<PAGE>
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 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
UNIVERSAL DISPLAY CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(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:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[insert Universal Display logo here]
UNIVERSAL DISPLAY CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
------------------------------
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 23, 2000
------------------------------
To All Holders of Shares
of Common Stock of Universal Display Corporation:
The 2000 Annual Meeting of Shareholders (the "Annual Meeting") of
Universal Display Corporation (the "Company") will be held at the Holiday Inn -
City Line Avenue, 4100 Presidential Boulevard, Philadelphia, Pennsylvania 19131
on June 23, 2000, at 4:00 p.m., Eastern Daylight Time, for the following
purposes:
(1) To elect seven directors;
(2) To vote upon a proposal to increase the number of shares of
the Company's common stock subject to the Company's Stock
Option Plan from 1,600,000 to 2,000,000;
(3) To approve an increase in the number of authorized shares of
Common Stock under the Company's Articles of Incorporation
from 25,000,000 to 50,000,000
(4) To vote upon a proposal to approve the appointment of Arthur
Andersen LLP as the Company's independent auditors for the
year ending December 31, 2000; and
(5) To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors of the Company has fixed April 17, 2000 as the
record date. Only shareholders of record at the close of business on that date
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. A list of shareholders as of that date will be available
for inspection at the Annual Meeting.
By Order of the Board of Directors,
Sidney D. Rosenblatt
Corporate Secretary
Ewing, New Jersey
May 15, 2000
- --------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID RETURN ENVELOPE PROVIDED WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON. THE GIVING OF A PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
[insert Universal Display logo here]
UNIVERSAL DISPLAY CORPORATION
375 Phillips Boulevard
Ewing, New Jersey 08618
------------------------------
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 23, 2000
------------------------------
This proxy statement and the accompanying form of proxy will be first
mailed to shareholders of Universal Display Corporation (the "Company") on or
about May 15, 2000. These materials are being furnished in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
annual meeting of shareholders (the "Annual Meeting") to be held at the Holiday
Inn - City Line Avenue, 4100 Presidential Boulevard, Philadelphia, Pennsylvania
19131 on June 23, 2000, at 4:00 p.m., Eastern Daylight Time, and at any
adjournments thereof.
At the Annual Meeting, shareholders of the Company will be asked to
vote upon (1) the election of seven directors; (2) a proposal to increase the
number of shares of the Company's Common Stock subject to the Company's Stock
Option Plan (the "Plan") from 1,600,000 to 2,000,000; (3) a proposal to approve
an increase in the number of authorized shares of Common Stock under the
Company's Articles of Incorporation from 25,000,000 to 50,000,000 shares; (4) a
proposal to approve the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 2000; and (5) such other
business as may properly come before the Annual Meeting or any adjournments
thereof.
The expense of this solicitation will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited by telephone or in
person by some officers, directors and regular employees of the Company who will
not be specially engaged or compensated for such services. The Company also will
request banks, brokers and other nominees, custodians and fiduciaries to send
proxy materials to beneficial owners and will reimburse such persons for
reasonable expenses incurred in that regard.
VOTING AT THE MEETING
Holders of shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), of record at the close of business on April 17, 2000
(the "Record Date") are entitled to vote at the Annual Meeting. As of the Record
Date, there were 15,016,856 shares of Common Stock outstanding. Each shareholder
entitled to vote will have one vote for each share of Common Stock owned of
record by such shareholder as of the close of business on the Record Date.
Shareholders do not have cumulative voting rights with regard to the election of
directors.
The presence, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes that all shareholders are entitled to cast are
the matters to be acted upon at the Annual Meeting will constitute a quorum.
The persons named in the enclosed proxy will vote the shares
represented by each properly executed proxy as directed therein. In the absence
of such direction on a properly executed proxy card, the persons named in the
enclosed proxy will vote FOR the persons nominated by the Board of Directors for
election as directors, FOR the proposal to increase the number of shares of the
Company's Common Stock subject to the Plan, FOR the proposal to increase the
number of authorized shares of Common Stock under the Company's Articles of
Incorporation, and FOR the proposal to approve the appointment of Arthur
Andersen LLP as the Company's independent auditors for the year ending December
31, 2000. As to other items of business that may properly be presented to the
Annual Meeting for action, the proxy holders will vote the proxies in accordance
with their best judgment.
The proxy may be revoked by a shareholder at any time before its
exercise by giving written notice of such revocation to the Secretary of the
Company. In addition, a shareholder who gives such notice of revocation and
attends the Annual Meeting in person may vote by ballot at the Annual Meeting.
