneficially own the shares of Common Stock of the Company. Mr. Royce
disclaims beneficial ownership of the shares of Common Stock held by
Royce and RMC. The address of Royce's principal business office is
1414 Avenue of the Americas, New York, New York 10019.
(4) Includes options to acquire 317,149 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Barbera also
has options to purchase 110,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999. All of the
currently owned shares are owned by The Barbera Trust, of which Mr.
Barbera and his wife are the trustees.
(5) Includes options to acquire 36,313 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Bennett also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999.
(6) Includes options to acquire 8,771 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Brand also
had options to purchase 17,543 shares of Common Stock that will have
not vested within 60 days following March 19, 1999.
(7) Includes options to acquire 156,333 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Cierzan also
has options to purchase 51,667 shares of Common Stock that will not
have vested within 60 days following March 19, 1999. All of the
currently owned shares are owned by Robert J. Cierzan and Lynn M.
Cierzan, JTWROS.
(8) On December 1, 1998, Jon B. DeVault resigned from the Board of
Directors and all positions held with the Company including all
subsidiaries thereof.
(9) Includes options to acquire 46,313 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Giles also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999.
(10) Includes options to acquire 91,666 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Gorguze also
has options to purchase 13,334 shares of Common Stock that will not
have vested within 60 days following March 19, 1999. All of the shares
currently owned by Mr. Gorguze are owned by Gorguze Investments, L.P.,
a limited partnership, of which Mr. Gorguze is sole limited partner
and a corporation, of which Lynn Gorguze, his daughter, owns 100% of
the capital stock, is sole general partner.
(11) Includes options to acquire 36,313 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Henry also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999.
(12) Includes options to acquire 46,313 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Klosterman
also has options to purchase 20,001 shares of Common Stock that will
not have vested within 60 days following March 19, 1999.
(13) Includes options to acquire 16,666 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Little also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999. Also includes
26,858 shares held by Mr. Little's IRA. Also includes 2,350 shares
held by each of Mr. Little's wife and his adult son and daughter, as
to which Mr. Little disclaims beneficial ownership.
(14) Includes options to acquire 196,665 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Mathewson
also has options to purchase 70,835 shares of Common Stock that will
not have vested within 60 days following March 19, 1999.
(15) Includes options to acquire 36,313 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Nolen also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999.
(16) Includes options to acquire 34,999 shares of Common Stock that will
have vested within 60 days following March 19, 1999. Mr. Rossi also
has options to purchase 30,001 shares of Common Stock that will not
have vested within 60 days following March 19, 1999.
(17) Includes beneficial ownership of shares of Common Stock subject to
options exercisable within 60 days following March 19, 1999 and
includes the shares held by Gorguze Investments, L.P.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission (the "SEC")
reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company on Forms 3, 4 and 5. Based on a review of
such forms and written representations of reporting persons, the Company
believes that during the fiscal year ended December 31, 1998, its officers
and directors and holders of more than 10% of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. Information about Messrs. Barbera and
Mathewson is presented in "ELECTION OF DIRECTORS -- Nominees for Election
by Holders of Common Stock." Officers are appointed by and serve at the
discretion of the Board. Except as otherwise indicated, the positions
listed are with Aldila, Inc.
Name Age Position
Gary T. Barbera 61 Chairman of the Board of Directors,
Chief Executive Officer, and Director
Peter R. Mathewson 48 Vice President and Director; President
and Chief Operating Officer of Aldila
Golf Corp.
Robert J. Cierzan 52 Vice President, Finance, Secretary and
Treasurer
Michael J. Rossi 45 Vice President, Sales and Marketing of
Aldila Golf Corp.
The principal occupations and positions for the past five years, and
in certain cases prior years, of the executive officers of the Company who
are not also nominees for election as a director, are as follows. Reference
to service with the Company through April 23, 1993 means only service with
Aldila Golf Corp. and the predecessor company to Aldila Golf Corp.
Robert J. Cierzan has been Secretary and Treasurer of Aldila since
January 1991 and Vice President, Finance since March 1989. From September
1988 to February 1989, Mr. Cierzan held the position of Executive Vice
President-Finance at Illinois Coil Spring Company, a diversified
manufacturer of springs, automotive push-pull controls and rubber products.
