-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OnO9aIdF/Fl5CR9n7x9badxMCJLefYQQHJd9+ZNUro+XCQ/jz64PojmsBQ8OShvx 8EBnlr+x1MrVLi+a3uk2jQ== 0000859163-97-000009.txt : 19970612 0000859163-97-000009.hdr.sgml : 19970612 ACCESSION NUMBER: 0000859163-97-000009 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970605 FILED AS OF DATE: 19970611 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVX CORP /DE CENTRAL INDEX KEY: 0000859163 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 330379007 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07201 FILM NUMBER: 97622621 BUSINESS ADDRESS: STREET 1: 801 17TH AVE S CITY: MYRTLE BEACH STATE: SC ZIP: 29577 BUSINESS PHONE: 8034499411 MAIL ADDRESS: STREET 1: PO BOX 867 STREET 2: PO BOX 867 CITY: MYRTLE BEACH STATE: SC ZIP: 29578 FORMER COMPANY: FORMER CONFORMED NAME: KC SUBSIDIARY CORP DATE OF NAME CHANGE: 19900212 DEF 14A 1 PROXY ANNUAL MEETING AVX Notice of Annual Meeting of Shareholders To Be Held July 17, 1997 AVX CORPORATION 801 17th Avenue South Myrtle Beach, South Carolina 29577 To our Shareholders: The Annual Meeting of Shareholders of AVX Corporation, a Delaware corporation, will be held at the Kingston Plantation Radisson Resort, 9800 Lake Drive, Myrtle Beach, South Carolina, on Thursday, July 17, 1997, at 10:00 a.m., for the purpose of acting upon the following matters, as well as such other business as may properly come before the Annual Meeting or any adjournment thereof: 1. To elect thirteen directors; 2 To ratify amendments to the 1995 Stock Option Plan; 3. To ratify the appointment of Coopers & Lybrand, L.L.P. as the Company's independent auditors for the fiscal year commencing April 1, 1997; and 4. To transact any other business that may properly come before the Annual Meeting or any adjournment thereof. Only shareholders of record on the books of the Company on May 24, 1997, will be entitled to vote at the Annual Meeting or any adjournment thereof. In order that your shares of stock may be represented at the Annual Meeting, please date and sign the enclosed proxy card and return it promptly in the enclosed envelope. If you attend the Annual Meeting, you may vote in person even though you have previously sent in your proxy card. /S/ John S. Gilbertson ------------------ John S. Gilbertson Corporate Secretary Myrtle Beach, South Carolina June 5, 1997 YOUR VOTE IS IMPORTANT PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. 1 AVX Corporation 801 17th Avenue South, Myrtle Beach, SC 29577 ___________________________________ PROXY STATEMENT Annual Meeting of Shareholders To be held July 17, 1997 -------------------------------------- This Proxy Statement is furnished to the shareholders of AVX Corporation ("AVX" or the "Company") in connection with the solicitation on behalf of the Board of Directors (the "Board") of proxies to be used at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on July 17, 1997, at 10:00 a.m., at the Kingston Plantation Radisson Resort, 9800 Lake Drive, Myrtle Beach, South Carolina and any adjournment thereof. The Company expects that this Proxy Statement, with the accompanying proxy and the Annual Report for fiscal year ended March 31, 1997, will be mailed to shareholders on or about June 5, 1997. Each share of AVX Corporation common stock, par value $.01 ("Common Stock"), outstanding at the close of business on May 23, 1997, will be entitled to one vote on all matters acted upon at the Annual Meeting. On May 24, 1997, the date for determining shareholders entitled to vote at the Annual Meeting, 88,000,000 shares of Common Stock were outstanding. Shares will be voted in accordance with the instructions indicated in a properly executed proxy. In the event that the voting instructions are omitted on any such proxy, the shares represented by such proxy will be voted as recommended by the Board. Shareholders have the right to revoke their proxies at any time prior to a vote being taken, by (i) delivering written notice of revocation before the Annual Meeting to the Corporate Secretary at the Company's principal offices; (ii) executing a proxy bearing a later date or time than the proxy being revoked provided the new proxy is received by Wachovia Bank of North Carolina (which will have a representative present at the Annual Meeting); or (iii) voting in person at the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of shareholders holding in the aggregate a majority of the outstanding shares of the Company's Common Stock entitled to vote shall constitute a quorum for the transaction of business. Proxies indicating stockholder abstentions will, in accordance with Delaware law, be counted as represented at the Annual Meeting for purposes of determining whether there is a quorum present, but will not be voted for or against the proposal. However, the effect of marking a proxy for abstention on any proposal, other than the election of directors, has the same effect as a vote against the proposal. Shares represented by "broker non-votes" (i.e., shares held by brokers or nominees that are represented at a meeting but with respect to which the broker or nominee is not empowered to vote on a particular proposal) will be counted for purposes of determining whether there is a quorum, but will not be voted on such matter and will not be counted for purposes of determining the number of votes cast on such matter. With respect to any matter brought before the Annual Meeting requiring the affirmative