<PAGE>
Assuming a quorum is present, nominees for directors must receive a
plurality of the votes cast at the meeting to be elected. Assuming a quorum is
present, the proposals to increase the number of shares of Common Stock subject
to the Plan, to increase in the number of shares of authorized Common Stock and
to approve the appointment of Arthur Andersen LLP as the Company's independent
auditors for the year ending December 31, 2000 must receive a majority of the
votes cast at the meeting to be approved. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be excluded entirely from the vote and will have no effect other than for
purposes of determining the presence of a quorum. Abstentions may be specified
on the proposals to increase the number of shares subject to the Plan and to
ratify the selection of the independent accountants, but not for the election of
directors. Abstentions will be considered present and entitled to vote at the
Annual Meeting, but will not be counted as votes cast in the affirmative.
Abstentions on the proposals to increase the number of shares subject to the
Plan and to ratify the selection of the independent accountants will have the
effect of a negative vote because these proposals require the affirmative vote
of a majority of the shares present at the Annual Meeting in person or
represented by proxy at the Annual Meeting and entitled to vote.
The Company believes that brokers that are member firms of the New York
Stock Exchange ("NYSE") and who hold shares in street name for customers have
the authority under the rules of the NYSE to vote those shares with respect to
the election of directors and the proposal to ratify the appointment of the
independent public accountants if they have not received instructions from a
beneficial owner. The Company does not believe that such brokers have the
authority to vote those shares with respect to the proposals to increase the
number of shares of Common Stock subject to the Plan or increase the number of
shares of authorized Common Stock. A failure by brokers to vote those shares
will have no effect on the outcome of the election of directors, approval of the
increase the number of shares subject to the Plan, approval of the increase of
the number of shares of authorized Common Stock or the adoption of the proposal
to ratify the appointment of the independent public accountants.
Your proxy vote is important. Please complete, sign and return the
accompanying proxy whether or not you plan to attend the Annual Meeting. If you
plan to attend the Annual Meeting to vote in person and your shares are
registered with the Company's transfer agent in the name of a broker, bank or
other custodian, nominee or fiduciary, you must secure a proxy from such person
assigning you the right to vote your shares of Common Stock.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at seven, all
of whom are to be elected at the Annual Meeting. Each director elected will
serve until the 2001 annual meeting and until a successor has been selected and
qualified or until the director's earlier death, resignation or removal. Each
nominee has consented to being nominated and to serve if elected. If any nominee
should subsequently decline or be unable to serve, the persons named in the
proxy will vote for the election of such substitute nominee as shall be
determined by the holders of such proxies.
All nominees are presently directors of the Company whose terms expire
at the Annual Meeting.
The Board of Directors Recommends a Vote FOR Each of the Nominees for Director
------------------------------
NOMINEES FOR ELECTION
------------------------------
<TABLE>
<CAPTION>
Name of Director Age Year First Became Director, Principal Occupations During
Past Five Years and Certain Directorships
<S> <C>
Sherwin I. Seligsohn...................... 64 Mr. Seligsohn has been Chairman and Chief Executive Officer
of the Company since 1994. He was President of the Company
until May 1996. Mr. Seligsohn founded, and since August 1991
has served as sole Director, Chairman, President and
Secretary of, American Biomimetics Corporation ("ABC"),
International Multi-Media Corporation and Wireless Unified
Network Systems Corporation. He is also Chairman and Chief
Executive Officer of Global Photonic Energy Corporation
("Global"). Mr. Seligsohn was the founder of InterDigital
Communications Corporation and from August 1972 to June 1990
served as its Chairman. Mr. Seligsohn is a member of the
Advisory Board of the Advanced Technology Center for Photonics
and Optoelectronic Materials (POEM) at Princeton University.
Steven V. Abramson........................ 48 Mr. Abramson joined the Company as President and Chief
Operating Officer in May 1996. He also has been a member of
the Board of Directors since May 1996. Mr. Abramson is also a
member of the Board of Directors of Global. From March, 1992
to May, 1996 he was Vice President, General Counsel,
Secretary and Treasurer of Roy F. Weston, Inc., a worldwide
environmental consulting and engineering firm. Mr. Abramson
is a member of the Advisory Board of the Advanced Technology
Center for Photonics and Optoelectronic Materials (POEM) at
Princeton University and on the Board of Governors of the
United States Display Consortium (USDC).
Sidney D. Rosenblatt...................... 52 Mr. Rosenblatt has been Executive Vice President, Chief
Financial Officer, Treasurer and Secretary of the Company
since June 1995. He has been a member of the Board of
Directors since May 1996. Mr. Rosenblatt is also Executive
Vice President, Chief Financial Officer, Secretary and
Treasurer of Global, and a member of its Board of Directors.
