SCHEDULE 14A INFORMATION
(RULE 14a-101)
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:
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
C.P. CLARE CORPORATION
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(Name of Registrant as Specified In Its Charter)
C.P. CLARE CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
/X/ No Fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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CP CLARE
C O R P O R A T I O N
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of C.P. Clare Corporation (the "Company") will be held on
Wednesday, September 22, 1999, at 10:00 a.m. at the Company's headquarters, at
78 Cherry Hill Drive, Beverly, Massachusetts for the following purposes:
1. To elect two Class I directors of the Company to serve until the 2002
Annual Meeting of Stockholders and until their successors are duly
elected and qualified;
2. To ratify the appointment of the accounting firm of Arthur Andersen LLP
as independent auditors for the Company for the current year; and
3. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on July 26, 1999, as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.
You are requested to fill in and sign the enclosed proxy card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
Harry Andersen
Clerk
August 9, 1999
Beverly, Massachusetts
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
CP CLARE
C O R P O R A T I O N
----------------------------
PROXY STATEMENT
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FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
To be held on September 22, 1999
August 9, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of C.P. Clare Corporation (the "Company") for
use at the 1999 Annual Meeting of Stockholders of the Company to be held on
Wednesday, September 22, 1999, and at any adjournments or postponements thereof
(the "Annual Meeting"). At the Annual Meeting, stockholders will be asked to
vote upon the election of two Class I directors of the Company, to ratify the
selection of Arthur Andersen LLP as independent auditors for the Company for the
current year and to act upon any other matters properly brought before them.
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of proxy are first being sent to stockholders on or about August 9, 1999. The
Board of Directors has fixed the close of business on July 26, 1999, as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 9,511,853 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share held by them.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Both abstentions and broker "non-votes" (as defined below) will be
counted in determining the presence of a quorum. The affirmative vote of the
holders of a plurality of shares of Common Stock present and represented (and
entitled to vote) at the Annual Meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented (and entitled to vote) at a meeting at which
a quorum is present is sufficient for the ratification of Arthur Andersen LLP as
the Company's independent auditors for the current year. Broker "non-votes" are
proxies from brokers or other nominees indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
the shares which are the subject of the proxy on a particular matter with
respect to which the broker or other nominee does not have discretionary voting
power. Abstentions and broker non-votes will have no effect on the outcome of
the election of directors and the ratification of the selection of the
independent auditors.
Stockholders of the Company are requested to complete, sign, date and
promptly return the accompanying Proxy Card in the enclosed postage-prepaid
envelope. Shares represented by a properly executed proxy received prior to the
vote at the Annual Meeting and not revoked will be voted at the Annual Meeting
as directed on the proxy. If a properly executed proxy is submitted prior to
such time
and no instructions are given, the proxy will be voted FOR the election of the
nominees for the Board of Directors of the Company named in this Proxy Statement
and FOR the approval of the ratification of Arthur Andersen LLP as the Company's
independent auditors for the current year. It is not anticipated that any
matters other than those set forth in this Proxy Statement will be presented at
the Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Clerk of the Company at the
address of the Company set forth above; by filing a duly executed proxy bearing
a later date; or by appearing in person and voting by ballot at the Annual
Meeting. Any stockholder of record as of the Record Date attending the Annual
Meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the Annual Meeting
will not constitute revocation of a previously given proxy.
The Company's 1999 Annual Report, including financial statements for the
fiscal year ended March 31, 1999, is being mailed to stockholders concurrently
with this Proxy Statement. The Annual Report, however, is not part of the proxy
solicitation material.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six members and
is divided into three classes. When Mr. Tiampo, a Class I director, retires at
the end of his term (as of the date of the Annual Meeting) the Board of
Directors will consist of five members. Directors serve for three-year terms
with one class of Directors being elected by the Company's stockholders at each
annual meeting.
At the Annual Meeting, two Class I directors will be elected to serve until
the 2002 annual meeting of stockholders and until their successors are duly
elected and qualified. The Board of Directors has nominated Winston R. Hindle,
Jr. and Larry L. Mihalchik (the "Nominees") for election as Class I directors at
the Annual Meeting. Mr. Hindle has served as a director of the Company since
1995 and Mr. Mihalchik was elected a director by the Board of Directors in July
1999. The Board of Directors anticipates that each of the Nominees will serve as
a director, if elected. However, if any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of such other person as the Board of Directors may recommend. The Board
of Directors will consider a nominee for election to the Board of Directors
recommended by a stockholder of record if the stockholder submits the nomination
in compliance with the requirements of the Company's Bylaws. See "Other
Matters--Stockholder Proposals" for a summary of these requirements.
