SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
and Exchange Act of 1934
Filed by the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
CALIFORNIA AMPLIFIER, INC.
(Exact name of Registrant as specified in its Charter)
CALIFORNIA AMPLIFIER, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee:
|X| No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (1) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
CALIFORNIA AMPLIFIER, INC.
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held July 17, 2003
----------------------------------
To the Stockholders of CALIFORNIA AMPLIFIER, INC.:
The Annual Meeting of Stockholders of California Amplifier, Inc. will be held at
the Radisson Hotel, 600 East Esplanade Drive, Oxnard, California 93030, on
Thursday, July 17, 2003 at 10:00 a.m. local time, for the purpose of considering
and acting upon the following proposals:
1. To elect six directors to hold office until the next Annual Meeting
of Stockholders.
2. To transact such other business as may properly come before the
meeting and any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on June 10, 2003 as the
record date for the determination of stockholders entitled to notice of and to
vote at the meeting. A list of stockholders entitled to vote at the Annual
Meeting will be open to examination by any stockholder for any purposes related
to the Annual Meeting, during normal business hours, from July 7, 2003 until
July 17, 2003 at the Company's executive offices located at 460 Calle San Pablo,
Camarillo, California 93012.
By Order of the Board of Directors,
/s/ Richard K. Vitelle
Richard K. Vitelle
Corporate Secretary
Camarillo, California
June 16, 2003
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER YOU
PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.
STOCKHOLDERS MAY VOTE IN PERSON IF THEY ATTEND THE MEETING EVEN THOUGH THEY HAVE
EXECUTED AND RETURNED A PROXY.
CALIFORNIA AMPLIFIER, INC.
Corporate Headquarters: Place of Meeting:
460 Calle San Pablo Radisson Hotel
Camarillo, CA 93012 600 East Esplanade Drive
Oxnard, CA 93030
Telephone: (805) 987-9000
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
July 17, 2003
Approximate date of mailing: June 20, 2003
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of California Amplifier, Inc. (the "Company" or "California
Amplifier") of proxies for use at the Annual Meeting of Stockholders of
California Amplifier (the "Annual Meeting") to be held on Thursday, July 17,
2003 at 10:00 a.m. local time or at any adjournment or postponement thereof.
VOTING RIGHTS
Stockholders of record of California Amplifier as of the close of business on
the record date established for the Annual Meeting, June 10, 2003, have the
right to receive notice of and to vote at the Annual Meeting. On June 10, 2003,
California Amplifier had issued and outstanding 14,745,812 shares of Common
Stock, par value $0.01 per share ("Common Stock"), the only class of voting
securities outstanding.
Each stockholder of record as of the record date will be entitled to one vote
for each share of Common Stock held as of the record date. The presence at the
Annual Meeting in person or by proxy of a majority of the shares of Common Stock
outstanding as of the record date will constitute a quorum for transacting
business. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
With regard to election of directors, votes may be cast in favor or withheld;
votes that are withheld will be excluded entirely from the vote and will have no
effect. Abstentions may be specified on proposals other than the election of
directors, and will be counted as present for purposes of the item on which the
abstention is noted, and therefore counted in the tabulation of the votes cast
on a proposal with the effect of a negative vote. Under applicable Delaware law,
broker non-votes are not counted for purposes of determining the votes cast on a
proposal.
1
Persons Making the Solicitation
The Proxy is solicited on behalf of the Board of Directors of the Company. The
only solicitation materials to be sent to stockholders will be this Proxy
Statement and the accompanying Proxy. The Board of Directors does not intend to
use specially engaged employees or paid solicitors. The Board of Directors also
intends to solicit the Proxies held on behalf of stockholders by brokers,
dealers, banks and voting trustees, or their nominees. The Company will pay all
reasonable expenses by such holders for mailing the solicitation material to the
stockholders for whom they hold shares. All solicitation expenses are being paid
by the Company.
Terms of the Proxy
The enclosed Proxy indicates the matters to be acted upon at the Annual Meeting
and provides a box to be marked to indicate the manner in which the
stockholder's shares are to be voted with respect to such matters. By
appropriately marking the boxes, a stockholder may specify, with respect to the
election of directors, whether the Proxy holder shall vote for or be without
authority to vote on any or all candidates. The Proxy also confers upon the
holders thereof discretionary voting authority with respect to such other
business as may properly come before the Annual Meeting.
Where a stockholder has appropriately directed how the Proxy is to be voted, the
shares will be voted in accordance with the stockholder's direction. In the
absence of instructions, shares represented by valid Proxies will be voted in
favor of the nominees for director and in favor of all proposals set forth in
the Notice of Meeting and this Proxy Statement. If any other matters are
properly presented at the Annual Meeting, the persons named in the Proxy will
vote or refrain from voting in accordance with their best judgment. A Proxy may
be revoked at any time prior to its exercise by giving written notice of the
revocation thereof to the Corporate Secretary of the Company or by filing a duly
executed Proxy bearing a later date. Stockholders may also vote in person if
they attend the Annual Meeting even though they have executed and returned a
Proxy.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of June 10, 2003 by (i) each person or entity who
is known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each director and nominee for director, (iii) each executive officer
appearing in the Summary Compensation Table appearing elsewhere in this Proxy
Statement and (iv) all directors and executive officers as a group. The Company
knows of no agreements among its stockholders that relate to voting or
investment power over its Common Stock.