Michael J. Rossi has been the Vice President, Sales and Marketing of
Aldila Golf Corp. since March 24, 1997 when he joined the Company. Prior to
that, from August 1994 to March 1997, Mr. Rossi was the Vice President and
General Manager of Fujikura Composite America which manufactures graphite
golf shafts and is a wholly owned subsidiary of Fujikura Rubber Limited, a
Japanese publicly held company. From November 1989 to August 1994, he was
Vice President, Sales Marketing for True Temper Sports, a division of the
Black & Decker Corporation which manufactures steel golf shafts.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation (cash and non-cash, plan and non-plan) paid to each of the
Named Executive Officers for services rendered in all capacities to the
Company during the three fiscal years ended December 31, 1998, 1997 and
1996.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
--------------------------------- ----------------
Securities
Other Annual Underlying
Name and Principal Position Fiscal Year Base Salary Bonus Compensation Options
- ----------------------------- ----------- -------------- ---------- --------------- ---------------
Gary T. Barbera 1998 $367,500 $ -- $ -- 40,000
Chairman of the Board and 1997 359,400 -- -- 250,000
Chief Executive Officer 1996 332,900 86,600 -- 60,000
Peter R. Mathewson 1998 209,700 -- -- 25,000
Vice President; 1997 200,800 -- -- 162,500
President and 1996 119,300 31,000 -- 40,000
Chief Operating Officer,
Aldila Golf Corp.
Robert J. Cierzan 1998 166,600 -- -- 15,000
Vice President, Finance; 1997 159,000 -- -- 125,000
Secretary and Treasurer 1996 137,400 35,700 -- 35,000
Jon B. DeVault(1) 1998 243,700 -- -- 50,000
Vice President; -- -- -- -- --
President, and -- -- -- -- --
Chief Operating Officer
Aldila Materials
Technology Corp.
Michael J. Rossi 1998 155,700 -- -- 25,000
Vice President - Sales 1997 115,300(2) -- -- 40,000
and Marketing, Aldila -- -- -- -- --
Golf Corp.
- ----------------------
<FN>
(1) On December 1, 1998, Jon B. DeVault resigned from the Board of
Directors and all positions held with the Company, including all
subsidiaries thereof.
(2) As Mr. Rossi's employment started March 27, 1997, this amount reflects
the compensation received, rather than his base salary.
</FN>
The following table sets forth information concerning the grant of
stock options during the fiscal year ended December 31, 1998 to each of the
Named Executive Officers.
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 1998
Individual Grants
-------------------------------------------------------
Percent of
Total
Options Potential Realizable
Granted to Value at Assumed
Employees Annual Rates of
in Fiscal Exercise or Stock Price
Options Year Base Price Expiration Appreciation for
Name Granted(1) 1998(2) (per share) Date(3) Option Term
- -------------------- -------------- ------------ ------------- ------------- ------------------------
5% (4) 10%(4)
----------- ------------
Gary T. Barbera 40,000 10% $7.06 5/06/08 $178,000 $450,000
Robert J. Cierzan 15,000 4% 7.06 5/06/08 67,000 169,000
Peter R. Mathewson 25,000 6% 7.06 5/06/08 111,000 281,000
Jon B. DeVault(5) 50,000 12% 7.06 5/06/08(6) 222,000 563,000
Michael J. Rossi 25,000 6% 7.06 5/06/08 111,000 281,000
- -----------------------
<FN>
(1) These options were granted pursuant to the Company's 1994 Stock
Incentive Plan, as amended and restated (the "1994 Stock Incentive
Plan"). One-third of the total number of options granted are
exercisable on the first anniversary of the option grant date and
thereafter, an additional one-third of the total number of options
granted are exercisable on each of the second and third anniversaries
of the option grant.
(2) In fiscal 1998, the Company granted a total of 410,000 options to its
employees under the Company's 1994 Stock Incentive Plan. This number
was used in calculating the percentages above.
(3) The options granted under the Company's 1994 Stock Incentive Plan
generally expire on the earliest of (a) the tenth anniversary of the
date of grant, (b) if the Optionee's employment is terminated as a
result of death, disability, retirement or within two years after a
change in control, one year following termination of employment, (c)
if the Optionee's employment is terminated for any other reason, 30
days following termination of employment or (d) the exercise in full
of the option.
