SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OPTICAL CABLE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:*
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4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration No.
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3) Filing party:
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4) Date filed:
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* Set forth the amount on which the filing fee is calculated and state how it
was determined.
OPTICAL CABLE CORPORATION
5290 CONCOURSE DRIVE
ROANOKE, VIRGINIA 24019
February 13, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Optical Cable Corporation (the "Company") to be held on March 10, 1998, at
10:00 a.m. local time at the Hotel Roanoke at 110 Shenandoah Avenue, Roanoke,
Virginia 24016.
You are being asked to elect the Company's Board of Directors and to ratify
the appointment of KPMG Peat Marwick LLP as independent accountants for the
Company. You will also be asked to approve the increase of the total number of
authorized shares of common stock from 50,000,000 to 100,000,000 shares. We will
also be pleased to report on the affairs of the Company and a discussion period
will be provided for questions and comments of general interest to shareholders.
Whether or not you are able to attend, it is important that your shares be
represented and voted at this meeting. Accordingly, please complete, sign and
date the enclosed proxy and mail it in the envelope provided at your earliest
convenience. Your prompt response would be greatly appreciated.
Sincerely,
Robert Kopstein
Chairman, President and
Chief Executive Officer
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YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED TO ENSURE THAT YOUR VOTE
WILL BE COUNTED. YOU MAY VOTE IN PERSON IF YOU SO DESIRE EVEN IF YOU HAVE
PREVIOUSLY SENT IN YOUR PROXY.
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OPTICAL CABLE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 10, 1998
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Optical
Cable Corporation, a Virginia corporation (the "Company"), is scheduled to be
held on March 10, 1998 at 10:00 a.m., local time, at the Hotel Roanoke located
at 110 Shenandoah Avenue, Roanoke, Virginia 24016 for the following purposes:
1. To elect five directors to serve for the terms of office specified in
the accompanying proxy statement and until their successors are duly
elected and qualified;
2. To ratify the selection of KPMG Peat Marwick LLP as independent
accountants for the Company for fiscal year 1998;
3. To amend the Amended and Restated Articles of Incorporation to
increase the total number of authorized shares of common stock of the
Company from 50,000,000 to 100,000,000; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only shareholders of record at the close of business on January 30, 1998
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the meeting, you are urged to
complete, sign and date the enclosed form of proxy and return it promptly in the
envelope provided. Shareholders attending the meeting may revoke their proxy and
vote in person.
FOR THE BOARD OF DIRECTORS
Kenneth W. Harber
Secretary
Roanoke, Virginia
February 13, 1998
OPTICAL CABLE CORPORATION
5290 CONCOURSE DRIVE
ROANOKE, VIRGINIA 24019
PROXY STATEMENT
TO BE MAILED ON OR ABOUT FEBRUARY 14, 1998
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 10, 1998
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of common stock, no par
value (the "Common Stock"), of Optical Cable Corporation, a Virginia corporation
(the "Company"), in connection with the solicitation by the Board of Directors
of the Company of proxies for use at the Annual Meeting of Shareholders to be
held on Tuesday, March 10, 1998, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Shareholders. The purposes of the
meeting and the matters to be acted upon are set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Board of Directors is
not currently aware of any other matters that will come before the Annual
Meeting.
Proxies for use at the Annual Meeting are being solicited by and on behalf
of the Board of Directors of the Company. These proxy solicitation materials are
first being mailed on or about February 14, 1998 to all shareholders entitled to
vote at the Annual Meeting. Proxies will be solicited chiefly by mail. The
Company will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to the beneficial
owners of the shares and will reimburse them for their reasonable out-of-pocket
expenses in so doing. Should it appear desirable to do so in order to ensure
adequate representation of shares at the Annual Meeting, supplemental
solicitations may also be made by mail or by telephone, telegraph or personal
interviews by directors, officers and regular employees of the Company, none of
whom will receive additional compensation for these services. All expenses
incurred in connection with this solicitation will be borne by the Company.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. A Shareholder may revoke the authority granted by his or her
execution of a proxy at any time before the effective exercise of such proxy by
filing with the Secretary of the Company a written notice of revocation or a
duly executed proxy bearing a later date, or by voting in person at the Annual
Meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby in favor of the matters as set forth in the
accompanying Notice of Annual Meeting of Shareholders and in accordance with
their best judgment on any other matters which may properly come before the
Annual Meeting.
