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SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential For Use of this Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL ELECTRONICS INC.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total Fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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[UNIVERSAL ELECTRONICS INC. LOGO]
April 26, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders of
Universal Electronics Inc. to be held on Thursday, June 21, 2001 at 9:00 a.m.,
Los Angeles local time, at The Courtyard by Marriott, 5865 Katella Avenue,
Cypress, California 90630. We urge you to be present in person or represented by
proxy at this Meeting of Stockholders.
You will be asked to consider and vote upon the election of certain members of
the Company's Board of Directors and the ratification of the Board of Directors'
engagement of the Company's independent auditors for the year ending December
31, 2001. Details of these proposals and a description of the general business,
directors and management of Universal Electronics are set forth in the
accompanying Proxy Statement. The Board of Directors unanimously recommends that
stockholders vote to approve all of the proposals.
Whether or not you plan to attend the Annual Meeting in person, it is important
that your shares are represented. Therefore, please promptly complete, sign,
date, and return the enclosed proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. You are, of course, welcome
to attend the Annual Meeting and vote in person even if you previously returned
your proxy card.
On behalf of the Board of Directors and management of Universal Electronics
Inc., we would like to thank you for all of your support.
Sincerely yours,
Paul D. Arling
President and Chief Executive Officer
UNIVERSAL ELECTRONICS INC.
6101 Gateway Drive
Cypress, California 90630
714-820-1000
714-820-1010 Facsimile
www.ueic.com
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UNIVERSAL ELECTRONICS INC.
Corporate Headquarters:
6101 Gateway Drive
Cypress, California 90630
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 21, 2001
The 2001 Annual Meeting of Stockholders of Universal Electronics Inc., a
Delaware corporation ("Universal" or the "Company"), will be held on Thursday,
June 21, 2001 at 9:00 a.m., Los Angeles, California local time, at The Courtyard
by Marriott, 5865 Katella Avenue, Cypress, California 90630. Doors to the
meeting will be open at 8:00 a.m.
The meeting will be conducted:
1. To consider and to vote upon the following proposals
(collectively, the "Proposals"), each of which is described in
more detail in the accompanying Proxy Statement:
(i) Proposal One: The election of Paul D. Arling and Camille
Jayne, each as a Class I director to serve on the Board
of Directors until the next Annual Meeting of
Stockholders to be held in 2002 or until election and
qualification of their successors;
(ii) Proposal Two: Ratification of the appointment of
PricewaterhouseCoopers LLP, a firm of independent
accountants, as the Company's auditors for the year
ending December 31, 2001.
2. To consider and act upon such other matters as may properly come
before the meeting or any and all postponements or adjournments
thereof.
Only stockholders of record at the close of business on April 19, 2001
will be entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
April 26, 2001
Richard A. Firehammer, Jr.
Senior Vice President, General Counsel
and Secretary
EACH STOCKHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE.
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UNIVERSAL ELECTRONICS INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, June 21, 2001
Mailed On or About April 26, 2001
INTRODUCTION
This Proxy Statement (the "Proxy Statement") is being furnished to
stockholders of Universal Electronics Inc., a Delaware corporation ("Universal"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors of the Company (the "Board" or the "Board of Directors") from
holders of record of the Company's outstanding shares of common stock, par value
$.01 per share (the "Company Common Stock"), as of the close of business on
April 19, 2001 (the "Annual Meeting Record Date") for use at the 2001 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held on
Thursday, June 21, 2001, at 9:00 a.m. (Los Angeles, California local time) at
The Courtyard by Marriott, 5865 Katella Avenue, Cypress, California 90630 and at
any adjournments or postponements thereof. This Proxy Statement and the
accompanying form of proxy are first being mailed to stockholders on or about
April 26, 2001. The world headquarters and principal executive offices of the
Company are located at 6101 Gateway Drive, Cypress, California 90630.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of Company Common Stock as of the close
of business on the Annual Meeting Record Date will be entitled to notice of and
to vote at the Annual Meeting or any adjournments or postponements thereof. Such
holders of shares of Company Common Stock are entitled to one vote per share on
any matter that may properly come before the Annual Meeting. The presence,
either in person or by properly executed and delivered proxy, of the holders of
a majority of the then outstanding shares of Company Common Stock is necessary
to constitute a quorum at the Annual Meeting and to permit action to be taken by
the stockholders at such meeting. Under Delaware law, shares of Company Common
Stock represented by proxies that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee which are represented at the Annual
Meeting, but with respect to which such broker or nominee is not empowered to
vote on a particular proposal) will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
The affirmative vote of a plurality of shares of Company Common Stock
present in person or represented by proxy at the Annual Meeting is required to
elect the directors nominated pursuant to Proposal One. "Plurality" means that
the individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting.
Consequently, any shares not voted (whether by abstention, broker non-vote, or
otherwise) as to Proposal One will have no impact on the election of directors,
except to the extent that the failure to vote for an individual results in
another individual receiving a larger number of votes. Thus, the withholding of
a vote with respect to the election of any nominee for director will have the
practical effect of a vote against that nominee.
Passage of Proposal Two and any other question or matter properly
brought before the Annual Meeting requires the approval of a majority of the
shares of Company Common Stock present in person or represented by proxy at the
Annual Meeting. An abstention with respect to any share will have the practical
effect of a vote against Proposal Two or any other question or matter properly
brought before the Annual Meeting. A broker non-vote with respect to any share
will not affect the passage of Proposal Two or any other question or matter
properly brought before the Annual Meeting, since the share is not considered
present for voting purposes.
As of April 19, 2001, there were 13,864,939 shares of Company Common
Stock outstanding and entitled to vote at the Annual Meeting. The directors and
executive officers of the Company intend to vote in accordance with the
recommendations of the Board with respect to Proposals One and Two and any other
question or matter properly brought before the Annual Meeting.
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All shares of Company Common Stock that are represented at the Annual
Meeting by properly executed and delivered proxies received prior to or at the
Annual Meeting and not revoked will be voted at the Annual Meeting in accordance
with the instructions indicated in such proxies. If no instructions are
indicated for any Proposal, such proxies will be voted in accordance with the
recommendations of the Board as set forth herein with respect to such Proposal.
In the event that a quorum is not present at the time the Annual Meeting
is convened or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the Company may adjourn the
Annual Meeting with or without a vote of the stockholders. If the Company
proposes to adjourn the Annual Meeting by a vote of the stockholders, the
persons named in the enclosed form of proxy will vote all shares of Company
Common Stock for which they have voting authority in favor of such adjournment.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with Firstar Bank N.A., in its capacity as transfer agent for the Company
(the "Transfer Agent"), at or before the Annual Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares of Company Common Stock and delivering it to
the Transfer Agent at or before the Annual Meeting, or (iii) attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not, in and of itself, constitute a revocation of a proxy). Any written
notice revoking a proxy should be sent to Firstar Bank, N.A., Corporate Trust,
1555 North Rivercenter Drive, Suite 301, Milwaukee, Wisconsin, 53212.
OWNERSHIP OF COMPANY SECURITIES
The Company Common Stock is the only outstanding class of equity
security of the Company.
Ownership as of March 31, 2001 of the Company Common Stock by directors,
nominees, each executive officer named in the Executive Compensation tables
below, as well as by all directors and executive officers of the Company as a
group, and to the Company's knowledge, beneficial holders of more than five
percent of the Company Common Stock, is as follows:
Shares of % of Shares
Common Stock Outstanding as
Beneficially Owned of
Name and Address(1) As of March 31, 2001 March 31, 2001
- -------------------- -------------------- --------------
Directors and Nominees
Paul D. Arling 191,133(2) 1.38
David Beddow 4,249(3) *
Bruce A. Henderson 25,843(4) *
Camille Jayne 304,067(5) 2.19
William C. Mulligan 27,143(6) *
J. C. Sparkman 82,723(7) *
Non-Director Executive Officers
John S. Ames 17,501(8) *
Jerry L. Bardin 19,166(9) *
Richard A. Firehammer, Jr. 65,000(10) *
All Directors and Executive Officers
as a Group (11 persons) 823,325(11) 5.94
Other Beneficial Owners of More than 5% of the
Outstanding Company Stock
Berger LLC(12) 2,743,640 19.80
Seneca Capital Management LLC(13) 907,940 6.55
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* Less than one percent.
