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 Section240.14a-11(c) or
Section240.14a-12
ROBINSON NUGENT, INC.
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(Name of Registrant as Specified In Its Charter)
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(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.
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/ / Fee paid previously with preliminary materials.
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previously. Identify the previous filing by registration statement number,
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ROBINSON NUGENT, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 5, 1998
The Annual Meeting of Shareholders of Robinson Nugent, Inc. will be held at
the Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana, on Thursday,
November 5, 1998, at 10:00 a.m. (EST) for the following purposes:
1. To elect two directors to serve for terms of three years each;
2. To ratify the selection by the Board of Directors of Deloitte & Touche
LLP as certified public accountants for the Company for the fiscal year
ending June 30, 1999; and
3. To transact such other business as may properly come before the meeting.
Holders of Common Shares of record at the close of business on September 15,
1998 are entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors
Richard L. Mattox, Secretary
October 5, 1998
New Albany, Indiana
YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING, OR IF
YOU DO PLAN TO ATTEND BUT WISH TO VOTE BY PROXY, PLEASE DATE, SIGN, AND MAIL
PROMPTLY THE ENCLOSED PROXY. A RETURN ENVELOPE IS PROVIDED FOR THIS PURPOSE.
ROBINSON NUGENT, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 5, 1998
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Robinson Nugent, Inc. (the "Company") of proxies to be
voted at the Annual Meeting of Shareholders to be held at 10:00 a.m. (EST) on
November 5, 1998, and at any adjournment thereof. The meeting will be held at
the Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana. This proxy
statement and the accompanying form of proxy were first mailed to shareholders
on or about October 5, 1998.
A shareholder who signs and returns the enclosed proxy may revoke it at any
time before it is exercised. The revocation must be executed by written notice
to the Secretary of the Company, by the submission of a subsequent proxy
relating to the same shares or by attending the Annual Meeting and voting in
person. All proxies returned prior to the meeting, and not revoked, will be
voted in accordance with the instructions contained therein. Any proxy not
specifying to the contrary will be voted (1) FOR the election of the nominees
for director named below, and (2) FOR the proposal to ratify the selection of
Deloitte & Touche LLP as certified public accountants for the Company for the
fiscal year ending June 30, 1999.
As of the close of business on September 15, 1998, the record date for the
Annual Meeting, there were outstanding and entitled to vote 4,891,765 Common
Shares of the Company. Each outstanding Common Share is entitled to one vote.
The Company has no other voting securities. Shareholders do not have cumulative
voting rights.
The presence in person or by proxy of a majority of the Common Shares is
necessary in order to constitute a quorum at the Annual Meeting. Proxies marked
as abstaining will be treated as present for purposes of determining a quorum
and will be treated as present and entitled to vote on any matter as to which
abstention is indicated. Proxies returned by brokers as "non-votes" on behalf of
shares held in street name because the beneficial owner has withheld voting
instructions will be treated as present for purposes of determining a quorum but
will not be counted as voting on any matter as to which a non-vote is indicated
on the proxy.
A copy of the Annual Report of the Company, including financial statements
and a description of operations for the fiscal year ended June 30, 1998, has
preceded or accompanies this proxy statement. The financial statements contained
in that report are not incorporated by reference herein.
All expenses in connection with solicitation of proxies will be borne by the
Company. The Company will provide copies of this proxy statement, the
accompanying form of proxy, and the Annual Report to brokers, dealers, banks and
voting trustees, and their nominees, for mailing to beneficial owners and, upon
request therefor, will reimburse such record holders for their reasonable
expenses in forwarding solicitation material. The Company expects to solicit
proxies primarily by mail, but directors, officers and regular employees of the
Company may also solicit in person or by telephone.
Shareholder proposals to be considered for presentation to the 1999 Annual
Meeting of Shareholders must be submitted in writing and received by the Company
on or before June 7, 1999.
The mailing address of the principal offices of the Company is 800 East
Eighth Street, Post Office Box 1208, New Albany, Indiana 47151-1208.
2
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain data with respect to those persons
known by the Company to be the beneficial owners of five percent or more of the
outstanding Common Shares of the Company as of September 15, 1998 and also sets
forth such data with respect to each director of the Company, each officer
listed in the Summary Compensation Table, and all directors and executive
officers of the Company as a group. Except as otherwise indicated in the notes
to the table, each beneficial owner possesses sole voting and investment power
with respect to the shares indicated.
