SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
HAWKER PACIFIC AEROSPACE
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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HAWKER PACIFIC AEROSPACE
11240 Sherman Way
Sun Valley, California 91352-4942
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On Wednesday, July 19, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Hawker Pacific Aerospace (the "Company") will be held at the
Burbank Holiday Inn Media Center, located at 150 East Angeleno Avenue, Burbank,
California, on Wednesday, July 19, 2000, at 10:00 A.M., Pacific Daylight Savings
Time, for the following purposes, as more fully described in the attached Proxy
Statement:
(1) To elect seven directors of the Company to serve until the
next annual meeting of shareholders or until their successors are duly elected
and qualified; and
(2) To transact such other business as may properly be brought
before the Annual Meeting or any and all adjournments thereof.
The Board of Directors has fixed the close of business on May 30,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only shareholders at the close of
business on the record date are entitled to vote at the Annual Meeting.
Accompanying this Notice are a Proxy and Proxy Statement. IF YOU WILL NOT
BE ABLE TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE. The Proxy may be revoked at any time prior to its exercise at the
Annual Meeting. The Proxy and Proxy Statement are first being mailed to
shareholders on or about June 12, 2000.
By Order of the Board of Directors,
Daniel J. Lubeck
Secretary
Sun Valley, California
June 12, 2000
Hawker Pacific Aerospace
11240 Sherman Way
Sun Valley, California 91352-4942
ANNUAL MEETING OF SHAREHOLDERS
July 19, 2000
PROXY STATEMENT
INTRODUCTION
This Proxy Statement ("Proxy Statement") is furnished to the shareholders
of Hawker Pacific Aerospace, a California corporation (the "Company"), in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of the Company. The proxies solicited hereby are to be voted at the
Annual Meeting of Shareholders of the Company to be held on Wednesday, July 19,
2000, and at any and all adjournments thereof (the "Annual Meeting").
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders will be asked: (i) to elect seven
directors of the Company to serve until the next annual meeting of shareholders
or until their successors are duly elected and qualified; and (ii) to transact
such other business as may properly be brought before the Annual Meeting or any
and all adjournments thereof. The Board recommends a vote in favor of (i.e.,
"FOR") the election of the seven nominees for directors of the Company.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding common shares of Hawker Pacific Aerospace (the "Common Stock") is
necessary to constitute a quorum at the Annual Meeting. Only shareholders of
record at the close of business on May 30, 2000 (the "Record Date"), will be
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, there were 5,822,722 shares of Common Stock outstanding and entitled to
vote. Holders of Common Stock as of the Record Date are entitled to one vote for
each share held.
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with the
instructions indicated in the proxies. If no instructions are indicated, the
shares will be voted in favor of (i.e., "FOR") the election of the seven
nominees for directors of the Company. With respect to any other item of
business that may come before the Annual Meeting, the proxy holders will vote
the proxy in accordance with their best judgment.
In the election of directors, the seven candidates receiving the highest
number of votes will be elected as directors. The other matters submitted for
shareholder approval at the Annual Meeting will be decided by the affirmative
vote of the majority of the shares represented in person or by proxy and
entitled to vote on each such matter. Abstentions with respect to any matter are
treated as shares present or represented and entitled to vote on that matter and
thus have the same effect as negative votes. If a broker which is the record
holder of certain shares indicates on a proxy that it does not have
discretionary authority to vote on a particular matter as to such shares, or if
shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to a particular matter, these non-
voted shares will be counted for quorum purposes but are not deemed to be
present or represented for purposes of determining whether shareholder approval
of that matter has been obtained. Any shareholder executing a proxy has the
power to revoke the proxy at any time prior to its exercise. A proxy may be
revoked prior to exercise by (a) filing with the Company a written revocation of
the proxy; (b) appearing at the Annual Meeting and casting a vote contrary to
that indicated on the proxy; or (c) submitting a duly executed proxy bearing a
later date.
Shareholders may cumulate their votes with respect to the election of
directors if one or more shareholder gives notice at the Annual Meeting, prior
to voting, of an intention to cumulate votes for a nominated director. A
shareholder may cumulate votes by casting for the election of one nominee a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which his shares are entitled, or by distributing his votes
on the same principle among as many candidates as he sees fit. If a proxy is
marked "FOR" the election of directors, it may, at the discretion of the proxy
holders, be voted cumulatively in the election of directors.
-1-
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies via U.S. Mail, officers, directors and regular employees
of the Company may solicit proxies by written communications, by telephone,
telegraph or personal call. These persons are to receive no special compensation
for any solicitation activities. The Company will reimburse banks, brokers and
other persons holding Common Stock in their names, or those of their nominees,
for their expenses in forwarding proxy solicitation materials to beneficial
owners of Common Stock. This Proxy Statement and the accompanying form of proxy
are first being mailed to shareholders on or about June 12, 2000.