RECORD DATE AND VOTING RIGHTS
Only shareholders of record at the close of business on January 30, 1998
are entitled to notice of and to vote at the Annual Meeting. As of the record
date, 38,511,936 shares of Common Stock were issued and outstanding. Each share
of Common Stock is entitled to one vote on all matters that may properly come
before the Annual Meeting. The holders of a majority of the outstanding shares
of Common Stock, present in person or by proxy, will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum. "Broker non-votes" are shares held by
brokers or nominees which are present in person or represented by proxy, but
which are not voted on a particular matter because instructions have not been
received from the beneficial owner.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. Accordingly, abstentions or broker non-votes will not affect the
election of candidates receiving the plurality of votes.
All other matters to come before the Annual Meeting require the approval of
the holders of either a majority of or two-thirds of the votes cast at the
Annual Meeting as indicated herein. For these purposes, abstentions and
non-votes will be deemed shares not voted on such matters, will not count as
votes for or against the proposals, and will not be included in calculating the
number of voted necessary for the approval of such matters.
Votes at the Annual Meeting will be tabulated by Inspectors of election
appointed by the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Unless otherwise specified, the enclosed proxy
will be voted in favor of the persons named below to serve until the next Annual
Meeting and until their successors are elected and qualified. Each person named
below is now a director of the Company. In the event any of these nominees shall
be unable to serve as a director, the shares represented by the proxy will be
voted for the person, if any, who is designated by the Board of Directors to
replace the nominee. All nominees have consented to be named and have indicated
their intent to serve if elected. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve or that any vacancy on
the Board of Directors will occur. The five nominees receiving the greatest
number of votes cast for the election of directors will be elected.
The names of the nominees and certain other information about them are set
forth below:
NOMINEE AGE DIRECTOR SINCE OFFICE HELD WITH COMPANY
- ----------------------------- ----- ---------------- ------------------------------------------------
Robert Kopstein ............. 48 1983 Chairman of the Board, President, Chief Execu-
tive Officer and Director
Luke J. Huybrechts .......... 52 1995 Senior Vice President of Sales and Director
Kenneth W. Harber ........... 47 1995 Vice President of Finance, Treasurer, Secretary
and Director
Randall H. Frazier .......... 46 1996 Director
John M. Holland ............. 52 1996 Director
MR. KOPSTEIN has been President and a Director of the Company since 1983
and Chairman of the Board and Chief Executive Officer since 1989. From 1981 to
1983, Mr. Kopstein worked at Phalo Corporation as the Plant Manager for its
Fiber Optic Cable Division, from 1979 to 1981 at ITT's Electro-Optical Products
Division as a Project Engineer on cable development projects for the United
States military, and from 1977 to 1979 at Rochester Corporation as a Product
Engineer on the development of cables for military-oriented applications.
MR. HUYBRECHTS was elected a Director of the Company in August 1995 and has
been Senior Vice President of Sales since joining the Company in 1986. Prior
thereto, Mr. Huybrechts worked at ITT's Electro-Optical Products Division for 10
years in marketing, sales and research and development.
MR. HARBER was elected a Director of the Company in August 1995 and has
been Vice President of Finance, Treasurer and Secretary of the Company since
1989. Prior to joining the Company as an accounting manager in 1986, Mr. Harber
was an accounting supervisor at an architecture and engineering firm.
MR. FRAZIER was elected a Director of the Company in April of 1996. Mr.
Frazier is President of R. Frazier, Inc., a company founded in 1988. Mr. Frazier
was self-employed in various chemical and engineering businesses prior to the
founding of R. Frazier, Inc.
2
MR. HOLLAND was elected a Director of the company in April of 1996. Mr.
Holland is currently President of Cybermotion, a company he co-founded in 1984.