NUMBER OF PERCENT
SHARES (1) OF CLASS
--------------- ------------
PRINCIPAL SHAREHOLDERS
Samuel C. Robinson 1,141,274(2) 21.8%
226 Barefoot Beach Blvd.
Bonita Springs, Florida 34134
ROI Capital Management, Inc. 446,500(3) 8.5%
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, California 94939
Lawrence Mazey 360,329(4) 6.9%
228 Santee Path
Louisville, Kentucky 40207
James W. Robinson 311,404(4) 5.9%
7621 State Road 62
Lanesville, Indiana 47136
Dimensional Fund Advisors, Inc. 296,500(3) 5.7%
1299 Ocean Avenue
Santa Monica, California 90401
DIRECTORS AND EXECUTIVE OFFICERS
Samuel C. Robinson 1,141,274(2) 21.8%
James W. Robinson 311,404(4) 5.9%
Larry W. Burke 234,663(5) 4.5%
Patrick C. Duffy 43,000(4) *
Richard L. Mattox 35,810(4) *
Jerrol Z. Miles 23,280(4) *
Donald C. Neel 2,000(6) *
Ben M. Streepey 3,000(7) *
Richard W. Strain 19,000(4) *
W. Michael Coutu 53,807(8) *
J. Henk van Melsen 26,800(9) *
Leong Chun Kin 15,300(10) *
David W. Pheteplace 5,842(11) *
William S. Jensen 10,000(12) *
All directors and executive officers 1,932,380(13) 36.8%
as a group (15 persons)
- ------------------------
* Less than 1%.
3
(1) The table includes certain shares owned of record by the Company's 401(k)
Plan and the 1993 Employee Stock Purchase Plan. The participants in these
Plans, as noted in the following footnotes, have voting rights but no rights
of disposition with respect to the shares allocated to their respective
accounts.
(2) Includes 14,608 shares owned of record by Mr. Robinson's wife, as to which
she possesses sole voting and investment power, and 7,443 shares owned of
record by National City Bank, Southern Indiana, as trustee for the benefit
of a child, as to which Mr. Robinson and the trustee share voting and
investment power. Mr. Robinson disclaims any beneficial interest in these
shares.
(3) The shareholder certified in Schedule 13G filed with the Securities and
Exchange Commission that these shares were acquired in the ordinary course
of business and were not acquired for the purpose of and do not have the
effect of changing or influencing the control of the Company, and were not
acquired in connection with or as a participant in any transaction having
such purpose or effect.
(4) Includes 18,000 shares which each named individual may acquire upon exercise
of stock options granted to non-employee members of the Board of Directors
under the 1993 Employee and Non-Employee Director Stock Option Plan.
(5) Includes 348 shares owned of record by Mr. Burke's wife, as to which he
disclaims any beneficial interest; 164,797 shares subject to immediately
exercisable options granted pursuant to the Company's Employee Stock Option
Plans; and 67,659 shares allocated to Mr. Burke's account pursuant to the
Company's 401(k) Plan and the 1993 Employee and Non-Employee Director Stock
Purchase Plan.
(6) Represents 2,000 shares subject to immediately exercisable options granted
to non-employee members of the Board of Directors under the 1993 Employee
and Non-Employee Director Stock Option Plan.
(7) Includes 2,000 shares subject to immediately exercisable options granted to
non-employee members of the Board of Directors under the 1993 Employee and
Non- Employee Director Stock Option Plan.
(8) Includes 37,310 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Director Stock
Option Plan.
(9) Represents 26,800 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Director Stock
Option Plan.
(10) Includes 7,200 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Director Stock
Option Plan.
(11) Mr. David W. Pheteplace resigned from the Company on April 23, 1998.
(12) Represents 10,000 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Director Stock
Option Plan. Mr. William S. Jensen resigned from the Company on August 21,
1998.
(13) Includes in the aggregate 354,407 shares which may be acquired within 60
days upon the exercise of outstanding stock options held by non-employee
directors and executive officers and 67,659 shares allocated to the accounts
of executive officers pursuant to the Company's 401(k) Plan and the 1993
Employee and Non-Employee Director Stock Purchase Plan.
4
1. ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for ten directors, divided into two
classes of three persons and one class of four persons, each of whom is to be
elected for a three-year term. Patrick C. Duffy and Richard L. Mattox, whose
terms of office expire at the annual meeting, each have been nominated by the
Board of Directors for re-election to an additional three-year term. The office
of the third director with a term expiring in 1998 is vacant.
Unless authority to vote for such nominees is withheld, the accompanying
proxy will be voted FOR the election of Messrs. Duffy and Mattox. However, the
persons designated as proxies reserve the right to vote for another person
designated by the Board of Directors in the event any nominee is unable or
unwilling to serve. The Board of Directors has no reason to believe that any
nominee will be unable or unwilling to serve. Proxies will not be voted for more
than two nominees. Directors are elected by a plurality of the Common Shares
voting in the election.
The following table sets forth information with respect to each nominee for
election to the Board of Directors, and with respect to each director whose term
of office will continue.