(1) Except as otherwise indicated, the address for all persons shown on this
table is c/o the Company, 6101 Gateway Drive, Cypress, California 90630.
Unless otherwise indicated in the footnotes to this table, and subject
to community property laws where applicable, to the knowledge of the
Company, each of the stockholders named in this table has sole voting
and investment power with respect to the shares shown as beneficially
owned by that stockholder.
(2) Includes 186,433 shares subject to options exercisable within 60 days.
Also includes 1,000 shares held by Mr. Arling's wife as to which Mr.
Arling disclaims beneficial ownership.
(3) Includes 3,333 shares subject to options exercisable within 60 days.
(4) Includes 6,667 shares subject to options exercisable within 60 days.
(5) Includes 304,067 shares subject to options exercisable within 60 days.
(6) Includes 16,667 shares subject to options exercisable within 60 days.
(7) Includes 6,667 shares subject to options exercisable within 60 days.
(8) Includes 17,501 shares subject to options exercisable within 60 days.
(9) Includes 19,166 shares subject to options exercisable within 60 days.
(10) Includes 65,000 shares subject to options exercisable within 60 days.
(11) Includes 685,001 shares subject to options exercisable within 60 days.
(12) As reported on Amendment No. 3 to Schedule 13G as filed with the
Securities and Exchange Commission by Berger LLC ("Berger"), Berger
Small Company Growth Fund, a Portfolio of the Berger Investment
Portfolio Trust ("BSCGF"), Stilwell Financial, Inc. ("SFI") and Stilwell
Management, Inc. ("SMI") reporting ownership as of February 14, 2001.
The principal business address for Berger, BSCGF and SMI is 210
University Boulevard, Suite 900, Denver, Colorado 80206. The principal
business address for SFI is 920 Main, 21st Floor, Kansas City, Missouri
64105. SFI owns 100% of SMI. SMI owns approximately 86% of Berger. All
of the Company Common Stock reported by Berger have been acquired by
Berger's mutual fund and institutional clients and as such Berger has
reported such ownership as a result of being potentially deemed the
beneficial owner of securities held by the mutual funds and
institutional clients to whom it provides investment advice. Each of SFI
and SMI specifically disclaims beneficial ownership over any of the
Company Common Stock. Each of Berger, BSCGF, SFI, and SMI is the
beneficial owner of approximately 10.59%, 9.21%, 0%, and 0%,
respectively, of Company Common Stock.
(13) As reported on Schedule 13G as filed with the Securities and Exchange
Commission by Seneca Capital Management LLC, whose principal business
address is 909 Montgomery Street, #500, San Francisco, California 94133,
reporting ownership as of February 14, 2000.
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
The number of directors of the Company's Board of Directors is presently
set at nine and is divided into two classes. There are currently six directors,
two of whom are Class I Directors and four of whom are Class II Directors, and
three vacancies. The Class I Directors are directors who are also employees of
the Company and/or any subsidiary of the Company, and are elected each year at
the Annual Meeting of Stockholders to serve a one-year term. The Class II
Directors are directors of the Company who are not also employees of the Company
and/or any subsidiary of the Company, and are elected every even-numbered year
at the Annual Meeting of Stockholders to serve a two-year term.
Each of the Class I Directors' terms expires at this year's Annual
Meeting.
The three vacancies are as a result of resignations that occurred in
early 1998 and in 1999.
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The Board has nominated and recommends the reelection of each of Mr.
Arling and Ms. Jayne as a Class I Director for a one-year term expiring at the
next Annual Meeting of Stockholders to be held in 2002.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR Mr. Arling and Ms. Jayne.
If elected, Mr. Arling and Ms. Jayne have consented to serve as
directors of the Company for a one-year term and until their respective
successors are elected and qualified. Although it is not contemplated that any
nominee will be unable to serve as director, in such event, the proxies will be
voted by the proxy holders for such other person or persons as may be designated
by the present Board of Directors. Information with respect to each nominee is
set forth below.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
Paul D. Arling Mr. Arling is President and Chief
President and Chief Executive Executive Officer of the Company. He has
Officer held the position of Chief Executive
Director since 1996 Officer since October 2000 and the
Age: 38 position of President since being rehired
by the Company in September 1998. He was
the Company's Chief Operating Officer from
September 1998 until his promotion to
Chief Executive Officer in October 2000.
He was the Company's Senior Vice President
and Chief Financial Officer from May 1996
until his termination by the Company on
August 31, 1998. Prior to joining the
Company, from 1993 through May 1996, he
served in various capacities at LESCO,
Inc. (a manufacturer and distributor of
professional turf care products) with the
most recent being Acting Chief Financial
Officer. At the 2000 Annual Meeting of
Stockholders, Mr. Arling was reelected as
a Class I Director of the Company to serve
until the 2001 Annual Meeting of
Stockholders.
Camille Jayne Ms. Jayne has been Executive Chairman of
Executive Chairman of the Board the Board of the Company since October
Director since 1998 2000. Prior to that, she was the Company's
Age: 48 Chairman since December 1998 and was the
Company's Chief Executive Officer since
August 1998. She was the Company's
President and Chief Operating Officer from
February 2, 1998. Prior to that, from July
1997 to March 1998, she was President and
CEO of The Jayne Group (a consulting firm
specializing in the development,
introduction and operation of digital
cable TV products and services) and a
Senior Partner at BHC Consulting (a
business management and market research
firm). Prior to The Jayne Group and BHC,
Ms. Jayne was Senior Vice President in
charge of the digital TV business unit at
Tele-Communications, Inc. ("TCI") from
November 1995 to July 1997. At the 2000
Annual Meeting of Stockholders, Ms. Jayne,
was elected as a Class I Director of the
Company to serve until the 2001 Annual
Meeting of Stockholders.
CLASS II DIRECTORS
CONTINUING AS DIRECTORS
David Beddow Mr. Beddow is the Founder and Chief
Director since 1999 Executive Officer and a Director of
Member: Liberty Livewire Corporation, a subsidiary
Audit Committee of Liberty Media Corporation, a position
Acquisition Advisory he has held since May 2000. Prior to that,
Committee he was Vice President/Technology of
Age: 67 Liberty Media Corp., which position he
held from April 1999 to May 2000. Prior to
that, from June 1993 to April 1999, he was
Executive Vice President of TCI
Communications, Inc. ("TCI") and President
and CEO of TCI's National Digital
Television Center, Inc.
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Bruce A. Henderson Mr. Henderson is Chief Executive of
Director since 1996 Invensys Software Systems, a division of
Member: Invensys PLC and was appointed to his
Audit Committee current position in July 2000. Mr.
Compensation Committee Henderson joined Siebe PLC in 1995 as
Age: 52 President of the Appliance Controls
Division, where he led work on
embedded-software controls. In February
1999, he was named Chief Executive of
Invensys Controls, following the merger of
BTR PLC and Siebe PLC.
William C. Mulligan Mr. Mulligan is Managing Partner with
Director since 1992 Primus Venture Partners (a Cleveland-based
Member: venture capital partnership), which
Audit Committee (Chairman) position he has held since 1987.
Nominating Committee
Acquisition Advisory Committee
Age: 48
J. C. Sparkman
Director since 1998
Member: Mr. Sparkman served as Executive Vice
Compensation Committee President and Chief Operating Officer of
(Chairman) Tele-Communications, Inc. ("TCI") from
1987 until his retirement in 1995. He is a
Acquisition Advisory director of Shaw Communications, Inc. and
Committee Broadband Services Inc.
Age: 68
VOTE REQUIRED
Approval of the election of the nominees is subject to the affirmative
vote of a plurality of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
EACH OF THE FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
In 2000, the Board met eight times and acted by unanimous written
consent three times. No director attended less than 75% of the number of
meetings of the Board of Directors and the committees on which he or she served
during the period for which he or she was a member of the Board.