Mr. Holland also currently serves as the chairman of the International Service
Robot Association. Mr. Holland's previous employment experience includes work
for the Electro-Optics Product Division of ITT where he was responsible for the
design of the earliest fiber optic systems and the development of automated
manufacturing systems for optical fiber.
DIRECTOR COMPENSATION
Each non-employee director will receive compensation in the amount of
$500.00 per meeting that is attended including committee meetings. In addition,
the Company will reimburse the non-employee directors for their reasonable
out-of-pocket expenses related to attending meetings of the Board of Directors
or the committees thereof. Officers of the Company who serve as directors do not
receive compensation for their services as Directors other than the compensation
they receive as officers of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held a total of four meetings during the Company's
fiscal year ended October 31, 1997. Each Director attended in person or
telephonically at least 75% of the meetings held by the Board of Directors and
all committees thereof on which he served.
The Board of Directors has established two standing committees: the Audit
and Compensation Committees. The Board of Directors does not have a Nominating
Committee. The Audit Committee is comprised of Messrs. Frazier and Holland,
while the Compensation Committee is comprised of Messrs. Kopstein, Frazier and
Holland.
The Audit Committee recommends annually to the Board of Directors the
appointment of the independent public accountants of the Company, discusses and
reviews the scope and the fees of the prospective annual audit, reviews the
results of the annual audit with the Company's independent public accountants,
reviews compliance with existing major accounting and financial policies of the
Company, reviews the adequacy of the financial organization of the Company,
reviews management's procedures and policies relative to the adequacy of the
Company's internal accounting controls and compliance with federal and state
laws relating to accounting practices, and reviews and approves transactions, if
any, with affiliated parties.
The Compensation Committee reviews and approves annual salaries and bonuses
for all officers, administers the Company's existing stock option plan, and
carries out the responsibilities required by the rules of the U.S. Securities
and Exchange Commission.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTORS
NAMED ON THE ENCLOSED PROXY.
3
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP as
the Company's independent accountants for fiscal year 1998. Although action by
the shareholders in this matter is not required, the Board of Directors believes
that it is appropriate to seek shareholder ratification of this appointment. The
appointment of KPMG Peat Marwick LLP will be considered ratified if approved by
the holders of a majority of the votes cast.
A representative of KPMG Peat Marwick LLP is expected to attend the Annual
Meeting. The representative will have the opportunity to make a statement, if he
or she so desires, and will be available to respond to appropriate questions
from shareholders. In the event the shareholders do not ratify the selection of
KPMG Peat Marwick LLP, the selection of other independent accountants will be
considered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF KPMG PEAT
MARWICK LLP AS INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR 1998.
4
PROPOSAL NO. 3
INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 50,000,000 TO 100,000,000 SHARES
The Board of Directors of the Company has unanimously approved, subject to
approval by the Shareholders, a proposal to amend Section 3.1 of the Amended and
Restated Articles of Incorporation of the Company to increase the number of
shares of Common Stock authorized and available for issuance from 50,000,000 to
100,000,000 shares (the "Proposed Amendment"). The Board of Directors recommends
the Shareholders approve the Proposed Amendment.
Currently, Section 3.1 of the Amended and Restated Articles of
Incorporation reads in its entirety as follows:
3.1 Number and Designation. The aggregate number and designation of shares
that the Corporation shall have the authority to issue are as follows:
CLASS NUMBER OF SHARES
- -------------------------------------- -----------------
Preferred, no par value ............ 1,000,000
Common, no par value ............... 50,000,000
As amended, Section 3.1 of the Amended and Restated Articles of
Incorporation would read in its entirety as follows:
3.1 Number and Designation. The aggregate number and designation of shares
that the Corporation shall have the authority to issue are as follows:
CLASS NUMBER OF SHARES
- -------------------------------------- -----------------
Preferred, no par value ............ 1,000,000
Common, no par value ............... 100,000,000
In all other respects the Amended and Restated Articles of Incorporation
will remain unchanged.