SERVED
AS TERM OF
POSITIONS HELD DIRECTOR OFFICE
NAME AGE WITH THE COMPANY SINCE EXPIRES
- ------------------------- --- ------------------------- -------- --------
Patrick C. Duffy 61 Chairman of the Board of 1991 1998
Directors
Samuel C. Robinson 66 Director 1955 2000
James W. Robinson 64 Director 1955 1999
Larry W. Burke 58 President and Chief 1990 1999
Executive Officer and
Director
Richard L. Mattox 64 Secretary and Director 1964 1998
Jerrol Z. Miles 58 Director 1974 2000
Richard W. Strain 57 Director 1991 2000
Donald C. Neel 53 Director 1997 1999
Ben M. Streepey 42 Director 1997 1999
BUSINESS EXPERIENCE OF DIRECTORS
Except as described below, the principal occupations of the directors and
nominees have not changed during the past five years.
Patrick C. Duffy was elected Chairman of the Board of Directors on January
23, 1998. He has been a management consultant since 1988 to various businesses
with emphasis on system management and electronics research, development and
manufacturing. Prior to 1998, Mr. Duffy was president of Chrysler Corporation
Space Division. Chrysler Corporation Space Division designed, manufactured and
performed launch operations for the Apollo space program. Mr. Duffy also
diversified the Space Division into the electrical/electronic automotive field
by initiating automotive wire harness design and production in Cape Canaveral,
Florida, and Juarez, Mexico. He established an electronics design and
manufacturing facility in Louisiana that supplied test equipment to automotive
outlets in the U.S. and Europe. He was the President and owner of Switches,
Inc., an Indiana company that designed and manufactured electronics for
5
the automotive industry. Mr. Duffy is a former Chairman of the Board of Acordia
Southeast, an insurance brokerage firm covering Florida, Georgia and Louisiana,
with headquarters in Clearwater, Florida.
Samuel C. Robinson retired as Chief Executive Officer of the Company on June
30, 1985 and retired as Chairman of the Board on January 23, 1998.
James W. Robinson served as Executive Vice President and Treasurer of the
Company until June 30, 1985, at which time he was elected as Chairman of the
Board. He served as Chairman of the Board of the Company until his resignation
on January 29, 1987. Mr. Robinson is active in various independent investments
unrelated to the activities of the Company. He is also a director of Caldwell
Tanks, Inc., Community Bank of Southern Indiana, Hughes Group, Inc., StemWood
Corp., CT Services Corp., SCI Broadcasting, Inc., Community Bank Shares of
Indiana, Inc., and Sunnyside Communications, Inc., all of which are located in
the Louisville, Kentucky metropolitan area.
Larry W. Burke has served as President and Chief Executive Officer of the
Company since March 6, 1990. He served as Executive Vice President of the
Company from April, 1986 to March, 1990. Mr. Burke serves as a Director of
Heritage Bank of Southern Indiana, a subsidiary of Community Bank Shares of
Indiana, Inc. He also serves as a member of the Board of Advisors of Indiana
University Southeast, New Albany, Indiana.
Richard L. Mattox is a partner in the law firm of Mattox & Mattox in New
Albany, Indiana and acted as legal counsel to the Company during fiscal 1998.
Jerrol Z. Miles is a Senior Vice President of National City Bank, Kentucky,
located in Louisville, Kentucky, where his primary responsibility is management
of commercial loans and special credit departments. He also serves as a member
of the Board of Advisors of Indiana University Southeast, New Albany, Indiana.
Donald C. Neel is president and CEO of Health Network International (HNI).
HNI develops software and services in the field of personal health management.
He was formerly an executive at Eli Lilly and Company holding a variety of
global positions in finance, information systems and general management. Mr.
Neel is a member of Ball State University's Advisory Board for the Center for
Information and Communication Sciences.
Ben M. Streepey is Vice President-Business Printers and General
Manager-Laser Printers for Lexmark International located in Lexington, Kentucky.
He is responsible for worldwide research, development and manufacturing for
business printers and related supplies.
Richard W. Strain has held a variety of positions with Eli Lilly and
Company. From July 1984 until 1990, he served as president of the Medical
Instrument Systems Division; and from 1990 to April 1992, he served as vice
president for Business Development and Pricing. In May 1992, Mr. Strain was
elected as president/CEO of Heart Rhythm Technologies, and in December 1993 he
returned to Eli Lilly and Company headquarters. Since his retirement from Eli
Lilly and Company, Mr. Strain has been president/ CEO of a biotech company,
participated in healthcare consulting, and serves on several boards.
FAMILY RELATIONSHIPS
Samuel C. Robinson and James W. Robinson are brothers. There is no other
family relationship among the directors and executive officers of the Company.
6
COMPENSATION OF DIRECTORS
In fiscal 1998, members of the Board of Directors who are not employees of
the Company received remuneration in the amount of $8,000 per year, and in
addition received $1,200 for each meeting of the Board of Directors attended.
