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 240.14a-11(c) or 240.14a-12
HEI, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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HEI, Inc.
P.O. Box 5000
1495 Steiger Lake Lane
Victoria, Minnesota 55386
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 22, 1997
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Dear HEI Shareholder:
The Annual Meeting of Shareholders of HEI, Inc., a Minnesota corporation,
will be held on Wednesday, January 22, 1997, at 3:00 p.m., Central Standard
Time, at the Marquette Hotel, 710 Marquette Avenue, Minneapolis, Minnesota for
the following purposes:
(1) To elect the Board of Directors for the ensuing year; and
(2) To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on November 29, 1996
will be entitled to notice of and to vote at the meeting. A copy of the HEI
Annual Report for fiscal 1996 is included in this mailing, first made on
approximately December 5, 1996.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ Jerald H. Mortenson
December 5, 1996 Jerald H. Mortenson
Corporate Secretary
Shareholders unable to attend this meeting are urged to sign the enclosed
Proxy and return it in the envelope provided.
HEI, INC.
P.O. Box 5000
1495 Steiger Lake Lane
Victoria, Minnesota 55386
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1997
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SOLICITATION AND REVOCATION OF PROXIES
This Proxy is furnished to the Shareholders of HEI, Inc. (the "Company" or
"HEI") in connection with the solicitation of proxies to be used in voting at
the Annual Meeting of the Shareholders to be held on January 22, 1997. The
enclosed Proxy is solicited by the Board of Directors of the Company.
The person giving the enclosed Proxy has the power to revoke it at any time
prior to the convening of the Annual Meeting. Revocation must be in writing,
signed in exactly the same manner as the Proxy, and dated. Revocations of Proxy
will be honored if received at the offices of the Company, addressed to Eugene
W. Courtney, on or before January 21, 1997. In addition, on the day of the
meeting, prior to the convening thereof, revocations may be delivered to the
tellers, who will be seated at the door of the meeting room. Revocation may also
be effected by delivery of an executed, later dated Proxy. Unless revoked, all
properly executed Proxies received in time will be voted.
Proxies not revoked will be voted in accordance with the choice specified
by shareholders on the Proxy. Proxies which are signed but which lack any such
specification will, subject to the following, be voted FOR the slate of
directors proposed by the Board of Directors and listed herein. If a shareholder
abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. Abstentions, therefore, as
to any proposal will have the same effect as votes against such proposal. If a
broker turns in a "non-vote" Proxy, indicating a lack of voting instruction by
the beneficial holder of the shares and lack of discretionary authority on the
part of the broker to vote on a particular matter, then the shares covered by
such non-vote Proxy shall be deemed present at the meeting for purposes of
determining a quorum but shall not be deemed to be represented at the meeting
for purposes of calculating the vote required for approval of such matter.
HEI will pay for costs of soliciting Proxies, including the costs of
preparing and mailing the Notice of Annual Meeting of Shareholders and this
Proxy Statement. Solicitation will be primarily by mailing this Proxy Statement
to all shareholders entitled to vote at the meeting. Proxies may be solicited by
officers or other employees of HEI who will receive no special
compensation for their services. HEI may reimburse brokers, banks, and others
holding shares in their names for others for the costs of forwarding proxy
materials to, and obtaining Proxies from, beneficial owners.
The Annual Report of HEI, including financial statements, for the year
ended August 31, 1996, is being mailed to each shareholder with this Proxy
Statement. Copies of this Proxy Statement and proxies will first be mailed to
shareholders on or about December 5, 1996.
SHARES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on November 29, 1996,
are entitled to notice of and to vote at the meeting or at any adjournment
thereof. As of that date, there were 4,072,427 outstanding shares of Common
Stock of HEI, the only class of securities entitled to vote at the meeting.
Each shareholder of record is entitled to one vote for each share
registered in his or her name. Cumulative voting is not permitted.
The following table shows as of November 29, 1996, information regarding
the share ownership of each person or group known to HEI to own beneficially
more than 5% of the outstanding Common Stock of HEI, each director or nominee to
become a director of the Company, each Named Executive Officer (as defined
below), and all directors and executive officers as a group. Except as otherwise
indicated, the persons listed in the table have sole voting and investment
powers with respect to the shares owned. Information regarding share ownership
of persons other than directors and officers is based on the records of the
Company's transfer agent and on information supplied to the Company by the
holders.
Shares Beneficially Owned (1)
--------------------------------
Name Number of Shares Percentage
- ---- ---------------- ----------
William R. Franta 45,211 (2) 1.0%
Eugene W. Courtney 139,628 (3) 3.4
Kenneth A. Schoen 77,108 (4) 1.9
Robert L. Brueck 22,000 (5) *
Frederick M. Zimmerman 20,300 (6) *
Jerald H. Mortenson 85,000 (7) 2.1
Dale A. Nordquist 47,692 (8) 1.2
All directors and executive 436,939 (9) 10.1
officers as a group
(7 persons)
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*Less than 1%
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__________________
(1) Represents outstanding shares beneficially owned both directly and
indirectly as of November 29, 1996, including shares that may be
acquired by exercise of options within 60 days after November 29,
1996 ("currently exercisable options"). Percentage of class is shown
to the nearest tenth of a percent.