The Board has four standing committees: (i) Acquisition Advisory (ii)
Audit; (iii) Compensation; and (iv) Nominating. The members of each committee
are appointed by the Board of Directors and serve at its discretion. A majority
of each of the committees constitutes a quorum, and the acts of a majority of
the members present at any meeting at which a quorum is present, or acts
approved in writing by all of the members, are acts of any of the respective
committees.
The members of the Acquisition Advisory Committee are David Beddow and
William C. Mulligan, neither of whom is an officer or employee of the Company or
any of its subsidiaries. The Acquisition Advisory Committee serves to assist
management in the development of the Company's acquisition and disposition
strategies and in the analysis of potential acquisition targets. During 2000,
the Acquisition Advisory Committee met with management on an informal basis
regularly throughout the year and acted once by unanimous written consent.
The members of the Audit Committee are David Beddow, Bruce A. Henderson
and William C. Mulligan (who is Chairman of the Committee), none of who is an
officer or employee of the Company or any of its subsidiaries. Each
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member of the Audit Committee is independent, as independence is defined in Rule
4200(a)(15) of the listing standards of the National Association of Securities
Dealers, Inc. The Audit Committee's functions include meeting with the Company's
independent auditors and management representatives, making recommendations to
the Board regarding the appointment of the independent auditors, approving the
scope of audits and other services to be performed by the independent auditors,
considering whether the performance of any professional service by the auditors
could impair their independence, and reviewing the results of external audits,
the accounting principles applied in financial reporting, and financial and
operational controls. The independent auditors have unrestricted access to the
Audit Committee and vice versa. During 2000, the Audit Committee met three times
and acted once by unanimous written consent. The Audit Committee report is set
forth in Appendix A hereto. The full text of the Audit Committee charter is set
forth in Appendix B hereto.
Audit Fees. The fees to PricewaterhouseCoopers LLP ("PWC") in connection
with the annual audit and review of Forms 10-Q for the fiscal year 2000 were
$172,500, of which an aggregate amount of $77,867 has been billed through
December 31, 2000.
Financial Information Systems Design and Implementation Fees. There were
no financial information systems design and implementation services rendered by
PWC to the Company for the fiscal year ended December 31, 2000.
All Other Fees. The total of all other fees to PWC during 2000 amount to
$362,145, of which, $111,672 relate to tax compliance and planning.
In making its determination regarding the independence of PWC, the Audit
Committee considered whether the provision of the services described under the
captions "Financial Information Systems Design and Implementation Fees" and "All
Other Fees" was compatible with maintaining the independence of PWC.
The members of the Compensation Committee are Bruce A. Henderson and
J.C. Sparkman (who is Chairman of the Committee), neither of whom is an officer
or employee of the Company or any of its subsidiaries. The Compensation
Committee's functions include making recommendations to the Board on policies
and procedures relating to executive officers' compensation and various employee
stock plans and approving individual salary adjustments and stock awards in
those areas. During 2000, the Compensation Committee met once and acted once by
unanimous written consent.
The members of the Nominating Committee are William C. Mulligan and J.
C. Sparkman, neither of whom is an officer or employee of the Company or any of
its subsidiaries. This committee considers nominees for election as directors.
The committee utilizes the same procedure to consider nominees recommended by
stockholders made pursuant to procedures identified in the Company's Amended and
Restated By-laws, which are described in this Proxy Statement in "STOCKHOLDER
NOMINATIONS OF DIRECTORS", as is used to consider nominees recommended by any
other source. In addition, the committee fulfills an advisory function with
respect to a range of matters affecting the Board and its committees, including
making recommendations with respect to qualifications of director candidates,
compensation of directors, the selection of committee assignments and chairs,
and related matters affecting the functioning of the Board. The Nominating
Committee did not meet during 2000.
COMPENSATION OF DIRECTORS
On February 1, 2000, the Board of Directors granted options to acquire
20,000 shares of the Company's common stock to each of Messrs. Henderson,
Mulligan and Sparkman and an option to acquire 10,000 shares of the Company's
common stock to Mr. Beddow. The options were all granted from one of the
Company's stock option plans and provided for the vesting of the options in
equal 1/3 increments on each of the first three anniversaries of the date of
grant, a 10 year life, accelerated vesting in the event of a change in control
of the Company and a cessation in vesting in the event the Optionee does not
stand for reelection. Each of the options was priced in accordance with the
option plan and has an exercise price of $18.5625 per share. In addition, the
Company pays an annual fee of $25,000 to each Director who is not an officer of
the Company or any of its subsidiaries. In 2000, this fee was paid entirely in
Company Common Stock. Directors who are also officers of the Company receive no
additional compensation for their services as directors (see "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION"). All directors are also
reimbursed for travel expense and other out-of-pocket costs incurred in
attending meetings.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and certain of its officers and persons
who own more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission and The Nasdaq Stock Market.
Such persons are further required to furnish the Company with copies of all such
forms they file. Based solely on the Company's review of the copies of such
forms it has received, the Company believes that, except for the late filing of
Form 5 reports by each of Paul Arling, Camille Jayne, Paul J. M. Bennett, Jerry
Bardin, J. Stewart Ames and Mark Belzowski with respect to the issuance of
options to acquire shares of the Company Common Stock and of Form 5 by each of
Bruce A. Henderson, William C. Mulligan and J. C. Sparkman with respect to the
issuance of shares of Company Common Stock as outside director compensation
received during 2000 (see "COMPENSATION OF DIRECTORS"), all of the Section 16(a)
filing requirements were satisfied by the Company's directors and executive
officers.
EXECUTIVE OFFICER COMPENSATION
SUMMARY OF COMPENSATION
TABLE I below sets forth a summary of the compensation paid by the
Company to its chief executive officer and the four additional most highly
compensated executive officers of the Company ("Named Executive Officers").
TABLE I
SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 2000
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) OTHER AWARDS
($) ANNUAL (#) ALL OTHER
----------------------- COMPENSATION STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) ($) OPTIONS(3),(4) ($)(5)
- --------------------------- ---- ------- -------- ------------ ---------------- --------------
Paul D. Arling(6) ................. 2000 261,058 360,000 -- 80,000 11,751
President and 1999 225,750 195,000 -- 180,000 97,069
Chief Executive Officer 1998 182,798 76,000 -- 160,000 438,890
Camille Jayne(8) .................. 2000 394,558 480,000 -- 80,000 12,552
Executive Chairman 1999 311,077 327,600 9,856(7) 320,000 157,159
1998 271,154 109,800 43,488(7) 350,000 6,151
Jerry Bardin(9) ................... 2000 186,804 142,120 -- 10,000 13,490
Senior Vice President of 1999 176,277 76,286 -- 30,000 11,717
Engineering and Operations 1998 68,654 32,800 -- 30,000 3,485
John S. Ames(10) .................. 2000 158,827 127,200 -- 10,000 7,252
Senior Vice President of 1999 148,758 64,723 -- 40,000 3,602
Sales and Marketing 1998 118,377 45,658 -- 10,000 3,602
Richard A. Firehammer, Jr.(11) .... 2000 157,356 110,250 -- 10,000 7,752
Senior Vice President and 1999 135,577 64,723 -- 140,000 5,909
General Counsel 1998 95,565 25,000 -- -- 350,062
(1) Excludes certain perquisites and other amounts that for any executive
officer did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus for such executive officer.
(2) Bonus includes the amount of cash bonus earned during the relevant year.
Actual pay out of bonuses occurred in the following year.
(3) Awards referenced above represent options to purchase shares of the
Company Common Stock granted during the relevant year.
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(4) On December 20, 1999, the Board of Directors declared a two-for-one
split of the Company Common Stock, to be paid January 31, 2000, in the
form of a stock dividend for stockholders of record at the close of
business on January 10, 2000. All share amounts in this table have been
restated to give effect to the stock split.