Audit and Compensation Committee members received a minimum of $400 per meeting
attended plus $200 per hour for attendance beyond two hours. Directors serving
on the Ad-hoc committees established at the April 1998 board meeting received
$200 per hour for attendance during meetings of these committees with a maximum
of $600 per meeting. During fiscal 1998, Samuel C. Robinson and Patrick C. Duffy
received, for their services as Chairman of the Board of Directors, $2,000 per
quarter and $1,700 per meeting, plus reimbursement of expenses. In addition, Mr.
Duffy received $750 per day, plus reimbursement of expenses, while meeting or
traveling with Management. The Chairpersons of the Audit and Compensation
Committees received $500 for their services in such capacities during fiscal
1998. Members of the Board of Directors who are employees of the Company receive
no separate remuneration for their service as directors. The Board of Directors
changed their compensation for attending regular quarterly board meetings in
fiscal 1999. Historically, these fees have been paid in cash. These cash
payments have been suspended until the Company returns to profitability, and
have been replaced by equivalent stock option grants. Members of the Board of
Directors will continue to be paid in cash for fees related to their attendance
at committee meetings, meetings with management, as well as for their
reimbursement of expenses.
Under the provisions of the 1993 Employee and Non-Employee Director Stock
Option Plan approved by the shareholders in November, 1993, Non-Employee
directors are granted non-qualified stock options (NQSOs) annually to purchase
4,000 Common Shares of the Company at the then current market price. Such
options were granted to Non-Employee Directors on September 13, 1993, September
13, 1994, September 13, 1995, September 13, 1996, and September 13, 1997, at an
exercise price of $8.75, $6.00, $8.625, $4.75, and $7.375 per Common Share,
respectively. Additional options to purchase 4,000 Common Shares were granted on
September 13, 1998 to Non-Employee Directors with an exercise price of $4.25 per
Common Share. These options are incentive stock options exercisable as to
one-half the shares after the first anniversary of the date of grant and as to
all the shares after the second anniversary of the date of grant and expire ten
years after date of grant.
For fiscal 1999, non-employee members of the Board of Directors will be
entitled to additional remuneration determined with reference to the actual
consolidated pretax income of the Company as compared to that specified in the
Company's 1999 financial plan. The amount of the additional compensation will be
paid in cash and shares of the Company's Common Stock, and will be determined,
on a cumulative basis, as follows:
Additional Remuneration--Cash:
If pretax income for fiscal 1999 is greater than 80% of the amount
specified in the plan, then the non-employee directors will share equally
in additional cash remuneration equal to 5% of the excess, up to the
amount of pretax income specified in the plan.
If pretax income for fiscal 1999 is greater than the amount specified in
the plan, then the non-employee directors will share equally in additional
cash remuneration equal to 15% of the excess.
Additional Remuneration--Shares of Common Stock:
If pretax income for fiscal 1999 is greater than 110%, but is no greater
than 120%, of the amount specified in the plan, then the non-employee
directors will share equally in additional remuneration equal to 30% of
the excess. To the extent that pretax income exceeds 120% of the amount
7
specified in the plan, then the non-employee directors will share equally
in additional remuneration equal to 60% of the excess. This additional
remuneration will be in the form of Common Shares to be issued to the
non-employee directors and valued, for this purpose, at an amount equal to
their fair market value per share as of the date of the grant.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is comprised of Richard
L. Mattox, Ben M. Streepey, and Jerrol Z. Miles. The Compensation Committee also
serves as the Stock Option Committee of the Board of Directors. The
responsibilities of the Compensation Committee include making recommendations to
the Board of Directors with respect to compensation arrangements for the
executive officers of the Company and policies relating to salaries and job
descriptions, insurance programs, and benefit programs of the Company, including
its retirement plans. The Committee administers the 1993 Employee and
Non-Employee Director Stock Option Plan. This committee met two times during
fiscal 1998.
The Audit Committee of the Board of Directors is comprised of Donald C.
Neel, James W. Robinson, and Richard W. Strain. The Audit Committee reviews with
the auditors the scope of the audit work performed, any questions arising in the
course of such work and inquiries as to other pertinent matters such as internal
accounting controls, financial reporting, security and personnel staffing. The
committee met three times during fiscal 1998.
The Board of Directors has no Nominating Committee. The Board of Directors
will consider for nomination as directors persons recommended by shareholders.
Such recommendations must be in writing and delivered to the Secretary, Robinson
Nugent, Inc., P. O. Box 1208, New Albany, Indiana 47151-1208.
The Board of Directors met five times during fiscal 1997. No director
attended fewer than 75% of the meetings of the Board of Directors and meetings
of any committee of the Board of Directors of which he or she was a member.