RECOMMENDATION
The Board of Directors recommends a vote FOR its Nominees, Winston R.
Hindle, Jr. and Larry L. Mihalchik.
INFORMATION REGARDING NOMINEES, OTHER DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth certain
information with respect to the Nominees for election as Class I directors at
the Annual Meeting, the continuing directors whose terms expire at the annual
meetings of stockholders in 1999, 2000 and 2001 and the executive officers of
the
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Company who are not directors and who are named in the Summary Compensation
Table ("Named Executive Officers"), based on information furnished to the
Company by such directors and executive officers. The following information is
as of June 30, 1999, unless otherwise specified.
NUMBER OF SHARES PERCENT OF
DIRECTOR BENEFICIALLY ALL SHARES
NAME AGE SINCE OWNED (1)
- ---------------------------------------- --- -------- ---------------- ----------
Class I Nominees for Election
(TERM TO EXPIRE IN 2002)
Winston R. Hindle, Jr. 69 1995 31,217(2)
Larry L. Mihalchik 52 7/21/99 -- *
Class I Director
(TERM TO EXPIRE IN 1999)
Clemente C. Tiampo 70 1996 31,217(3) *
Class II Continuing Directors
(TERM TO EXPIRE IN 2000)
John G. Turner 59 1994 92,502(4) *
Class III Continuing Director
(TERM TO EXPIRE IN 2001)
Arthur R. Buckland 51 1993 576,591(5) 6%
James K. Sims 52 1996 35,217(6) *
Named Executive Officers who are not
Directors
Dennis Cocco 45 50,242(7)
Harsh Koppula 45 27,678(8) *
Richard E. Morgan** 42 20,827(9)
William D. Reed 47 43,966(10) *
Executive Officers and Directors as a
Group (11 Total) 939,186(11) 9.1%
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(FOOTNOTES FOR PRECEDING PAGE)
* Less than one percent
** Mr. Morgan resigned April 30, 1999. He continues to provide consulting
services to the Company.
1. As of June 30, 1999 there were 9,509,234 shares of Common Stock outstanding.
2. Includes 15,000 shares subject to options that are immediately exercisable.
3. Includes 20,000 shares subject to options that are immediately exercisable.
4. Includes 20,000 shares subject to options that are immediately exercisable.
Includes 5,500 shares held directly. Also includes 67,002 shares held by
Late Stage Fund 1990 Limited Partnership ("Late Stage"), of which MVP
Capital L P. is investment general partner and holder of a 0.9% interest.
Mr. Turner is a general partner of MVP and shares voting control over Late
Stage. Shares indirectly beneficially owned by Mr. Turner include only 218
of the 67,002 shares owned by Late
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
3
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
Stage. While Mr. Turner may be an affiliate of Late Stage he disclaims
beneficial ownership of the remainder of such shares.
5. Includes 212,421 shares subject to options that are exercisable within 60
days of June 30, 1999.
6. Includes 20,000 shares subject to options that are immediately exercisable.
7. Includes 48,000 shares subject to options that are immediately exercisable.
Includes 2,242 shares purchased under the Company's 1995 Employee Stock
Purchase Plan ("1995 Employee Stock Purchase Plan").
8. Includes 19,000 shares subject to options that are immediately exercisable.
Includes 2,384 shares purchased under the 1995 Employee Stock Purchase Plan.
9. Includes 20,000 shares subject to options that are immediately exercisable.
Includes 827 shares purchased under the 1995 Employee Stock Purchase Plan.
10. Includes 40,000 shares subject to options that are immediately exercisable.
Includes 4,701 shares purchased under the 1995 Employee Stock Purchase Plan.
11. Includes 364,971 shares subject to options that are exercisable within 60
days of June 30, 1999.
NOMINEES FOR ELECTION AS A DIRECTOR
WINSTON R. HINDLE, JR. Mr. Hindle has been a Director since July 1995. He
was a Senior Vice President of Digital Equipment Corporation and a member of the
Executive Committee prior to his retirement in 1994 after 32 years with the
company. Mr. Hindle also serves as a Director of Keane, Inc. and Mestek, Inc.
LARRY L. MIHALCHIK. From the beginning of 1997 until July 1999, Mr.
Mihalchik served as President, Chief Executive Officer of Atex Media Solutions,
Inc., a developer and integrator of complex publishing systems for major
newspapers and other multimedia organizations around the world. Prior to joining
Atex Media Solutions, Mr. Mihalchik served as Senior Vice President and Chief
Financial Officer of M/A COM, a NYSE manufacturer of electronic components which
was purchased by AMP, Incorporated. Mr. Mihalchik specializes in the strategic
repositioning and financial turnaround of companies with strong brand
recognition.