(5) For 2000, All Other Compensation was composed of the following items:
401(k) Supplemental
Company Life Insurance
Contributions Premiums Relocation Totals
------------- -------------- ---------- ------
Paul D. Arling .................... 5,250 6,501 -- 11,751
Camille Jayne ..................... 5,250 7,302 -- 12,552
Jerry Bardin ...................... 5,250 8,240 -- 13,490
John S. Ames ...................... 5,250 2,002 -- 7,252
Richard A. Firehammer, Jr ......... 5,250 2,502 -- 7,752
(6) Mr. Arling's employment with the Company was terminated on August 31,
1998 as part of the Company's discontinuation of its North American
retail line of business. The Company rehired Mr. Arling in September
1998.
(7) The amount of Other Annual Compensation for Ms. Jayne represents
commuting and housing allowance. SEE EMPLOYMENT AGREEMENTS AND
TERMINATION OF EMPLOYMENT ARRANGEMENTS -- Ms. Jayne.
(8) Ms. Jayne joined the Company on February 2, 1998.
(9) Mr. Bardin joined the Company on August 3, 1998.
(10) Mr. Ames became an executive officer of the Company in 1998. In 1997, he
served the Company in non-executive capacities.
(11) Mr. Firehammer's employment with the Company was terminated on August
31, 1998 as part of the Company's discontinuation of its North American
retail line of business. The Company rehired Mr. Firehammer in February
1999.
STOCK OPTIONS
Grant of Stock Options. The following table sets forth details regarding
stock options granted to the Named Executive Officers in 2000. The Company has
never granted stock appreciation rights. In addition, in accordance with
Securities and Exchange Commission ("SEC") rules, the table shows the
hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term. The actual value, if any, an executive may realize will depend on
the spread between the market price and the exercise price on the date the
option is exercised.
TABLE II
STOCK OPTION GRANTS DURING THE YEAR ENDED DECEMBER 31, 2000
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE APPRECIATION
OPTIONS FOR OPTION TERM (4)
STOCK OPTIONS GRANTED TO EXERCISE ($)
GRANTED (1),(5) EMPLOYEES PRICE (2) EXPIRATION ----------------------------
NAME (#) IN 2000 ($/SH) DATE (3) 5% 10%
---- --------------- ----------- --------- ---------- --------- ----------
Paul D. Arling ............ 80,000 19.16 20.1880 08/24/10 1,015,690 2,573,958
Camille Jayne ............. 80,000 19.16 20.1880 08/24/10 1,015,690 2,573,958
Jerry Bardin .............. 10,000 2.40 20.1880 08/24/10 126,961 321,745
John S. Ames .............. 10,000 2.40 20.1880 08/24/10 126,961 321,745
Richard A. Firehammer, Jr.. 10,000 2.40 20.1880 08/24/10 126,961 321,745
- ------------
(1) Under its 1993, 1995, 1996, 1998 and 1999 Stock Incentive Plans, the
Company may grant to eligible employees stock options either on a
non-qualified tax basis or as "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). Under its 1999A Nonqualified Stock Plan, the Company may
only grant stock options to eligible employees on a non-qualified tax
basis. In August 2000, the Company granted a total of 417,500 option to
employees.
(2) Under all stock option plans, the option purchase price is equal to the
fair market value at the date of the grant.
(3) If an optionee ceases to be an employee, other than by reason of death
or disability, while holding an exercisable option, the option will
generally terminate if not exercised within the following 180 days. If
the optionee's employment ceases without "cause" or as a result of a
"constructive termination", each as defined in the Plan, all options
shall be immediately exercisable and, if the optionee's employment
ceases within two years
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of such constructive termination (18 months in the case of options
granted under the 1999A Plan), then the optionee shall be permitted to
exercise the options at any time until the expiration of the option in
accordance with its original term. Stock options are not transferable
except that under all Plans if an optionee dies while an employee of the
Company or within one year after becoming disabled, a legal
representative or legatee may exercise the option, to the extent not
already exercised, at any time up to one year from the date of death or,
if shorter, the expiration of the option in accordance with its original
term and in addition, under the 1999A Plan stock options may be
transferred (i) by will or by the laws of descent and distribution or
(ii) by gift or domestic relations order to a family member of the
Optionee, (a "Permitted Transferee"), but in such cases, such options
may only be exercised during the Optionee's lifetime by a Permitted
Transferee, the Optionee, or in the case of Optionee's legal
incompetency, by Optionee's guardian or legal representative.
(4) In accordance with SEC rules, these columns show gains that might exist
for the respective options, assuming the market price of the Company's
Stock appreciates from the date of the grant over a period of ten years
at the annualized rates of five and ten percent, respectively. If the
stock price does not increase above the exercise price at the time of
the exercise, realized value to the named officers from these options
will be zero. There can be no assurance that the amounts reflected in
this table or the associated rates of appreciation will be achieved.
(5) Options were granted pursuant to the Universal Electronics Inc. 1999A
Nonqualified Stock Plan and vest over four years on the anniversary date
of the grant at a rate of 25% per year and have ten year terms.
Aggregated Stock Option Exercises and Year-End Value. Table III below
sets forth, on an aggregated basis, information regarding the exercise during
2000 of options to purchase Company Common Stock by the Company's Named
Executive Officers and the value on December 31, 2000 of all unexercised stock
options held by such individuals.
TABLE III
AGGREGATED STOCK OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 2000
AND YEAR-END STOCK OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED STOCK IN-THE-MONEY STOCK OPTIONS
SHARES OPTIONS AT YEAR END AT YEAR END (1)
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME # ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ --------- ----------- ------------- ----------- -------------
Paul D. Arling ............... 1,900 -- 159,767 288,333 1,522,417 1,592,423
Camille Jayne ................ -- -- 208,333 481,667 1,802,297 3,206,542
Jerry Bardin ................. -- -- 15,833 46,667 117,934 257,984
John S. Ames ................. -- -- 24,167 48,333 214,868 283,010
Richard A. Firehammer, Jr .... -- -- 45,000 105,000 379,632 781,371
----- ----- ------- ------- --------- ---------
Total ........................ 1,900 -- 453,100 970,000 4,037,148 6,121,330
===== ===== ======= ======= ========= =========
- --------------------
(1) Based on a per share price for Company Common Stock of $15.4375,
which price reflects the closing price of the Company Common Stock as
reported on The Nasdaq Stock Market on December 29, 2000, the last
trading day of 2000. The price per share has been adjusted to reflect
the two-for-one stock split.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Arling. In August 2000, the Company and Mr. Arling entered into an
employment agreement with an initial term of two years commencing on October 1,
2000 and ending on September 30, 2002. By this agreement, Mr. Arling was
promoted to the positions of President and Chief Executive Officer of the
Company. The agreement also provides that, during the term of the agreement, Mr.
Arling is to (i) devote his full working time and energy to the Company, (ii)
refrain from disclosing and/or using any of the Company's trade secrets and
proprietary information, and (iii) during the term of the agreement and for a
period of two (2) years thereafter, refrain from soliciting any of its certain
large customers or any key employees. In addition, unless terminated by either
party in accordance with the terms of the agreement, the term would
automatically renew for successive one-year terms. The agreement also provides
that effective on October 1, 2000, Mr. Arling's annual base salary would
increase to $300,000 (an increase of 20% over his 2000 annual base salary), with
the opportunity to receive increases (but not decreases) in such annual salary
as determined and set by the Board of Directors' Compensation Committee in
accordance with plans and policies established by that committee. For 2001, Mr.