Name and Address of
Beneficial Owner (1): Shares Beneficially Owned (2): Percent (3):
-------------------- ----------------------------- -----------
Ira Coron, Chairman of the Board
of Directors 118,600 *
Fred Sturm, Chief Executive Officer,
President and Director 225,000 1.5%
Robert Hannah, Vice President,
Satellite Products 155,000 1.0%
Patrick Hutchins, Vice President,
Operations 41,750 *
Kris Kelkar, Vice President,
Wireless Access Products 186,250 1.2%
Richard Vitelle, Vice President, Finance and
Chief Financial Officer 45,000 *
Richard Gold, Director 24,000 *
Arthur Hausman, Director 77,210 *
Frank Perna, Jr., Director 32,000 *
Thomas Ringer, Director 59,000 *
All directors and executive officers
as a group (11 persons) 1,048,810 6.7%
State of Wisconsin Investment Board (4) 1,480,800 10.0%
* Less than 1.0% ownership
(1) The address of each named officer and director is 460 Calle San Pablo,
Camarillo, California 93012.
3
(2) Includes shares purchasable upon exercise of exercisable stock options as
of June 10, 2003 or within 60 days thereafter, in the following amounts:
Ira Coron 32,000
Fred Sturm 225,000
Robert Hannah 143,750
Patrick Hutchins 35,000
Kris Kelkar 184,150
Richard Vitelle 45,000
Richard Gold 24,000
Arthur Hausman 72,000
Frank Perna, Jr. 32,000
Thomas Ringer 56,000
All officers and directors as a group 933,900
(3) For the purposes of determining the percentage of outstanding Common Stock
held by the persons set forth in the table, the number of shares is
divided by the sum of the number of outstanding shares of the Company's
Common Stock on June 10, 2003 (14,745,812 shares) and the number of shares
of Common Stock subject to options exercisable currently or within 60 days
of June 10, 2003 by such persons.
(4) This information is based on a Schedule 13G/A filed by the State of
Wisconsin Investment Board with the Securities and Exchange Commission on
March 7, 2003. The address for the State of Wisconsin Investment Board is
P.O. Box 7842, Madison, Wisconsin 53707.
4
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of six directors will be elected at the Annual Meeting. It is intended
that the shares of Common Stock represented by each Proxy, unless otherwise
specified on the Proxy, will be voted for the election to the Board of Directors
of each of the six nominees set forth below. Directors shall be elected by a
plurality of the votes of shares present in person or represented by proxy at
the meeting. The term of office of each person elected as director will continue
until the next Annual Meeting of Stockholders, or until his successor has been
elected and qualified. The Board of Directors recommends a vote "FOR" each of
the six nominees.
In the event that any of the nominees for director listed below should become
unavailable for election for any currently unforeseen reason, the persons named
in the accompanying Proxy have the right to use their discretion to vote for
such other person as may be determined by the holders of such Proxies. To the
best of the Company's knowledge, all nominees are and will be available to
serve.
The following table sets forth the name and age of each nominee for director,
the calendar year each was first elected as a director and the positions each
currently holds with the Company:
Capacities in Director
Name Age Which Served Since
---- --- ------------ -----
Ira Coron 74 Chairman of the Board 1994
of Directors
Fred Sturm 45 Chief Executive Officer, 1997
President and Director
Richard Gold 48 Director 2000
Arthur Hausman 79 Director 1987
Frank Perna, Jr. 65 Director 2000
Thomas Ringer 71 Director 1996
Ira Coron has been Chairman of the Board for California Amplifier, Inc. since
March 1994. In addition, he was the Chief Executive Officer until 1997 and
remained an officer of the Company until February 1999. From 1989 to 1994 he was
an independent management consultant to several companies and venture capital
firms. He retired from TRW Inc., after serving in numerous senior management
positions from June 1967 to July 1989 among which was Vice President and General
Manager of TRW's Electronic Components Group. He also served as a member of the
Executive Committee of the Wireless Communications Association.
Fred Sturm was appointed Chief Executive Officer, President and Director in
August 1997. Prior to joining the Company, from 1990 to 1997, Mr. Sturm was
President of Chloride Power Systems (USA), and Managing Director of Chloride
Safety, Security, and Power Conversion (UK), both of which are part of Chloride
Group, PLC (LSE: CHLD). From 1979 to 1990, he held a variety of general
management positions with M/A-Com and TRW Electronics, which served radio
frequency (RF) and microwave markets.
Richard Gold has been a director of the Company since December 2000. Mr. Gold is
President and Chief Executive Officer of Nova Crystals, Inc., a privately held
supplier of optical communications equipment, a position he has held since
December 2002. He also serves as Chairman of Radia
5
Communications, Inc., a privately held supplier of wireless communications
semiconductors, a position he has held since June 2002. Previously, Mr. Gold was
Chairman, President and Chief Executive Officer of Genoa Corporation, a
privately held supplier of optical communications equipment, from January 1999
to June 2002. From November 1991 through December 1998, Mr. Gold held various
senior-level executive positions with Pacific Monolithics, Inc., a supplier of
wireless communications equipment, including Vice President-Engineering, Chief
Operating Officer and, from January 1997 through December 1998, President and
Chief Executive Officer. In October 1998, Pacific Monolithics filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Mr.
Gold is a director of Nucentrix Broadband Networks, Inc.
Arthur Hausman has been a director of the Company since 1987. Mr. Hausman, a
private investor, currently serves as a director of Drexler Technology
Corporation, a publicly held manufacturer of optical data storage products.