vote of a majority or other proportion of the outstanding shares, an abstention or broker non-vote will have the same effect as a vote against the matter being voted upon. The Company has been informed by the Trustee for the Company's Stock Bonus Plans and the Deferred Compensation Plan that shares of Common Stock held by the Trustee for such plans will be voted by the Trustee in accordance with instructions received from the participants, and if no instructions are received, such shares will be voted in the same proportion as shares for which instructions are received from other participants in the plan. At the date of this Proxy Statement, management does not know of any matter to be brought before the Annual Meeting for action other than the matters described in the Notice of Annual Meeting and matters incident thereto. If any other matters should properly come before the Annual Meeting, the holders of the proxies will vote and act with respect to such matters in accordance with their best judgment. Discretionary authority to do so is conferred by the enclosed proxy. 2 PROPOSAL I ELECTION OF DIRECTORS The following thirteen directors have been nominated by the Board. Unless contrary instructions are given, it is intended that the votes represented by the proxies will be cast for the election of the persons listed below as directors. The affirmative vote of the holders of a plurality of the shares of Common Stock of the Company present in person or represented by proxy and entitled to vote at the Annual Meeting is required for the election of the directors. In the event that any of the nominees should become unavailable, the Board may designate a substitute. It is intended that all properly executed and returned proxies will be voted for such substitute nominee. All directors hold office until the next Annual Meeting of shareholders or until their successors have been duly elected and qualified. KAZUO INAMORI Age 65 Chairman Emeritus of the Board effective July 5, 1997. Chairman of the Board from the Company's acquisition by Kyocera Corporation ("Kyocera") in January 1990 to July 1997, Chairman of the Board of Kyocera, which he founded in 1959. BENEDICT P. ROSEN Age 61 Chairman of the Board effective July 5, 1997 and President and Chief Executive Officer of the Company since April 1993 and a member of the Board since January 1990. Executive Vice President from February 1985 to March 1993 and employed by the Company since 1972. Senior Managing and Representative Director of Kyocera since June 1995 and previously served as a Managing Director of Kyocera from 1992 to June 1995. Director of Nitzanim-AVX/Kyocera-Venture Capital Fund Ltd. and Aerovox Corporation. JOHN S. GILBERTSON Age 53 Executive Vice President and Chief Operating Officer of the Company since April 1994, Corporate Secretary of the Company since April 1996 and a member of the Board since January 1990. Executive Vice President from April 1992 to present, Senior Vice President from September 1990 to March 1992 and employed by the Company since 1981. Director of Kyocera since June 1995. DONALD B. CHRISTIANSEN Age 58 Vice President of Finance, Chief Financial Officer and Treasurer of the Company since April 1994 and a member of the Board since April 1992. Chief Financial Officer from March 1992 to April 1994. MARSHALL D. BUTLER Age 70 Member of the Board since December 1973 and Chairman of the Board from December 1973 to January 1990. Chief Executive Officer from December 1973 until his retirement from the Company in March 1993. Director of Kyocera from 1990 to June 1995. Chairman of the Board of Nitzanim-AVX/Kyocera-Venture Capital Fund Ltd. and Alpha Technologies Group, Incorporated. A Director of MassMutual Corporate Investors and a Director of MassMutual Participation Investors. CARROLL A. CAMPBELL, JR. Age 57 Member of the Board since August 1995. Presently President and Chief Executive Officer of the American Council of Life Insurance. Governor of South Carolina from January 1987 to January 1995. Director of Fluor Corporation, Telequest, Wachenhut Corporation and Norfolk Southern Corporation. KENSUKE ITOH Age 59 Member of the Board since January 1990. President of Kyocera since June 1989 and a Representative Director of Kyocera since 1985. RODNEY N. LANTHORNE Age 52 Member of the Board since January 1990. President of a United States subsidiary of Kyocera since January 1987. A Managing Director of Kyocera since 1990. RICHARD TRESSLER Age 55 Member of the Board since October 1995. Professor and head of the Department of Material Science and Engineering at Pennsylvania State University since 1991. 3 MASAHIRO UMEMURA Age 53 Member of the Board since January 1990. General Manager of the Corporate Development Group of Kyocera since June 1992 and Managing Director of Kyocera since June 1993. Executive Vice President and Treasurer of a United States subsidiary of Kyocera from April 1986 to June 1992. MASAHIRO YAMAMOTO Age 55 Member of the Board since February 1993. Senior Managing and Representative Director of Kyocera since June 1995. Employee of Kyocera since 1977. MICHIHISA YAMAMOTO Age 55 Senior Managing and Representative Director of Kyocera since June 1992. Employee of Kyocera since 1970. YUZO YAMAMURA Age 55 Member of the Board since July 1995. President of Kyocera Elco Corporation, a subsidiary of Kyocera. Senior Managing and Representative Director of Kyocera since June 1995. Employee of Kyocera since 1965. Ownership