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, seven directors, who will constitute the entire
Board of Directors, are to be elected to serve until the next Annual Meeting of
Shareholders and until their successors shall be elected and duly qualified. All
nominees have consented to being named herein and have agreed to serve if
elected. The names of such nominees are as follows:
Daniel J. Lubeck
Mellon C. Baird
Scott W. Hartman
David L. Lokken
John G. Makoff
Joel F. McIntyre
Daniel C. Toomey, Jr.
Management proxies will be voted FOR the election of all of the above named
nominees unless the shareholder indicates that the proxy shall not be voted for
all or any one of the nominees. If cumulative voting is used, the proxy holders
intend to distribute the votes represented by each proxy, unless such authority
is withheld, among the seven nominees named, in such proportion as they see fit.
Nominees receiving the highest number of affirmative votes cast, up to the
number of directors to be elected, will be elected as directors. Abstentions,
broker non-votes, and instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees will result in the respective
nominees receiving fewer votes. If for any reason any nominee should, prior to
the Annual Meeting, become unavailable for election as a Director, an event not
now anticipated, the proxies will be voted for such substitute nominee, if any,
as may be recommended by management. In no event, however, shall the proxies be
voted for a greater number of persons than the number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE SEVEN PERSONS NOMINATED ABOVE.
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Executive Officers and Directors
Set forth below is certain information with respect to the directors,
director-nominees and executive officers of the Company.
Name Position
- ------------------------- -------------------------------------------------------------
Daniel J. Lubeck................................ Chairman of the Board and Secretary (1)(2)(4)
David L. Lokken................................. President, Chief Executive Officer and Director (2)(4)
Philip M. Panzera............................... Executive Vice President
Brian S. Carr................................... Managing Director of Sun Valley Operations
Dennis Biety.................................... Managing Director of United Kingdom Operations
Michael A. Riley................................ Vice President, Sales & Marketing
Mellon C. Baird................................. Director (3)(4)
Scott W. Hartman................................ Director (2)
John G. Makoff.................................. Director
Joel F. McIntyre................................ Director (1)(3)
Daniel C. Toomey, Jr. .......................... Director (1)(3)
____________________
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Executive Committee
Daniel J. Lubeck, 38, has served as Chairman of the Board since January
1999. Mr. Lubeck has been a director and the Company's Secretary since December
1996. Since July 1996, Mr. Lubeck has served as a Managing Director of Unique
Investment Corporation ("Unique"). Mr. Lubeck has served as the Chief Executive
Officer of a private manufacturing concern, and also sits on the Boards of
various private companies. From March 1993 until he joined Unique, Mr. Lubeck
was an attorney with McIntyre, Lubeck, Borgess & Burns, a multi-service law
firm. He has also served as an attorney with Paul, Hastings, Janofsky & Walker
from 1987 until 1992, and with Manatt, Phelps & Philips, LLP from 1992 until
1993. Mr. Lubeck earned a B.A. in Economics from the University of California-
San Diego, and a J.D. from the University of Southern California.
David L. Lokken, 53, joined the Company in May 1989 as Executive Vice
President and Chief Operating Officer. He has served as President and Chief
Executive Officer of the Company since June 1993, and as a Director of the
Company since 1994. From November 1985 until he joined the Company, Mr. Lokken
served as Vice President and General Manager of Cleveland Pneumatic's Product
Service Division. Mr. Lokken previously served as Vice President, Technical
Operations, for the Flying Tiger cargo airline. He has also held avionics and
product engineering positions with Western Airlines and the Sperry Flight
Systems Division. Mr. Lokken holds a B.S. in Electrical Engineering from North
Dakota State University and an M.B.A. from Arizona State University.
Philip M. Panzera, 50, joined the Company in October 1998 as Vice President
of Corporate Development. In March 1999 he was appointed Vice President and
Chief Financial Officer, and since September 1999 he has served as Executive
Vice President. Mr. Panzera has held a number of senior management positions as
Chief Financial Officer, Chief Operating Officer, President and Director in both
private and public companies. He has worked as an attorney, specializing in tax
and corporate law, and business planning, and has also served with Coopers &
Lybrand. Mr. Panzera received a B.A. from Methodist College, an M.B.A. from the
Rutgers University Graduate School of Management, and a J.D. from the Rutgers
University School of Law.
Brian S. Carr, 43, became Managing Director of Sun Valley Operations in
November 1997 after having served as Vice President of the Landing Gear Business
Unit since he joined the Company in January 1993. From 1980 until he joined the
Company, Mr. Carr held various engineering, technical sales and management
positions with Cleveland Pneumatic's
-3-
Product Service Division and Dowty Aerospace. Mr. Carr holds a B.S. in Aerospace
Engineering Technology from Kent State University.
Dennis M. Biety, 52, joined the Company in November 1998 as the Managing
Director of the Hawker Pacific Aerospace Ltd. subsidiary in the United Kingdom.
Mr. Biety has served as Vice President, Landing Gear and Hydromechanical
Products, and then President with Messier Services America. He has held other
senior positions in marketing and program management, and has also served as a
corporate counsel in several organizations. Mr. Biety has a B.A. from the
University of Illinois, and a J.D. from Wake Forest University.