INCUMBENT DIRECTOR--TERM EXPIRING IN 1999
CLEMENTE C. TIAMPO. Mr. Tiampo has been a Director since January 1996. He
is a private investor.
INCUMBENT DIRECTOR--TERM EXPIRING IN 2000
JOHN G. TURNER. Mr. Turner has been a Director of the Company since 1993.
Mr. Turner is a General Partner of MVP Ventures, a venture capital investment
firm based in Boston, Massachusetts, a position he has held since 1988. Mr.
Turner also serves as a Director of Ampro Corporation and Micro Module Systems
Corporation.
4
INCUMBENT DIRECTORS--TERM EXPIRING IN 2001
ARTHUR R. BUCKLAND. Mr. Buckland has been President, Chief Executive
Officer and a Director of the Company since September 1993. He was elected
Chairman of the Board in January 1996. Prior to assuming these responsibilities,
he served as a consultant to the Company from July 1993 to September 1993. Mr.
Buckland was President and Chief Executive Officer of Four Pi Systems, a process
control capital equipment company based in San Diego, California, from September
1992 until June 1993, and served as a consultant to that company from May 1992
to September 1992. From September 1990 until September 1991, Mr. Buckland was
President of Lex Electronics, a wholly-owned subsidiary of Lex plc, a
London-based automotive/distribution company, and from January 1982 until June
1990, he served as Vice President and General Manager for Schlumberger Ltd., a
diversified multinational company, in multiple locations. Mr. Buckland is also a
director of Helix Technologies Corporation.
JAMES K. SIMS. Mr. Sims has been a Director since March, 1996. Until July
1999, he was the President and Chief Executive Officer of Cambridge Technology
Partners, a position he held since the Company's inception in 1991. Prior to
founding Cambridge Technology Partners, Mr. Sims was Chairman and Chief
Executive Officer of Concurrent Computer Corporation. Mr. Sims is also a
director of Security Dynamics Corporation.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
HARRY ANDERSEN. Mr. Andersen joined the company as Senior Vice President,
Chief Financial Officer, in December 1998. Mr. Andersen has extensive financial
management and systems operations experience. Previously he worked at Fidelity
Investments in various management capacities, including Vice President, Office
of the CFO from 1996 to 1998, and Vice President Systems Operations from 1993 to
1996. Prior to joining Fidelity Mr. Andersen was Controller and Chief Accounting
Officer at Lotus Development Corporation.
DENNIS COCCO. Mr. Cocco is the President of the Company's Clare Micronix
Integrated Systems, Inc. subsidiary that was acquired by the Company in July
1998. Mr. Cocco was the founder of Micronix Integrated Systems, Inc. in 1983 and
served as President and Chief Executive Officer until its acquisition by the
Company.
HARSH KOPPULA. Mr. Koppula is currently President, Clare EMG, Inc., a
division of C.P. Clare. Prior to that, he was Vice President and General Manager
of the Advanced Magnetic Products Group, a position he held since October 1993.
From January 1991 until October 1993, he held the position of Director,
Strategic Marketing. Mr. Koppula joined the Company in 1988, as Director of
Materials. Before joining the Company, Mr. Koppula was Director of Materials at
Schlumberger Technologies, a division of Schlumberger Ltd. which manufactures
and markets automatic test equipment. Prior to that Mr. Koppula was part of the
corporate staff of Schlumberger Ltd. as an Internal Consultant to Global
Operations.
M. WILLIAM MILLER. Mr. Miller is the Company's Vice President, Global
Operations, to which he was named in January 1999. Previously he served as: Vice
President, Worldwide Manufacturing from April of 1998, Vice President,
Semiconductor manufacturing from April 1996, and Director of
5
Operations, Solid State Products Division from May 1995. Prior to joining the
Company he worked at Analog Devices, Inc. for eight years in various engineering
and operations management capacities.
WILLIAM D. REED. Mr. Reed was named Executive Vice President of Sales and
Marketing in November 1997. Prior to that, he held the position of Vice
President of Worldwide Sales and Corporate Marketing since joining the Company
in September 1996. Prior to joining CP Clare, Mr. Reed served as an Executive
Director of Russell Reynolds Associates, an international executive recruiting
firm from December 1994 to August 1996. From March 1989 to November 1994, Mr.