Until his retirement in 1988, he served as Chairman of the Board of Directors
and Chief Executive Officer of Ampex Corporation, a manufacturer of professional
audio-video systems, data/memory products and magnetic tape, where he was
employed for 27 years. Mr. Hausman was appointed by President Reagan to the
President's Export Council, to the Council's Executive Committee and to the
Chairmanship of the Export Administration Subordinate Committee of the Council
for the period 1985 to 1989.
Frank Perna, Jr. has been a director of the Company since May 2000. From 1998 to
the present Mr. Perna has served as Chairman and Chief Executive Officer of MSC
Software Corporation. From 1994 to 1998, Mr. Perna was Chairman and Chief
Executive Officer of EOS Corporation, and from 1990 to 1993 he was Chief
Executive Officer of Magnetek, Inc. Mr. Perna also serves as Chairman of the
Board of Software.com and on the Board of Trustees of Kettering University.
Thomas Ringer has been a director of the Company since August 1996. Since 1990,
Mr. Ringer has been actively involved as a member of the boards of directors for
various public and private companies. Mr. Ringer is currently Chairman of
Wedbush Morgan Securities, Inc., an investment banking and financial services
company, Chairman of Document Sciences Corporation, a publicly held company
engaged in developing and marketing document automation software, Chairman of
M.S. Aerospace, Inc., a privately held manufacturer of aerospace fasteners,
Chairman of the Center for Innovation and Entrepreneurship, an executive
education services company, and Chairman of Camping Business Systems, Inc., a
collateral recovery services company. Prior to 1990, Mr. Ringer served as
President and Chief Executive Officer of Recognition Equipment Inc., a New York
Stock Exchange listed company, President and Chief Executive Officer of Fujitsu
Systems of America, Inc. and President and Chief Executive Officer of Computer
Machinery Corporation.
Committees of the Board
The Board of Directors has delegated certain of its authority to three
committees: the Compensation Committee, the Audit Committee and the Governance
and Nominating Committee. The Compensation Committee is composed of Messrs.
Coron, Gold and Hausman, with Mr. Hausman serving as Chairman. The Audit
Committee is composed of Messrs. Hausman, Perna and Ringer, with Mr. Ringer
serving as Chairman. The Governance and Nominating Committee is composed of
Messrs. Gold and Perna, with Mr. Gold serving as Chairman.
The primary functions of the Compensation Committee are to review and make
recommendations to the Board of Directors with respect to the compensation of
the Company's executive officers, and to administer the Company's stock option
plans. See also the Compensation Committee Report on Executive Compensation
included elsewhere herein.
The primary functions of the Audit Committee are to review and approve the scope
of audit procedures performed by the Company's independent auditors, to review
the audit reports rendered by the Company's independent auditors, to monitor the
internal control environment within the Company, and to pre-approve the fees for
all audit and non-audit services charged by the independent auditors. The Audit
Committee reports to the Board of Directors with respect to such
6
matters and makes recommendations with respect to its findings. See also the
Report of the Audit Committee included elsewhere herein.
The primary functions of the Governance and Nominating Committee are to review
and make recommendations on the composition of the Board and its committees, to
evaluate and recommend candidates for election to the Board, and to review and
make recommendations to the full Board on corporate governance matters.
Board of Director and Committee Attendance
In fiscal year 2003, the Board of Directors held eight meetings, the
Compensation Committee held six meetings, the Audit Committee held eight
meetings, and the Governance and Nominating Committee held one meeting. All
directors attended more than 75% of the aggregate meetings of the Board and
committees on which the directors serve which were held during fiscal year 2003.
Compensation of Directors
For fiscal year 2003, each non-employee director received an annual retainer as
follows:
o $25,000 for the Chairman of the Board;
o $20,000 for chairmen of board committees;
o $15,000 for other non-employee directors
Annual retainers are payable monthly at 1/12th of the annual amount.
Non-employee directors also receive meeting fees as follows:
o A fee of $1,250 for each Board meeting attended in person;
o A fee of $625 for each Board meeting attended telephonically;
o A fee of $1,000 for each committee meeting attended in person which
is not held on the same day as a Board meeting; and
o A fee of $500 for each committee meeting attended telephonically, or
which is held on the same day as a Board meeting.
Directors are also reimbursed for out-of-pocket expenses incurred in connection
with attending meetings. In addition, pursuant to the terms of the Company's
1999 Stock Option Plan, each non-employee director receives an automatic grant
of 8,000 non-qualified stock options upon initial appointment to the Board, and
an additional grant of 8,000 non-qualified stock options annually upon
re-election to the Board, with all such options vesting one year from date of
grant.
Directors who are also executive officers of the Company receive no additional
compensation for their services on the Board.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board has furnished the following report on
executive compensation. This report will not be deemed to be incorporated by
reference by any general statement incorporating this proxy statement into any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this information by reference and will not be deemed
soliciting material or deemed filed under those Acts.
7
The Compensation Committee of the Board is composed entirely of independent
outside directors. We are responsible for monitoring the performance and
compensation of executive officers, reviewing the compensation plans, including
bonuses, and administering the Company's stock option plans.
Each year, we comprehensively review the compensation of Fred Sturm, the
Company's Chief Executive Officer, and the other executive officers to assure
that compensation is appropriately tied to performance and that salary and
potential bonus compensation levels are appropriate. To focus and facilitate
such review, we developed the following executive compensation guidelines for
the Company:
o executive compensation should be at or above the 50th percentile of
technology company market levels to allow the Company to attract and
retain talented management;
o annual variable compensation should reward the executives for
achieving specific results which should lead to increased
stockholder value; and
o supplemental benefits and perquisites which reward executives
without regard to performance should be minimal.