Michael A. Riley, 54, joined the Company as Vice President of Marketing in
October 1989. He served as Vice President of the Hydromechanical Business Unit
from January 1994 to September 1999, when he was appointed as Vice President of
Sales & Marketing. From 1982 until he joined the Company, Mr. Riley held various
positions in the aerospace/aircraft industry with Abex Aerospace and Dunlop
Aviation. Mr. Riley served as a helicopter pilot in the United States Navy after
receiving a B.S. in Engineering from the United States Naval Academy, Annapolis,
Maryland.
Mellon C. Baird, 69, became a director of the Company in March 1998. Mr.
Baird is serving as Chief Executive Officer of Titan Systems and Senior Vice
President of the Titan Corporation. He was Chairman, President and Chief
Executive Officer of Delfin Systems, a private company, from 1990 until 1998.
From 1987 to 1989, Mr. Baird served as President and Chief Executive Officer of
Tracor, Inc., a privately-held company. From 1986 until 1987, Mr. Baird served
as President, Chief Operating Officer and a director of Tracor, a publicly-held
company. Mr. Baird currently serves on the Board of Directors of Software
Spectrum, Inc. and EDO Corporation, which are both publicly-held companies. Mr.
Baird received a B.B.A. and an M.B.A. from the University of North Texas in 1956
and 1961, respectively.
Scott W. Hartman, 37, became a director of the Company in December 1996,
and served as Chairman of the Board from March 1997 to January 1999. Since March
1995, Mr. Hartman has served as a Managing Director of Unique Investment
Corporation. From December 1993 until he joined Unique, Mr. Hartman served as
Chief Executive Officer of Nucor World Industries, a private holding company.
From December 1991 until December 1993, Mr. Hartman served as a Vice President
of Business Development for City National Bank, and from May 1983 until he
joined City National Bank, he held various management positions with Emerson
Electric Company. Mr. Hartman earned a B.S. from Indiana University.
John G. Makoff, 37, became a director of the Company in December 1996. Mr.
Makoff founded Unique in June 1993 and currently serves as one of its Managing
Directors. From June 1991 until he founded Unique, Mr. Makoff served as Manager
for Computerland of Pasadena, Inc., a computer reseller. Mr. Makoff holds a B.A.
from Lewis & Clark University.
Joel F. McIntyre, 61, became a director of the Company in February 1998.
From 1963 through 1993, Mr. McIntyre was an attorney with the law firm of Paul,
Hastings, Janofsky and Walker. In 1993, Mr. McIntyre founded his own law firm,
specializing in merger and acquisition transactions. Mr. McIntyre currently
serves on the Board of Directors of International Aluminum Corporation, a
publicly-held company. Mr. McIntyre received a B.A. from Stanford University in
1960, and a J.D. from the University of California- Los Angeles in 1963.
Daniel C. Toomey, Jr., 36, became a director of the Company in February
1998. Since January 1998, Mr. Toomey has served as the President and Chief
Executive Officer of Nomadix, LLC. Mr. Toomey served as Vice President and Chief
Financial Officer of Eltron International, Inc., a publicly-held company, from
October 1992 until December 1997. From 1987 until he joined Eltron, Mr. Toomey
was employed with Arthur Andersen LLP, where he served as Manager in the
Enterprise Division of its Woodland Hills, California office. Mr. Toomey
received a B.A. from the University of California-Los Angeles in 1986.
Meetings; Attendance; Committees
During the fiscal year ended December 31, 1999, the Board of Directors of
the Company met three times, had four telephonic meetings, and took action two
times by unanimous written consent.
The Audit Committee is composed of Messrs. McIntyre, Toomey and Baird. The
functions of the Audit Committee include (i) recommending to the Board of
Directors the selection and retention of independent auditors, (ii) reviewing
the scope of the annual audit undertaken by the Company's independent auditors
and the progress and results of their work, and (iii) reviewing the financial
statements of the Company and its internal accounting and auditing procedures.
The Audit Committee met once during 1999.
-4-
The Compensation Committee is composed of Messrs. Lubeck, McIntyre and
Toomey. The functions of the Compensation Committee include (i) establishing the
compensation of the Chief Executive Officer, (ii) reviewing and approving
executive compensation policies and practices, (iii) reviewing salaries and
bonuses for certain executive officers of the Company, (iv) administering the
Company's employee stock option plans, and (v) considering such other matters as
may from time to time be delegated to the Compensation Committee by the Board of
Directors. The Compensation Committee met once during 1999.
The function of the Nominating Committee, which consists of Messrs. Lubeck,
Hartman and Lokken, is to select the slate of directors to be presented to the
shareholders for election at the annual meeting of the shareholders of the
Company. The Nominating Committee may consider director nominees recommended by
the Company's shareholders if recommendations are submitted to the Company in
the manner provided under "Submission of Shareholder Proposals".