Arling's annual base salary is $300,000. Mr. Arling also may earn an annual
bonus payable at or near the end of the each fiscal year in an amount equal to a
percentage of his base salary in accordance with the method established by the
Compensation Committee (see "COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION -- Annual Bonus Incentives"). Mr. Arling received an annual bonus
of $360,000 for 2000. The agreement also permits the Company to award a
discretionary bonus to Mr. Arling as determined by the Compensation Committee,
Mr. Arling received no discretionary bonus in 2000. The agreement further
provides for the grant of options to acquire shares of Company Common Stock as
determined by the Compensation Committee. On August 24, 2000, Mr. Arling
received an option to acquire up to 80,000 shares of Company Common Stock at an
exercise price of $20.188 per share, equal to the average of the high and low
prices
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of the Company Common Stock on the date of grant, and which vests in equal
increments over four (4) years. The agreement also continues the non-recourse
interest bearing secured loan previously provided Mr. Arling. The loan was used
by Mr. Arling for the acquisition of his primary residence in Southern
California. The loan bears interest at the rate of 5.28% per annum, which
interest is payable annually to the Company on each December 15th. The loan is
secured by the primary residence purchased by Mr. Arling and the principal is
payable on the earlier of (i) December 15, 2007, (ii) within twelve (12) months
following a demand from the Company in the event that Mr. Arling shall cease
(for whatever reason) being an employee of the Company or upon the occurrence of
an Event of Default (as such term is defined within the promissory note
evidencing the loan) or (iii) on the closing of a sale or transfer by Mr. Arling
or his spouse of all or any part of his and/or her primary residence in Southern
California that secures the loan, including without limitation any sale or
transfer of any interest therein (including any beneficial interest therein)
without the Company's prior written consent, which consent will not be
unreasonably withheld. The agreement further entitles Mr. Arling to participate
in benefits plans of the Company in effect from time to time and for other
customary benefits.
If during the term of the agreement Mr. Arling should resign for "good
reason" (as such term is defined in the agreement), Mr. Arling will receive
salary, bonus, other incentive compensation and perquisites, and may continue to
participate in Company benefits plans, for an 18-month period following such
resignation (twenty-four (24) months if such resignation is due to a "friendly
acquisition" "Change in Control" (as such term is defined in the agreement).
Ms. Jayne. In August 2000, the Company and Ms. Jayne entered into an
employment agreement with the term commencing on October 1, 2000 and ending on
February 1, 2002, on which date, the agreement will automatically end. By this
agreement, Ms. Jayne was promoted to the position of Executive Chairman of the
Board. The agreement also provides that during the term of the agreement, Ms.
Jayne is to (i) devote her full working time and energy to the Company, (ii)
refrain from disclosing and/or using any of the Company's trade secrets and
proprietary information, and (iii) during the term of the agreement and for a
period of two (2) years thereafter, refrain from soliciting any of its certain
large customers or any key employees. The agreement also provides that effective
on October 1, 2000, Ms. Jayne's annual base salary would increase to $400,000
(an increase of 1.3% over her 2000 annual base salary), with the opportunity to
receive increases (but not decreases) in such annual salary as determined and
set by the Board of Directors' Compensation Committee in accordance with plans
and policies established by that committee. For 2001, Ms. Jayne's annual base
salary is $400,000. Ms. Jayne also may earn an annual bonus payable at or near
the end of the each fiscal year in an amount equal to a percentage of her base
salary in accordance with the method established by the Compensation Committee
(see "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- Annual Bonus
Incentives"). Ms. Jayne received an annual bonus of $480,000 for 2000. The
agreement also permits the Company to award a discretionary bonus to Ms. Jayne
as determined by the Compensation Committee, Ms. Jayne received no discretionary
bonus in 2000. The agreement further provides for the grant of options to
acquire shares of Company Common Stock as determined by the Compensation
Committee. On August 24, 2000, Ms. Jayne received an option to acquire up to
80,000 shares of Company Common Stock at an exercise price of $20.188 per share,
equal to the average of the high and low prices of the Company Common Stock on
the date of grant, and which vest in equal increments over four (4) years. In
addition, as a part of the employment agreement, each of Ms. Jayne's previously
granted stock options was amended to provide for its continuation in accordance
with its terms so long as she remains a member of the Company's Board of
Directors.
If during the term of the agreement, as amended, Ms. Jayne should resign
for "good reason" (as such term is defined in the agreement), Ms. Jayne will
receive salary, bonus, other incentive compensation and perquisites, and may
continue to participate in Company benefits plans, for an 18-month period
following such resignation (twenty-four (24) months if such resignation is due
to a "friendly acquisition" "Change in Control" (as such terms are defined in
the agreement) or thirty-six (36) months if such resignation is due to a
"hostile acquisition" (as such term is defined in the agreement) Change in
Control).
Mr. Bennett. On June 16, 1996, the Company's subsidiary, Universal
Electronics B.V. (formerly known as One For All, B.V.) entered into an
employment agreement with Mr. Bennett. The Company believes that the agreement
contains terms and provisions that are typical of these types of agreements in
The Netherlands. By the agreement, Mr. Bennett receives a base salary, which
salary may be increased as determined and set by the Board of Directors'
Compensation Committee in accordance with plans and policies established by that
committee. In 2000, Mr. Bennett's base salary was approximately US$156,000. By
the agreement, Mr. Bennett is entitled to earn an annual bonus payable at or
near the end of the Company's fiscal year in an amount equal to a percentage of
his base salary, provided
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that certain earnings targets are met. In 2000, the Company awarded Mr. Bennett
an annual bonus equal to US$90,000. The agreement further entitles Mr. Bennett
to receive a use of Company paid automobile, participate in benefits plans of
the Company in effect from time to time and for other customary benefits. Mr.
Bennett has also received a salary continuation agreement from the Company (see
"Pre1999 Salary Continuation Agreements" below).
Pre1999 Salary Continuation Agreements. In 1995 and 1996, Messrs. Ames
and Bennett and certain officers of the Company received salary continuation
agreements with the Company (each, an "SCA(s)"). Each SCA takes effect upon the
occurrence of certain triggering events (as defined in the agreements). In
January 1997, Mr. Bennett's SCA was amended by providing that a triggering event
under his SCA would include a sale or transfer or disposition by the Company of
all or substantially all of the assets or stock of Universal Electronics B.V.
(formerly known as "One For All B.V.") to a third party. When effective, each
SCA operates as an employment agreement providing for a term of employment with
the Company for a period ranging from twelve (12) to eighteen (18) months
(thirty-six (36) months in the event of a hostile acquisition). In addition,
each SCA provides that the executive or officer would receive increases in
salary and bonuses during the term of the SCA in accordance with the Company's
standard policies and practices; however, in no event would such base salary and
bonus be less than the base salary and bonus such executive or officer received
in the year immediately preceding the effective date of the SCA. Further, each
SCA provides that the executive or officer will be entitled to receive stock
option grants and to otherwise participate in the Company's incentive
compensation and benefits plans and other customary benefits programs in effect
from time to time, but in no event would such participation be less than that
provided such executive or officer immediately prior to the effective date of
the SCA.
Under each SCA, in the event the Company terminates the executive's or
officer's employment for reasons other than the executive's or officer's death
or disability or for "cause" (as such term is defined in each SCA) or the
executive or officer resigns for "good reason" (as such term is defined in each
SCA, which definition includes resigning in connection with the occurrence of a
change in control), the executive or officer would receive, in one lump sum, an
amount equal to salary, bonus and other incentive compensation (including being
paid the cash value of all options held by such executive or officer, which
options become immediately fully vested on the executive's or officer's
termination or resignation date) and to continue all health, disability and life
insurance benefits for periods ranging from twelve (12) to eighteen (18) months
(thirty-six (36) months in the event of a hostile acquisition) following such
termination or resignation.
1999 Salary Continuation Agreements. In February 1999, the Company
entered into salary continuation agreements with Messrs. Firehammer and
Belzowski. These salary continuation agreements are substantially similar to the
SCAs (described above) in that they too take effect upon the occurrence of
certain triggering events (as defined in the agreements). Similarly, when
effective, each salary continuation agreement also (i) operates as an employment
agreement providing for a term of employment with the Company for eighteen (18)
months following a triggering event (thirty-six (36) months if the triggering
event is a "hostile acquisition" (as such term is defined in the salary
continuation agreement)), (ii) provides that the executive would receive
increases in salary and bonuses during the term of his salary continuation
agreement in accordance with the Company's standard policies and practices;
however, in no event would such base salary and bonuses be less than the base
salary and bonuses such executives received in the year immediately preceding
the effective date of the salary continuation agreements, and (iii) entitles the
executive to receive stock option grants and to otherwise participate in the
Company's incentive compensation and benefits plans and other customary benefits
programs in effect from time to time, but in no event would such participation
be less than that provided such executive immediately prior to the effective
date of his salary continuation agreement.