(2) Includes 40,000 shares purchasable pursuant to currently exercisable
options.
(3) Includes 60,000 shares purchasable pursuant to currently exercisable
options. Also includes 46,974 shares held jointly with Mr. Courtney's
spouse.
(4) Includes 50,000 shares purchasable pursuant to currently exercisable
options.
(5) Includes 20,000 shares purchasable pursuant to currently exercisable
options.
(6) Includes 20,000 shares purchasable pursuant to currently exercisable
options.
(7) Includes 20,000 shares purchasable pursuant to currently exercisable
options.
(8) Includes 35,000 shares purchasable pursuant to currently exercisable
options.
(9) Includes 245,000 shares subject to currently exercisable options.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The five directors are standing for reelection. Management recommends that
these individuals be elected to serve as directors. If elected, these persons
will serve as directors until the next Annual Meeting of Shareholders and until
their successors have been elected and qualified.
Each of the nominees has consented to being named in this Proxy Statement
and to serve if elected. The Board of Directors recommends a vote FOR election
of these nominees. It is the intention of the persons named in the accompanying
Proxy, unless authority is specifically withheld, to vote for the nominees
listed below. Should any nominee become unable to serve, the persons voting the
enclosed Proxy may, in their discretion, vote for a substitute nominee.
-3-
Following is certain information about the current directors. Unless
otherwise indicated, each person has held the principal occupation indicated for
more than the past five years.
NAME, PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
- -------------------------- --- --------------
WILLIAM R. FRANTA 54 1985
Formerly Senior Vice
President,
Network Systems Corporation
(1987 - 1996)
EUGENE W. COURTNEY 60 1989
President and Chief Executive
Officer of the Company;
Director, Datakey, Inc., DRS
Data & Research Services, PLC
KENNETH A. SCHOEN 69 1989
Executive Vice President,
3M Company, until retirement
in October 1989
ROBERT L. BRUECK 60 1995
Semi-retired from venture
capital investing; Business
Development Consultant;
Director, The DII Group
FREDERICK M. ZIMMERMAN 61 1995
Professor of Manufacturing
Systems Engineering and
International Management,
University of St. Thomas,
St. Paul, MN; Director,
Winnebago Industries, Inc.
MEETINGS OF THE BOARD AND CERTAIN COMMITTEES
During the fiscal year ended August 31, 1995, the Board held
a total of seven meetings. Each director attended at least 75%
of the aggregate of the total number of meetings of the Board
plus the total number of meetings of all committees of the Board
on which he served.
The Audit Committee, which consists of the four outside directors, reviews
the annual audit plan and results with the independent accountants and also
reviews the Company's financial statements and its accounting and reporting
practices. The Audit Committee held three meetings during fiscal 1996 to review
the Company's fiscal 1995 financial statements and the related audit and to
consider the selection of independent accountants for fiscal 1996.
-4-
The Nominating Committee, consisting of all directors, met once during
fiscal 1996 to recommend nominees for the Board of Directors.
The Compensation Committee, which consists of the four nonemployee
directors, met informally several times during the 1996 fiscal year to discuss
executive compensation.
DIRECTORS' FEES
The nonemployee directors receive $750 per quarter plus $700 for each
regular board meeting and $300 for each committee or special board meeting
attended. Each committee chairperson receives an annual fee of $300. For
services during the fiscal year ended August 31, 1996, $31,400 in directors'
fees was paid or accrued, in the aggregate, to the four nonemployee directors,
plus expenses.
DIRECTORS' STOCK OPTIONS
Under the Company's Stock Option Plan for Nonemployee Directors (the "1991
Plan"), an option to purchase 10,000 shares of Common Stock at an exercise price
equal to the fair market value (as defined) on the date of grant is granted each
year to all nonemployee directors then in office on the business day next
following the annual shareholders' meeting or April 1, whichever is earlier.
Awards under the 1991 Plan may be made to any director who is not a regular
employee of the Company or any subsidiary or affiliate. The options become
exercisable on the earlier of one year following the date of grant or the next
annual shareholders meeting, so long as the director is still serving on such
date, and terminate five years following the date of grant. Upon the death or
disability of an optionee prior to the end of one year following grant, the
option will become immediately fully exercisable. Effective January 18, 1996,
each of the Company's nonemployee directors was granted an option to purchase
10,000 shares at an exercise price of $6.00 per share. These options become
exercisable on January 18, 1997, and are exercisable until January 18, 2001.