The Board of Directors has also established an Executive Committee to
advise the Company on strategic planning matters. The Executive Committee is
composed of Messrs. Lubeck, Lokken and Baird. There are no other committees
serving the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of beneficial ownership and reports of
changes in beneficial ownership of the Common Stock. Directors, executive
officers and greater-than-ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of copies of reports filed with the SEC and
submitted to the Company, the Company believes that all of the Company's
directors, executive officers and greater-than-ten-percent shareholders filed
all required reports on a timely basis.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth certain compensation earned or accrued
during the years ended December 31, 1997, 1998 and 1999 by the Company's Chief
Executive Officer, and the Company's three other most highly compensated
executive officers whose total salary and bonus during the year ended December
31, 1999, exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------
Name and Principal Position Year Salary Bonus(1) Other
- -------------------------------------------- ---- --------- -------- -------------
David L. Lokken............................. 1999 $245,326 $30,751 -
Chief Executive Officer 1998 222,351 22,431 -
1997 233,147 44,358 -
Philip M. Panzera........................... 1999 $159,843 $24,002 -
Executive Vice President
Brian S. Carr............................... 1999 $160,637 $24,002 -
Managing Director of Sun Valley Operations 1998 136,022 10,669 -
1997 125,156 21,097 -
Dennis M. Biety............................. 1999 $156,141 $24,002 -
Managing Director of UK Operations
Michael A. Riley............................ 1999 $123,588 $19,500 -
Vice President-Sales & Marketing 1998 115,003 9,438 -
1997 113,430 18,663 -
Long-term Compensation
----------------------
Awards Payouts
------ -------
Securities
Restricted Underlying All Other
Stock Options/ LTIP Compen-
Name and Principal Position Year Award SARs (#) Payouts sation
- -------------------------------------------- ---- ------ -------- -------- ------
David L. Lokken............................. 1999 - - - -
Chief Executive Officer 1998 - - - -
1997 - - - -
Philip M. Panzera........................... 1999 - - - -
Executive Vice President
Brian S. Carr............................... 1999 - - - -
Managing Director of Sun Valley Operations 1998 - - - -
1997 - - - -
Dennis M. Biety............................. 1999 - - - -
Managing Director of UK Operations
Michael A. Riley............................ 1999 - - - -
Vice President-Sales & Marketing 1998 - - - -
1997 - - - -
- -----------
(1) Bonus amounts are shown in the year accrued.
-5-
Director Compensation
Messrs. Baird, McIntyre and Toomey receive a cash fee of $1,500 per regular
and special Board meeting attended in person, or $1,000 per telephonic Board
meeting, plus an additional $500 per month for being a member of one or more
committees of the Board. At the discretion of the Board, these three directors
may also be granted stock options.
In January 1998, Messrs. McIntyre and Toomey were each granted five-year
options to purchase up to 14,861 shares, exercisable at $8.00 per share, vesting
33 1/3% per year beginning on the first anniversary of the effective date of the
initial public offering. In March 1998, the Company granted Mr. Baird five-year
options to purchase up to 14,861 shares, exercisable at the then current market
price, vesting 33 1/3% per year beginning on the first anniversary of the date
of grant. Directors are also reimbursed for expenses incurred in connection with
the performance of services as directors.
Stock Options/SAR Grants
No stock options or Stock Appreciation Rights were granted to or exercised
by the Named Executive Officers during the fiscal year ended December 31, 1999.
Employment Arrangements
In November 1996, the Company entered into an employment agreement with
David L. Lokken pursuant to which Mr. Lokken agreed to serve as the Company's
President and Chief Executive Officer. The employment agreement is for an
initial term of five years and, as amended in 1997, provides for an annual base
salary of $205,000, and a performance bonus to be awarded in accordance with the
terms and conditions of a separate Management Incentive Compensation Plan.
Pursuant to the employment agreement, the Company may terminate Mr. Lokken's
employment with or without cause at any time before its term expires upon
providing written notice. In the event the Company terminates Mr. Lokken's
employment without cause, Mr. Lokken would be entitled to receive a severance
amount equal to his annual base salary and benefits for the greater of two years
or the balance of the term of his employment agreement, and a pro rata bonus for
the year of termination. In the event of a termination by reason of Mr. Lokken's
death or permanent disability, his legal representative will be entitled to
receive his annual base salary and benefits for the remaining term of his
employment agreement. In the event of, or termination following, a change in
control of the Company, as defined in the agreement, Mr. Lokken would be
entitled to receive eighteen months salary and benefits.
In November 1996, the Company also entered into employment agreements with
Brian S. Carr, Managing Director of Sun Valley Operations, and Michael A. Riley,
Vice President, Sales & Marketing. The employment agreements are each for an
initial term of three years, which has been automatically extended for one year.