In addition, each of these salary continuation agreements similarly
provides that in the event the Company terminates the executive's employment for
reasons other than his death or disability or for "cause" (as such term is
defined in the salary continuation agreement) or he resigns for "good reason"
(as such term is defined in each salary continuation agreement, which definition
includes resigning in connection with the occurrence of a change in control),
the executive would receive, in one lump sum, an amount equal to salary, bonus
and other incentive compensation (including being paid the cash value of all
options held by him, which options become immediately fully vested on the
executive's termination or resignation date) and to continue all health,
disability and life insurance benefits for a period of eighteen (18) months
(thirty-six (36) months in the event of a hostile acquisition) following such
termination or resignation.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As stated above, the Compensation Committee currently consists of
Messrs. Sparkman and Henderson, both of whom are non-employees. The Compensation
Committee recommends compensation arrangements for the Company's executive
officers and is also responsible for determining and otherwise administering the
timing, amount, exercise price and other terms of options granted under the
Company's various stock incentive plans. Under certain of those plans, options
may be granted to non-employee directors of the Board of Directors. In all
instances, the recommendations of the Compensation Committee regarding executive
officer compensation, including all stock option grants, are passed upon and
approved by the full Board of Directors, except that neither Ms. Jayne nor Mr.
Arling vote or make decisions on matters involving their own and each other's
compensation. Pursuant to one of the Company's stock option plans previously
approved by the stockholders, on February 1, 2000, the full Board of Directors
authorized a grant of options to each of Messrs. Beddow, Henderson, Mulligan and
Sparkman, each an outside director of the Company, in the respective amounts of
10,000, 20,000, 20,000 and 20,000 shares, respectively, with each option vesting
ratably over three years and having an exercise price of $18.5625 per share, the
then fair market value as determined in accordance with the plan.
CERTAIN TRANSACTIONS
On September 1, 1998, the Company entered into an asset purchase
agreement with H & S Management Corp. ("H&S"), J. C. Sparkman and Steven Helbig
in which the Company acquired all of the assets that were used and useful in the
H & S remote control business. Mr. Sparkman received approximately 22% of the
purchase price for H&S paid by the Company. The amount received by Mr. Sparkman
was $1.5 million in cash and 84,211 shares of Company Common Stock (pre-split),
which had a value of approximately $874,000 on the closing date of the
acquisition. Twenty-five thousand dollars ($25,000) of the amount received by
Mr. Sparkman was in exchange for a non-compete agreement that he entered into
with the Company in which he agreed that for seven (7) years from September 1,
1998, he would not, directly or indirectly, either alone or in conjunction with
any person or persons, or in any other manner whatsoever (i) carry on or be
engaged in the H&S remote control business or any other business which is in
competition with the H&S remote control business as existing on September 1,
1998, (ii) solicit business from or transact business with any person, firm or
corporation to whom the Company or any of the other parties to the non-compete
agreement has sold products where such solicitation would involve the sale of
products competitive with those of the H&S remote control business, or (iii)
directly or indirectly solicit for employment, offer employment to, or hire any
person (as an employee or consultant), or otherwise engage in business any
person or persons who is or are employed by the Company immediately after the
closing date of the acquisition or during the seven (7) year non-compete period,
except with the prior written consent of the Company. The non-compete agreement
does not prohibit Mr. Sparkman from (i) carrying on or being engaged in any type
of business, which is not competitive with the H&S remote control business in
any area whatsoever, or (ii) being an owner of not more than 5% of the
outstanding stock of any class of a corporation that is publicly traded whose
principal business is competitive with the H&S remote control business, so long
as he has no active participation in the business of such corporation.
In connection with the acquisition, Mr. Sparkman also entered into a
consulting agreement with the Company whereby Mr. Sparkman would provide the
Company with certain consulting services for a period of two years commencing on
September 1, 1998 in exchange for which the Company would pay Mr. Sparkman
$250,000 per year and reimburse him for all reasonable and fully documented
travel, office, entertainment, and other costs actually incurred in connection
with carrying out his consulting services. During 2000, Mr. Sparkman received
$250,000 under this agreement. Mr. Sparkman has agreed to indemnify, defend and
hold the Company harmless from any claim that any payment made to him under the
consulting agreement should have been made to any other shareholder, employee or
director of H & S. In addition, Mr. Sparkman has agreed to hold, in confidence,
information regarding the Company that he learns while performing his consulting
services. Finally, Mr. Sparkman has agreed that all inventions that he may
conceive of or assist in creating while performing consulting services under the
agreement belong to the Company and that he will assign all rights to each such
invention to the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors met once and acted
once by unanimous written consent in 2000. The members of the Committee are J.
C. Sparkman (Chairman of the Committee) and Bruce A. Henderson.
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The Committee recommends compensation arrangements for the Company's executive
officers and administers its various stock incentive plans.
The Compensation Committee will review the compensation policies of the
Company throughout the coming year. All compensation actions taken during 2000
were consistent with principles previously established by the Board of
Directors. These principles include building a strong relationship between
stockholder return and executive compensation, providing incentives to achieve
both near and long-term goals, and providing an overall level of remuneration
that is fair and reflective of performance. The chief executive officer and
other executive officers are not present at the meetings unless requested by the
Committee. Further, consistent with past practice, the Board has decided that
management of the Company should make decisions with respect to the compensation
of all employees other than the chief executive officer and all other executive
officers of the Company.
Compensation Philosophy and Program. In administering executive officer
compensation, the Compensation Committee's objective is to establish a total pay
program for the Company that appropriately balances compensation costs with
salaries and incentives sufficient to retain and motivate key executives. The
chief executive officer presents proposals and recommendations on executive
officer compensation to the Committee for its review and evaluation. In 2000,
the Compensation Committee used data from independent sources, provided by the
Company to establish compensation targets that reflect overall and individual
executive officer compensation history, the Company's recent and planned
performance and, to the extent available, data reflecting compensation practices
of companies who are competitors of the Company (the "Compare Group"). The
Compare Group included members of the Company's Peer Group and private
companies. However, because the Company found that the companies comprising the
Compare Group were substantially larger than the Company, the Compensation
Committee discounted such comparison data and relied more on internal
information and criteria in establishing its overall pay program for the
executive officers. In 2001, the Committee will continue to employ a similar
method to establish executive compensation. The Committee believes that the
method it has employed in establishing executive compensation appropriately
reflects the labor market for Company executives.
Base Salary. Base salaries are determined from an assessment of various
factors including position, tenure, experience, salary history and individual
performance. This assessment is generally subjective, not subject to weightings
or formulas and only considers Compare Group data to the extent available and
believed by the Compensation Committee to be helpful; however, it does include
data received from independent sources. Individual base salary increases reflect
what the Compensation Committee believes to be fair and appropriate after
considering the subjective factors, an assessment of the Company's current and
projected labor costs and the data it received from independent sources. Based
upon the Company's financial performance for the year ended December 31, 2000,
the Committee reassessed the base salaries of each of Mr. Arling and Ms. Jayne
and the other executive officers. In this regard, Mr. Arling, who has an
employment agreement with the Company (see "Employment Agreements") and is paid
in accordance with the provisions of the employment agreement, received an
increase in his base salary of 20% for 2001. The other executive officers (some
of whom also have employment agreements with the Company or its subsidiaries -
see "Employment Agreements") received increases for 2001 ranging from 1.3% to
approximately 5%.
Annual Bonus Incentives. The Company believes that incentives help
motivate attainment of annual objectives, including the Company's performance
relative to that year's plan and the individual performance of each executive
officer. Based in part on data provided by the Company that was obtained from
independent consultants, the Compensation Committee has established a method for
determining bonuses for the Company's executive officers, including the chief
executive officer, utilizing a combination of financial and strategic goals.