of Securities by Directors, Director Nominees and Executive Officers The Common Stock is the only class of equity securities of the Company outstanding. As of May 12, 1997, the directors and director nominees and each executive officer named in the Summary Compensation Table, individually, and all directors, director nominees and executive officers of the Company as a group, beneficially owned shares of Common Stock of the Company as follows: Amount of Beneficial Ownership Name of Direct & Beneficial Indirect Percent of Owner Ownership 1/ Class Kazuo Inamori 11,875 * Benedict P. Rosen 84,635 * John S. Gilbertson 78,323 * Donald B. Christiansen 31,777 * C. Marshall Jackson 25,585 * Ernie Chilton 28,800 * Marshall D. Butler 4,875 * Carroll A. Campbell, Jr. 1,875 * Kensuke Itoh 66,154,875 75.2% 2/ Rodney N. Lanthorne 3,375 * Masato Takeda 1,875 * Richard Tressler 2,375 * Masahiro Umemura 2,875 * Masahiro Yamamoto 2,875 * Michihisa Yamamoto 1,000 * Yuzo Yamamura 2,875 * All directors, director nominees and executive officers as a group 66,496,109 75.5% 2/ (a total of 21 individuals including those named above) * Less than 1% 1/ Only includes options granted under the 1995 Stock Option Plan and the Non-Employee Directors Stock Option Plan that were exercisable within 60 days. 2/ Includes the 66,150,000 shares of Common Stock owned directly or indirectly by Kyocera as to which Mr. Itoh, as President and Representative Director of Kyocera, may be deemed to have voting and investor power. The information provided in the above chart as to each director, director nominee and named executive officer, individually, and all directors, director nominees and executive officers as a group, is based on information received from such individuals. However, the listing of such shares is not necessarily an admission of beneficial ownership by the person. Unless otherwise indicated in the footnotes, such individuals held, together with certain members of their family, sole voting and investment power over the shares. 4 Security Ownership of Certain Beneficial Owners Set forth below is a table indicating those persons whom the management of the Company believes to be beneficial owners of more than 5% of any class of the Company's securities as of May 24, 1997. Shares Name and Address Beneficially Percent of Beneficial Owner Owned of Class Kyocera Corporation 5-22 Kitainoue-cho Higashino Yamashina-ku, Kyoto 607, Japan 66,150,000 75.2% Except for Mr. Itoh, who may be deemed to beneficially own the shares held by Kyocera as a result of his voting and investment power of these shares, to the best of the Company's knowledge, as of May 24, 1997, no other person owned more than 5% of the outstanding voting securities of the Company. Compliance With Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and officers, and persons who own more than 10% of the Company's Common Stock, to file reports of ownership and changes in ownership of any class of the Company's registered equity securities with the Securities and Exchange Commission and the New York Stock Exchange. The Company believes that during fiscal year ended March 31, 1997, all Section 16(a) filing requirements applicable to its directors and officers were complied with. Board of Directors - Meetings Held and Committees The Board held four meetings during fiscal year ended March 31, 1997. During that period, all the directors attended 75% of the meetings of the Board and meetings of the committees of the Board on which they served, except Messrs. Takeda, Yamamoto and Yamamura who are residents of Japan and are representatives on the Board for Kyocera. Because of time and logistics to travel, Messrs. Takeda, Yamamoto and Yamamura attended two Board meetings. The Board has the following standing committees: Executive Committee. The Executive Committee has been, and from time to time is, delegated authority by the Board to exercise the powers of the Board in matters pertaining to the management of the business. The Executive Committee held no meetings during fiscal year ended March 31, 1997. The members of the Executive Committee are Messrs. Inamori (Chairman), Rosen, Butler, Lanthorne and Umemura. Audit Committee. The functions of the Audit Committee include (a) making recommendations to the full Board as to engagement of the Company's independent auditors, (b) reviewing with the independent auditors the plan and results of the audit engagement, (c) reviewing the scope and results of the Company's internal audit procedures, and (d) reviewing proposed audit fees and other fees of the independent auditors. The Audit Committee held one meeting during fiscal year ended March 31, 1997. The members of the Audit Committee are Messrs. Butler (Chairman), Campbell and Tressler. Compensation Committee. The Compensation Committee has the full power and authority of the Board with respect to the determination of compensation for all executive officers of the Company. The Compensation Committee also has full power and authority over any compensation plan approved by the Board other than the 1995 Stock Option Plan, including the issuance of shares of Common Stock, as such Compensation Committee may deem necessary or desirable in accordance with such compensation plans. The Compensation Committee held three meetings during the fiscal year ended March 31, 1997. The members of the Compensation Committee are Messrs. Inamori (Chairman), Itoh, Campbell and Tressler. Equity Compensation Committee. The Equity Compensation Committee is a subcommittee of the Compensation Comittee and is responsible for any action on all matters concerning the 1995 Stock Option Plan. This committee consists of the Messrs. Tressler (Chairman), Campbell and Butler. The Equity Compensation Committee held one meeting during the fiscal year ended March 31, 1997. Special Advisory Committee. The Special Advisory Committee is required to review and approve all material contracts and transactions between the Company and related parties. The Special Advisory Committee held one meeting during fiscal year ended March 31, 1997. The members of the Special Advisory Committee are Messrs. Campbell (Chairman), Butler and Tressler. 