During fiscal year 1996, none of the nonemployee directors exercised
options.
COMPLIANCE WITH SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that officers and directors of the Company and persons who own more than 10% of
a registered class of the Company's equity securities file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1996 and written representation from certain reporting
persons, the Company believes that all filing requirements have been complied
with.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's chief
executive officer and the other executive officers whose total annual
compensation in fiscal 1996 (based on salary and bonus) exceeded $100,000 (the
"Named Executive Officers").
Long-Term
Annual Compensation Compensation Other
Name and Principal Fiscal ------------------- ------------ Annual
Position Year Salary Bonus Awards/Options(1) Compensation(2)
- ----------------- ---- ------ ----- ----------------- ---------------
Eugene W. Courtney 1996 $157,734 $41,012 -- $4,496
Chief executive 1995 150,091 40,785 90,000 3,648
officer 1994 142,526 27,617 -- 3,792
Jerald H. Mortenson 1996 $111,348 $19,301 -- $3,369
Chief financial 1995 105,946 19,194 60,000 2,401
officer 1994 100,578 12,997 -- 2,743
Dale A. Nordquist 1996 $92,334 $21,522 -- $3,249
Vice president of 1995 87,866 30,608 52,500 2,762
sales 1994 83,684 19,360 -- 2,458
- ------
(1) The number indicated is the number of shares of common stock
subject to options granted in fiscal 1995, which become
exercisable in three equal annual increments commencing in
January 1996 and will expire in January 2000.
(2) In each case, consists solely of Company matching contributions
to 401(k) plan.
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OPTIONS GRANTED DURING FISCAL 1996
During fiscal 1996, no options were granted to the Named
Executive Officers.
AGGREGATED OPTION EXERCISES DURING FISCAL 1996 AND FISCAL YEAR-
END OPTION VALUES
The following table provides information related to options
exercised by the Named Executive Officers during fiscal 1996 and
the number and value of options held at fiscal year end. The
Company does not have any outstanding stock appreciation rights.
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End(2)
Shares --------------- ------------------
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable
- ---------------- ----------- ----------- ------------- ----------------
Eugene W. Courtney 30,000 $115,500 30,000/60,000 $57,375/$114,750
Jerald H. Mortenson 40,000 151,500 20,000/40,000 38,250/ 76,500
Dale A. Nordquist -0- -0- 17,500/35,000 33,469/ 66,938
- --------
(1) Value realized is calculated as the difference between the fair
market value of the Common Stock on the date of exercise of the
option and the option exercise price multiplied by the number of
shares acquired.
(2) Value is calculated as the difference between the closing price
of the Common Stock on August 30, 1996, which was $6-5/8, and
the option exercise price multiplied by the number of shares
subject to the option.
OTHER MATTERS
The Board does not intend to present any business to the
meeting other than as specifically set forth in the Notice of
Annual Meeting of Shareholders and currently knows of no other
business to come before the meeting. If any other matters are
properly brought before the meeting, the Proxies will vote on
such matters in accordance with their judgment of the best
interests of HEI.
-7-
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. has been the independent accountants for the
Company since fiscal 1992. A representative of Coopers & Lybrand L.L.P. is
expected to be present at the Annual Meeting and will be given an opportunity to
make a statement if so desired and to respond to appropriate questions.
The Company has selected Coopers & Lybrand L.L.P. as its independent
accountants for fiscal 1997.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by HEI at its principal executive
offices no later than August 7, 1997.
AVAILABILITY OF REPORT ON FORM 10-KSB
The Company's 1996 Report on Form 10-KSB may be obtained by writing to HEI
Shareholder Relations, P.O. Box 5000, 1495 Steiger Lake Lane, Victoria,
Minnesota 55386.
By Order of the Board of Directors
/s/ Jerald H. Mortenson
--------------------------------
Jerald H. Mortenson
Corporate Secretary
Dated: December 5, 1996
-8-
PROXY FOR ANNUAL SHAREHOLDERS' MEETING
JANUARY 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Eugene W. Courtney and Jerald H. Mortenson as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of HEI, Inc., held of record by the undersigned on November 29, 1996, at
the Annual Meeting of Shareholders to be held at 3:00 p.m., on Wednesday,
January 22, 1997 or any adjournment thereof.
(1) ELECTION OF DIRECTORS
-- FOR all nominees listed below -- WITHHOLD AUTHORITY
(except as marked to the to vote for ALL
contrary below) nominees below
Nominees: Robert L. Brueck Eugene W. Courtney William R. Franta
Kenneth A. Schoen Frederick M. Zimmerman
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
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(2) In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated: _______________________ Signed:___________________________
Signed:____________________________
PLEASE SIGN ABOVE EXACTLY AS NAME APPEARS HEREON. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS, ETC. SHOULD SO INDICATE WHEN SIGNING. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT OR OTHER AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED PERSON.