The compensation of the Chief Executive Officer and of the Company's other
executive officers is comprised of three primary
components:
o Salary
o Bonus
o Stock options
Salary is fixed at a competitive level to attract and retain qualified
candidates. Bonuses are tied specifically to performance of the Company or a
specific business unit of the Company and/or individual contributions. Stock
options are awarded in amounts we believe necessary to provide incentives for
future performance, taking into account individual performance and length of
service with the Company. This mix of compensation elements places a significant
portion of compensation at risk and emphasizes performance.
From time to time we utilize the services of independent compensation
consultants to review and assess various aspects of the Company's compensation
program for executive officers as a means of ensuring that the Company maintains
compensation at appropriate levels relative to the peer companies and the
overall industry in which the Company operates.
Salary. Mr. Sturm's base salary for fiscal 2003 was set at $325,000, effective
March 1, 2002, and was determined by us in accordance with the general
principles described above. The base salaries of the other executive officers
were similarly reviewed and set, with consideration also given to the
relationship of those salaries to the salary of Mr. Sturm. Mr. Sturm's base
salary for fiscal 2004 is unchanged from his salary in fiscal 2003.
Bonus. For fiscal 2003, we established an expected target bonus for Mr. Sturm of
50% of his base salary that was dependent upon Company performance in relation
to the annual operating plan. Mr. Sturm's actual bonus for the year was
$164,000. Under the fiscal 2003 incentive compensation program, the target bonus
of other senior executive officers was set at between 30% to 40% of their annual
base salary, depending upon the actual executive officer, and was also dependent
on Company or business unit performance.
Stock Options. We believe that the Company should provide greater equity
incentives to the Chief Executive Officer and other executive officers to better
align their interests with those of the Company's stockholders, and to enhance
retention and continuity of management. Equity incentives for management at the
Company have historically been below the median level at peer companies. We
assigned option awards to Mr. Sturm and other executive officers in part based
on our desire to increase equity incentives at the Company and on their
respective compensation levels and individual performance.
8
COMPENSATION COMMITTEE
Arthur H. Hausman
Ira Coron
Richard Gold
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Hausman, Coron and Gold.
Messrs. Hausman and Gold have never been employed by the Company. Mr. Coron was
an officer of the Company from March 1994 to February 1999. There are no
interlocks between the Company and other entities involving the Company's
executive officers and directors who serve as executive officers or directors of
other entities.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company for each of the three fiscal years in
the period ended February 28, 2003 of (i) the Chief Executive Officer and (ii)
the next four most highly compensated executive officers:
Long Term
Compensation
Awards
------------
Annual Compensation Stock
Name and Fiscal --------------------- Option All Other
Principal Position Year Salary Bonus Grants Compensation (1)
------------------------ ---- --------------------- ------ ----------------
Fred Sturm 2003 $325,000 $164,000 80,000 $ 5,600
Chief Executive Officer 2002 283,000 206,000 25,000 14,100(2)
and President 2001 283,000 88,000 40,000 6,000
Robert Hannah 2003 $210,000 $ 76,000 30,000 $ 5,900
Vice President, Satellite 2002 200,000 100,000 15,000 5,700
Products 2001 169,000 34,000 40,000 5,900
Patrick Hutchins (3) 2003 $200,000 $ 81,000 40,000 $ 52,900
Vice President, Operations 2002 108,000 55,000 50,000 103,900
Kris Kelkar 2003 $204,000 $ 94,000 30,000 $ 5,800
Senior Vice President, 2002 210,000 99,000 50,000 5,400
Wireless Access Products 2001 167,000 93,000 40,000 5,100
Richard Vitelle (4) 2003 $175,000 $ 71,000 40,000 $ 5,800
Vice President, Finance 2002 108,000 65,000 35,000 1,300
and Chief Financial Officer
(1) Amounts include Company matching of employee contributions pursuant to the
Company's 401(k) plan, and term life insurance premiums paid by the
Company for the benefit of the named officers.
(2) Amount includes cash payments of $8,200 in lieu of time off for earned
vacation.
(3) Mr. Hutchins joined the Company effective August 20, 2001. The amount
under "All Other Compensation" in the table includes cash payments of
$102,600 in 2002 to Mr. Hutchins relating to
9
expenses for his relocation from the East Coast and a recruiting bonus,
and $47,000 in 2003 for additional costs associated with his relocation
from the East Coast.
(4) Mr. Vitelle joined the Company effective July 23, 2001.
10
Employment Agreements and Executive Severance Arrangements
The Company historically had not entered into written employment agreements and
severance arrangements with executive officers. During fiscal year 2002, the
Compensation Committee addressed the subject of employment agreements, and
reached the determination that such agreements with executive officers would
help maintain a competitive compensation structure with peer group companies in
the telecommunications equipment industry, thereby enhancing the motivation and
retention of the Company's executive officers. The Compensation Committee also
engaged an independent compensation consultant and legal counsel to provide
input on provisions of the employment agreements. As a result of this process,
on May 31, 2002, the Company entered into employment agreements with each of the
officers named in the Summary Compensation Table above. The key terms of each
officer's employment agreement, which are the same for all officers except as
noted below, are as follows:
o The officer's base salary will be reviewed by and be subject to adjustment
at the sole discretion of the Board of Directors each year during the
agreement;
o The officer will be eligible to participate in the Company's employee
bonus program and employee stock option award program;
o The initial term of the employment agreement is 12 months (or 24 months in
the case of the Chief Executive Officer), and unless either the Company or
the officer provide notice of non-renewal at least 30 days before the end
of the employment agreement term, the agreement will be automatically
extended for a period of one year, with such procedure to be followed in
each successive year; and
o If the officer's employment is terminated by the Company for "Cause" (as
defined), then he is not entitled to severance pay. If the officer's
employment is terminated by the Company without Cause, if the Company
elects to not renew the employment agreement, or if the officer resigns
for "good reason" (as defined) within 12 months following a change in
control of the Company, then the officer is entitled to severance in the
form of continuation of payments of base salary and employee benefits
coverage for 12 months (or 24 months in the case of the Chief Executive
Officer).