The agreements, as amended in 1997 and 1999, provide for annual base salaries of
$160,000 and $130,000, respectively, and performance bonuses to be awarded in
accordance with the terms and conditions of a separate Management Incentive
Compensation Plan. Mr. Riley will also receive commissions totaling $30,000 per
year if the Company achieves its revenue targets, plus additional commissions if
Company revenue should exceed its targets. In the event the Company terminates
their employment without cause, Messrs. Carr and Riley would each be entitled to
receive a severance amount equal to his respective annual base salary and
benefits for the greater of one year or the balance of the term of his
employment agreement and a pro rata bonus for the year of termination. In the
event of a termination by reason of Messrs. Carr's or Riley's death or permanent
disability, his legal representative will be entitled to receive his annual base
salary and benefits for the remaining term of his employment agreement. In the
event of, or termination following, a change in control of the Company, as
defined in the agreement, Messrs. Carr and Riley would each be entitled to
receive twelve months salary and benefits.
In October 1998, the Company entered into an employment agreement with
Philip M. Panzera, Executive Vice President. The agreement is for an initial
term of three years, and, as amended in 1999, provides for an annual base salary
of $160,000, and a performance bonus to be awarded in accordance with the terms
and conditions of a separate Management Incentive Compensation Plan. In the
event the Company terminates his employment without cause, Mr. Panzera would be
entitled to receive a severance amount equal to his annual base salary and
benefits for the greater of one year or the balance of the term of his
employment agreement, and a pro rata bonus for the year of termination. In the
event of a termination by reason of Mr. Panzera's death or permanent disability,
his legal representative will be entitled to receive his annual base salary and
benefits for the remaining term of his employment agreement. In the event of, or
termination following, a change in control of the Company, as defined in the
agreement, Mr. Panzera would be entitled to receive twelve months salary and
benefits.
In October 1998, the Company entered into an employment agreement with
Dennis M. Biety, Managing Director of United Kingdom Operations. The agreement
is for an initial term of five years, and, as supplemented, provides for an
annual base salary of $160,000, a performance bonus to be awarded in accordance
with the terms and conditions of a
-6-
separate Management Incentive Compensation Plan, and reimbursement for housing
and automobile expenses while living abroad. In the event the Company terminates
his employment without cause, Mr. Biety would be entitled to receive a severance
amount equal to his annual base salary and benefits for the greater of two years
or the balance of the term of his employment agreement, and a pro rata bonus for
the year of termination. In the event of a termination by reason of Mr. Biety's
death or permanent disability, his legal representative will be entitled to
receive his annual base salary and benefits for the remaining term of his
employment agreement. In the event of, or termination following, a change in
control of the Company, as defined in the agreement, Mr. Biety would be entitled
to receive twenty-four months salary and benefits.
In addition, during 2000 the Board of Directors provided contracts to each
of the executive officers, and certain other key employees, which provide
additional financial incentives upon a change in control of the Company, as
defined in the officers' employment agreements. Pursuant to these contracts,
either no fee or a gradually increasing success fee would be payable depending
on the purchase price for the Company. The contracts also provide for
accelerated vesting of stock options.
Employee Defined Benefit Plan
General. On January 1, 1997, the Board of Directors adopted the Employee
Defined Benefit Pension Plan (the "Pension Plan") for the benefit of the
eligible employees of the Company. The primary purpose of the Pension Plan is to
provide a retirement benefit for participating employees. All employees of the
Company are eligible to participate in the Pension Plan on the January 1st next
following their date of hire. Employees who are covered by collective bargaining
units and whose retirement benefits are the subject of good faith bargaining,
however, are not eligible to participate in the Pension Plan.
Administration. The Pension Plan is administered by a committee (the "Plan
Committee") whose members are appointed by the Board of Directors of the
Company. The Plan Committee oversees the day-to-day administration of the
Pension Plan and has the authority to take action and make rules and regulations
necessary to carry out the purpose of the Pension Plan.
Normal Retirement Benefits and Vesting. The Pension Plan provides for
employer contributions only. Each year, the Company makes a contribution to the
pension plan equal to the minimum funding requirement sufficient to fund for the
benefits being accrued under the Pension Plan for the year. The Pension Plan
provides for a normal retirement benefit payable on a monthly basis for the
lifetime of the participant. The normal retirement benefit is equal to the
participant's credited benefit service (up to a maximum of 35 years) times the
sum of 0.75% of the participant's final average monthly compensation plus 0.65%
of such compensation in excess of the participant's average monthly wage.
However, the benefit actually payable from the Pension Plan will be reduced for
any benefits payable (or paid) with respect to service credited from the Defined
Benefit Plan of the Company's predecessor.
For purposes of calculating a participant's normal retirement benefits,
average monthly compensation is defined in the Pension Plan as average monthly
compensation during the five consecutive plan years of the participant's
employment which yields the highest average compensation.
No maximum monthly benefit payable under the Pension Plan is to exceed the
applicable Internal Revenue Code Section 415 limit adjusted actuarially to
reflect a participant's retirement age if the retirement age is other than the
social security retirement age. The monthly retirement benefit payable by the
Pension Plan is a benefit payable in the form of a straight life annuity with no
ancillary benefits. For a participant who is to receive benefits other than in
the form of a straight life annuity, the monthly retirement benefit will be
adjusted to an equivalent benefit in the form of a straight life annuity on an
actuarial equivalent basis.