These goals contain both objective and subjective components and based upon the
level at which those goals are achieved, each executive officer is paid a bonus
equal to a percentage of the executive's base salary. For the chief executive
officer and the executive chairman of the board, the percentage ranges between
30% and 120% of their respective base salaries as of year-end. For each other
executive officer, the percentage ranges between 20% and 100% of the executive's
base salary as of year-end. In certain circumstances, an additional bonus may be
awarded if the Compensation Committee determines that an executive officer's
individual performance warrants such award. Based on the achievement of the
financial and strategic goals during 2000, Mr. Arling and Ms. Jayne each
received an annual bonus for 2000 equal to 120% of their annual base salaries as
of year-end and each of the other executive officers received a bonus in 2000
ranging from 44% to 76% of such executive's annual base salary as of year end.
During 2000, none of the Named Executive Officers received a discretionary
bonus.
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Common Stock Incentives. In addition to the Company's 401K and Profit
Sharing Plan, the Company, through its various stock incentive plans, may grant
options to purchase Company Common Stock, stock appreciation rights or phantom
stock awards to executive officers and employees of the Company and its
subsidiaries with a view toward providing the executive officers and employees a
stake in the Company's future and compensation directly aligned with the
creation of stockholder value. The Compensation Committee may also issue stock
options to attract new executive officers to the Company. The Compensation
Committee generally establishes the terms and conditions of such grants.
Individual awards are determined based on a subjective assessment of individual
performance, contribution and potential. The Compensation Committee, based in
part on the number of discretionary options granted to the Named Executive
Officers during 2000, has determined that there will be no annual grant of
options made to the Named Executive Officers during 2001. However, the
Compensation Committee retains the discretion to make individual grants that it
deems appropriate under the circumstances, including to any or all of the Named
Executive Officers. During 2000, the Committee made no changes in the Company's
401K and Profit Sharing Plan and none are anticipated during 2001.
Perquisites. The Company offers very few perquisites or special benefits
to executive officers. In general, the Compensation Committee believes that the
benefits offered are less than those offered at typical companies of similar
size, and are not material when considering total compensation.
Deductibility. The Compensation Committee does not believe that the
provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), will limit the deductibility of compensation expected to be paid
by the Company during 2001. Section 162(m) generally limits the deductibility
for federal tax purposes of certain types of executive compensation in excess of
$1.0 million dollars per year. The Compensation Committee will continue,
however, to evaluate the impact of Section 162(m) of the Code and any other such
provisions and take any action deemed appropriate to maximize the deductibility
for federal tax purposes of all elements of compensation. The Company, however,
may from time to time pay or award compensation to its executive officers that
may not be deductible. Further, because of the ambiguities and uncertainties as
to the application and interpretation of Section 162(m) and the regulations
issued thereunder, no assurance can be given, notwithstanding the efforts of the
Company in this area, that compensation intended by the Company to satisfy the
requirements for deductibility under Section 162(m) does in fact do so.
It is the view of the Compensation Committee that the compensation
programs of the Company are well structured to encourage attainment of
objectives, offer opportunities for a total level of compensation that is
consistent with other companies of similar size, and foster a stockholder
perspective in management. The Compensation Committee believes that the overall
levels of compensation provided by these programs are fair and appropriate for
the year just ended and that they serve stockholders' long-term interests.
Compensation Committee of the Board of Directors
J. C. Sparkman -- Chairman
Bruce A. Henderson
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PERFORMANCE CHART
The following line graph compares the yearly percentage change in the
cumulative total stockholder return with respect to Company Common Stock versus
the cumulative total return of the Company's Peer Group Index (the "Peer Group
Index") and the Nasdaq Composite Index (the "Nasdaq Composite Index") for the
five (5) year period commencing December 31, 1995 and ended December 31, 2000.
The graph and table assume that $100 was invested on December 31, 1995 in each
of Company Common Stock, the Peer Group Index and the Nasdaq Composite Index and
that all dividends were reinvested (although no dividends were declared on
Company Common Stock during the period) and actual market value increases and
decreases relative to the initial investment of $100. This data was furnished by
Nasdaq*Amex and is based on a calendar year.
The Company believes that the information provided within this
performance chart has only limited relevance to an understanding of the
Company's compensation policies during the indicated periods and does not
reflect all matters appropriately considered by the Company in developing its
compensation strategy. This information shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, and is not necessarily
indicative of future price performance.
COMPARISON OF STOCKHOLDER RETURNS AMONG UNIVERSAL ELECTRONICS INC.,
THE PEER GROUP INDEX(1) AND THE NASDAQ COMPOSITE INDEX
[PERFORMANCE GRAPH]
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------
Universal Electronics Inc. $100 $ 73 $133 $143 $613 $412
Peer Group Index $100 $112 $110 $135 $123 $152
Nasdaq Composite Index $100 $123 $149 $208 $387 $235
- ----------------
(1) Companies in the Peer Group Index are as follows: Harman International
Industries, Inc.; Recoton Corporation; Royal Appliance Manufacturing
Co.; Koss Corporation.; and Boston Acoustics Inc.
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PROPOSAL TWO: APPOINTMENT OF AUDITORS
The Board of Directors, acting on the recommendation of its Audit
Committee, has appointed PricewaterhouseCoopers LLP ("PWC"), a firm of
independent public accountants, as auditors, to examine and report to the Board
and to the Company's stockholders on the consolidated financial statements of
the Company and its subsidiaries for 2001. The Board of Directors is requesting
stockholder ratification of such appointment. Representatives of PWC will be
present at the Annual Meeting, will be given an opportunity to make a statement
and will be available to respond to appropriate questions.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR the ratification of the appointment of PWC as the Company's
independent auditors. If the stockholders of the Company reject the nomination,
the Board of Directors will reconsider its selection.
VOTE REQUIRED
The ratification of the Board of Directors' appointment of PWC as the
Company's independent auditors for 2001 requires an affirmative vote of the
holders of a majority of shares of Company Common Stock present in person or
represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
THE RATIFICATION OF SUCH APPOINTMENT.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any stockholder who meets the requirements of the proxy rules under the
Exchange Act may submit to the Board of Directors proposals to be considered for
submission to the Annual Meeting of Stockholders to be held in 2002. Any such
proposal should be submitted in writing by notice delivered or mailed by
first-class United States mail, postage prepaid, to the Secretary of the
Company, Universal Electronics Inc., 6101 Gateway Drive, Cypress, California
90630 and must be received no later than December 31, 2001. Any such notice
shall set forth: (a) the name and address of the stockholder and the text of the
proposal to be introduced; (b) the number of shares of stock held of record,
owned beneficially and represented by proxy by such stockholder as of the date
of such notice; and (c) a representation that the stockholder intends to appear
in person or by proxy at the meeting to introduce the proposal specified in the
notice. The chairman of the meeting may refuse to acknowledge the introduction
of any stockholder proposal not made in compliance with the foregoing
procedures.
Proxy holders will use their discretion in voting proxies with respect
to any stockholder proposal properly presented from the floor and not included
in the Proxy Statement for the 2002 Annual Meeting, unless specific voting
instructions are received with respect to any such proposal by March 11, 2002.
STOCKHOLDER NOMINATION OF DIRECTOR
The Nominating Committee of the Company's Board of Directors will
consider nominees to the Company's Board of Directors to the extent permitted
under, and made pursuant to the procedures established by, Article IV of the
Company's Amended and Restated By-laws.
Any stockholder may recommend any person as a nominee for director of
the Company by writing to the Secretary of the Company, c/o Universal
Electronics Inc., 6101 Gateway Drive, Cypress, California 90630. Recommendations
must be received by December 31, 2001 for the Annual Meeting of Stockholders to
be held in 2002, and must comply with the requirements in the Company's Amended
and Restated By-laws.