Options Grants In Last Fiscal Year
The following table sets forth information on grants of stock options pursuant
to the Company's 1999 Stock Option Plan during the fiscal year ended February
28, 2003 to the executive officers included in the Summary Compensation Table:
Potential Realizable Value
at Assumed Annual Rate
% of Total Exercise of Stock Price Appreciation
Options Granted or Base for Option Term (3)
Options to Employees in Price Expiration ---------------------------
Name Granted Fiscal Year (1) ($/share) Date (2) 5% 10%
--------------------- ------- --------------- --------- ----------- -------- --------
Fred Sturm 80,000 26.6% $5.00 3/7/2012 $251,600 $637,500
Robert Hannah 30,000 10.0% $5.00 3/7/2012 $ 94,300 $239,100
Patrick Hutchins 40,000 13.3% $5.00 3/7/2012 $125,800 $318,700
Kris Kelkar 30,000 10.0% $5.00 3/7/2012 $ 94,300 $239,100
Richard Vitelle 40,000 13.3% $5.00 3/7/2012 $125,800 $318,700
(1) In fiscal 2003, option grants to the named executive officers represented
73% of total options granted to employees because of a change in the
timing of option grants to non-officer employees, which like officer
grants are typically made once a year. The most recent dates for option
grants to non-officer employees, other than grants made to newly recruited
employees, were February 26, 2002 (in fiscal 2002) and April 25, 2003 (in
fiscal 2004). Therefore, no options were granted to non-officer employees
during fiscal 2003, other than grants to newly hired managers.
(2) Options become exercisable at the rate of 25% per year, and have an option
term of ten years.
11
(3) The potential realizable value is calculated assuming both a 5% and a 10%
annual increase in the stock value from the date and price of the option
grant, and also assumes that the option is exercised at the end of 10
years on the last day of the option period (expiration date). The
calculated future stock price for options granted at $5.00 assuming 5%
annual appreciation is $8.14, and $12.97 assuming 10% annual appreciation.
There can be no assurances, however, that such future stock prices or
annual appreciation percentage amounts can be achieved.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth information as to options exercised during fiscal
year 2003, and options held at the end of fiscal year 2003, by executive
officers named in the Summary Compensation Table:
Number of Securities
Number Underlying Unexercised Value of Unexercised
of Shares Options Held In-The-Money Options (1)
Acquired on Value ----------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
Fred Sturm 0 $0 182,500 112,500 $149,700 $-0-
Robert Hannah 0 $0 122,500 57,500 $101,500 $-0-
Patrick Hutchins 0 $0 25,000 65,000 $ -0- $-0-
Kris Kelkar 0 $0 145,400 75,000 $ 57,500 $-0-
Richard Vitelle 0 $0 17,500 57,500 $ -0- $-0-
(1) The value of in-the-money options is computed by multiplying the number of
in-the-money options by the difference between the option exercise prices
and closing stock price at February 28, 2003 of $4.00. In-the-money
options are options whose exercise price is less than $4.00 per share.
Equity Compensation Plan Information
The following table summarizes as of February 28, 2003 the Company's equity
compensation plans which authorize the Company to issue equity securities:
------------------------------------------------------------------------------------------------------------------
Number of securities
Number of securities to remaining available for
be issued upon exercise Weighted-average exercise future issuance under equity
of outstanding options, price of outstanding compensation plans (excluding
warrants options, warrants and securities reflected in
Plan Category and rights (a) rights column (a))
------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security
holders 2,312,338 $10.51 308,000*
------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security - 0 - - 0 - - 0 -
holders
------------------------------------------------------------------------------------------------------------------
Total 2,312,338 $10.51 308,000
------------------------------------------------------------------------------------------------------------------
* Under the Company's 1999 Stock Option Plan, on the first business day of
each fiscal year the number of options available for grant is reset to an
amount equal to the lesser of 500,000 or 4% of the total number of
outstanding shares of the Company's Common Stock. Pursuant to this
12
provision, on March 3, 2003, the number of options available for grant
under the 1999 Stock Option Plan was increased from 308,000 to 500,000.
13
Stock Performance Graph
The following graph and table compares the Company's stock performance to three
stock indices over a five-year period assuming a $100 investment was made on the
last day of fiscal year 1998.
[PERFORMANCE GRAPH]
[The following was represented as a line chart in the printed material.]
--------------------------------------------------------------------------------------------------
Years Ended February 28, 1998 1999 2000 2001 2002 2003
--------------------------------------------------------------------------------------------------
(in dollars)
California Amplifier, Inc. 100 34 1,641 211 176 145
NASDAQ Composite Index 100 130 266 121 99 77
NASDAQ Electronic Components 100 124 354 144 108 75
NASDAQ Telecommunications 100 163 278 108 52 38
--------------------------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than 10 percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission, the National Association of Securities
Dealers and the Company. Specific due dates for these reports have been
established and the Company is required to disclose in this Proxy Statement any
failure to file, or late filing, of such reports with respect to the fiscal year
ended February 28, 2003. Based solely upon a review of reports delivered to the
Company during this period, all of these filing requirements were satisfied on a
timely basis.