Mr. Rosenblatt is the owner, and served as the President and
Chief Executive Officer of S. Zitner Company from August 1990
until 1998. Mr. Rosenblatt sits on the Board of Directors and
Executive Committee for the Greater Philadelphia Chamber of
Commerce and sits on various Boards for non-profit
organizations.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Dean L. Ledger ........................... 51 Mr. Ledger has been a director of the Company since 1995.
From January 1997 until the present and from June 1995 to
November 1995, Mr. Ledger was Executive Vice President of the
Company. From November 1995 to December 1996 he was a
consultant to the Company. Since October 1992, Mr. Ledger has
been Vice President - Corporate Development and a consultant
to ABC.
Camille Naffah............................ 73 Mr. Naffah has been a director of the Company since October
1996. Since 1990, he has been President of Camille Naffah
Enterprises, a holding company for leisure enterprises
including hotels, lounges and restaurants.
Elizabeth H. Gemmill...................... 54 Ms. Gemmill has been a Director of the Company since April
1997. Since March 1999, she has been Managing Trustee of the
Warwick Foundation. From 1988 to March 1999, Ms. Gemmill was
Vice President and Secretary of Tasty Baking Company. Ms.
Gemmill is Chairman of the Board of Philadelphia University and
is on the Boards of American Water Works Company, Inc., Willow
Grove Bancorp, Philadelphia College of Osteopathic Medicine
and Metropolitan YMCA of Philadelphia and vicinity.
Lawrence Lacerte.......................... 47 Mr. Lacerte has been a director of the Company since October
1999. Since July 1998 he has been Chairman and Chief Executive
Officer of Lacerte Technology Inc., a company specializing in
technology and Internet-related ventures. Prior to that time he
was the founder, Chairman and CEO of Lacerte Software, which was
sold to Intuit Corporation in June, 1998. Mr. Lacerte also
serves on the boards of directors of TeraGlobal Communications
Corporation, Citadel Technology, Inc., How2.com, Inc., World point
Interactive, Inc., and Fandom.com, Inc. Mr. Lacerte also serves on
various not-for-profit boards.
</TABLE>
General Information Concerning the Board of Directors and its Committees
The Board of Directors held five meetings during 1999. Each incumbent
director attended at least 75% of the aggregate of all meetings of the Board of
Directors during the period for which he or she was a director and the meetings
of the committees on which he or she served. The Board of Directors has
established an Audit Committee and a Compensation Committee. It has not
established a nominating committee.
4
<PAGE>
Members of the Board of Directors do not receive cash compensation.
However, they do receive options to purchase 5,000 shares of Common Stock for
service on the Board.
Audit Committee. The Audit Committee is responsible for providing
general oversight with respect to accounting principles employed in the
Company's financial reporting. The Audit Committee meets periodically with the
Company's principal financial and accounting officer and independent public
accountants to review the scope of auditing procedures and the Company's
policies related to internal auditing and accounting procedures and controls.
The Audit Committee met once during 1999. The Audit Committee is currently
composed of non-employee directors, Elizabeth Gemmill, Chairman, and Camille
Naffah.
Compensation Committee. The Compensation Committee recommends to the
Board of Directors the compensation of the Company's Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer, reviews and takes action on
the recommendations of the Chief Executive Officer as to the appropriate
compensation for other officers, reviews other compensation and personnel
development matters generally and administers the stock option plans. The
Compensation Committee is currently composed of Elizabeth Gemmill, Chairman,
and Camille Naffah.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 17, 2000, certain
information regarding the beneficial ownership of shares of Common Stock: (i) by
each director of the Company, (ii) by each person who is known by the Company to
beneficially own 5% or more of the outstanding shares of Common Stock, (iii) by
each executive officer of the Company named in the Summary Compensation Table
included elsewhere herein, and (iv) by all of the Company's executive officers
and directors as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percentage
Name and Address of Beneficial Owner (1) Beneficial Ownership(2) of CommonStock(2)
---------------------------------------- ----------------------- -----------------
<S> <C> <C>
Lori S. Rubenstein(3)(4) 3,301,000 28.0%
Scott Seligsohn(3)(4) 3,523,000 23.5
Clifford D. Schlesinger(3) 3,000,000 20.0
Sherwin I. Seligsohn(5) 380,167 2.5
Dean L. Ledger(6) 391,667 2.6
Steven V. Abramson(2) 436,667 2.9
Sidney D. Rosenblatt(2) 431,307 2.8
Camille Naffah 315,000 2.1
Elizabeth H. Gemmill 15,500 *
Lawrence Lacerte 538,332 3.6
All executive officers and directors as a group (seven people) 2,508,640 16.7
</TABLE>
- ------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is 375
Phillips Boulevard, Ewing, New Jersey 08618.