(4) The assumed 5% and 10% annual rates of appreciation over the term of
the options are set forth in accordance with rules and regulations
adopted by the SEC and do not represent the Company's estimate of
stock price appreciation.
(5) On December 1, 1998, Jon B. DeVault resigned from the Board of
Directors and all positions held with the Company including all
subsidiaries thereof.
(6) Mr. DeVault's options have been terminated following his resignation
in December 1998. These dates represent the original expiration dates
of Mr. DeVault's options.
</FN>
Aggregated Option Exercises. The following table sets forth
information (on an aggregated basis) concerning each exercise of stock
options during the fiscal year ended December 31, 1998 by each of the Named
Executive Officers and the fiscal year-end value of unexercised options.
The Company has no outstanding stock appreciation rights, either
freestanding or in tandem with options.
AGGREGATE OPTION EXERCISES
IN THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying "In-the-Money"
Unexercised Options at Options at Fiscal
Shares Fiscal Year-End Year-End(1)
Acquired on ---------------------------- ---------------------------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ------------- ----------------- ------------- -------------- ------------ --------------
Gary T. Barbera -- -- 200,483 226,667 -- --
Robert J. Cierzan -- -- 97,999 110,001 -- --
Jon B. DeVault(2) -- -- -- -- -- --
Peter R. Mathewson -- -- 120,832 146,668 -- --
Michael J. Rossi -- -- 13,333 51,667 -- --
- --------------------------
<FN>
(1) Options are "in-the-money" at the fiscal year-end if the fair market
value of the underlying securities on such date exceeds the exercise
price of the option. The closing price of the Company's Common Stock
on December 31, 1998 did not exceed the exercise price of the above
underlying securities and, accordingly, none of the options are
"in-the-money."
(2) On December 1, 1998, Jon B. DeVault resigned from the Board of
Directors and all positions held with the Company including all
subsidiaries thereof.
</FN>
DIRECTOR COMPENSATION
Directors, other than management directors (Gary T. Barbera, and Peter
R. Mathewson), currently receive for their service as directors $2,000 per
quarter, $1,000 per Board meeting attended and $500 per committee meeting
attended. Each director, including each management director and other
directors not receiving directors' fees, is reimbursed for his or her
out-of-pocket expenses arising from attendance at meetings of the Board or
committees thereof.
Pursuant to the Company's 1994 Stock Incentive Plan, on May 29, 1998,
each of the non-employee directors who had more than one year of service
(Peter E. Bennett, Marvin M. Giles, III, Vincent T. Gorguze, John J. Henry,
Donald C. Klosterman, Wm. Brian Little, and Chapin Nolen) received an
annual stock option grant of 10,000 shares. Under the 1994 Stock Incentive
Plan, each non-employee director with more than one year of service
(currently, Messrs. Bennett, Brand, Giles, Henry, Klosterman, Little and
Nolen) will receive additional options to acquire 10,000 shares annually on
the last trading day in the month of May.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Except for the provisions of the 1994 Stock Incentive Plan and related
agreements thereto, there are no compensatory plans or arrangements with
respect to any of the above executive officers (including each of the Named
Executive Officers) which are triggered by, or result from, the
resignation, retirement or any other termination of such executive
officer's employment, a change-in-control of the Company or a change in
such executive officer's responsibilities following a change-in-control.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
From January 1992 until April 23, 1993, Wm. Brian Little, who was on
the Compensation Committee throughout 1997, served as President of the
Company and also served in an executive officer capacity at Aldila Golf
Corp. Mr. Little received no compensation from the Company or any of its
subsidiaries for services rendered in any of such capacities.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
Introduction. The Compensation Committee of the Board of Directors in
1998 was comprised of Peter E. Bennett, Donald C. Klosterman and Wm. Brian
Little. The Company's employee stock option plans, including its 1994 Stock
Incentive Plan, are administered by the Stock Option Committee, which was
comprised in 1998 of Marvin M. Giles, III, Mr. Klosterman and Mr. Little.
Although the Compensation Committee did not have a formal meeting during
1998, the members discussed issues related to executive compensation among
themselves before approving the changes in compensation discussed below.