5 Compensation of Directors Each director who is not an employee of the Company or Kyocera is paid an annual director's fee of $30,000, an attendance fee of $2,500 per Board meeting and reimbursement of travel expenses. Non-employee directors who are required to attend committee meetings will receive $2,500 in addition to reasonable expenses for each meeting attended. In addition, each director who is not an employee of the Company is granted stock options pursuant to the 1995 Non-Employee Directors Stock Option Plan. Non-Employee Directors Stock Option Plan Pursuant to the 1995 Non-Employee Directors Stock Option Plan adopted by the Company, options are granted to members of the Board who are not employees of the Company (a "Non-Employee Director") for the purchase of an aggregate of up to 100,000 shares of Common Stock. The 1995 Non-Employee Directors Stock Option Plan is administered by the Board. Each Non-Employee Director serving on the Board on August 14, 1995, and each other Non-Employee Director subsequently elected for the first time shall automatically receive an option for 7,500 shares of Common Stock (the "Initial Option"). Beginning in the year in which the fifth anniversary of the grant of the Initial Option occurs and in each year thereafter, each Non-Employee Director who has been re-elected as a member of the Board shall automatically receive an additional option for 1,000 shares of Common Stock. Each Initial Option granted under the 1995 Non-Employee Directors Stock Option Plan will vest at the rate of 25% of the shares subject to the initial grant commencing on the first anniversary of the date of grant, so that such Initial Options will be fully vested as of the fourth anniversary of the initial grant. All options other than Initial Options become exercisable in full beginning on the first anniversary of the date of the grant of the option. In the event the Non-Employee Director ceases to be a director by reason of retirement, incapacity or death, the total number of shares of Common Stock covered by option grants shall thereupon become exercisable; otherwise, options granted shall automatically be forfeited if such person shall cease to be a director. Retirement shall mean resignation from the Board upon reaching retirement age or otherwise resigning or not standing for re-election with the approval of the Board but shall not include any termination of service as a result of fraud, intentional misrepresentation, embezzlement, misappropriation or conversion of assets or opportunities of the Company or any majority owned subsidiary. The 1995 Non-Employee Directors Stock Option Plan requires that options granted thereunder will expire on the date which is ten years after the date of grant. All options granted to Non-Employee Directors have an exercise price equal to the average of the high and low sales prices of the Common Stock as reported on the New York Stock Exchange Composite Transactions Tape on the date of the grant. Options may be exercised by the payment of cash, the tendering of shares of Common Stock or a combination of cash and shares. Options granted under the 1995 Non-Employee Directors Stock Option Plan are not assignable. Unless sooner terminated by action of the Board, the 1995 Non-Employee Directors Stock Option Plan will terminate on August 1, 2005. Subject to certain exceptions, the 1995 Non-Employee Directors Stock Option Plan may be amended or discontinued by the Board without stockholder approval. Federal Income Tax Consequences There are no Federal tax consequences either to the Non-Employee Directors or to the Company upon the grant of an option. On exercise of an option, the excess of the date-of-exercise fair market value of the shares acquired over the option price will generally be taxable to the Non-Employee Director as ordinary income and deductible by the Company. The disposition of shares acquired upon exercise of the option generally result in a capital gain or loss for the Non-Employee Director but will have no tax consequences for the Company. Deferred Compensation Plan The Company sponsors a nonqualified deferred compensation program for non-employee directors which permits participants to defer their compensation related to services rendered as a Board member. The plan provides for several investment options. 6 Executive Compensation Cash Compensation The following table shows cash compensation paid and certain other compensation paid or accrued, by the Company during the fiscal years ended March 31, 1997, 1996, and 1995, to each of the Company's five most highly compensated executive officers as of the end of the last completed fiscal year, including the Chief Executive Officer, in all capacities in which they served.