Reed held various positions with Praxis International Inc., a database software
vendor, most recently as its Executive Vice President and as President and Chief
Operating Officer of its principal operating subsidiary, Computer Corporation of
America.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The business of the Company is managed under the direction of the Company's
Board of Directors. The Company's Amended and Restated Articles of Organization
provide that the Company's Board of Directors shall be divided into three
classes and that the members of each class of Directors will serve for staggered
three-year terms. The Board consists of three Class I Directors (Messrs. Hindle,
Tiampo (who is retiring from the board at the end of the present term) and
Mihalchik (who was elected to the board at the July 1999 Board of Directors
meeting)), one Class II Director (Mr. Turner), and two Class III Directors
(Messrs. Buckland and Sims), whose initial terms will expire upon the election
and qualification of Directors at the annual meeting of stockholders held
following the fiscal years ending March 31, 1999, 2000 and 2001, respectively.
At each annual meeting of stockholders, Directors will be reelected or elected
for a full term of three years to succeed those Directors whose terms are
expiring.
The Company's Board of Directors has established an Audit Committee to
recommend the appointment of independent accountants to audit financial
statements and to perform services related to the audit, review the scope and
results of the audit with the independent accountants, review with management
and the independent accountants the Company's year-end operating results,
consider the adequacy of the internal accounting procedures and consider the
effect of such procedures on the accountants' independence. The Audit Committee
consists of Mr. Hindle, the Chairman, and Mr. Tiampo. During fiscal 1999 the
Audit Committee held two meetings.
The Company's Board of Directors has also established a Compensation
Committee which reviews and recommends the compensation arrangements for all
Directors and executive officers, approves such arrangements for other senior
level employees and administers certain compensation and incentive plans of the
Company and its subsidiaries. The Compensation Committee consists of Mr. Turner,
the Chairman, and Mr. Hindle. During fiscal 1999 the Compensation Committee held
two meetings.
Officers of the Company are elected annually at the first meeting of the
Board of Directors following the annual meeting of stockholders and serve at the
discretion of the Board of Directors. There are no family relationships between
any officers or Directors of the Company. The Company does not maintain a
nominating committee.
During the fiscal year ended March 31, 1999, the Board of Directors held
seven meetings. All directors attended at least 75% of the total number of
meetings of the Board of Directors and all committees of the Board on which they
served.
6
COMPENSATION OF DIRECTORS
Non-employee Directors ("Independent Directors") of the Company receive an
annual fee of $20,000 and are reimbursed for travel expenses incurred in
attending meetings of the Board of Directors and its committees. Some directors
elect to receive this fee in the form of Company stock which is distributed on a
quarterly basis. Commencing on the date of the Company's initial public offering
in June 1995, each Independent Director then serving, was granted an option to
purchase 10,000 shares of Common Stock and annually thereafter receives a stock
option to purchase shares of Common Stock. Each new Independent Director, upon
initial election to the Board of Directors, is granted an option to purchase
10,000 shares of the Company's Common Stock and receives an annual stock option
grant to purchase additional shares of Common Stock, beginning the year
following such Director's initial election to the Board. In June 1998, the Board
of Directors increased the annual grant of options to Independent Directors from
5,000 shares to 10,000 shares. All options granted to Independent Directors vest
in full one year after they are granted and the exercise price of each stock
option is the fair market value of the Common Stock on the date the option is
granted. Directors who are employees of the Company are not paid any separate
fees for serving as Directors.
SPECIAL COMMITTEE. On January 19, 1999, the board of directors created a
Special Committee of the board to consider the strategic direction of the
Company. Messrs. Hindle, Sims, Tiampo and Turner were appointed to this
committee. In recognition of the additional work to be done by the members of
the Special Committee, each member of the Committee was granted additional
compensation equal to, at the choice of the member, 5,000 shares of the
Company's Common Stock or cash equal to the value of 5,000 shares of the Common
Stock as of the date of grant. Each member of the committee elected to receive
shares of stock. The closing price of the Company's stock on January 19, 1999
was $7.375.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth for the fiscal
years ended March 31, 1997, 1998 and 1999, the cash and non-cash compensation
awarded to (i) the Chief Executive Officer (ii) each of the four most highly
compensated executive officers (the "Named Executive Officers") of the Company
whose compensation exceeded $100,000 during the fiscal year ended March 31, 1999
and who were employed by the Company in such capacities at the end of the 1999
fiscal year, and (iii) two additional individuals for whom disclosure would have
been provided in this table but for the fact that they were not serving as
Executive Officers at the end of the 1999 fiscal year.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
----------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
FISCAL SALARY BONUS (1) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $ # $
- ----------------------------------------- ----------- ---------- ------------- ------------------- -------------
Arthur R. Buckland....................... 1999 384,470 -- 50,000 56,031(2)
President & Chief Executive Officer 1998 353,821 209,875 -- 50,797(2)
1997 315,000 -- 125,000 24,718(2)
Dennis Cocco............................. 1999 176,230 200,981(3)
President, Clare-Micronix Division 1998
1997
William D. Reed.......................... 1999 230,000 -- 30,000 22,665(4)
Executive Vice President Sales & 1998 207,692 76,762 -- 22,101(4)
Marketing 1997 107,917 46,250 160,000 4,200(4)
Harsh Koppula............................ 1999 157,298 -- 21,067(5)
President, CP Clare EMG, Inc. 1998 147,115 50,062 -- 16,591(5)
1997 150,000 -- 95,000 12,412(5)
Richard Morgan*.......................... 1999 136,325 -- -- 12,449(6)
Vice President, Human Resources 1998 127,500 43,387 -- 12,283(6)
1997 122,676 -- 80,000 5,725(6)
Michael J. Ferrantino(7)**............... 1999 256,539 -- -- 40,215(7)
Vice President, Chief Operating Officer 1998 220,600 76,762 -- 48,476(7)
1997 200,000 90,000 29,241(7)
Thomas B. Sager***....................... 1999 152,923 -- -- 11,093(8)
Vice President, Chief Financial Officer 1998 131,164 43,387 9,505(8)
1997 103,250 -- 6,627(8)
- ------------------------
* Mr. Morgan resigned April 30, 1999. He continues to provide consulting
services to the Company.