New Ad-hoc committees of the Board of Directors were established in April
1998. These Ad-hoc committees include an organization oversite committee, an
information system implementation oversite committee, an executive search
oversite committee, and a product development oversite committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, the Compensation Committee was comprised of Richard
L. Mattox, Ben M. Streepey, and Jerrol Z. Miles. Except for Mr. Richard L.
Mattox, none of the other members of the Compensation Committee are now serving
or previously have served as officers of the Company or any subsidiary, and none
of the Company's executive officers serve as directors of, or in any
compensation-related capacity for, companies with which members of the
Compensation Committee are affiliated. Mr. Richard L. Mattox serves as Corporate
Secretary of the Company and various subsidiaries, but receives no compensation
for his services in such capacity.
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth certain information with
respect to the aggregate compensation paid during each of the last three years
to the Company's President and Chief Executive Officer and each of the other
executive officers of the Company whose salary and bonus exceeded $100,000
during fiscal 1998.
8
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------
------------------------------------- RESTRICTED OPTIONS/
OTHER ANNUAL STOCK SAR'S ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) # OF COMPENSATION
YEAR ($) ($) ($)(1) ($) SHARES(2) ($)(3)
--------- --------- --------- --------------- ----------- ------------- -------------
Larry W. Burke, President 1998 216,477 -- 4,012 -- 16,500 61,701
and Chief Executive 1997 216,491 21,000 5,505 -- 15,750 62,208
Officer 1996 206,250 -- 6,997 -- 15,000 66,506
W. Michael Coutu, 1998 142,837 10,000 -- -- 9,020 12,255
Vice President of 1997 180,479 11,900 2,408 -- 8,600 9,498
Operations 1996 130,000 -- 3,986 -- 8,200 10,261
Leong Chun Kin, 1998 198,137 -- -- -- 8,800 --
Managing Director, 1997 214,625 -- -- -- 8,400 --
Asia Pacific Operation 1996 216,020 -- -- -- 2,500 --
J. Henk van Melsen, 1998 186,923 -- -- -- 8,800 36,367
Managing Director, 1997 158,114 -- -- -- 8,400 36,434
European Operations 1996 198,106 -- -- -- 8,000 39,207
David W. Pheteplace, (4) 1998 282,177 -- -- -- 12,000 1,798
Former Vice President and 1997 293,708 19,000 -- -- 50,000 697
General Manager of North 1996 -- -- -- -- -- --
American Operations
William S. Jensen (5) 1998 210,670 -- -- -- -- 2,096
Former Director of Sales 1997 15,000 10,000 -- -- 20,000 --
and Marketing of North 1996 -- -- -- -- -- --
American Operations
- ------------------------
(1) Represents imputed interest attributable to interest-free loans authorized
by the Board of Directors in connection with the purchase of Common Shares
of the Company under the 1993 Employee Stock Purchase Plan.
(2) Represents options granted under the 1993 Employee and Non-Employee Director
Stock Option Plan.
(3) Includes contributions by the Company on behalf of the named persons and the
group to the Company's Retirement Plan and 401(k) Plan, and pursuant to
deferred compensation agreements. Effective May 10, 1990, the Company
entered into a deferred compensation agreement with Mr. Burke. The deferred
compensation agreement provides for payments of $50,000 per year to a trust
administered by PNC Bank, Kentucky, Inc., Louisville, Kentucky, as
supplemental retirement income benefits to Mr. Burke. The Company also
entered into a deferred compensation agreement with Mr. van Melsen on
January 1, 1994, requiring the Company to contribute to a fund administered
by Swiss Life Insurance for supplemental retirement benefits in addition to
the Netherland's government pension plan. The 1998 fiscal contribution to
this fund was $36,367. These agreements continue until termination of the
respective employment relationships.
9
(4) Mr. David W. Pheteplace was appointed Vice President and General Manager of
North American Operations as of September 10, 1996. His salary for fiscal
1997 includes a $15,000 signing bonus, a $27,750 stock award (5,842 shares),
and $99,911 of reimbursement for moving and relocation expenses. Mr. David
W. Pheteplace resigned from the Company on April 23, 1998. His salary for
1998 includes $95,000 of severance pay expense.
(5) Mr. William S. Jensen was appointed Director of Sales and Marketing of North
American Operations as of May 12, 1997. His bonus for 1997 represents a
signing bonus relative to his employment with the Company. His salary for
1998 includes $64,577 reimbursement for moving and relocation expenses. Mr.
William S. Jensen resigned from the Company on August 21, 1998.
Each of the officers listed in the Summary Compensation Table serves for a
term of one year.
STOCK OPTIONS
The following table shows the options granted to the named executive
officers of the Company in fiscal 1998. These options are incentive stock
options exercisable as to one-half the shares after the first anniversary of the
date of grant and as to all the shares after the second anniversary of the date
of grant and expire ten years after date of grant.