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy pursuant to which material transactions between
the Company and its executive officers, directors, nominees for election as
directors, and principal stockholders (i.e., stockholders owning beneficially
five percent or more of the outstanding voting securities of the Company) and
members of immediate family of any of the foregoing persons, shall be submitted
to the Board of Directors for approval by a disinterested majority of the
directors voting with respect to the transaction. For this purpose, a
transaction is deemed material if such transaction, alone or together with a
series of similar transactions during the same fiscal year, involves an amount
which exceeds $60,000. No such transactions occurred during the fiscal year
ended February 28, 2003.
REPORT OF THE AUDIT COMMITTEE
The following Audit Committee Report does not constitute soliciting material and
shall not be deemed filed or incorporated by reference into any other Company
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent the Company specifically
incorporates this Audit Committee Report by reference therein.
The members of the Audit Committee have been appointed by the Board of
Directors. The Audit Committee operates under a written charter which was
adopted by the Board in May 2001. On May 28, 2003, the Board of Directors
adopted an amended and restated Audit Committee Charter, which is attached
hereto as Exhibit A. The Audit Committee consists of three directors, none of
whom were or are officers or employees of the Company. The current members of
the Audit Committee are Thomas Ringer, who serves as Chairman, Arthur Hausman
and Frank Perna, Jr. Each is an "independent" director within Section
4200(a)(14) of the National Association of Securities Dealers' Marketplace
Rules.
Duties of the Audit Committee during the period covered by this Report were to:
o oversee the Company's internal accounting and operational controls
as well as its financial and regulatory reporting,
o select the Company's independent auditors and assess their
performance on an ongoing basis,
o review the Company's interim and year-end financial statements and
audit findings with management and the Company's independent
auditors, and take any action considered appropriate by the Audit
Committee and the Board,
o review the Company's general policies and procedures regarding
audits, accounting and financial controls, the scope and results of
the auditing engagement, and the extent to which the Company has
implemented changes suggested by the auditors,
o review the results of each audit by the Company's independent
accountants and discuss with them any factors, including, without
limitation, the provision of any non-audit services, that may affect
their independence,
o perform other oversight functions as requested by the full Board,
and
o report activities performed to the full Board.
Management is responsible for the Company's internal controls. The Company's
independent auditors are responsible for performing an independent audit of the
Company's consolidated financial statements in accordance with generally
accepted auditing standards and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.
15
In this context, the Audit Committee reviewed California Amplifier's audited
financial statements for the fiscal year ended February 28, 2003 and discussed
with both the management of California Amplifier and KPMG LLP ("KPMG"), its
independent public accountants, these financial statements. California
Amplifier's management, which has primary responsibility for the Company's
financial statements, represented to the Audit Committee that its audited
financial statements were prepared in accordance with accounting principles
generally accepted in the United States.
The Audit Committee also discussed with KPMG the matters required to be
discussed by Statement on Auditing Standards (SAS) No. 61, "Communication with
Audit Committees", and SAS No. 90, "Audit Committee Communications". The Audit
Committee also received from KPMG the written disclosures and letter required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees", and discussed with KPMG the independence of that firm. For
the fiscal year ended February 28, 2003, KPMG received fees for the audit of
California Amplifier's consolidated financial statements, for income tax
planning and return preparation services, for services rendered in connection
with the Company's acquisition of Kaul-Tronics, and for various accounting
related consultation and advice. The Audit Committee also considered whether the
provision of these services is compatible with maintaining the independence of
KPMG.
Based on the review and discussions as described above, and in reliance thereon,
the Audit Committee recommended to Board of Directors that the audited financial
statements be included in Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 2003.
AUDIT COMMITTEE
Thomas L. Ringer
Arthur Hausman
Frank Perna, Jr.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG was selected by the Board of Directors as independent public accountants to
audit the consolidated financial statements of the Company for fiscal year 2003.
A representative of KPMG is expected to be present at the 2003 Annual Meeting,
and will have the opportunity to make a statement and respond to questions. KPMG
has served as the Company's independent public accountants since fiscal 2002.
On April 3, 2002, the Board of Directors, upon recommendation of the Audit
Committee, dismissed Arthur Andersen LLP ("Andersen") as the Company's
independent auditor. Andersen's reports on the Company's consolidated financial
statements for fiscal years 2001 and 2000 did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. However, as previously reported in the
Company's Form 8-Ks filed with the Securities and Exchange Commission on April
4, 2001 and May 23, 2001, Andersen's report on the Company's consolidated
financial statements for fiscal year 2000 was withdrawn on April 2, 2001 when it
was discovered that such financial statements contained misstatements made by
the Company's former controller. Andersen's audit report, as restated, on the
fiscal year 2000 financial statements was reissued on May 21, 2001, following
the correction and re-audit of such financial statements.
During fiscal years 2000 and 2001 and through the date hereof, there were no
disagreements with Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to Andersen's satisfaction, would have caused Andersen to make
reference to the subject matter of such disagreements in connection with their
reports on the Company's consolidated financial statements for such years.
16
In connection with their audits of the financial statements of the Company for
fiscal years 2000 and 2001, Andersen reported to the Company's Board of
Directors conditions they believed to be material weaknesses in the Company's
system of internal accounting and financial controls. In response, management
identified measures to improve the Company's system of internal controls,
including implementing more rigorous internal accounting policies, procedures
and controls. Management believes these improved procedures corrected the noted
weaknesses.