** Mr. Ferrantino resigned October 31, 1998.
*** Mr. Sager resigned January 31, 1999.
(1) Bonuses earned in fiscal 1996, 1997 and 1998 were awarded to the Named
Executive Officers and paid by the Company in the following fiscal year.
8
(2) Includes insurance premiums of $12,418, $32,537and $40,148 paid by the
Company, matching contributions of $4,500 $10,910 and $8,083 made by the
Company on behalf of Mr. Buckland under the Company's 401(k) Savings Plan
for fiscal years 1997, 1998 and 1999, respectively and a car allowance of
$7,800 in fiscal years 1997, $7,350 in fiscal 1998 and $7,800 in fiscal
1999.
(3) Includes $125,000 paid pursuant to Mr. Cocco's non-competiton agreement with
the Company pursuant to which Mr. Cocco is entitled to receive a total of
$1,250,000 payable in equal installments over five years in accordance with
the Company's payroll practices.
(4) Includes insurance premiums of $6,455 and $11,920 paid by the Company,
matching contributions of $9,162 and $3,545 made by the Company on behalf of
Mr. Reed under the Company's 401(k) Savings Plan for fiscal years 1998 and
1999, respectively and a car allowance of $4,200, $6,484 and $7,200 for
fiscal years 1997, 1998 and 1999 respectively.
(5) Includes a car allowance of $7,800, $7,350 and $7,800 and matching
contributions of $4,612, $4,584 and $4,782 made by the Company on behalf of
Mr. Koppula under the Company's 401(k) Savings Plan in fiscal years, 1997,
1998 and 1999 respectively. Also includes insurance premiums of $4,657 and
$8,485 in fiscal year 1998 and 1999 respectively.
(6) Includes a car allowance of $5,725, $7,350 and $7,800 in fiscal years 1997,
1998 and 1999 respectively, and matching contributions of $4,933 and $4,649
made by the Company on behalf of Mr. Morgan under the Company's 401(k)
Savings Plan in fiscal year 1998 and 1999 respectively.
(7) Includes insurance premiums of $15,605, $34,938 and $22,740, a car allowance
of $7,800, $7,050 and $15,750 and matching contributions of $5,836, $6,659
and $1,725 made by the Company on behalf of Mr. Ferrantino under the
Company's 401(k) Savings Plan in fiscal years 1997, 1998 and 1999
respectively.
(8) Includes a car allowance of $3,000, $5,184 and $7,800, and and matching
contributions of $3,627, $4,320 and $3,293, made by the Company on behalf of
Mr. Sager under the Company's 401(k) Savings Plan in fiscal years 1997, 1998
and 1999 respectively.
OPTION GRANTS IN FISCAL YEAR 1999. The following table sets forth certain
information concerning grants of stock options made during the fiscal year ended
March 31, 1999 to each of the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR*
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED EXERCISE GRANT
UNDERLYING TO EMPLOYEES PRICE EXPIRATION DATE
OPTIONS GRANTED IN FISCAL YEAR PER SHARE DATE(1) VALUE*
-------------------- ------------------- ------------ ------------- ------------
Arthur R. Buckland........... 50,000 4.6% $ 6.25 11/13/08 $ 224,685
Dennis Cocco................. 240,000 22.0% $ 9.0625 07/06/08 1,563,816
William D. Reed.............. 30,000 2.8% $ 6.25 11/13/08 134,811
- ------------------------
* Except as stated in note 2 below, all options listed in the table above are
intended to qualify as incentive stock options under the Internal Revenue
Code of 1986, as amended, and are exercisable in equal amounts over five
years from the date of grant.