Compensation Objectives and Policies. The principle objectives of the
Company's executive compensation are to: (i) support the achievement of
desired Company performance, (ii) align the executive officers' interests
with the success of the Company and with the interests of the Company's
stockholders and (iii) provide compensation that will attract and retain
superior talent and reward performance. These objectives are principally
achieved through compensation in the form of annual base salaries, bonuses
and equity investment opportunities.
Executive officers generally receive salary increases at the time of
their respective employment anniversaries as approved by the Compensation
Committee, taking into consideration the recommendations of the Company's
Chairman and Chief Executive Officer. In 1998, executive officer salaries
increased by 5%. In deciding to provide these salary increases to the
executive officers, the Compensation Committee took into account the
overall performance of the Company in 1998 and 1997 in the face of
increasing competitive pressures, including declining unit prices that have
been negatively impacting the Company's gross margins. The Compensation
Committee also took into account the efforts of a number of the executive
officers in connection with the development of the Company's carbon fiber
plant.
Principally as a result of the continued price pressures as well as
delays in bringing the carbon fiber plant to full production, the Company
did not perform at a level that warranted any bonuses under the Company's
Executive Bonus Plan (the "Bonus Plan") as described below.
The Compensation Committee believes that overall 1998 executive
compensation levels adequately reflected (i) each executive's business
results and performance in his area of responsibility, (ii) each
executive's contribution to the overall management team and (iii) each
executive's then expected future contributions to the Company.
In addition to annual base salaries, in 1998, all executive officers
participated in the Company's Bonus Plan. Bonus awards to be granted under
the Bonus Plan were predicated on the actual financial performance of the
Company at the end of the Company's fiscal year as compared to the target
financial performance objectives established by the Compensation Committee
in late 1997 based on the Company's 1998 operating plan. The bonuses
awarded were dependent upon the Company achieving a specified dollar amount
of pretax profits and increased to the extent pretax profits exceeded that
minimum level and achieved various higher levels. The bonus for each
participant was set at a percentage of the participant's base salary, with
the percentage depending on what level of pretax profits the Company
achieved. In establishing the targets and resulting bonuses, the Committee
determined that it was important that the bonus payment structure be
designed to reward executive officers for high levels of performance by the
Company, weighted so that superior performance (viewed against the
performance then expected in accordance with management's internal
projections for 1998 performance as approved by the Board of Directors)
would result in substantially higher bonuses than would result from merely
acceptable performance. While a substantial portion of the bonus was
subject solely to the Company attaining its quantitative objectives, a
portion of the total bonus award was also subject to a discretionary
modifier determined by the Chairman and Chief Executive Officer allowing
him to reduce the bonus if the executive's individual performance so
warranted. As indicated above, the Company's pre-tax profits did not meet
the minimum thresholds in the Bonus Plan and no bonuses were paid under the
Bonus Plan for 1998.
The Board of Directors believes that executive officers who are in a
position to make a substantial contribution to the long-term success of the
Company and to build stockholder value should have a significant stake in
the Company's on-going success. To this end, the Company's compensation
objectives have been designed to be achieved through significant stock
ownership in the Company by executive officers in addition to base salary
and bonus payments.
The purpose of the 1994 Stock Incentive Plan is to provide an
additional incentive to employees to work to maximize stockholder value and
to facilitate broadening and increasing stock ownership by executives and
other key employees. In 1998, options to purchase an aggregate of 410,000
shares were granted to employees of the Company as a group, with 155,000 of
those being granted to the Named Executive Officers. The Stock Option
Committee believes that these stock option grants were appropriate in light
of the policy of the Board of Directors that significant equity ownership
by executive officers is an important contributor to aligning the interests
of executive officers with those of the stockholders of the Company, and
the number of options awarded to individual officers were set based on the
Stock Option Committee's perception, in part in light of recommendations by
the Company's Chairman and Chief Executive Officer, as to each officer's
ability to affect the Company's overall future performance.
The Stock Option Committee believes that these options, together with
the shares and options previously made available to executive officers,
have provided significant incentives for executives to increase the value
of the Company for the benefit of all stockholders and have offered
executives significant opportunities to profit personally from their
efforts to increase that value.