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SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, or other means of
communication. Solicitation also may be made by directors, officers and other
employees of the Company not specifically employed for this purpose. The Company
will reimburse brokerage firms, custodians, nominees and fiduciaries in
accordance with the rules of the National Association of Securities Dealers,
Inc., for reasonable expenses incurred by them in forwarding materials to the
beneficial owners of shares. The entire cost of solicitation will be borne by
the Company.
FORM 10-K ANNUAL REPORT
All stockholders received a copy of the Company's 2000 Annual Report on
Form 10-K filed with the Securities and Exchange Commission (excluding
exhibits). Stockholders may obtain a copy of the exhibits by addressing a
request to Investor Relations, Universal Electronics Inc., 6101 Gateway Drive,
Cypress, California 90630. A charge equal to the reproduction cost will be made
if the exhibits are requested.
BY ORDER OF THE BOARD OF DIRECTORS
Richard A. Firehammer, Jr.
Senior Vice President,
General Counsel and Secretary
April 26, 2001
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APPENDIX A
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Corporation's financial reporting
process on behalf of the Board of Directors and while management has the primary
responsibility for the financial statements and the reporting process, the
Corporation's independent auditors are responsible for expressing an opinion on
the conformity of the Corporation's audited financial statements to generally
accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the Corporation's audited financial
statements for the three years ended December 31, 2000. The Audit Committee has
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees), as
amended by Statement on Auditing Standards No. 90. In addition, the Audit
Committee has received from the independent auditors the written disclosures
required by Independence Standards Board Standard No. 1 (Independence Discussion
with Audit Committees) and discussed with them their independence from the
Corporation and its management. Finally, the Audit Committee has considered
whether the independent auditors' provision of non-audit services to the
Corporation is compatible with the auditors' independence.
Relying on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the financial statements of the Corporation for the three years ended
December 31, 2000 as presented to the Audit Committee be included in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000 to
be filed with the Securities and Exchange Commission in accordance with the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.
Audit Committee of the Board of Directors
William C. Mulligan -- Chairman
David Beddow
Bruce A. Henderson
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APPENDIX B
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee ("the Committee") is to
assist the Board of Directors ("the Board") of Universal Electronics
Inc. ("the Company") in fulfilling its oversight responsibilities with
respect to (i) the annual financial information to be provided to
shareholders and the Securities and Exchange Commission ("SEC"); (ii)
the system of internal controls that management has established; and
(iii) the external audit process. In addition, the Committee provides an
avenue for communication between the independent accountants, management
and the Board. The Committee should have a clear understanding with the
independent accountants that they must maintain an open relationship
with the Committee, and that the ultimate accountability of the
independent accountants is to the Board and the Committee.
II. ORGANIZATION
The Committee shall be composed of three or more directors as determined
by the Board. The members must be independent of the management of the
corporation and free of any relationship that, in the opinion of the
Board, would interfere with their exercise of independent judgement as a
committee member. One of the members of the Committee will be elected
Committee Chair by the Board.
III. MEETINGS
The Committee is to meet at least two times per year, and as many times
as the Committee deems necessary.
IV. RESPONSIBILITIES AND DUTIES
The Committee believes its policies and procedures should remain
flexible in order to react to changing conditions. The Committee will
fulfill its duties and responsibilities as follows:
A. General
- Review and update this Charter periodically, at least
annually, as conditions dictate.
- Report Committee actions to the Board with such
recommendations as the Committee may deem appropriate.
- Provide open avenues of communication between and among
the independent accountants, the management of the
Company and the Board.
- Conduct or authorize investigations into any matters
within the Committee's scope of responsibilities. The
Committee shall be empowered to retain independent
counsel, accountants or others to assist it in the
conduct of any investigation.
- The Committee will do whatever else the law, the
Company's charter, bylaws, or the Board requires.
B. External/Independent Accountants
- Recommend to the Board the selection of the independent
accountants, considering independence and effectiveness.
The Committee will review annually with management the
fee arrangement with the independent accountants. On an
annual basis, the Committee will review and discuss with
the accountants all significant relationships the
accountants have with the Company to determine the
accountant's independence.
- Obtain from the external auditors a formal written
statement delineating all services provided to the
Company and all relationships between the auditor and
the Company.
- The external auditor is ultimately accountable to the
Board and the Committee, as representatives of the
shareholders, and the Committee has the ultimate
authority and responsibility to select, evaluate, and
where appropriate replace the outside auditor.
- Meet annually with the independent accountants and
financial management of the Company to review the
proposed scope of the external audit for each current
year. The external audit scope shall include a
requirement that the independent accountants inform the
Committee of any significant changes in the independent
accountants' original audit plan.
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C. Financial Reporting Processes/Internal Controls
QUARTERLY REPORTING PROCESS
- Ensure that the independent accountants and the
management of the Company are satisfied with the quality
and appropriateness of the financial statements and that
they advise the Committee through its Chair and the
management of the Company of any significant matters
identified through their review of the Company's interim
quarterly financial statements. And that such
notification is to be made prior to the related press
release or, if not practicable, prior to filing the Form
10-Q for the applicable quarter.
- On an ongoing basis, ensure that the independent
accountants and the management of the Company are
satisfied with the disclosure and content of the
financial statements included in Form 10-Q, including
the nature and extent of any significant changes in
accounting principles, prior to the filing of the Form
10-Q with the SEC.
ANNUAL REPORTING PROCESS
- At the completion of the annual audit, discuss the
following with management and the independent
accountants:
- Review the results of the audit, and the annual
financial statements and related information to
determine that the independent accountants and the
management of the Company are satisfied with the
quality, not just the acceptability, of the Company's
accounting principles and underlying estimates, and the
appropriateness of the financial statements, prior to
the release of the annual earnings.
- Discuss the adequacy of the company's system of internal
controls.
- Advise management and the independent accountant to
discuss with the Committee their qualitative judgments
about the appropriateness of accounting principles and
financial disclosure practices used or adopted by the
Company.
- Ensure that the independent accountants and the
management of the Company are satisfied with the
disclosure and content of the Form 10-K prior to its
filing with the SEC.
D. Legal and Regulatory Compliance
- Review with the Company's legal counsel any legal matters that
may have a significant impact on the Company's overall
financials.
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PROXY PROXY
UNIVERSAL ELECTRONICS INC.
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
on June 21, 2001, 9:00 a.m., Los Angeles, California time
The undersigned appoints Camille Jayne and Paul D. Arling as proxy
holders. Each shall have the power to appoint a substitute and is authorized to
represent and vote, as designated hereon, all shares of Universal Electronics
Inc. held of record by the undersigned as of April 19, 2001 at the Annual
Meeting of Stockholders to be held on June 21, 2001, 9:00 a.m., Los Angeles,
California time, or any adjournments or postponements thereof. The Board of
Directors recommends a vote FOR the election of all persons nominated as
Directors by the Board of Directors and FOR proposal 2.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL PERSONS NOMINATED AS DIRECTORS BY THE BOARD OF
DIRECTORS AND FOR PROPOSAL 2 AND, AS TO ANY OTHER MATTERS PROPERLY BROUGHT
BEFORE THE MEETING, AS PROXIES MAY DIRECT.
* DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED *
UNIVERSAL ELECTRONICS INC. 2001 ANNUAL MEETING
1. ELECTION OF DIRECTORS: Class I Nominees 1 - PAUL D. ARLING 2 - CAMILLE JAYNE [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the to vote for all
left (except as nominees listed to
specified below). the left.
(Instructions: To withhold authority to vote for any indicated nominee, write -----------------------------------------------
the number(s) of the nominee(s) in the box provided to the right.)
-----------------------------------------------
2. Proposal to ratify appointment of PricewaterhouseCoopers LLP as independent
auditors. [ ] FOR [ ] AGAINST [ ] ABSTAIN
Check appropriate box Date NO. OF SHARES
Indicate changes below: --------------------
Address Change? [ ] Name Change? [ ] ----------------------------------------------------
----------------------------------------------------
Signature(s) in Box
Please sign name exactly as name appears hereon.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by an authorized person.