** Black-Scholes method of valuation
9
(1) The expiration date of an option is the tenth anniversary of the date on
which the option was originally granted. The exercisability of these options
would be accelerated upon the occurrence of a change in control as set forth
in Section 15 of the 1995 Stock Option and Incentive Plan.
(2) These options, which include incentive stock options for 55,170 shares and
non-qualified options for 184,830 shares, are exercisable in five equal
annual installments commencing on July 14, 1999.
OPTION EXERCISES AND YEAR-END HOLDINGS. The following table sets forth the
aggregate number of options exercised in fiscal 1999, and the value of options
held on March 31, 1999, by the Company's Chief Executive Officer and Named
Executive Officers.
OPTION EXERCISES AND YEAR-END HOLDINGS
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)(1)
ACQUIRED ON VALUE ----------------- ---------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME # ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------- ----------- ----------------- ---------------------
Arthur R. Buckland............................... -- -- 212,421/235,000 0/0
Dennis Cocco..................................... -- -- 0/240,000 0/0
Harsh Koppula.................................... 34,000 251,385 19,000/95,000 0/0
William D. Reed.................................. -- -- 40,000/150,000 0/0
Richard Morgan................................... -- -- 20,000/60,000 0/0
Michael J. Ferrantino............................ -- -- 0/0 0/0
Thomas B. Sager.................................. -- -- 0/21,200 0/0
- ------------------------
(1) Based on the fair market value at the fiscal year end less the option
exercise price.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has entered into the following employment agreements:
ARTHUR R. BUCKLAND. Under an agreement dated September 15, 1993, Mr.
Buckland shall serve as President, Chief Executive Officer and a Director of the
Company at an annual salary of at least $275,000. Mr. Buckland is also eligible
to participate in the Company's management bonus plan. Under the agreement, Mr.
Buckland received options to purchase 492,107 shares of Common Stock, one-fifth
of which vested upon grant and the rest of which vest in equal annual
installments over the following four years. In the event that Mr. Buckland
terminates his employment for Good Reason (as defined in his agreement,
including a Change in Control) or Mr. Buckland's employment is terminated by the
Company without Cause (as defined in the agreement) or because the Company
elects not to extend the term of the agreement, the Company shall pay Mr.
Buckland for a period of 12 months. Mr. Buckland has agreed not to compete with
the Company or solicit customers or employees of the Company for a period of two
years following the termination of employment with the Company. The initial term
of the agreement expired on September 15, 1995, but was extended and will
continue to be extended for one-year periods thereafter unless terminated by
either party on 60 days' notice.
OTHER EXECUTIVE OFFICERS. The Company has entered into Employment
Agreements (together, the "Management Employment Agreements") with Messrs.
Andersen, Cocco, Koppula, Morgan, and Reed (together, the "Contracting
Parties"). The Management Employment Agreements provide that each
10
Contracting Party shall receive a base salary and be entitled to participate in
any bonus program implemented by the Company. Each Contracting Party has also
been granted options to purchase shares of the Company's Common Stock, such
options to vest ratably over a five year period. If a Contracting Party is
terminated by the Company without Cause, by the Contracting Party for Good
Reason or in the event of a Change of Control (as all such terms are defined in
the applicable Management Employment Agreement), the Company is obligated to pay
the Contracting Party for 12 months.
STOCK PERFORMANCE GRAPH
The following graph provides a comparison, from the Company's initial public
offering on June 21, 1995 through March 31, 1999, of the cumulative total
stockholder return (assuming reinvestment of any dividends) among the Company,
the NASDAQ Composite Index and the NASDAQ Electronic Components Index. Upon
written request, the Company will provide any stockholder with a list of the
companies included in the NASDAQ Electronic Components Index. The historical
information set forth below is not necessarily indicative of future performance.
STOCK PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
C.P. CLARE CORPORATION NASDAQ COMPOSITE INDEX NASDAQ ELECTRONIC COMPONENTS
6/21/95 100 100 100
3/31/96 122 119 123
3/31/97 66 132 111
3/31/98 87 200 223
3/31/99 23 269 358
6/21/95 3/31/96 3/31/97 3/31/98 3/31/99
------- ------- ------- ------- -------
C.P. Clare Corporation.............................................. 100 122 66 87 23
NASDAQ Composite Index.............................................. 100 119 132 200 269
NASDAQ Electronic Components........................................ 100 123 111 223 358
11
REPORT OF THE COMPENSATION COMMITTEE
OBJECTIVE OF THE COMPANY'S COMPENSATION PROGRAM. The Company's executive
compensation program is intended to attract, retain and reward executives who
are capable of and responsible for leading the Company effectively and
continuing its growth. The Company's objective is to utilize a combination of
cash and equity-based compensation to provide appropriate incentives for
executives while aligning their interests with those of the Company's
stockholders.