(2) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. The percentage for
each beneficial owner listed above is based on 15,016,856 shares
outstanding as of April 17, 2000. In accordance with the rules of the
Securities and Exchange Commission, options to purchase shares of
5
<PAGE>
Common Stock that are exercisable as of April 17, 2000, or exercisable
within 60 days thereafter are deemed to be outstanding and beneficially
owned by the person holding such options for the purpose of computing
such person's percentage ownership, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person. The numbers of shares indicated in the table includes
the following number of shares issuable upon the exercise of warrants
or options: Scott Seligsohn -- 203,000; Sherwin I. Seligsohn --
227,167; Dean L. Ledger -- 231,667; Steven V. Abramson -- 331,667;
Sidney D. Rosenblatt -- 326,667; Elizabeth H. Gemmill -- 15,000; and
Lawrence Lacerte -- 5,000.
(3) Includes (i) 1,500,000 shares of Common Stock owned by the Sherwin I.
Seligsohn Irrevocable Indenture of Trust dated 7/29/93 FBO Lori S.
Rubenstein (the "Rubenstein Trust"), of which Lori S. Rubenstein, Scott
Seligsohn and Clifford D. Schlesinger are co-trustees and (ii)
1,500,000 shares of Common Stock owned by Sherwin I. Seligsohn
Irrevocable Indenture of Trust dated 7/29/93 FBO Scott Seligsohn (the
"Seligsohn Trust"), of which Lori S. Rubenstein, Scott Seligsohn and
Clifford D. Schlesinger are co-trustees. Mr. Schlesigner's address is
1500 Chestnut Street, Philadelphia, Pennsylvania.
(4) Includes 176,000 shares of Common Stock owned by American Biomimetics
Corporation, which the Rubenstein Trust and Seligsohn Trust are
principal shareholders.
(5) Does not include (i) 176,000 shares of Common Stock owned by American
Biomimetics Corporation, (ii) 200,000 shares of Series A Preferred
Stock owned by American Biomimetics Corporation, (iii) 1,500,000 shares
of Common Stock owned by the Rubenstein Trust, (iv) 1,500,000 shares of
Common Stock owned by the Seligsohn Trust, (v) 125,000 shares of Common
Stock owned by Lori S. Rubenstein, his emancipated daughter, and (vi)
125,000 shares of Common Stock owned by Scott Seligsohn, his
emancipated son, for which Mr. Seligsohn disclaims beneficial
ownership.
(6) Does not include 24,000 shares of Common Stock owned by the Ledger
Family Trust II, for which Mr. Ledger disclaims beneficial ownership.
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation of the Chief
Executive Officer and the other two most highly compensated executive officers
of the Company for services in all capacities to the Company or its subsidiary
for the fiscal year ended December 31, 1999 and the total compensation earned by
such individuals for the Company's two previous fiscal years.
<TABLE>
<CAPTION>
Securities
Year Ended Restricted Underlying All Other
Name and Principal Position December 31, Salary ($) Bonus Stock Options Compensation
--------------------------- ----------- ---------- -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sherwin I. Seligsohn.................... 1999 $125,000 $ -- $ -- 30,000 $2,988 (3)
Chairman of the Board 1998 85,000 -- -- 20,000 --
and Chief Executive Officer 1997 85,000 -- -- 25,000 --
Steven V. Abramson...................... 1999 $200,000 $165,256 (1) $362,500 (2) 30,000 $4,657 (4)
President and Chief Operating 1998 180,000 -- -- 120,000 --
Officer 1997 180,000 -- -- 25,000 --
Sidney D. Rosenblatt.................... 1999 $200,000 $165,256 (1) $362,500 (2) 30,000 $5,541 (5)
Executive Vice President, Chief 1998 180,000 -- -- 120,000 --
Operating Officer, Secretary & 1997 180,000 -- -- 25,000 --
Treasurer
</TABLE>
6
<PAGE>
(1) Represent the payroll taxes associated with the stock bonus in (2), paid
by the Company.
(2) On 5/20/99, Steve Abramson and Sidney Rosenblatt were each granted 100,000
shares of restricted Common Stock.
(3) Includes Company contributions to the Company's Simple IRA plan of $1,769,
life and disability insurance premium payments of $1,219.
(4) Includes Company contributions to the Company's Simple IRA plan of $3,000,
life and disability insurance premium payments of $1,657.
(5) Includes Company contributions to the Company's Simple IRA plan of $3,000,
life and disability insurance premium payments of $2,541.