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS OPTIONS RATES OF SHARE APPRECIATION
GRANTED GRANTED TO EXERCISE FOR OPTION TERM(1)
# OF EMPLOYEES IN PRICE EXPIRATION --------------------------------
NAME SHARES FISCAL YEAR $/SHARE DATE 5%($) 10%($)
- ---------------------------- ------------ --------------- ----------- ----------- --------------- ---------------
Larry W. Burke 16,500 16.1% 6.125 7/31/07 63,608 161,123
David W. Pheteplace 12,000 11.7% 6.125 7/21/98 46,260 117,180
W. Michael Coutu 9,020 8.8% 6.125 7/31/07 34,772 88,080
Leong Chun Kin 8,800 8.6% 6.125 7/31/07 33,924 85,932
J. Henk van Melsen 8,800 8.6% 6.125 7/31/07 33,924 85,932
William S. Jensen -- -- -- -- -- --
All optionees 102,740 100.0% -- -- 394,088 998,256
All shareholders -- -- -- 13,476,813(2) 34,120,061(2)
% of all shareholder gain 2.92% 2.93%
- ------------------------
(1) Potential realizable value is calculated based on an assumption that the
price of the Company's Common shares appreciates at the annual rate shown
(5% and 10%), compounded annually, from the date of grant of the option
until the end of the option term (10 years). The value is net of the
exercise price but is not adjusted for the taxes that would be due upon
exercise. THE 5% AND 10% ASSUMED RATES OF APPRECIATION ARE MANDATED BY THE
RULES OF THE SECURITIES AND EXCHANGE COMMISSION AND DO NOT IN ANY WAY
REPRESENT THE COMPANY'S ESTIMATE OR PROJECTION OF FUTURE STOCK PRICES.
Actual gains, if any, upon future exercise of any of these options will
depend on the actual performance of the Company's Common shares, the
continued employment of the Named Executive Officer holding the option
through its vesting period and the subsequent exercise of the option by the
Named Executive Officer.
(2) Calculated by applying assumed 5% and 10% appreciation through the year
2006, less the value of outstanding shares at June 30, 1998, with assumed
market price of $4.375.
10
There were no stock options exercised by the executive officers named in the
Summary Compensation Table in fiscal 1998.
The following table sets forth the number of unexercised options held at
June 30, 1998 by each of the Company's executive officers named in the Summary
Compensation Table, and the related values of such options at June 30, 1998. The
value of unexercised options at June 30, 1998 is based upon a market value at
June 30, 1998 of $4.375 per Common Share.
FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED
OPTIONS VALUE OF UNEXERCISED
AT JUNE 30, 1998 (# OF IN-THE-MONEY OPTIONS
SHARES) AT JUNE 30, 1998 ($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ------------- ----------- -------------
Larry W. Burke 148,672 24,375 30,000 --
W. Michael Coutu 27,500 13,320 -- --
David W. Pheteplace 31,000 31,000 -- --
Leong Chun Kin 6,700 13,000 -- --
J. Henk van Melsen 18,200 13,000 -- --
William S. Jensen 10,000 10,000 -- --
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(1) Value is calculated by (i) subtracting the exercise price per share from the
fiscal year-end market value of $4.375 per share and (ii) multiplying by the
number of shares subject to the option. Options that have an exercise price
equal to or greater than the fiscal year-end market value are not included
in the value calculation.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Compensation Committee and Stock Option Committee of the Board of
Directors has responsibility for the Company's executive compensation program.
The Committee is currently comprised solely of Non-Employee directors. The
Committee is chaired by Mr. Richard L. Mattox. The other Committee members are
Mr. Ben M. Streepey and Mr. Jerrol Z. Miles. The following report is submitted
by the members of the Compensation Committee and the Stock Option Committee.
* * *
The Company's executive compensation program is designed to align executive
compensation with financial performance, business strategies and Company values
and objectives. The Company's compensation philosophy is to ensure that the
delivery of compensation, both in the short- and long-term, is consistent with
the sustained progress, growth and profitability of the Company and acts as an
inducement to attract and retain qualified individuals. This program seeks to
enhance the profitability of the Company, and thereby enhance shareholder value,
by linking the financial interests of the Company's executives with those of its
long-term shareholders. Under the guidance of the Company's Compensation
Committee of the Board of Directors, the Company has developed and implemented
an executive compensation program to achieve these objectives while providing
executives with compensation opportunities that are competitive with companies
of comparable size in related industries.
11
The Company's executive compensation program has been designed to implement
the objectives described above and is comprised of the following fundamental
three elements:
- a base salary that is determined by individual contributions and sustained
performance within an established competitive salary range. Pay for
performance recognizes the achievement of financial goals, accomplishment
of corporate and functional objectives, and performance of individual
business units of the Company.
- an annual incentive cash bonus that is directly tied to corporate and
business unit performance measures
- a long-term incentive program that rewards executives when shareholder
value is created through increase in the market value of the Company's
Common Shares. Stock option grants focus executives on managing the
Company from the perspective of an owner with an equity position in the
business.