The Company uses a three-pronged approach to its compensation program.
First, the executive's base salary is intended to create a competitive level of
compensation for each executive for the following twelve months. Second, the
Company maintains an annual incentive bonus program for executive officers and
certain other members of management under which bonuses are payable based upon
the achievement of corporate and individual performance goals which are set each
fiscal year. Bonuses can be paid in cash or stock. The objective of the annual
incentive bonus program is to encourage effective performance relative to
current plans and objectives. Effective with the start of the 1999 fiscal year,
the Board of Directors adopted a Voluntary Deferred Compensation Plan for Key
Employees which allows designated Executive Officers to defer the payment of
their annual bonuses until their retirement. Finally, the Company utilizes stock
options granted under the 1995 Stock Option and Incentive Plan as a long-term
incentive for the executive officers. The Company believes that stock options
are an important way of aligning management and stockholder interests and
retaining effective management. Accordingly, options generally provide for pro
rata incremental vesting over a five-year period.
COMPENSATION COMMITTEE PROCEDURES. The Company's executive compensation
program is administered under the direction of the Compensation Committee, which
is composed of two non-employee directors. At the Board of Director's meeting
which most closely coincides with the Company's fiscal year-end, the Chief
Executive Officer's bonus, if any, is determined for the past year's
performance, his base salary for the following fiscal year is set, and option
grants for the officers and other employees may be made. With respect to the
compensation of the Chief Executive Officer, the Committee exercises its
independent discretion in determining his compensation, subject to review by all
of the non-employee directors. With respect to the compensation of the other
executive officers, the Compensation Committee relies to a significant extent on
Mr. Buckland's recommendations as the Company's Chief Executive Officer which
are given in the framework of the Company's overall compensation philosophy.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Compensation Committee
considers the Company's financial performance to be a significant determinant in
Mr. Buckland's overall compensation package. The Committee considers the
Company's sales, earnings and return on capital and the growth thereof, to be
the most important performance factors in setting Mr. Buckland's compensation.
Along with these corporate performance factors, the directors also consider
subjective factors, including Mr. Buckland's leadership role and his efforts on
behalf of the Company in developing the Company's reputation among both its
customer and investor bases during the year. The Committee has set Mr.
Buckland's total annual compensation, including that derived from the Company's
bonus and option program, at a level it believes to be competitive with other
companies in its industry.
During the 1999 fiscal year Mr. Buckland's annual cash compensation was set
at $385,000. Because of the Company's failure to achieve its financial goals,
including new orders, revenue and earnings per
12
share, Mr. Buckland did not receive a bonus for the 1999 fiscal year. Mr.
Buckland was granted options to purchase 50,000 shares of stock in November
1998. In March 1997, the Compensation Committee granted performance stock option
awards to the Chief Executive Officer and other Executive Officers. The
performance stock options were given in order to (a) provide long term incentive
for senior executives, (b) balance short-term incentives and focus management on
long-term results, (c) reward executives for attaining high performance levels
and (d) retain key executives during the next critical period of the Company's
growth. The awards are designed to cover a three-year award cycle and vesting of
the options granted is contingent upon the achievement of performance targets
ratified by the full Board of Directors. The awards granted during the 1997
fiscal year will vest 50% on March 31, 2000 and 100% on March 31, 2002, if the
performance goals relating to the achievement of compounded growth on earnings
per share are achieved. The performance options vest in all cases on March 4,
2004, subject to the continued employment of the executive officer. Pursuant to
this program, in March 1997 the Board awarded Mr. Buckland options to purchase
125,000 shares.
COMPENSATION OF OTHER EXECUTIVE OFFICERS. The Company's executive
compensation program utilizes several different performance factors in
determining the compensation of the Company's other executive officers. Each
executive officer's compensation is based upon the achievement of specific
individual and Company performance goals. During fiscal 1999, each executive
officer's compensation was set at what the committee determined to be
competitive levels. During fiscal 1999, the Named Executive Officers were
granted options as described in the table entitled Option Grants in Last Fiscal
Year.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). The Securities and
Exchange Commission requires that this report comment upon the Company's policy
with respect to Section 162(m) of the Internal Revenue Code of 1986, as amended.
This section generally limits the deductibility on the Company's tax return of
compensation over $1 million to the chief executive officer and any of the named
executive officers of the Company unless the compensation is paid pursuant to a
plan which is performance-related, non-discretionary and has been approved by
the Company's stockholders. The Committee's policy with respect to Section
162(m) is to make every reasonable effort to ensure that compensation is
deductible to the extent permitted and appropriate while simultaneously
providing executives with appropriate rewards for their performance.