The following table summarizes stock options granted during 1999 to the
persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
--------------------------------------------------------------- ---------------------------------
Percentage of Total
Options Options Granted to Exercise Expiration
Name Granted Employees In 1999 Price Date 5% 10%
- ----- ------- ----------------- ----- ---- -- ---
<S> <C> <C> <C> <C>
Sherwin I. Seligsohn 30,000 9.35% $ 3.875 10/12/09 $189,359 $301,523
Steven V. Abramson 30,000 9.35% $ 3.875 10/12/09 189,359 301,523
Sidney D. Rosenblatt 30,000 9.35% $ 3.875 10/12/09 189,359 301,523
</TABLE>
The Company does not currently grant any long-term incentives, other than stock
options and warrants, to its executives or other employees. Similarly, the
Company does not sponsor any defined benefit or actuarial plans at this time.
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at Fiscal Year Value of Unexercised In-the-Money
End Options at Fiscal Year End
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
Name Exercisable Unexercisable Exercisable Unxercisable
- ---- ----------- ------------- ----------- ------------
Sherwin I. Seligsohn 16,667 13,333 $214,588 $171,662
Steven V. Abramson 16,667 13,333 214,588 171,662
Sidney D. Rosenblatt 16,667 13,333 214,588 171,662
</TABLE>
No options were exercised last fiscal year by any of the persons named in the
Summary Compensation Table.
7
<PAGE>
Employment Agreement
The Company had entered into an employment agreement with Sherwin
Seligsohn on November 1, 1995, which expired on November 1, 1997, to serve as
its Chairman of the Board and Chief Executive Officer. The agreement contained a
provision prohibiting Mr. Seligsohn from competing directly with the Company
during the term of employment and for a period of two years thereafter.
CERTAIN TRANSACTIONS
In October 1999, pursuant to the Company's Stock Option Plan, the
following officers and directors were granted options to purchase the amounts of
Common Stock reflected below, at an exercise price of $3.875, the fair market
value on the date of grant: Sherwin I. Seligsohn -- 30,000; Steven V. Abramson
- -- 30,000; Sidney D. Rosenblatt -- 30,000; Dean L. Ledger -- 30,000; Camille
Naffah -- 10,000; Elizabeth H. Gemmill -- 10,000; and Lawrence Lacerte -- 5,000.
In June, 1999, the Board of Directors issued to each of Steven V Abramson and
Sidney Rosenblatt 100,000 shares of unregistered common stock.
The Company shares office space and certain related expenses with
Global Photonic Energy Corporation, ("Global"), a company for which Messrs.
Seligsohn, Rosenblatt and Ledger are directors and executive officers and Mr.
Abramson is a director.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors performs five principal
tasks. It:
o recommends to the full Board the compensation of the Company's chief
executive officer, chief operating officer, and chief financial
officer;
o approves the granting of any bonuses to officers; and
o generally reviews other compensation and personnel development matters.
In fulfilling these duties, it is the objective of the Compensation Committee to
have a policy that will enable the Company to attract, retain and reward
executive officers of outstanding ability.
The Company's compensation policy for executives is to pay competitively and to
be fair in the administration of pay. This is the same policy applicable to all
the Company's employees. Base salary levels for the Company's executive officers
are intended to be generally competitive with other comparable companies, taking
into account such factors as the level of responsibility involved, the need for
special expertise and the specific individual's experience and prior performance
at the Company. Stock bonuses based on individual and company performance have
been used to create an incentive for outstanding performance. The Company
believes that the grant of equity option and securities to executives and other
employees aligns the interests of such executives and employees with those of
the Company's shareholders and further rewards successful performance
Executive base salaries are reviewed by the Committee periodically. During this
review the Committee considers the performance of the Company during the prior
year, the individual executive's contribution to that performance and changes in
the role and responsibility of the executive.
Mr. Seligsohn serves as the Company's Chief Executive Officer. During 1999, Mr.
Seligsohn's annual base salary was $125,000, an increase of approximately 50%
from 1998. Mr. Seligsohn's base salary is determined in accordance with the
criteria outlined above. In addition, the Compensation Committee evaluated the
Company's overall performance as well as Mr. Seligsohn's individual performance
and took into account that Mr. Seligsohn also serves as Chairman of, and
performs services for, other companies which he has founded. Mr. Seligsohn was
also granted options to purchase 30,000 shares of the Company's Common Stock.
Because of the compensation levels of the Company's officers, the Compensation
Committee has not traditionally considered the effect of Section 162(m) of the
Code limiting deduction in excess of $1 million.
Respectfully submitted by the Compensation Committee as of April 20, 2000.
Elizabeth Gemmill
Camille Naffah
9
<PAGE>
PERFORMANCE GRAPH
The performance graph below compares the change in the cumulative
shareholder return of the Company's Common Stock from April 11, 1996 (the date
of the Company's initial public offering) to December 31, 1999 with the
percentage change in the cumulative total return over the same period on (i) the
Nasdaq Electronics Components Index and (ii) the Russell 2000 Index.