The Compensation Committee and the Stock Option Committee have
considered the impact of Section 162(m) of the Internal Revenue Code on
their executive compensation decisions. Section 162(m) generally disallows
a federal income tax deduction to any publicly-held corporation for
compensation paid to the chief executive officer and the four other most
highly compensated executive officers to the extent that such compensation
in a taxable year exceeds $1 million. Section 162(m), however, does not
disallow a deduction for qualified "performance-based compensation" the
material terms of which are disclosed to and approved by stockholders. The
Company's Bonus Plan as in effect in 1995 does not qualify as
performance-based compensation for the purposes of Section 162(m), although
the 1992 Plan and the 1994 Stock Incentive Plan each so qualify. During
1998, the Compensation Committee believed it unlikely that any executive
officer of the Company would receive in excess of $1 million in
compensation, other than performance-based compensation, and the
Compensation Committee believes that it unlikely that any executive officer
will receive in excess of that amount in 1999. As a result, the
Compensation Committee has not taken any steps to qualify the bonus plan as
performance-based compensation, although it anticipates that the Company
would do so before any executive receives salary, bonus and other
non-performance based compensation in excess of $1 million.
Compensation of Chief Executive Officer. Gary T. Barbera's
compensation during 1998 as Chairman of the Board and Chief Executive
Officer was reviewed in connection with the Compensation Committee's
overall review of executive officer compensation, at which time the
Compensation Committee decided in the fall of 1998 to maintain his base
salary at $367,500. As described above, Mr. Barbera did not receive any
bonus under the Bonus Plan. The Compensation Committee believed that Mr.
Barbera's current compensation continued to be appropriate given his
responsibilities at the Company and the recent and expected future
performance of the Company, particularly related to the expectation of a
slowdown in golf shaft sales due to overall golf industry market conditions
and resulting potential cash flow issues for the Company and the
difficulties in bringing the carbon fiber operations up to anticipated
levels of profitability, all of which had been reflected in a substantial
drop in the market price of the Company's Common Stock. In May 1998, as
part of the general grant referred to above, the Stock Option Committee
awarded Mr. Barbera options to acquire 40,000 shares of the Company's
Common Stock. The Stock Option Committee believed that this number of
options was appropriate in light of the importance of Mr. Barbera's
position to the Company and his level of stock ownership. The Compensation
Committee also continues to believe that Mr. Barbera's participation in the
Bonus Plan in conjunction with his stock ownership and employee stock
options have provided substantial incentives for him to create stockholder
value.
Compensation Committee Stock Option Committee
---------------------- ----------------------
Peter E. Bennett Marvin M. Giles
Donald C. Klosterman Donald C. Klosterman
Wm. Brian Little Wm. Brian Little
The Board Compensation Committee Report on Executive Compensation
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act and shall not otherwise be deemed filed under such Acts.
PERFORMANCE GRAPH FOR ALDILA, INC. COMMON STOCK
The performance graph for the Company's Common Stock compares the
cumulative total return (assuming reinvestment of dividends) on the
Company's Common Stock with (i) the Center for Research in Security Prices
("CRSP") Index for NASDAQ Stock Market (U.S. Companies) (the "Market
Index") and (ii) the CRSP Index for NASDAQ Stocks (SIC 3940 - 3949) --
Dolls, Toys, Games and Sporting and Athletic Goods (the "Peer Index"),
assuming an investment of $100 on December 31, 1993 (the date the Common
Stock commenced trading on the NASDAQ Stock Market) in each of the Common
Stock, the stock comprising the Market Index and the stock comprising the
Peer Index.
INDEXED/CUMULATIVE RETURN
------------------------------------------------------
12/31 12/31 12/31 12/31 12/31
COMPANY/INDEX 1994 1995 1996 1997 1998
------------- ---- ---- ---- ---- ----
Aldila 80.7 29.8 34.0 30.7 17.5
Market Index 97.8 138.3 170.0 208.6 293.2
Peer Index 80.9 77.5 48.0 42.6 22.5
NOTES:
A. The index levels are derived from compounded daily returns that
include all dividends.
B. The index levels for the Company, the Market Index and the Peer Index
were each set to 100 at December 31, 1993.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31,
1998 (the "1998 Annual Report") is included with the mailing of this Proxy
Statement. The 1998 Annual Report contains consolidated financial
statements of the Company and its subsidiaries and the report thereon of
Deloitte & Touche LLP, independent accountants.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company.