A participant becomes fully vested in his accrued benefits under the
Pension Plan upon attainment of normal retirement age (age 65), permanent
disability, death or the termination of the Pension Plan. If a participant
terminates employment with the Company prior to retirement, death or disability,
the vested interest he has in accrued benefits under the Pension Plan is based
on years of service, with 0% vesting for less than five years of service and
100% vesting after five or more years of service.
Pension Plan Investments. The Plan Committee selects vehicles for the
investment of plan assets. The Plan Committee then directs the trustee to invest
employer contributions in the investment option selected by the Plan Committee
under the Pension Plan.
-7-
Pension Plan Amendment or Termination. Under the terms of the Pension Plan,
the Company reserves the right to amend or terminate the Pension Plan at any
time and in any manner. No amendment or termination, however, may deprive a
participant of any benefit accrued under the Pension Plan prior to the effective
date of the amendment or termination.
Estimated Monthly Benefits. The following table sets forth the estimated
monthly benefits under the pension Plan, without regard to any offsetting
benefit which may be payable from the Defined Benefit Pension Plans of the
Company's predecessors for service prior to January 1, 1997, based on the
current benefit structure and assuming the participant's current age is 50.
PENSION PLAN TABLE
Years of Service
----------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ----------------------------------- ----------------------------------------------------------------------
$125,000........................... $ 1,684 $ 2,246 $ 2,807 $ 3,369 $ 3,930
150,000........................... 2,122 2,829 3,536 4,244 4,951
175,000........................... 2,297 3,063 3,828 4,594 5,360
200,000........................... 2,297 3,063 3,828 4,594 5,360
225,000........................... 2,297 3,063 3,828 4,594 5,360
250,000........................... 2,297 3,063 3,828 4,594 5,360
300,000........................... 2,297 3,063 3,828 4,594 5,360
400,000........................... 2,297 3,063 3,828 4,594 5,360
450,000........................... 2,297 3,063 3,828 4,594 5,360
500,000........................... 2,297 3,063 3,828 4,594 5,360
The compensation covered by the Pension Plan includes basic salary or
wages, overtime payments, bonuses, commissions and all other direct current
compensation but does not include contributions by the Company to Social
Security, benefits from stock options (whether qualified or not), contributions
to this or any other retirement plans or programs or the value of any other
fringe benefits provided at the expense of the Company. For benefit calculation
purposes, a "highest five-year" average of compensation is used. Benefits are
paid as straight-life annuities with no subsidies or offsets. The compensation
covered by the Pension Plan for all of the Named Executive Officers was limited
in accordance with Section 401(a)(17) of the Internal Revenue Code to $160,000
in 1999 ($170,000 for 2000 and after).
The years of credited service for each Named Executive Officer who
participates in the Pension Plan are as follows.
Name Years
--------------------------------- ---------
David L. Lokken.................. 11 years
Michael A. Riley................. 10 years
Brian S. Carr.................... 7 years
Philip M. Panzera................ 1 year
Dennis M. Biety.................. 1 year
Compensation Committee Interlocks and Insider Participation
Messrs. McIntyre, Lubeck and Toomey served on the Compensation Committee of
the Company's Board of Directors during 1999. Mr. McIntyre serves as the
Chairman of the committee. During 1999, Mr. Lubeck also served as Chairman of
the Board. Messrs. Lubeck, Hartman and Makoff also serve as directors and
executive officers of Unique Investment Corporation.
-8-
Compensation Committee Report
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is a standing
committee comprised of three outside directors. One of the Compensation
Committee's functions is to recommend to the Board of Directors base salary,
incentive compensation and stock option awards for the executive officers of the
Company. Each of the principal executive officers of the Company is presently
employed pursuant to a written Employment Agreement. The Employment Agreement
with Mr. Lokken provides for a term ending on October 31, 2001. Each Employment
Agreement provides for the payment of a base salary and participation by the
executive officer in the Company's Management Incentive Compensation Plan
pursuant to a Management Incentive Compensation Agreement executed by the
Company and the executive officer. Stock option awards are made pursuant to the
Company's 1997 Stock Option Plan. No member of the Compensation Committee is
eligible to participate in any of the plans or programs which it administers.
Compensation Philosophy. The Compensation Committee's primary objective is
to craft a compensation package for the Company's executive officers that aligns
the interest of management with the long-term interests of the Company's
shareholders. This is accomplished by tying major portions of executive
compensation to the achievement of both individual and Company performance
objectives which are directed at enhancing shareholder value. A second goal of
the Compensation Committee is to implement a compensation philosophy that will
both attract and retain the experienced and talented individuals who are
essential to the Company's long-term success. The Committee regularly reviews
publicly available information regarding compensation programs and philosophies
of the Company's competitors, and other entities of a comparable size with the
Company, with the objective of ensuring that the Company's compensation
philosophy and programs remain competitive and appropriate.