This graph assumes an initial investment of $100 on April 11, 1996 in
each of the Company's Common Stock, the Nasdaq Electronics Components Index and
the Russell 2000 Index.
Cumulative Total Return
------------------------------------------------
4/11/96 12/96 12/97 12/98 12/99
UNIVERSAL DISPLAY CORPORATION 100.00 111.58 90.24 76.83 326.83
RUSSELL 2000 100.00 117.09 154.31 144.36 142.21
NASDAQ ELECTRONIC COMPONENT 100.00 167.63 175.74 271.48 530.99
10
<PAGE>
PROPOSAL 2
APPROVAL OF ADDITIONAL SHARES TO BE ISSUED UNDER THE STOCK OPTION PLAN
At the Annual Meeting, there will be presented to the shareholders a
proposal to increase the number of shares of Common Stock subject to the Plan
from 1,600,000 to 2,000,000.
The Board of Directors believes that the amendment to increase the
number of shares of Common Stock available for issuance under the Plan is in the
best interest of the Company. The Board of Directors believes that the Plan
allows the Company to attract, retain and motivate participants and encourages
participants to devote their best efforts to the business and financial success
of the Company. The Board of Directors believes that providing key employees,
directors, consultants and advisors of the Company with the opportunity to
acquire an equity interest in the Company will encourage the participants to
contribute materially to the growth of the Company, thereby benefiting the
Company's shareholders, and will align the economic interests of the
participants with those of other shareholders. As of April 17, 2000, options to
purchase 1,294,039 shares of Common Stock were outstanding under the Plan;
options to purchase 305,961 shares of Common Stock remain available for future
grants. Assuming approval of this proposal, 705,961 shares will remain available
for future grant.
The Board of Directors Recommends a Vote FOR the Proposal To Increase the Number
of Shares of Common Stock Subject to the Plan from 1,600,000 to 2,000,000.
DESCRIPTION OF THE PLAN
The amended Plan authorizes up to 2,000,000 shares of Common Stock for
issuance upon the exercise of options available for future grant under the Plan
designated as either (i) incentive stock options ("ISOs") under the Internal
Revenue Code of 1986, as amended (the "Code") or (ii) non-qualified stock
options ("NQSOs") ("NQSOs" and ISOs are collectively referred to as "Options.")
Subject to approval, ISOs may be granted under the Plan to employees (including
directors) and officers of the Company. NQSOs may be granted to consultants,
directors (including non-employee directors), employees and officers of the
Company. As of April 17, 2000 there were 7 officers, 21 employees and 3
consultants eligible to participate in the Plan. In certain circumstances, the
exercise of options granted under Plan may have an adverse effect on the market
price of the Common Stock.
The Board of Directors of the Company (the "Board") administers the Plan.
The Board has the authority to grant options in its discretion and may consider
the nature of the optionee's services and responsibilities, the optionee's
present and potential contribution to the Company's success and such other
factors as it may deem relevant. The Board will determine the excercisability
and term (not to exceed ten years), of options granted under the Plan. The
purchase price of Common Stock subject to an option may be equal to, greater
than or less than fair market value at the time of grant. ISOs granted under the
Plan may not be granted at a price less than the fair market value of the Common
Stock on the date of grant (or 110% of fair market value in the case of persons
holding 10% or more of the voting stock of the Company). The aggregate fair
market value of the shares for which ISOs granted to any employee are
exercisable for the first time by such employee during any calendar year (under
all stock option plans of the Company and related corporation) may not exceed
$100,000. Options granted under the Plan will expire not more than ten years
from the date of grant (five years in the case of ISOs granted to persons
holding 10% or more of the voting stock for the Company). Fair market value is
currently the closing price of a share of Common Stock on the NASDAQ Small Cap
Market on the date of grant, or if there is no sale on such date, the closing
price on the last previous date on which a sale is reported. As of April 17,
2000, the fair market value of a share of Common Stock was $13.75 per share.
Options granted under the Plan are not transferable during an optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Board may permit an employee to
transfer rights under an NQSO to the employee's spouse or family member without
receiving consideration, subject to certain other conditions.
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The Board may amend or terminate the Plan at any time; provided that
any amendment that increases the aggregate number of shares of Common Stock that
may be issued or transferred under the Plan or modifies the requirements as to
eligibility for participation in the Plan will be subject to shareholder
approval.
New Plan Benefits
The following table sets forth benefits related to the Plan. Future
awards under the Plan are not determinable because specific awards are made at
the discretion of the Board of Directors, depending upon a variety of factors.
For information concerning awards made under the Plan to the Company's Chief
Executive Officer and other officers, see "Summary Compensation Table." The
following table sets forth additional information with respect to fiscal 1999.