ChaseMellon Shareholder Services, 300 South Grand Avenue, 2nd Floor, Los
Angeles, California 90071, has been retained to solicit proxies by mail,
telephone or personal solicitation for a fee of $3,500 plus expenses. The
Company has also arranged for reimbursement, at the rate suggested by the
New York Stock Exchange, of brokerage houses, nominees, custodians and
fiduciaries for the forwarding of proxy materials to the beneficial owners
of shares held of record. Proxies may also be solicited by directors,
officers and employees of the Company, but such persons will not be
specially compensated for such services.
PROPOSALS OF STOCKHOLDERS
If a stockholder desires to have a proposal included in the proxy
materials for the 2000 Annual Meeting of Stockholders, such proposal shall
conform to the applicable proxy rules of the SEC concerning the submission
and content of proposals and must be received by December 10, 1999 at the
executive offices of the Company, 12140 Community Road, Poway, California
92064, Attention: Secretary. The Company's receipt of notice of a
stockholder's intent to submit a proposal outside of Rule 14a-8 at the 2000
Annual Meeting of Stockholders after February 25, 2000 will be considered
untimely under Rule 14a-4(c)(1).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements
and other information with the SEC. Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's Regional
Offices located at 7 World Trade Center (13th Floor), New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials can be obtained by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates or, at no charge, may be obtained at the
SEC's web site: http://www.sec.gov. In addition, such material may also be
inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006-1500.
OTHER MATTERS
The Board knows of no matters other than those listed in the attached
Notice of Annual Meeting which are likely to be brought before the Meeting.
However, if any other matter properly comes before the Meeting, the persons
named on the enclosed proxy card will vote the proxy in accordance with
their best judgment on such matter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
-------------------------------------
Robert J. Cierzan
Secretary
April 9, 1999
[FRONT OF PROXY CARD]
ALDILA, INC.
The undersigned stockholder of ALDILA, INC. hereby
appoints GARY T. BARBERA and WM. BRIAN LITTLE, or any of
them, Proxies of the undersigned, each with full power to
act without the other and with the power of substitution, to
represent the undersigned at the Annual Meeting of
Stockholders of Aldila, Inc., to be held at the Rancho
Bernardo Inn, 17550 Bernardo Oaks Drive, San Diego,
California 92128 on Wednesday, May 5, 1999 at 9:00 a.m.
(Pacific time), and at any adjournments or postponements
thereof, and to vote all shares of stock of the Company
standing in the name of the undersigned with all the powers
the undersigned would possess if personally present, in
accordance with the instructions below and on the reverse
hereof, and in their discretion upon such other business as
may properly come before the meeting or any adjournments
thereof.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND
WILL BE VOTED IN FAVOR OF PROPOSALS 1, 2 AND 3 IF NO
INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
- ---------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE ON REVERSE SIDE
(Continued and to be signed on reverse side)
[BACK OF PROXY CARD]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
|X| PLEASE MARK
YOUR VOTES AS INDICATED
IN THIS EXAMPLE
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. FOR all WITHHOLD 2. Ratification of the appointment [ ] [ ] [ ]
nominees AUTHORITY to of Deloitte & Touche LLP as the
listed vote for all independent accountants of the
(except as nominees Company.
marked to the listed
contrary)
[ ] [ ] 3. In their discretion, the [ ] [ ] [ ]
Proxies are authorized to vote
upon such other business as
may properly come before the
meeting or any adjournment
thereof.
Nominees: Gary T. Barbera, Peter E. Bennett, Thomas A. Brand, I PLAN TO ATTEND THE
Marvin M. Giles, III, John J. Henry, Donald C. Klosterman, MEETING [ ]
Wm. Brian Little, Peter R. Mathewson, Chapin Nolen
(INSTRUCTION: To withhold authority to vote for any individual COMMENTS/ADDRESS CHANGE
nominee, write that nominee's name on the line provided below.) Please mark this box if you have
written comments or an address
Change on the reverse side. [ ]
- ------------------------------------------------------------
The undersigned hereby acknowledges
receipt of the Notice of Annual
Meeting of Stockholders to be held
May 5, 1999 and the Proxy Statement
furnished herewith.
Signature(s) Date , 1999
----------------------------------------------------------------------- ------------------
Please sign as name appears hereon. When signing as attorney, executor, administrator, trustee
or guardian, give full title as such. If more than one name appears hereon, all parties should sign.