As of January 30, 1998, 38,511,936 shares of Common Stock were issued and
outstanding and no shares of preferred stock were issued and outstanding. An
additional 4,000,000 shares of Common Stock are reserved for issuance upon the
exercise of stock options under the Company's stock incentive plan. On May 31,
1996 and June 21, 1996 the Board of Directors of the Company declared
two-for-one stock splits in the form of stock dividends, which are reflected in
the number of shares of Common Stock outstanding set forth herein. As a result
of these stock splits, the number of authorized but unissued shares of Common
Stock has been significantly reduced. The Board of Directors of the Company
believes that the approval of the Proposed Amendment will benefit the Company by
ensuring additional shares of Common Stock are available, if and when needed,
for issuance from time to time for any proper purpose approved by the Board of
Directors.
The additional authorized shares of Common Stock will provide the Company
with greater flexibility in meeting future capital requirements and will be
available for, without limitation, such purposes as (i) general corporate needs,
such as any future stock splits and dividends, and issuance under the Company's
employee benefit plans, (ii) raising additional capital for operations, or (iii)
use in connection with acquisitions. Although the Company considers transactions
from time to time which could involve the issuance of additional shares of
Common Stock (any one or more of which may be under consideration or acted upon
at any time), the Company is not a party to any agreements with respect to any
such transactions, nor does it have any agreements, commitments or
understandings with respect to any such transactions.
If the Proposed Amendment is approved by the Shareholders, the Board of
Directors does not presently intend to seek further shareholder approval with
respect to any particular issuance of shares of Common Stock, unless required by
applicable law, by regulatory authorities or by The Nasdaq Stock Market or any
securities exchange on which the securities of the Company may then be listed.
5
Depending upon the consideration per share received by the Company for any
subsequent issuance of Common Stock, such issuance could have a dilutive effect
on Shareholders. Future issuances of Common Stock will increase the number of
outstanding shares, thus decreasing the percentage ownership in the Company (for
voting, distributions and all other purposes) represented by existing shares of
Common Stock. Additionally, the availability for issuance of additional shares
of Common Stock may be viewed as having the effect of discouraging an
unsolicited attempt by someone to acquire control of the Company. Although the
Board of Directors has no present intention of doing so, the Company's
authorized but unissued shares of Common Stock could, subject to applicable
laws, be issued in one or more transactions that would make a unsolicited
takeover of the Company more difficult or costly, and therefore less likely. The
Company is not aware of anyone who is seeking to acquire control of the Company.
Shareholders of the Company do not have any preemptive or similar rights to
subscribe for or purchase any additional shares of Common Stock which may be
issued in the future.
Approval of the Proposed Amendment to the Amended and Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock
requires the affirmative vote of the holders of two-thirds of the outstanding
shares of Common Stock entitled to be cast as of the record date. Therefore,
abstentions and broker non-votes will be counted as votes against the Proposed
Amendment. If the Proposed Amendment is approved by a sufficient number of votes
of the Shareholders, the increase in the number of authorized shares of Common
Stock will be effective upon the filing with the State Corporation Commission of
the Commonwealth of Virginia of either articles of amendment or articles of
restatement which set forth the amended text of Section 3.1 of the Amended and
Restated Articles of Incorporation set forth above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDING THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 50,000,000 TO 100,000,000 SHARES.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of January 30, 1998 regarding
the beneficial ownership of the Company's Common Stock of (i) each person known
to the Company to be the beneficial owner, within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of more
than 5% of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each executive officer or former executive officer of the Company
named in the Summary Compensation Table (see "Executive Compensation") and (iv)
all executive officers and directors of the Company as a group. Unless otherwise
indicated, the address of each named beneficial owner is c/o Optical Cable
Corporation, 5290 Concourse Drive, Roanoke, Virginia 24019. Except to the extent
indicated in the footnotes, each of the beneficial owners named below has sole
voting and investment power with respect to the shares listed.