Number of Options
-----------------
All executive officers as a group 90,000
All directors not executive officers as a group 55,000
All employees, as a group, excluding executive officers 230,750
Federal Income Tax Consequences
The following discussion is intended to point out the general
principles of current federal income tax law applicable to ISOs and NQSOs
granted under the Plan. Participants should contact their own tax advisors
concerning the tax consequences, if any, of the grant of ISOs and NQSOs,
exercise of Options and the disposition of any shares acquired through the
exercise of Options. Since federal income tax laws may change subsequent to the
date hereof, individual financial situations vary and state and local tax
consequences may also be significant.
A participant is not subject to federal income tax upon the grant or
exercise of ISOs and the Company is not entitled to a federal income tax
deduction by reason of such grant or exercise. The amount by which the fair
market value of the option shares received at the time of exercise exceeds the
option price is, however, a tax preference item for purposes of calculating the
alternative minimum tax. Further, the participants basis in option shares
acquired through exercise of an ISO will, for alternative minimum tax purposes,
equal the fair market value of the option shares taken into account in
determining the participants alternative minimum taxable income.
The disposition of option shares acquired by a participant upon
exercise of an ISO within one year after the issuance of the option shares upon
exercise of the options or before the expiration of two years from the date the
options are granted generally constitute disqualifying dispositions, resulting
in the participant recognizing ordinary income in the year of disposition in an
amount equal to the lesser of (i) the excess of the fair market value of the
option shares on the date of exercise over the exercise price or (ii) the excess
of the amount realized on the disposition over the participants tax basis in the
option shares. Any gain realized on the disposition in excess of the amount of
ordinary compensation income recognized is long-term or short-term capital gain,
depending upon the length of the holding period of the option shares. In the
case of a disqualifying disposition, the Company may claim a tax deduction in an
amount equal to the ordinary compensation income recognized by the participant,
but does not receive a deduction corresponding to any capital gain realized by
the participant. If the option shares are sold more than one year after the date
of the exercise of the option and more than two years after the date the options
are granted, the participant will realize capital gain or loss (assuming the
option shares are held as capital assets) equal to the difference between the
amount realized on disposition and the option price. If the participant
satisfies both of the holding periods described above, then the Company will not
be allowed a deduction by reason of the exercise of the ISO.
For federal income tax purposes, the holder of an option that is a NQSO
will not recognize taxable income at the time of grant, and the Company will not
be allowed a deduction by reason of the grant of an NQSO. Except as described
below, the participant will recognize ordinary compensation income upon exercise
of the NQSO, in an amount equal to the difference between the fair market value
of the option shares received at the time of exercise and the option price of
the NQSO. The Company will generally be entitled to a deduction equal to the
amount of ordinary compensation income recognized by the participant.
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For the purpose of computing gain or loss on the subsequent sale or
taxable exchange of option shares purchased upon the exercise of the NQSO, a
participant's tax basis in such shares will be the fair market value of the
option shares on the date the participant recognized ordinary compensation
income. Upon the subsequent sale or taxable exchange by the participant of such
option shares acquired by exercise of an NQSO, assuming the option shares are
held as capital assets, the participant will realize capital gain or loss
(long-term or short-term, depending upon the length of the holding period of the
shares) in an amount equal to the difference between the participant's tax basis
in such option shares and the selling price.
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PROPOSAL 3
APPROVAL OF INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Introduction
On April 20, 2000, the Board of Directors unanimously adopted a
resolution declaring it advisable to amend the Company's Articles of
Incorporation (the "Articles of Incorporation") to increase the number of shares
of common stock that the Company has the authority to issue from 25,000,000 to
an aggregate of 50,000,000 shares (the "Amendment"). The Amendment was adopted
subject to shareholder approval at the Annual Meeting. In the event the
Amendment is approved by shareholders, the Company will thereafter amend the
Articles of Incorporation by making a filing with the Secretary of State of the
Commonwealth of Pennsylvania reflecting the Amendment, which will become
effective on the date the filing is accepted by the Secretary of State.
Current Use of Shares
As of April 17, 2000, the Company had 15,016,856 shares of Common Stock
outstanding and 1,600,000 shares reserved for possible future issuance under the
Plan, of which 1,294,039 shares are covered by outstanding options and 305,961
shares are available for future grant or purchase. Additionally, there are
2,776,541 shares issuable upon exercise of outstanding warrants. Based upon the
foregoing number of outstanding and reserved shares of Common Stock, the Company
currently has 5,606,603 shares of Common Stock available for other purposes.