Summary Compensation Table Other Securities All Annual Underlying Other Fiscal Salary Bonus Compensation Options Compensation Name & Position Year ($) ($) ($) (#) ($) Benedict P. Rosen 1997 $495,000 $184,650 $17,100 75,000 $32,725 President 1996 465,000 730,716 15,484 150,000 31,963 Chief Executive Officer 1995 450,000 762,830 3,788 31,721 John S. Gilbertson 1997 348,000 128,775 10,035 62,500 32,691 Executive Vice President 1996 322,500 505,470 9,056 125,000 32,019 Chief Operating Officer 1995 300,000 471,280 8,919 31,721 Donald B. Christiansen 1997 205,000 52,480 12,032 50,000 32,613 Chief Financial Officer 1996 190,000 136,530 10,307 100,000 31,940 Vice President 1995 178,000 99,240 9,639 30,972 C. Marshall Jackson 1997 183,500 46,870 8,357 50,000 32,601 Senior Vice President of 1996 170,000 134,797 8,303 100,000 30,750 Marketing 1995 158,000 122,640 8,357 26,303 Ernie Chilton 1997 180,850 20,000 15,745 50,000 24,400 Senior Vice President of 1996 162,800 123,000 9,939 100,000 22,000 Tantalum 1995 150,000 90,000 9,658 20,000 The stock options granted during the fiscal years ended March 31, 1997 and 1996, were granted pursuant to the 1995 Stock Option Plan. Includes 75,000 stock options granted to Mr. Rosen in August 1996 which are contingent upon stockholder approval of the proposal included in this Proxy Statement to increase the number of shares of Common Stock which may be issued under the 1995 Stock Option Plan. See Proposal II All other Compensation includes: the Company's contribution on behalf of the respective executive officer pursuant to the terms of the AVX Ltd. Pension Plan ("Pension Plan"), AVX Corporation Deferred Compensation Plan ("DCP"), AVX Corporation Stock Bonus Plan ("Bonus Plan") and the AVX Corporation Retirement Plan ("Savings Plan"). Mr. Chilton participates in a defined benefit pension plan maintained by AVX Limited, a wholly-owned subsidiary of AVX Corporation. The pension plan provides for a retirement benefit at a normal Pension Date, as defined, equal to 60% of the Final Pensionable Salary, as defined, after having completed at least 20 years of continuing service. Mr. Chilton has been employed by AVX Limited since 1979. The table below sets forth the component of All Other Compensation described above, for the fiscal year ended March 31, 1997, for the above named executive officers:
Pension Plan DCP Bonus Plan Savings Plan Benedict P. Rosen $13,000 $4,725 $15,000 John S. Gilbertson 13,000 4,691 15,000 Donald B. Christiansen 13,000 4,613 15,000 C. Marshall Jackson 13,000 4,601 15,000 Ernie Chilton $ 24,400 7 Stock Option Grants The following table provides certain information concerning the grant of options during the fiscal year ended March 31, 1997 to the executive officers named in the Summary Compensation Table. In addition, hypothetical gains or spreads, calculated based on assumed rates of annual compounded stock price appreciation of 5% and 10% over the term of the option, have been included in the table.
Options Granted During the Fiscal Year Ended March 31, 1997 Individual Grants Number of % Total Securities Options Potential Realizable Value at Underlying Granted Exercise Assumed Annual Rates Of Stock Options Employees Base Price Expiration Appreciation for Option Term Granted In Fiscal Year ($/share) 3/ Date 5% 10% Benedict P. Rosen 75,000 14.0% $18.125 8/12/06 $854,900 $2,116,500 John S. Gilbertson 62,500 11.7 18.125 8/12/06 712,400 1,805,500 Donald B. Christiansen 50,000 9.4 18.125 8/12/06 569,900 1,444,300 C. Marshall Jackson 50,000 9.4 18.125 8/12/06 569,900 1,444,300 Ernie Chilton 50,000 9.4 18.125 8/12/06 569,900 1,444,300 Each option was granted on August 12, 1996, to purchase shares of Common Stock. Twenty five percent of the shares subject to the options become exercisable one year from the date of grant and 25% become exercisable on each of the three succeeding anniversaries, provided the optionee continues to be employed by the Company or any of its subsidiaries. The actual value an optionee receives is dependent on future stock market conditions, and there can be no assurance that the amounts reflected in the right hand columns of the table will actually be realized. No gain to the optionee is possible without an appreciation in the stock value which will benefit all shareholders commensurately. Includes 75,000 shares of Common Stock underlying stock options granted to Mr. Rosen which are contingent upon the approval by the shareholders of the proposal included in this Proxy Statement to increase the number of shares of Common Stock which may be issued under the 1995 Stock Option Plan . The options were granted pursuant to the 1995 Stock Option Plan and do not provide for tandem or stand alone stock apprecation rights. Payment for shares of Common Stock upon exercise of a stock option may be made in cash, or with the Company's consent, shares of Common Stock or a combination of cash and shares of Common Stock.