During fiscal years 2000 and 2001, and through April 4, 2002, the date KPMG was
engaged as independent auditor, the Company did not consult KPMG with respect to
either (i) the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's consolidated financial statements, and neither a
written report nor oral advice was provided by KPMG to the Company that KPMG
concluded was an important factor considered by the Company in reaching a
decision as to an accounting, auditing or financial reporting issue; or (ii) any
matter that was either the subject of a disagreement, as that term is defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event, as that term is defined in Item
304(a)(1)(v) of Regulation S-K.
Fees paid to KPMG
Fees and out-of-pocket expenses for the fiscal year 2003 audit, and other work
provided by KPMG during fiscal year 2003, are as follows:
Audit fees and expenses $165,000
Financial information systems design
and implementation fees $ -0-
All other fees $ 92,000
The amount shown for "All other fees" represents fees for income tax planning
and return preparation services ($52,000), fees associated with accounting
services rendered in connection with the Company's acquisition of Kaul-Tronics
In April 2002 ($33,000), and fees for advising on the accounting treatment of
various transactions ($7,000).
ANNUAL REPORT
The Annual Report to Stockholders for the fiscal year ended February 28, 2003 is
being sent to all stockholders with this Proxy Statement. The Annual Report does
not form any part of the material for the solicitation of any Proxy.
STOCKHOLDER PROPOSALS
The Bylaws of the Company provide that at any meeting of the stockholders only
such business shall be conducted as shall have been brought before the meeting
by or at the discretion of the Board of Directors or by any stockholder of the
Company who gives written notice (in the form required by the Bylaws) of such
business to the Corporate Secretary of the Company not less than 60 days in
advance of such meeting or, if later, the seventh day following the first public
announcement of the date of such meeting. The Bylaws also provide that only such
nominations for the election of directors may be considered as are made by the
Board of Directors, or by any stockholder entitled to vote in the election of
directors who provides written notice (in the form required by the Bylaws) of
such stockholder's intent to make such nomination to the Corporate Secretary of
the Company not later than 60 days in advance of such meeting or, if later, the
seventh day following the first public announcement of the date of such meeting.
17
Stockholders who intend to submit proposals for inclusion in the Proxy Statement
relating to the fiscal year ending February 28, 2004 must do so by sending the
proposal and supporting statements, if any, to the Company no later than
February 14, 2004. Such proposals should be sent to the attention of the
Corporate Secretary, California Amplifier, Inc., 460 Calle San Pablo, Camarillo,
California 93012.
OTHER MATTERS
Except for the matters described herein, management does not intend to present
any matter for action at the Annual Meeting and knows of no matter to be
presented at such meeting that is a proper subject for action by the
stockholders. However, if any other matters should properly come before the
Annual Meeting, it is intended that votes will be cast pursuant to the authority
granted by the enclosed Proxy in accordance with the best judgment of the person
or person(s) acting under the Proxy.
By Order of the Board of Directors,
/s/ Richard K. Vitelle
Richard K. Vitelle
Corporate Secretary
Camarillo, California
June 16, 2003
18
EXHIBIT A
CALIFORNIA AMPLIFIER, INC.
AUDIT COMMITTEE CHARTER
MAY 28, 2003
1. Members
The Board of Directors shall appoint an Audit Committee of at least three
members, consisting entirely of independent directors of the Board, and
shall designate one member as chairperson. Members of the Audit Committee
shall be appointed by the Board of Directors upon the recommendation of
the Governance and Nominating Committee, and may be removed by the Board
of Directors in its discretion. For the purposes hereof, the term
"independent" shall mean a director who meets the independence
requirements of the Nasdaq Stock Market, Inc. ("NASDAQ"), as determined by
the Board of Directors.
Each member of the Company's Audit Committee must be financially literate
at the time of appointment and at least one member of the Audit Committee
must have accounting or related financial management expertise, as
determined by the Board of Directors.
2. Purposes, Duties, and Responsibilities
The purposes of the Audit Committee shall be to:
o represent and assist the Board of Directors in discharging its
oversight responsibility relating to: (i) the accounting, reporting,
and financial practices of the Company and its subsidiaries,
including the integrity of the Company's financial statements; (ii)
the Company's compliance with legal and regulatory requirements;
(iii) the Company's program to monitor compliance with internal
controls; (iv) the outside auditor's qualifications and
independence; and (v) the performance of the Company's outside
auditor; and
o prepare the Audit Committee report required by the rules of the
Securities and Exchange Commission ("SEC") to be included in the
Company's annual proxy statement.
Among its specific duties and responsibilities, the Audit Committee shall,
consistent with and subject to applicable law and rules and regulations
promulgated by the SEC, NASDAQ or other regulatory authority:
a. Be directly responsible, in its capacity as a committee of the
Board, for the appointment, compensation and oversight of the work
of the outside auditor. In this regard, the Audit Committee shall
appoint and retain, approve the compensation of, evaluate and
terminate, when appropriate, the outside auditor, which shall report
directly to the Audit Committee.
b. Approve in advance all audit services to be provided by the outside
auditor, including any written engagement letters related thereto.