Each executive officer's compensation package is comprised of three
principal components: (i) base salary; (ii) annual incentive compensation; and
(iii) stock options.
Base Salary. The current base salary of each of the Company's principal
executive officers is set forth in the Employment Agreement between the Company
and such executive officer. As a general principle, the Compensation Committee
will attempt to establish and maintain base salaries within the range of
salaries for companies of a size and engaged in a business comparable to the
Company. Among the specific factors which are considered in establishing base
salary levels for the Company's principal executive officers are (i) the
executive officer`s recent and long-term performance; (ii) identifiable
contribution by the executive officer to the Company's achievement of its
performance objectives; (iii) level of responsibility; and (iv) years of service
with the Company. Performance goals for each principal executive officer are
established prior to the beginning of each fiscal year. These goals are
established by the Chief Executive Officer with respect to other officers and by
the Compensation Committee with respect to the Chief Executive Officer.
Management Incentive Compensation Plan. Certain employees of the Company
(including the Company's principal executive officers) are participants in the
Company's Management Incentive Compensation Plan (the "Plan") pursuant to which
they are entitled to receive performance based bonuses. Under the Plan, bonuses
are based on the Company's actual percentage achievement, versus forecast, with
respect to three criteria: revenue, net income and return on net assets. Under
the Plan, the President and Vice Presidents have the potential of receiving
bonuses equal to forty percent (40%) and thirty percent (30%) of their base
salaries for the fiscal year, respectively. If the weighted average of the three
criteria drops to 80% of forecast, then no bonus is payable. If the weighted
average of the three criteria amounts to 120% of forecast, then the bonus
amounts are doubled. Results in between 80% and 120% of forecast are pro rated
accordingly. This bonus methodology is exactly the same as the calculation used
for bonuses for all other Company personnel.
Stock Options. Stock options are granted to principal executive officers
under the Company's 1997 Stock Option Plan. The purpose of the 1997 Plan is to
encourage and facilitate stock ownership by participants and to provide
incentives to participants to remain in the employ of the Company and contribute
to enhancing shareholder value over the long-term. The 1997 Plan is administered
by the Board of Directors which has the discretion to select optionees and the
terms and conditions of each option, subject to the provisions of the 1997 Plan.
Options granted under the 1997 Plan may be either incentive stock options or
nonqualified options.
Change of Control Program. During 2000, upon the recommendation of the
Company's financial advisors, the Board of Directors approved certain financial
incentives for the executive officers, and certain other key employees, upon a
successful change in control of the Company. Such incentives include the
potential for an award if the Company should be sold for a certain amount, and
acceleration of unvested stock options. Upon investigation, and consultation
with the
-9-
Company's financial advisors, the Compensation Committee determined that such
incentives were consistent with those awarded by other companies pursuing
similar strategic transactions, and that such incentives could reasonably serve
to enhance the realized value from such a transaction to the Company's
shareholders.
The foregoing report on executive compensation is provided by the following
members of the Compensation Committee of the Board of Directors.
Joel F. McIntyre, Chairman of the Compensation Committee
Daniel J. Lubeck
Daniel C. Toomey, Jr.
Performance Measurement Comparison
The chart below depicts the cumulative total return to the Company's
shareholders of a hypothetical $100 investment in the Company's Common Stock
from January 29, 1998, the date of the Company's initial public offering,
through December 31, 1999. Hypothetical investments of $100 in the NASDAQ
Composite Index and the Standard and Poor's Small Cap Aerospace/Defense Index
are shown for comparison.
The Company does not believe that an appropriate industry index or peer
group exists that would provide a meaningful comparison to the Company's Common
Stock performance. There is no other public company in the United States of a
similar size that provides similar services to the aerospace industry. All of
the Company's principal competitors are either privately held, foreign based,
significantly different in size or services offered, or divisions of much larger
companies.
This chart does not reflect the Company's forecast of future financial or
market performance.
[PERFORMANCE GRAPH APPEARS HERE]
1/29/98 12/31/98 12/31/99
- ------------------------------------------------------------------------------------------------------------
Hawker Pacific Aerospace $ 100 $ 43.75 $ 90.63
S&P Small Cap Aerospace/Defense $ 100 $ 110.07 $ 102.92
NASDAQ Composite $ 100 $ 135.90 $ 252.23
- ------------------------------------------------------------------------------------------------------------
-10-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 2000, by: (i) each person known by the Company to
beneficially own 5% or more of the outstanding shares of Common Stock; (ii) each
director of the Company; (iii) each Named Executive Officer of the Company; and
(iv) all directors and executive officers of the Company as a group.