Fiscal Year-End Option Values Number of Shares Value of Unexercised Underlying Unexercised Options In-the-Money Options at Fiscal Year End at Fiscal Year End Name Exercisable (#) Unexercisable (#) Exercisable($) Unexercisable ($) Benedict P. Rosen 37,500 187,500 $0 $206,250 John S. Gilbertson 31,250 156,250 0 171,875 Donald B. Christiansen 25,000 125,000 0 137,500 C. Marshall Jackson 25,000 125,000 0 137,500 Ernie Chilton 25,000 125,000 0 137,500
Compensation Committee Interlocks and Insider Participation During the fiscal year ended March 31, 1997, the Compensation Committee was comprised of Messrs. Inamori, Itoh, Campbell and Tressler. Dr. Inamori is Chairman of the Board and Mr. Itoh is President of Kyocera. Kyocera owns 66,150,000 shares, or 75.2%, of the Company's outstanding Common Stock and has engaged in a significant number and variety of related company transactions. Report of Compensation Committee This report provides an overview of the Company's executive compensation philosophy and describes the role of the Compensation Committee. 8 The Board established a Compensation Committee in August 1995, in connection with the Company's initial public offering. Beginning with fiscal year commencing April 1, 1996, the Compensation Committee, subject to review by the Board, made determinations regarding salary levels and annual incentive bonus opportunities for executive officers, and performed such other compensation related functions that were delegated to the Compensation Committee by the Board. The Company's compensation policy reflects a commitment to an executive compensation plan which enables the Company to attract, retain and motivate highly qualified management professionals. The Company's compensation philosophy is to directly align executive compensation with the financial performance of the organization. The Company believes that the relationship between executive compensation and Company performance will create benefit for all shareholders. The Executive compensation program has been developed by the Compensation Committee using various factors which include, historical earnings, review of industry competition executive compensation plans, and consultation with compensation experts. The key elements of the executive compensation program are base salary, annual incentive bonus and stock options in addition to those benefits provided under the Company's retirement plans. The Compensation Committee and its subcommittee, The Equity Compensation Committee, review and approve each element of the Company's executive compensation program and periodically assesses the effectiveness of the program as a whole. This program covers the chief executive officer, the four other named executive officers and all other executive officers of the Company. Specifically, the committees approve the salaries of all executive officers, cash awards under the Company's Officers' Annual Incentive Program ("OAIP"), the grant of stock options under the 1995 Stock Option Plan ("SOP"), and the provision of any special benefits or perquisites to executive officers. The Base Salary Program The base salary program is intended to provide base salary levels that are externally competitive and internally equitable, and to reflect each individual's sustained performance and cumulative contribution to the Company. Each executive officer's individual performance is reviewed to arrive at merit increase determinations. These merit increases are then reviewed within the context of the total merit increase budget to determine reasonableness. The Officers' Annual Incentive Program The OAIP provides for annual cash incentive compensation based on various performance measures for executive officer positions. Bonus awards are paid under the OAIP generally if the Company's financial performance exceeds a predetermined performance target. The bonus awards for the Chief Executive Officer and the Chief Operating Officer are based on a percentage of profits. The rest of the executive officer bonuses are derived from a pool determined based on a percentage of profits. Stock Option Plan The SOP is designed to reward executive officers and other key employees directly for appreciation in the long-term price of the Company's stock. The plan directly links the compensation of executive officers to gains by the shareholders and encourages executive officers to adopt a strong stakeholder orientation in their work. The SOP also places what can be a significant element of compensation at risk because the options have no value unless there is apprecation over time in the value of Company stock. With the understanding that the value (if any) of stock options is based on future performance, the Company bases stock option grants on levels of expected value for long-term incentive grants among other companies and other comparable corporate employers. The Equity Compensation Committee periodically reviews the practices, grant levels, and grant values of other companies to ensure the plan continues to meet the Company's objectives. Chief Executive Officer Compensation As President and Chief Executive Officer of the Company, Mr. Rosen's base salary and merit increase for fiscal year ended March 31, 1997, reflect his substantial responsibilities. Based on these responsibilities, the Board awarded Mr. Rosen a base salary of $495,000 reflecting a merit increase of 6.4% over the prior year. Mr. Rosen received an Annual Incentive Bonus. Such bonus was based on the Company's financial results for the fiscal year ended March 31, 1997. In August 1996, Mr. Rosen was awarded stock options for 75,000 shares of Common Stock condtioned upon shareholder approval of an increase in the number of shares authorized for issuance under the 1995 Stock Option Plan. 9 Deferred Compensation Plan Each employee of the Company whose annual compensation is in excess of $150,000, is eligible to participate in the deferred compensation plan. The Company contributes an equivalent amount that the officer would have been entitled to under the Company's regular retirement program, up to allowable statutory limitations, but is otherwise limited under regulatory requirements. Summary The Compensation Committee believes the executive compensation program is adequate to accomplish the program's goals of attracting, retaining, and motivating highly qualified management professionals. The Committee additionally believes the executive compensation program is fair to both the executive officers and the Company. SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD: Kazuo Inamori, Chairman Carroll A. Campbell, Jr. Kensuke Itoh Richard Tressler Employment Agreement Benedict Rosen has an employment agreement that provides for a two year advisory period upon his retirement from the Company. During this advisory period Mr. Rosen will receive an annual payment equivalent to his most recent base salary. If Mr. Rosen dies previous to or during the two year advisory period, his heirs will be entitled to the compensation Mr. Rosen would have received. Performance Graph The following chart compares the percentage change in the cumulative total shareholder return on the Company's Common Stock from August 15, 1995 through March 31, 1997, with the cumulative total return of the S&P 500 Stock Index and a Peer Group Index. The Peer Group is comprised of the following companies: AMP, Amphenol, Kemet, Methode, Molex and Vishay. Fiscal year 1996 Peer Group figures have been revised to exclude Augat, which is no longer a publicly traded company. Comparison of Quarterly Cumulative Total Return: AVX, Peer Group, S&P 500 Value of $100 Invested on August 15, 1995