Purpose and Effect of the Proposed Amendment
The Board of Directors believes that it is in the Company's best
interest to increase the number of authorized but unissued shares of Common
Stock in order to have additional shares available for issuance to meet the
Company's future business needs as they arise. The Board believes the
availability of the additional shares will provide the Company with the
flexibility to issue Common Stock for a variety of proper corporate purposes as
the Board of Directors may deem advisable without further action by the
Company's shareholders, except as may be required by law or by regulation or
rule of The Nasdaq Stock Market. These purposes could include, among others, the
sale of stock to obtain additional capital funds, the purchase of property, the
acquisition by merger into the Company or otherwise of other companies, use in
various equity compensation and other employee benefit plans, the declaration of
stock dividends or distributions and other bona fide corporate purposes. The
Company's management has no present arrangements, agreements, understandings or
plans for the issuance or use of the additional shares proposed to be authorized
by the Amendment, other than as stated in the proposal to increase the number of
shares of Common Stock subject to the Plan from 1,600,000 to 2,000,000.
Under the Articles of Incorporation, the Company's shareholders do not
have preemptive rights with respect to Common Stock. Thus, should the Board of
Directors elect to issue additional shares of Common Stock, shareholders would
not have preferential rights to purchase such shares. In addition, if the Board
of Directors elects to issue additional shares of Common Stock, such issuance
could have a dilutive effect on earnings per share and on the voting power and
shareholdings of then current shareholders.
Although an increase in the authorized shares of Common Stock could,
under certain circumstances, also be construed as having an anti-takeover
effect, the current proposal to amend the Articles of Incorporation is not in
response to any effort to accumulate the Company's stock or to obtain control of
the Company. In addition, the proposal is not part of any plan by management to
recommend a series of similar amendments to the Board of Directors and the
shareholders. The Board also does not currently contemplate recommending the
adoption of any other amendments to the Articles of Incorporation, which could
be construed to affect the ability of third parties to take over or change
control of the Company.
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The Board of Directors unanimously recommends a vote FOR the proposal
to amend the Articles of Incorporation to increase the number of authorized
shares of Common Stock from 25,000,000 to 50,000,000.
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PROPOSAL 4
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Arthur Andersen LLP
as independent public accountants to examine the financial statements of the
Company for the year ending December 31, 2000. Arthur Andersen LLP has served as
accountants for the Company since 1994. Representatives of Arthur Andersen LLP
will be present at the meeting to make a statement if they desire to do so and
to respond to appropriate questions of shareholders.
Although the submission of the appointment of Arthur Andersen LLP is
not required by law or the By-Laws of the Company, the Board is submitting it to
the shareholders to ascertain their views. If the shareholders do not approve
the appointment, the Board will not be bound to seek other independent
accountants for 2000, but the selection of other independent accountants will be
considered in future years.
The Board Recommends a Vote FOR the Proposal To Approve the Appointment
of Arthur Andersen LLP as the Company's Independent Auditors for the Year Ending
December 31, 2000.
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SHAREHOLDER PROPOSALS
Shareholders may submit proposals for inclusion in the proxy statement
on matters appropriate for shareholder action at annual meetings in accordance
with regulations adopted by the SEC. The Company must receive such proposals no
later than January 29, 2001 to be considered for inclusion in the proxy
statement and form of proxy relating to the 2001 annual meeting. Shareholders
who intend to submit proposals appropriate for shareholder action at the 2001
annual meeting, but who are not seeking to have the proposal included in the
proxy statement, must submit such proposal so that the Company receives it no
later than April 5, 2001. Proposals should be directed to the attention of the
Secretary of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires directors and executive officers of the Company and persons or entities
beneficially owning more than 10% of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission reports of
beneficial ownership and reports of changes in beneficial ownership of such
equity securities. Officers, directors and shareholders owning more than 10% of
the Company's equity securities are required by the regulations of the
Securities and Exchange Commission to furnish the Company with copies of all
forms they file under Section 16(a) of the Act. Based solely upon its review of
the copies of such reports and any amendments thereto received by the Company
during the year ended December 31, 1999, all Section 16 (a) filing requirements
applicable to its officers, directors and 10% shareholders were satisfied,
except that Mr. Ledger purchased 5,000 shares of the Company's Common Stock on
February 10, 1999. The Form 4 was filed approximately six months after the
purchase.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Company's 1999 Annual Report, containing financial
statements for the year ended December 31, 1999, is being transmitted herewith.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange Commission,
excluding exhibits thereto, may be obtained, without charge, by contacting
Sidney D. Rosenblatt, Corporate Secretary, Universal Display Corporation, 375
Phillips Boulevard, Ewing, New Jersey 08618.
By Order of the Board of Directors,
Sidney D. Rosenblatt
Corporate Secretary
Ewing, New Jersey
May 15, 2000
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