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
- ------------------------------------------------------------------------ ------------ ---------
Robert Kopstein ..................................................... 36,000,000 93.5%
Luke J. Huybrechts .................................................. -- --
Kenneth W. Harber ................................................... 3,000 *
Randall H. Frazier .................................................. -- --
John M. Holland ..................................................... -- --
All directors and executive officers as a group (5 persons) ......... 36,003,000 93.5%
- ----------
* Less than 1%
6
EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES
EXECUTIVE OFFICERS
The Executive Officers of the Company are: Robert Kopstein, President and
Chief Executive Officer; Luke J. Huybrechts, Senior Vice President of Sales; and
Kenneth W. Harber, Vice President of Finance, Treasurer and Secretary. See the
information concerning nominees for directors above for certain information
concerning each of these officers.
OTHER SIGNIFICANT EMPLOYEES
The following table contains information as to certain other significant
employees of the Company.
NAME AGE OFFICE HELD WITH COMPANY
- ----------------------- ----- ---------------------------------------------
Ted Leonard ........... 45 Vice President of Sales, Western Region
James Enochs .......... 37 Vice President of Sales, Southeastern Region
Paul Oh ............... 55 Vice President of Sales, Far East
Susan Adams ........... 37 Vice President of Marketing
MR. LEONARD has been Vice President of Sales, Western Region since 1992.
Before joining the Company, Mr. Leonard worked in engineering management at
Alcatel Telecommunications Cable. Prior to that he worked at ITT's
Electro-Optical Products Division.
MR. ENOCHS has been Vice President of Sales, Southeastern Region since
1992. Before that he was Distribution Sales Manager from 1990 to 1992 and Inside
Sales Manager from 1988 to 1990.
DR. OH has been Vice President of Sales, Far East since 1989. Before
joining the Company, Dr. Oh worked at Samsung Electronics Co. as the
Technical/Managing Director of fiber optic products. Prior to that he worked at
ITT's Electro-Optical Products Division.
MS. ADAMS has been Vice President of Marketing since 1992. Ms. Adams worked
as Marketing Services Coordinator from 1984 to 1987 and Director of Marketing
from 1987 to 1992.
There are no family relationships among the directors, executive officers,
or other significant employees of the Company.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation paid by
the Company to the Chief Executive Officer and to all other executive officers
of the Company whose total salary and bonus exceeded $100,000 for the year ended
October 31, 1997.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------ ----------------------------------------------
NAME AND FISCAL OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEARS SALARY($) BONUS($) COMPENSATION GRANTED COMPENSATION
- ------------------------------ -------- ----------- ---------- ------------------ --------- -------------
Robert Kopstein .............. 1997 451,523 70,366 -- -- 12,667
Chairman, President and Chief 1996 363,600 87,923 6,150,000(1) -- 13,310
Executive Officer 1995 594,150 78,221 1,080,000(1) -- 16,860
Luke J. Huybrechts ........... 1997 98,450 59,016 -- 10,000 15,354
Senior Vice President of 1996 94,200 57,338 -- 40,000 9,834
Sales 1995 88,580 43,714 -- -- 9,189
Kenneth W. Harber ............ 1997 93,300 59,332 -- 8,000 18,742
Vice President of 1996 89,550 57,503 -- 40,000 9,488
Finance, Treasurer and 1995 85,400 43,946 -- -- 8,935
Secretary
- ----------
(1) Represent distributions to Mr. Kopstein primarily to pay his income tax
liability resulting from the Company's status as an S Corporation, which
status terminated March 31, 1996.
STOCK OPTION GRANTS
The following table sets forth certain information concerning stock options
granted to the officers named in the Summary Compensation Table above during the
year ended October 31, 1997.
OPTION GRANTS IN FISCAL YEAR 1997
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
NUMBER OF % OF TOTAL OPTIONS PRICE APPRECIATION
SHARES GRANTED TO FOR OPTION TERM(1)
UNDERLYING EMPLOYEES EXERCISE EXPIRATION ----------------------
NAME OPTIONS GRANTED(2) IN FISCAL YEAR PRICE DATE 5% 10%
- ------------------------ -------------------- ------------------- ------------ ----------- ---------- -----------
Luke J. Huybrechts ..... 10,000 3.9% $ 11.125 4/30/06 $61,335 $151,072
Kenneth W. Harber ...... 8,000 3.1% $ 11.125 4/30/06 $49,068 $120,857
- ----------
(1) Amounts represent hypothetical gains that could be achieved if exercised at
end of the option term. The dollar amounts under these columns assume 5%
and 10% compounded annual appreciation in the Common Stock from the date
the respective options were granted. These calculations and assumed
realizable values are required to be disclosed under Securities and
Exchange Commission rules and, therefore, are not intended to forecast
possible future appreciation of Common Stock or amounts that may be
ultimately realized upon exercise.