Aug-15-95 Sep-30-95 Dec-31-95 Mar-31-96 Jun-30-96 Sep-30-96 Dec-31-96 Mar-31-97 AVX 100 131 104 86 73 91 85 83 Custom Peer Group 100 97 91 94 91 91 92 85 S&P 500 100 105 111 117 122 126 137 140
The Stock Price Performance Graph above and the foregoing Report of Compensation Committee 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 or under the Securities Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. 10 PROPOSAL II PROPOSED RATIFICATION OF AN AMENDMENT TO THE 1995 STOCK OPTION PLAN The Board has adopted, subject to stockholder approval, amendments to the 1995 Stock Option Plan to (i) increase the number of shares that may be issued under the plan by 1,100,000 and (ii) modify the 300,000 share limit on the stock options that may be granted to any one individual to apply to grants in any five-year period. As of May 24, 1997, 1,488,500 shares of Common Stock were subject to outstanding options granted under the 1995 Stock Option Plan, excluding options conditionally granted (the "Conditional Grant") on August 12, 1996 to Mr. Rosen to purchase 75,000 shares of Common Stock at $18.125 per share, which grant was conditioned upon stockholder approval of an increase in number of shares available for issuance under the 1995 Stock Option Plan. Other than the Conditional Grant to Mr. Rosen, no additional stock options are presently contemplated to be granted under the 1995 Stock Option Plan. The purpose of the 1995 Stock Option Plan is to promote Company success by aligning employee financial interests with long-term shareholder value. The Board believes that the number of shares remaining available for issuance will be insufficient to achieve the purpose of the plan unless the additional shares are authorized. The modification of the 300,000 share limit with respect to which any one individual may be granted stock options to apply to grants in any five-year period allows the Company more flexibility in providing equity incentives to its employees while assuring that any compensation deemed paid by the Company in connection with the exercise of these options will qualify as performance-based compensation which is not subject to the $1 million limitation on the tax deductibility of executive compensation per covered individual imposed under Section 162 (m) of the Internal Revenue Code of 1986, as amended (the "Code" ). The material terms of the 1995 Stock Option Plan are summarized below. Stock Option Plan Pursuant to the 1995 Stock Option Plan, as amended, options may be granted to officers and key employees of the Company for the purchase of up to an aggregate of 2,650,000 shares of Common Stock. As of May 24, 1997, approximately 90 employees (including 10 officers) of the Company were eligible to participate in the 1995 Stock Option Plan. The 1995 Stock Option Plan is administered by the Equity Compensation Committee which determines, in its discretion, the number of shares subject to each option granted and the related purchase price and option period. Incentive stock options ("ISO's"), as defined by the Code and nonqualified stock options ("NQSO's") may currently be granted under the 1995 Stock Option Plan. No person, however, may be granted options under this plan during any five year period representing an aggregate of more than 300,000 shares of Common Stock. The 1995 Stock Option Plan requires that the exercise price for each stock option may not be less than 100% of the fair market value of the Common Stock on the date the option is granted. Under the 1995 Stock Option Plan, no ISO may be granted to an employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company unless the option price is at least 110% of the fair market value of the Common Stock at the date of grant. An ISO may not be granted to any employee if the aggregate fair market value of the Common Stock (determined as of the date of grant) with respect to which such options have been granted are exercisable for the first time by such employee during any calendar year exceeds $100,000. The 1995 Stock Option Plan requires that each stock option shall expire on the date specified by the Equity Compensation Committee, but not more than ten years from its date of grant; however, in the case of an employee who at the time of such grant owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, such options shall not be exercisable after the expiration of five years after the date of grant. Options will become exercisable in accordance with the stock option agreement; provided, however, that no options shall be exercisable until the six-month anniversary of the date of its grant. Except as provided otherwise in the applicable agreement or upon termination of employment due to death, retirement after age 55 ("Retirement") or incapacity, if the employee voluntarily terminates his employment or he is terminated for cause, his or her option (whether or not vested) shall immediately terminate. If the employee's employment is terminated by the Company for reasons other than cause, the option may be exercised within 90 days of such termination but in no event beyond the scheduled expiration of the option. If the employee's employment is terminated due to death, retirement or incapacity, the option may (a) at the discretion of the Equity Compensation Committee, become fully vested and (b) be exercised, to the extent vested, including options vested in accordance with (a) above, during the one-year period following such termination but in no event beyond the scheduled expiration of the option. Options may be exercised by the payment of cash, or unless prohibited by the option agreement, by the delivery of shares of Common Stock. Options granted under the 1995 Stock Option Plan are not assignable. 