(By approving the audit engagement, the audit service contemplated
in any written engagement letter shall be deemed to have been
pre-approved.)
c. Establish policies and procedures for the engagement of the outside
auditor to provide permissible audit and non-audit services, which
shall include pre-approval by the Audit Committee of all permissible
non-audit services to be provided by the outside auditor.
d. Consider, at least annually, the independence of the outside
auditor, including whether the outside auditor's performance of
permissible non-audit services is compatible with the auditor's
independence; obtain and review a report by the outside auditor
describing any
A-1
relationships between the outside auditor and the Company or any
other relationships that may adversely affect the independence of
the auditor; and discuss with the outside auditor any disclosed
relationships or services that may impact the objectivity and
independence of the auditor.
e. Review and discuss with the outside auditor: (i) the scope of the
audit, the results of the annual audit examination by the auditor
and any accompanying management letters, and any difficulties the
auditor encountered in the course of their audit work, including any
restrictions on the scope of the outside auditor's activities or on
access to requested information, and any significant disagreements
with management; and (ii) any reports of the outside auditor with
respect to interim periods.
f. Review and discuss with management and the outside auditor the
annual audited and quarterly unaudited financial statements of the
Company, including: (i) an analysis of the auditor's judgment as to
the quality of the Company's accounting principles, setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements; (ii)
the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
including the development, selection and reporting of accounting
policies that may be regarded as critical; (iii) major issues
regarding the Company's accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles and
financial statement presentations; and (iv) review reports from the
outside auditor as required by SEC rules.
g. Recommend to the Board based on the review and discussion described
in paragraphs (d) - (f) above, whether the financial statements
should be included in the Annual Report on Form 10-K.
h. Review and discuss the adequacy and effectiveness of the Company's
internal controls, any significant deficiencies in internal
controls, and significant changes in such controls; and review and
discuss with the principal financial officer of the Company and such
others as the Audit Committee deems appropriate, the scope and
results of the program to monitor compliance with internal controls.
i. Review and discuss the adequacy and effectiveness of the Company's
disclosure controls and procedures and management reports thereon.
j. Review and discuss corporate policies with respect to earnings press
releases, as well as financial information and earnings guidance
provided to analysts and ratings agencies.
k. Review and discuss with management and the outside auditors any
material financial or non-financial arrangements of the Company that
do not appear in the financial statements of the Company.
l. Review and approve all related party transactions (as defined in
applicable listing standards).
m. Review material pending legal proceedings involving the Company and
other contingent liabilities, and consult with outside legal counsel
on such matters as deemed necessary.
n. Establish procedures for receiving and handling complaints regarding
accounting, internal accounting controls and auditing matters,
including procedures for confidential, anonymous submission of
concerns by employees regarding accounting and auditing matters.
o. Administer the Company's code of conduct in conjunction with
administering the procedure for handling employee complaints on
accounting and auditing matters.
A-2
p. Evaluate annually the performance of the Audit Committee and the
adequacy of the Audit Committee charter.
3. Outside Advisors
The Audit Committee shall have the authority to retain such outside
counsel, accountants, experts and other advisors as it determines
appropriate to assist the Audit Committee in the performance of its
functions. The Audit Committee shall have sole authority to approve
related fees and retention terms.
4. Meetings
The Audit Committee will meet at least four times per year, either in
person or telephonically, and at such times and places as the Audit
Committee shall determine. The Audit Committee shall meet separately in
executive session, periodically, with each of management and the outside
auditor. A majority of the members of the Audit Committee present in
person or by telephone shall constitute a quorum. The Audit Committee
shall report regularly to the full Board of Directors with respect to its
activities.
A-3
--------------------------------------------------------------------------------
================================================================================
CALIFORNIA AMPLIFIER, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JULY 17, 2003
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of California Amplifier, Inc. (the "Company")
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
the accompanying Proxy Statement for the 2003 Annual Meeting of Stockholders,
and hereby appoints Ira Coron and Fred Sturm, and each of them, as Proxies, each
with the power to appoint his substitute, and hereby authorizes each of them to
represent and to vote as designated on the reverse side, all the shares of
Common Stock of the Company held of record by the undersigned on June 10, 2003
at the Annual Meeting of Stockholders to be held on July 17, 2003 and at any
postponements or adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
INDICATED; HOWEVER, IF NO INSTRUCTIONS ARE GIVEN , THIS PROXY WILL BE VOTED IN
FAVOR OF THE NOMINEES FOR DIRECTOR LISTED, AND IN THE DISCRETION OF THE PROXIES
ON ALL SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(CONTINUED ON REVERSE SIDE)
================================================================================
CALIFORNIA AMPLIFIER, INC. VOTE BY MAIL
ATTN: INVESTOR RELATIONS Mark, sign, and date your proxy card and
460 CALLE SAN PABLO return it in the postage-paid envelope
CAMARILLO, CA 93012 we have provided or return it to
California Amplifier, Inc., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: CALIA1 KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
====================================================================================================================================
CALIFORNIA AMPLIFIER, INC.
1. Election of Directors:
NOMINEES: For Withhold For All To withhold authority to vote for any
01) Ira Coron All All Except individual nominee, mark "For All
02) Fred Sturm Except" and write that nominee's number
03) Richard Gold |_| |_| |_| on the line below.
04) Arthur Hausman
05) Frank Perna, Jr. -----------------------------------------------
06) Thomas Ringer
For Against Abstain
2. In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before such meeting and any and all postponements or adjournments thereof. |_| |_| |_|
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED IN FAVOR OF THE NOMINEES FOR
DIRECTOR LISTED ABOVE, AND IN THE DISCRETION OF THE PROXIES ON MATTERS DESCRIBED IN ITEM 2.
NOTE: Please sign exactly as the name appears hereon. When the shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full
title as such. If a corporation, please sign in full corporate name by
the president or other authorized officer. If a partnership, please
sign in the partnership's name by an authorized person.
================================================= =================================================
================================================= =================================================
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
====================================================================================================================================