(2) Options vest one-fourth on each of the second, third, fourth and fifth
anniversaries of the date of grant, and expire 8.75 years after the date of
grant.
8
FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information as of October 31, 1997
concerning the value of unexercised options held by the officers named in the
Summary Compensation Table above.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT OCTOBER 31, 1997 AT OCTOBER 31, 1997(1)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------- --------------- ------------- --------------
Luke J. Huybrechts ......... -- 50,000 -- $297,500
Kenneth W. Harber .......... -- 48,000 -- $297,500
- ----------
(1) Represents the difference between the exercise price of the outstanding
options and the closing bid price of the Common Stock on October 31, 1997,
which was $9.9375 per share.
COMPENSATION COMMITTEE INTERBLOCKS AND INSIDER PARTICIPATION
Robert Kopstein, the Chairman, Chief Executive Officer and President of the
Company, serves on the Compensation Committee of the Board of Directors.
EMPLOYMENT AGREEMENTS
Since February 1, 1995, Mr. Kopstein has had an employment arrangement
pursuant to which Mr. Kopstein receives an annual salary equal to one percent of
the previous fiscal year's net sales and one percent of any increase between the
current fiscal year's net sales and the prior fiscal year's net sales.
Compensation under this arrangement amounted to $521,889 during the period from
November 1, 1996 to October 31, 1997. Mr. Kopstein's employment arrangement is
governed by employment agreements. Mr. Kopstein and the Company entered into an
employment agreement, dated as of February 1, 1995, which was to expire October
31, 1997. Prior to the expiration of this employment agreement, Mr. Kopstein and
the Company entered into another employment agreement, dated as March 12, 1997,
to review Mr. Kopstein's employment arrangement through October 31, 1998. All
other terms of the employment agreement dated March 12, 1997 are substantially
similar to the terms of the employment agreement dated February 1, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of a majority of independent, non-management directors. The Committee
has responsibility for developing and implementing the Company's compensation
policy for senior management, and for determining the compensation for the
executive officers of the Company. The goal of the Committee is to achieve fair
compensation for the individuals and to enhance shareholder value by continuing
to closely align the financial rewards of management with those of the Company's
shareholders.
The Company seeks to attract and retain qualified executives and employees
who are creative, motivated and dedicated. The Committee attempts to create and
administer a compensation program to achieve that goal with consistency
throughout the Company. With respect to its executive officers, the Company
competes with other manufacturers and fiber optic related industries in North
America. The Committee is very much aware of the demand for highly qualified
executives in specialized field of fiber optics.
9
Executive officer compensation is generally comprised of three components:
base salary, monthly and annual incentive bonus compensation and long-term
incentive stock options. The mix of an officer's total compensation is generally
based upon the seniority of the officer's position within the Company. Senior
officers receive a greater percentage of their total compensation in the form of
incentive compensation.
Salary and incentive compensation awards are reviewed semiannually for
competitiveness and fairness. Each executive's contribution to the advancement
of corporate goals is also considered. Factors taken into account include, among
others, the executive's impact on financial results, business production,
development of the management team and strategic accomplishments such as
development of new customers and products, geographical spread of business and
product development.
Base Salary
In determining the salary of each senior executive other than the Chief
Executive Officer, the Committee is guided by the recommendations of the Chief
Executive Officer. The base salary of the Chief Executive Officer is based on
the terms of his employment contract which expires on October 31, 1998. Prior to
the current employment arrangement and effective November 1, 1994, the Company
had entered into two separate one-year employment agreements with the Chief
Executive Officer. Total compensation under these agreements considered of
salary payments equal to 6 percent of the fiscal year's net sales. However,
effective February 1, 1995, these agreements were replaced by the current
employment arrangement that expires October 31, 1998 and reduced the base salary
payment percentage from 6 percent to 1 percent of the fiscal year's net sales.