BASE SALARY. The salary, and any periodic increase thereof, of the
President and Chief Executive Officer was and is determined by the Board of
Directors of the Company based on recommendations made by the Compensation
Committee. The salaries, and any periodic increases thereof, of the other
executive officers were and are determined by the Board of Directors based on
recommendations made by the President and Chief Executive Officer and approved
by the Committee.
The Company, in establishing base salaries, levels of incidental and/or
supplemental compensation, and incentive compensation programs for its officers
and key executives, assesses periodic compensation surveys and published data
covering the electrical/electronics industry and industry in general. The level
of base salary compensation for officers and key executives is determined by
both their scope and responsibility and the established salary ranges for
officers and key executives of the Company. Periodic increases in base salary
are dependent on the executive's proficiency of performance in the individual's
position for a given period, and on the executive's competency, skill and
experience.
BONUS PAYMENTS. The bonus compensation program for the Company's officers
is subject to annual review by the Compensation Committee and requires annual
approval of the Board of Directors.
Under the bonus plan for executive officers and key employees for fiscal
year 1998, executive officers were eligible for a first tier bonus award
provided the consolidated pretax income of the Company and subsidiaries for
fiscal year 1998 exceeded the reported pretax income. A second tier, or added
bonus, was payable to executive officers provided the consolidated pretax income
for fiscal year 1998 exceeded the pretax income objectives outlined in the
fiscal year 1998 annual financial plan. The bonus awards under both tiers were
predicated upon a formula whereby bonuses increased in proportion to the level
of pretax income over fiscal year 1997 and the financial plan objectives for
fiscal year 1998, respectively. No bonus awards were made to executive officers
in fiscal year 1998.
Under the bonus plan for executive officers and key employees for fiscal
1999, if consolidated pretax income exceeds 80% of the amount specified in the
1999 financial plan, an amount equal to 5% of that excess (up to the plan
amount), will be available for the payment of bonuses; and if pretax income is
greater than the plan amount, an amount equal to 20% of that excess will be
added to the bonus pool. The bonus amount payable to each of the executive
officers and key employees will be determined by the President and Chief
Executive Officer of the Company.
12
LONG-TERM INCENTIVE PLANS. The Company's long-term incentive compensation
program is intended to align executive interest with the long-term interests of
shareholders by linking executive compensation with enhancement of shareholder
value. In addition, the program motivates executives to improve long-term stock
market performance by allowing them to develop and maintain a significant
long-term equity ownership position in the Company's Common Shares.
Currently, the only long-term incentive plan of the Company is its 1993
Employee and Non-Employee Director Stock Option Plan. This plan was adopted by
the Board of Directors on September 13, 1993, and approved by the shareholders
of the Company at the 1993 annual meeting of the shareholders held on November
4, 1993. Pursuant to this plan 500,000 Common Shares were made available for the
grant of stock options to Non-Employee Directors of the Company and key
employees of the Company and its subsidiaries as determined by the Stock Option
Committee. An amendment authorizing an additional 500,000 Common Shares to be
made available for grants of stock options under the 1993 Employee and
Non-Employee Director Stock Option Plan was adopted by the Board of Directors
and approved by the shareholders in 1997.
On May 28, 1992, the Board of Directors adopted the 1993 Employee Stock
Purchase Plan to provide executive officers and other key employees with the
opportunity to purchase Common Shares and thereby establish or increase their
equity position in the Company. As an added incentive to participants in this
plan, the Company awarded a matching number of Common Shares in proportion (not
more than 50%) to the Common Shares purchased and provided interest-free loans
to the participants, subject to the discretion of the Board of Directors. The
Company's matching shares vest with the participants who remain in the
employment of the Company in three equal annual installments starting in
September, 1994. Loans to employees are payable over periods not to exceed ten
years. Participation in the Plan was completed in fiscal 1993 and the Plan
expired with respect to new participation on November 10, 1993.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEES
Mr. Richard L. Mattox
Mr. Ben M. Streepey
Mr. Jerrol Z. Miles
13
STOCK PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Shares with the cumulative
total return of the NASDAQ market composite (U.S. Companies) and the Peer Group
Index for the five years ending June 30, 1998. The Peer Group consists of AMP
Inc., Methode Electronics, Inc., Molex Incorporated and Thomas & Betts
Corporation. The Peer Group consists of publicly-held companies, all of which
participate in the electronic connector industry in varying degrees with respect
to their total sales volume. All of these companies are significantly larger
than the Company in terms of sales and assets. The comparison assumes that $100
was invested on June 30, 1993, in the Company's Common Shares and in each of the
foregoing indices and assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ROBINSON NUGENT, INC., THE NASDAQ STOCK
MARKET-U.S. COMPANIES INDEX AND A PEER GROUP**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ROBINSON NASDAQ STOCK
NUGENT, INC. PEER GROUP MARKET (U.S.)