Submitted by the Compensation
Committee:
John G. Turner, Chairman
Winston R. Hindle, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is an officer or employee of the
Company, and no executive officer of the Company serves on the compensation
committee of an entity or serves as a director of an entity, in which one of its
executive officers serves on the Compensation Committee of the Company or serves
as a Director of the Company.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers. Officers,
directors and greater than 10% beneficial owners are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all forms
they file in compliance with Section 16(a). To the Company's knowledge, based
solely on its review of the copies of such reports furnished to the Company and
written representations that no other reports were required during the fiscal
year ended March 31, 1999, other than as set forth herein, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners were satisfied.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
14
OTHER MATTERS
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock for
each person who the Company believes to be the beneficial owner of more than a
5% of the Company's Common Stock on June 29, 1999. All such information was
provided by the sources specified in the footnotes to the table.
NUMBER OF
SHARES
NAME AND BUSINESS ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNERS OWNED ALL SHARES (*)
- ------------------------- ----------------- ---------------
EQSF Advisors, Inc....................................................... 1,682,700(1) 17.7%
767 Third Avenue
New York, NY 10017-2023
M.J. Whitman Advisors, Inc.
Wellington Management.................................................... 1,295,500(2) 13.6%
Wisconsin Investment Board............................................... 1,134,700(2) 11.9%
121 East Wilson Street
Madison, Wisconsin 53702
Merrill Lynch & Co. Inc.
250 Vesey Street
World Financial Center Floor 23
New York, NY 10281
on behalf of:
Merrill Lynch Asset Management Group................................... 921,250(2) 9.7%
Fleet Financial Group, Inc............................................... 588,100(2) 6.2%
One Federal Street
Boston, MA 02211
Dimensional Fund Advisors, Inc........................................... 495,400(2) 5.2%
1299 Ocean Avenue
11(th) Floor
Santa Monica, CA 90401
- ------------------------
* As of June 30, 1999, there were 9,509,234 shares of Common Stock
outstanding.
1. Information received from NASDAQ-AMEX-Online.com. Includes 171,300 shares
held by M.J. Whitman Advisors, Inc., based on information received from EQSF
Advisors, Inc. as filed on Schedule 13G with the Securities and Exchange
Commission on February 16, 1999.
2. Information received from NASDAQ-AMEX-Online.com.
INDEPENDENT AUDITORS
The accounting firm of Arthur Andersen LLP serves as the Company's
independent public accountants. A representative of Arthur Andersen LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he so desires and will be available to respond to appropriate questions.
15
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company does not intend to engage a proxy solicitation firm to assist in the
solicitation of proxies.
The Company will also request persons, firms and corporations holding shares
in their names or in the names of their nominees, which are beneficially owned
by others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted pursuant to 1934 Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the year 2000
annual meeting of stockholders must be received in writing by the Company before
March 26, 2000. Such proposals must also comply with the requirements as to form
and substance established by the Securities and Exchange Commission if such
proposals are to be included in the proxy statement and form of proxy. Any such
proposals should be mailed to C.P. Clare Corporation, 78 Cherry Hill Drive,
Beverly, MA 01915, Attn.: Clerk.
Stockholder proposals to be presented at the 2000 annual meeting of
stockholders, other than stockholder proposals submitted pursuant to 1934 Act
Rule 14a-8, must be received in writing by the Company not earlier than May 25,
2000 or later than July 9, 2000, unless the year 2000 annual meeting of
stockholders is scheduled to take place before August 22, 2000 or after November
22, 2000. The Company's Bylaws provide that any stockholder wishing to nominate
a director or have a stockholder proposal, other than a stockholder proposal
submitted pursuant to 1934 Act Rule 14a-8, considered at an annual meeting must
provide written notice of such nomination or proposal and appropriate supporting
documentation, as set forth in the Bylaws, to the Company not less than 75 days
nor more than 120 days prior to the anniversary of the immediately preceding
annual meeting of stockholders (the "Anniversary Date"); provided, however, that
in the event that the annual meeting is scheduled to be held more than 30
calendar days prior to or more than 60 calendar days after the Anniversary Date,
such nominations or proposals must be delivered to the Company not later than
the later of 75 calendar days prior to or 15 calendar days after the date on
which public announcement of the date of such meeting is first made. Any such
proposals should be mailed to C.P. Clare Corporation, 78 Cherry Hill Drive,
Beverly, MA 01915, Attn: Clerk.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
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CP CLARE
C O R P O R A T I O N