The base salary under the current arrangement amounted to $451,523 and $363,600
for the fiscal years ended October 31, 1997 and 1996, respectively.
Annual Incentive Compensation
The revised employment arrangement with the Chief Executive Officer which
became effective February 1, 1995 also provides for an incentive bonus equal to
1 percent of the positive difference between the current fiscal year's net sales
and the prior fiscal year's net sales. The bonuses under this arrangement
amounted to $70,366 and $87,923 for the fiscal years ended October 31, 1997 and
1996, respectively. The other senior executives are included in a monthly and
lump-sum bonus plan which is based on a percentage of the previous months sales.
Long-Term Incentive Compensation
The Company adopted a stock incentive plan on March 1, 1996. All of the
senior executives participate in the plan with the exception of the Chief
Executive Officer. The plan is intended to provide a means for employees to
increase their personal financial interest in the Company, thereby stimulating
the efforts of those employees and strengthening their desire to remain with the
Company through the use of stock incentives. The Company has reserved 4,000,000
shares of common stock for issuance pursuant to incentive awards under the plan.
Under the plan, stock options may be granted at not less than fair market value
on the date of grant. The options vest 25 percent after two years, 50 percent
after three years, 75 percent after four years and 100 percent after five years.
Each executive officer, other than the Chief Executive Officer, was granted
options on 40,000 shares of common stock during the fiscal year ended October
31, 1996. The exercise price was $2.50 per share and the options expire on
February 28, 2006. For the fiscal year ended October 31, 1997, the Senior Vice
President of Sales and the Vice President of Finance were granted options for
10,000 and 8,000 shares of common stock, respectively. The exercise price for
the options granted during the fiscal year ended October 31, 1997 was $11.125
and the options expire April 30, 2006. All options granted during the fiscal
years ended October 31, 1996 and 1997 were unexercisable as of October 31, 1997.
The plan is administered by the Committee. The Committee receives
recommendations from the Chief Executive Officer (who is also a member of the
Committee but does not receive compensation under the plan and does not vote on
grants pursuant to the plan) for each employee, and considers individual and
Company performance in awarding long-term compensation pursuant to the plan. The
Committee anticipates that over the next few
10
years, awards will generally be in the form of stock options. The Committee
believes that awards of stock options, which reward employees for Company stock
price appreciation over the long-term, are particularly appropriate in light of
the nature of the Company's business and long-term business plans.
Chief Executive Officer's Fiscal Year 1997 Compensation
As set forth in the Summary Compensation above, Mr. Kopstein's total
compensation for the fiscal year ended October 31, 1997 was $534,556. Such
annual compensation consisted of a base salary of $451,523 and a bonus of
$70,366, pursuant to Mr. Kopstein's employment agreement. The Company also made
matching contributions to the Company 401(k) retirement savings plan for the
benefit of Mr. Kopstein totaling $12,667 for fiscal year 1997.
The Compensation Committee:
---------------------------
Randall H. Frazier
John M. Holland
Robert Kopstein
11
PERFORMANCE GRAPH
The following graph compares the cumulative total return based on share
price (assuming reinvestment of dividends) since April 2, 1996, the date on
which the Company's common stock began trading on the Nasdaq National Market, of
(i) the Company's common stock, (ii) the Nasdaq Market Index and (iii) a peer
group index comprised of the following companies: AFC Cable Systems, Andrew
Corporation, Belden, Inc., Cable Design Technologies, Inc., and Encore Wire
Corp.
COMPARISON OF 19 MONTH CUMULATIVE TOTAL RETURN*
AMONG OPTICAL CABLE CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[PERFORMANCE GRAPH]
[GRAPHIC OMITTED]
04/96 10/96 10/97
----- ----- -----
OPTICAL CABLE CORPORATION 100 417 331
PEER GROUP 100 113 108
NASDAQ 100 100 144
- ----------
* $100 invested on 4/02/96 in stock or index including reinvestment of
dividends. Fiscal years ended October 31.