11 Federal Income Tax Consequences The following brief description of the tax consequences of awards under the 1995 Stock Option Plan is based on Federal tax laws currently in effect and does not purport to be a complete description of such Federal tax consequences. Options There are no Federal tax consequences either to the optionee or to the Company upon the grant of an ISO or of a NQSO. On the exercise of an ISO, the optionee will not recognize any income and the Company will not be entitled to a deduction, although such exercise may give rise to alternative minimum tax liability for the optionee. Generally, if the optionee disposes of shares acquired upon exercise of an ISO within two years of the date of grant or one year of the date of exercise, the optionee will recognize ordinary income and, subject to the limitation described below, the Company will be entitled to a deduction, equal to the excess of the fair market value of the shares on the date of exercise over the option price (limited generally to the gain on the sale). The balance of any gain, and any loss, will be treated as a capital gain or loss to the optionee. If the shares are disposed of after the foregoing holding requirements are met, the Company will not be entitled to any deduction, and the entire gain or loss for the optionee will be treated as a capital gain or loss. On exercise of a NQSO, the excess of the date-of-exercise fair market value of the shares acquired over the option price will generally be taxable to the optionee as ordinary income and, subject to the limitation described below, deductible by the Company. The disposition of shares acquired upon exercise of a NQSO will generally result in a capital gain or loss for the optionee, but will have no tax consequences for the Company. Limitation on Company's Deduction Pursuant to Code Section 162(m), the Company's tax deduction for all compensation paid to specified officers in any one year is limited to $1,000,000. The Company's deduction arising from an underlying stock acquired through the exercise of an NQSO (or the sale of the underlying stock acquired through the exercise of an ISO before the required holding periods are met) will be exempt from this limitation if certain outside director and shareholder approval requirements are met. The affirmative vote of the holders of a majority of the shares of Common Stock of the Company present in person or represented by proxy at the Annual Meeting and entitled to vote on the Proposal is required for approval of the amendments to the 1995 Stock Option Plan. The amendments to the 1995 Stock Option Plan are conditional upon and are of no force and effect unless the proposal receives approval by the requisite vote of the shareholders. The Board recommends a vote FOR ratification of the amendments to the 1995 Stock Option Plan. 12 PROPOSAL III PROPOSED RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board has appointed Coopers & Lybrand, L.L.P. as the independent auditors to examine the accounts of the Company for the fiscal year commencing April 1, 1997. Coopers & Lybrand L.L.P. has been serving the Company in this capacity for many years. In the event that ratification of this selection of auditors is not approved by the affirmative vote of a majority of the shares voting on the proposal, the selection of independent auditors will be reconsidered by the Board. A member of Coopers & Lybrand L.L.P. is expected to be in attendance at the Annual Meeting with the opportunity to make a statement and respond to questions. The Board recommends a vote FOR ratification of the appointment of Coopers & Lybrand L.L.P. as the Company's independent auditors. Shareholder Proposals If any shareholder intends to present a proposal to the Company for inclusion in its proxy statement relating to the Annual Meeting of Shareholders expected to be held in July 1998, or wishes to recommend nominees to the Board, such proposal, in writing and addressed to the Corporate Secretary, must be received by the Company no later than January 16, 1998. In general, stockholder proposals intended to be presented at an Annual Meeting, including proposals for the nomination of directors, must be received by the Company 60 days in advance of the meeting, or prior to May 15, 1998, to be considered for the 1998 Annual Meeting. Proxy Solicitation The entire cost of this solicitation will be borne by the Company, including reimbursement of banks, brokerage firms, custodians, nominees and fiduciaries for their reasonable Xexpenses in sending proxy materials to the beneficial owners of stock. Solicitation will primarily be made by mail, but proxies may be solicited personally, by telephone or by facsimile. In addition, the Company has retained Wachovia Bank of North Carolina to assist in the solicitation of proxies at a fee estimated to be $8,000, excluding out-of-pocket expenses. By order of the Board, /S/ John S. Gilbertson ------------------- John S. Gilbertson Corporate Secretary June 5, 1997 13 AVX CORPORATION Directors Recommend Voting For 1, 2 and 3 Mark box at right if an address change or comment has been noted on the reverse side of this card. _______ RECORD DATE SHARES: Please be sure to sign and date this Proxy Date_____________________ Shareholder sign here ____________________ Co-owner sign here ____________ DETACH CARD 1. Election of Directors, For Withhold For All Except Nominees: Marshall D. Butler Kensuke Itoh Masahiro Umemura Carroll A. Campbell, Jr. Rodney N. Lanthorne Masahiro Yamamoto Donald B. Christiansen Benedict P. Rosen Michihisa Yamamoto John S. Gilbertson Richard Tressler Yuzo Yamamura Kazuo Inamori NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark the "For All Except" box and strike a line through the nominee's(s') name(s). Your shares will be voted for the remaining nominee(s). 2. Ratify an increase to the number of shares by 1,100,000 that may be issued pursuant to the terms of the 1995 Stock Option Plan and modify the 300,000 share limit. For Against Abstain 3. Proposal to approve the election of Coopers & Lybrand L.L.P. certified public accountants as the independent auditors of the corporation. For Against Abstain 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AVX CORPORATION 17TH Ave. South - Myrtle Beach, South Carolina 29577 The undersigned hereby appoint Benedict P. Rosen, President and Chief Executive Officer, or John S. Gilbertson, Executive Vice President, Chief Operating Officer and Corporate Secretary, as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Common Stock of AVX Corporation held of record by the undersigned on May 24, 1997 at the Annual Meeting of Shareholders to be held on July 17, 1997, or any adjournment thereof. 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 PROPOSALS 1, 2 AND 3. PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign this proxy exactly as your name(s) appear(s) 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 authorized person. HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS? _____________________________ _____________________________ _____________________________ ______________________________ ___________________________ _____________________________ -----END PRIVACY-ENHANCED MESSAGE-----