6/93 $100.00 $100.00 $100.00
6/94 $86.59 $115.93 $100.96
6/95 $141.49 $144.21 $134.77
6/96 $87.55 $145.70 $173.03
6/97 $93.67 $174.47 $210.38
6/98 $71.33 $150.77 $277.69
14
CERTAIN TRANSACTIONS
Richard L. Mattox, Secretary, Corporate Counsel and a member of the Board of
Directors of the Company, is a partner in the law firm of Mattox & Mattox, with
offices in New Albany, Indiana. That firm was retained by the Company as legal
counsel during fiscal 1998, and it is anticipated that such relationship will
continue in the current fiscal year.
Jerrol Z. Miles, a director of the Company, is a Senior Vice President of
National City Bank, Kentucky, with which the Company maintains a commercial
banking relationship including a $8,000,000 credit facility. The Company
utilized this loan facility during fiscal 1998 and incurred interest charges of
$416,208 on borrowed funds. In fiscal 1998, the Company made periodic
investments in short-term securities administered by National City Bank,
Kentucky, and the Company received interest payments of approximately $6,696
thereon.
The Board of Directors believes that the transactions described above were
on terms no less favorable to the Company than would have been available in the
absence of the relationships described.
In September 1992, pursuant to the terms of the Company's Employee Stock
Purchase Plan, Messrs. Burke, and Coutu borrowed $165,000 and $94,000,
respectively, from the Company to purchase Common Shares of the Company. These
loans are non-interest bearing and are payable over a period not to exceed ten
years. At June 30, 1997, the principal balance of the loan to Mr. Burke was
$42,578. Mr. Coutu paid off his loan in January 1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company to file initial reports of ownership and reports of
changes in ownership of the Common Shares of the Company. The officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by them.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) of the Securities
Exchange Act of 1934 related to market transactions in the Common Shares of the
Company were timely filed.
2. RATIFICATION OF SELECTION OF
CERTIFIED PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors has
selected Deloitte & Touche LLP as certified public accountants for the Company
for the fiscal year ending June 30, 1999. The Company has been advised by such
firm that neither it nor any of its associates has any direct or material
indirect financial interest in the Company. In order for Deloitte & Touche LLP
to be ratified as the certified public accountants for the Company for the
fiscal year ending June 30, 1999, a majority of the Common Shares represented
and entitled to vote at the Annual Meeting must be affirmatively voted FOR
approval of this proposal.
Deloitte & Touche LLP's report for the fiscal year ended June 30, 1998
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified in any respect. There were no disagreements with that firm on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
15
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and to have the opportunity to make statements if they so desire.
3. OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Company has no knowledge of any matters to be presented for consideration at the
meeting other than those referred to above. If (a) any matters of which the
Company did not have notice by August 20, 1998 (forty five days prior to the
month and day of mailing of Proxy materials with respect to the 1997 annual
meeting) should properly come before the meeting; (b) a person not named herein
is nominated at the meeting for election as a director because a nominee named
herein is unable to serve or for good cause will not serve; or (c) any matters
should arise incident to the conduct of the meeting; then the proxies will be
voted in accordance with the recommendations of the Board of Directors of the
Company.
By Order of the Board of Directors
Richard L. Mattox, Secretary
October 5, 1998
16
PROXY ROBINSON NUGENT, INC. PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 5, 1998
The undersigned hereby appoints Patrick C. Duffy and Larry W. Burke, and
each of them, the proxies of the undersigned, with full power of
substitution, to vote all Common Shares of Robinson Nugent, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held November 5, 1998 or any adjournment thereof, as follows:
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 PROPOSALS 1 AND 2.
Your vote is important. If you do not expect to attend the Annual Meeting, or
if you do plan to attend but wish to vote by proxy, please date, sign and
mail this proxy. A return envelope is provided for this purpose.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- -------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
ROBINSON NUGENT, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
1. ELECTION OF DIRECTORS: / / / / / /
Patrick C. Duffy and
Richard L. Mattox
- ---------------------------------------------
(INSTRUCTION: To withold authority to
vote for any individual nominee,
write that nominee's name on the
space provided above.)
FOR AGAINST ABSTAIN
/ / / / / /
2. Proposal to ratify the selection of
Deloitte & Touche LLP as certified public
accountants for the Company for the fiscal
year ending June 30, 1999.
3. The proxies are authorized to vote in
their discretion on any other matters
which may properly come before the Annual
Meeting to the extent set forth in the
proxy statement.
Dated: , 1998
----------------
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(Signature) (Signature)
Please date this proxy. If
shares are held jointly, both
joint owners should sign. If
signing as attorney, executor,
(CONTINUED FROM REVERSE SIDE) administrator, guardian or in
any other representative
capacity, please give your full
title as such.
- -------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.