12
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10 percent of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10 percent shareholders are required by the regulation to furnish
the Company with copies of the Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended October 31, 1997 all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten percent beneficial owners were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TAX INDEMNIFICATION AGREEMENT
Mr. Kopstein has entered into a Tax Indemnification Agreement with the
Company, pursuant to which he will indemnify the Company for any income tax
liability of the Company arising from its S Corporation status being denied for
any periods prior to its termination on March 31, 1996, but only to the extent
such denial results in a refund to Mr. Kopstein of personal income taxes paid
with respect to such periods.
OTHER MATTERS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors may recommend.
SHAREHOLDER PROPOSALS
Proposals of Shareholders of the Company that are intended to be presented
at the Company's 1999 Annual Meeting of shareholders must be received by the
Company no later than October 15, 1998 in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended October 31,
1997 including the financial statements and notes thereto is being mailed to the
shareholders of record along with this Proxy Statement. The Annual Report is not
incorporated by reference in this Proxy Statement and is not considered to be
part of the proxy material.
13
INFORMATION INCORPORATED BY REFERENCE
The Company hereby incorporates herein by reference the Company's annual
report on Form 10-K for the fiscal year ended October 31, 1997, including the
financial statements set forth therein, previously filed with the U.S.
Securities and Exchange Commission.
FURTHER INFORMATION
The Company will provide without charge to each person from whom a proxy is
solicited by the Board of Directors, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements set forth therein, required to be filed with the U.S.
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, for the Company's fiscal year ended October 31, 1997. Such
written requests should be sent to the Company at its principal executive
offices, 5290 Concourse Drive, Roanoke, Virginia 24019, attention Corporate
Secretary.
Upon request, the Company will also furnish any other exhibit of the annual
report on Form 10-K upon advance payment of reasonable out-of-pocket expenses of
the Company related to the Company's furnishing of such exhibit. Requests for
copies of any exhibit should be directed to the Company at its principal
executive offices, 5290 Concourse Drive, Roanoke, Virginia 24019, attention
Corporate Secretary.
By Order of the Board of Directors
Kenneth W. Harber
Secretary
Date: February 14, 1998
14
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OPTICAL CABLE
CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 10, 1998
The undersigned appoints Luke J. Huybrechts or Kenneth W. Harber, or either
of them, with full power of substitution, to attend the Annual Meeting of
Stockholders of Optical Cable Corporation on March 10, 1998, and at any
adjournments thereof, and to vote all shares which the undersigned would be
entitled to vote if personally present upon the following matters set forth in
the Notice of Annual Meeting and Proxy Statement.
1. ELECTION OF DIRECTORS
[ ] FOR the FIVE nominees listed below [ ] WITHHOLD AUTHORITY to vote for the
(except as marked to the contrary FIVE nominees listed below
below)
Robert Kopstein, Luke J. Huybrechts, Kenneth W. Harber, Randall H.
Frazier, and John M. Holland
INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name in the space provided below:
- --------------------------------------------------------------------------------
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants for the Company for fiscal year 1998;
[ ] FOR this proposal [ ] AGAINST this proposal [ ]ABSTAIN
3. To amend the Amended and Restated Articles of Incorporation to increase the
number of authorized shares of common stock from 50,000,000 to 100,000,000
shares;
[ ] FOR this proposal [ ] AGAINST this proposal [ ]ABSTAIN
and
4. In their discretion, upon such other business as may properly come before
the meeting and any adjournments thereof.
PLEASE DATE, SIGN, AND RETURN PROXY
PROMPTLY. Receipt of Notice of
Annual Meeting and Proxy Statement
is hereby acknowledged
Date:
-------------------------------
------------------------------------
Shareholder's signature
------------------------------------
Joint Holder's Signature
(If applicable)
When properly executed, this proxy will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposals 2. and 3. above
and FOR the election of the nominees of the Board of Directors in the election
of directors and in accordance with the judgment of the person(s) voting the
proxy upon such other matters properly coming before the meeting and any
adjournments thereof. Please sign exactly as name(s) appear above.