Number of Shares of Percentage of
Name and Address (1) Common Stock (2)(3) Outstanding (2)
- ----------------------------------------------------------- --------------------- ---------------
Melanie L. Bastian......................................... 961,252 16.5%
John G. Makoff (4)........................................ 444,943 7.6%
Daniel J. Lubeck (4)....................................... 330,120 5.7%
Scott W. Hartman........................................... 319,120 5.5%
David L. Lokken (5)....................................... 268,717 4.5%
Brian S. Carr.............................................. 57,546 *
Michael A. Riley........................................... 57,546 *
Philip M. Panzera.......................................... 12,978 *
Mellon C. Baird............................................ 11,907 *
Joel F. McIntyre........................................... 11,907 *
Daniel C. Toomey, Jr....................................... 11,907 *
Dennis M. Biety............................................ 8,652 *
All directors and executive officers as a group............ 1,546,343 25.5%
- -------------
* Less than 1%
(1) The address for all persons is c/o the Company at 11240 Sherman Way, Sun
Valley, California 91352-4942.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the securities. Shares of Common Stock
subject to options currently exercisable, or exercisable within 60 days of
March 31, 2000, are deemed outstanding for computing the percentage of any
person.
(3) Includes the following share amounts issuable upon exercise of vested
options to purchase Common Stock: Mr. Lokken, 129,787; Messrs. Carr and
Riley, 28,840 each; Mr. Panzera, 12,978; Messrs. Baird, McIntyre and
Toomey, 9,907; and Mr. Biety, 8,652.
(4) Includes 6,000 shares of Common Stock which have been gifted to immediate
family members.
(5) Includes 138,930 shares held by the David L. Lokken and Susan M. Lokken
Revocable Trust, dated March 20, 1998, of which Mr. Lokken is co-trustee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a $2.5 million long-term loan balance with Unique. Interest
paid or accrued on this loan during 1999 amounted to $295,000. Unique also
received $21,456 in 1999 for reimbursed expenses related to services performed
by Unique, and its principals who serve as directors of the Company.
Commencing in January 1999, the Company began paying monthly management
fees of $12,500 to Unique pursuant to a November 1997 management services
agreement. The management services agreement will terminate when the Company
completes an additional underwritten public offering in which selling
shareholders offer 25% or more of the aggregate amount of securities available
in such offering.
In June 1999, Ms. Bastian established a $2.5 million letter of credit which
secured the Company's obligations on a certain debt instrument with its senior
lender, Heller Financial Inc.
-11-
INDEPENDENT AUDITORS
The Company's independent auditor for the fiscal year ended December 31,
1999, was Ernst & Young LLP, and the Board of Directors has selected Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 2000. A representative of Ernst & Young LLP will be available at
the Annual Meeting to respond to appropriate questions or make any other
statements as such representative deems appropriate.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999, to any
shareholder desiring a copy. Shareholders may request a copy by sending a (i)
letter to the Company, Attn: Investor Relations; (ii) fax to (818) 765-2416; or
(iii) e-mail to investor@hawker.com.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal, including
nominations to the Board of Directors, intended for consideration at the 2001
Annual Shareholders Meeting, must be received by the Company no later than
February 15, 2001, to be included in the proxy material for the Meeting. It is
recommended that shareholders submitting proposals direct them to the Company's
Chief Financial Officer by U.S. certified mail, return receipt requested, in
order to ensure and document timely delivery.
OTHER MATTERS
The Board of Directors knows of no matter to come before the Annual Meeting
other than as specified herein. If other business should, however, be properly
brought before the Annual Meeting, the persons voting the proxies will vote them
in accordance with their best judgment.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Daniel J. Lubeck
Daniel J. Lubeck
Chairman of the Board
June 12, 2000
-12-
PROXY PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HAWKER PACIFIC AEROSPACE
The undersigned hereby constitutes and appoints Daniel J. Lubeck and David
L. Lokken, and each of them, with full power of substitution, the proxies of the
undersigned to represent the undersigned and vote all shares of common stock of
Hawker Pacific Aerospace., which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders to be held at the
Burbank Holiday Inn Media Center, 150 East Angeleno Avenue, Burbank, California,
on July 19, 2000, at 10:00 a.m. Pacific Daylight Time, and at any adjournment
thereof, with respect to the matters described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged, in the following manner.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN ITEM 1.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed (except [ ] WITHHOLD AUTHORITY
as marked to the contrary below) to vote all nominees listed below
Daniel J. Lubeck, Mellon C. Baird, Scott W. Hartman, David L. Lokken,
John G. Makoff, Joel F. McIntyre, Daniel C. Toomey, Jr.
Instructions: To withhold authority to vote for any individual nominee strike
a line through the nominee's name on the list above.
2. IN ACCORDANCE WITH THEIR BEST JUDGMENT, with respect to any other matters
which may properly come before the meeting and any adjournment thereof.
Please sign and date on the reverse side.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder.
If no choice is specified, this proxy will be voted FOR Proposal 1.
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
- --------------------------------------------------------------------------------
Please date and sign exactly as
your name or names appear
hereon. If more than one owner,
all should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If the signatory is a
corporation or partnership, sign
the full corporate or
partnership name by its duly
authorized officer or partner.
Date: ____________________, 2000
________________________________
Signature
________________________________
Signature if held jointly