<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Globecomm Systems Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- -------------------------------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
- -------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(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>
GLOBECOMM SYSTEMS INC.
45 OSER AVENUE
HAUPPAUGE, NEW YORK 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of Globecomm
Systems Inc. (the "Company") will be held at the offices of the Company, 45
Oser Avenue, Hauppauge, New York 11788 on November 17, 1999, at 10:00 a.m.
(eastern standard time) for the following purposes:
(1) To elect eight directors to serve until the next Annual Meeting of
Stockholders or until their respective successors shall have been
elected and qualified;
(2) To ratify the selection of Ernst & Young LLP, as independent
auditors of the Company for the fiscal year ending June 30, 2000;
and
(3) To transact such other business as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on September 24, 1999
will be entitled to notice of, and to vote at, the Annual Meeting. A list of
stockholders eligible to vote at the meeting will be available for inspection
at the meeting and for a period of ten days prior to the meeting during
regular business hours at the corporate headquarters at the address above.
Whether or not you expect to attend the Annual Meeting, your proxy vote is
important. To assure your representation at the meeting, please sign and date
the enclosed proxy card and return it promptly in the enclosed envelope,
which requires no additional postage if mailed in the United States or
Canada.
By Order of the Board of Directors
/s/ Paul J. Johnson
Paul J. Johnson
Secretary
October 15, 1999
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
GLOBECOMM SYSTEMS INC.
PROXY STATEMENT
OCTOBER 15, 1999
This Proxy Statement is furnished to stockholders of record of Globecomm
Systems Inc. (the "Company") as of September 24, 1999 in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board
of Directors" or "Board") for use at the Annual Meeting of Stockholders to be
held on November 17, 1999 (the "Annual Meeting").
Shares cannot be voted at the meeting unless the owner is present in
person or by proxy. All properly executed and unrevoked proxies in the
accompanying form that are received in time for the meeting will be voted at
the meeting or any adjournment thereof in accordance with instructions
thereon, or if no instructions are given, will be voted (i) "FOR" the
election of the named nominees and (ii) "FOR" the ratification of Ernst &
Young LLP, independent public auditors, as auditors of the Company for the
fiscal year ending June 30, 2000 and will be voted in accordance with the
best judgment of the persons appointed as proxies with respect to other
matters which properly come before the Annual Meeting. Any person giving a
proxy may revoke it by written notice to the Company at any time prior to
exercise of the proxy. In addition, although mere attendance at the Annual
Meeting will not revoke the proxy, a stockholder who attends the meeting may
withdraw his or her proxy and vote in person. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence
of a quorum for the transaction of business at the Annual Meeting.
Abstentions will be counted in tabulations of the votes cast on each of the
proposals presented at the Annual Meeting, whereas broker non-votes will not
be counted for purposes of determining whether a proposal has been approved.
The Annual Report of the Company (which does not form a part of the proxy
solicitation material), with the financial statements of the Company for the
fiscal year ended June 30, 1999, is being distributed concurrently herewith
to stockholders.
The mailing address of the principal executive offices of the Company is
45 Oser Avenue, Hauppauge, New York 11788. This Proxy Statement and the
accompanying form of proxy are being mailed to the stockholders of the
Company on or about October 15, 1999.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its
common stock, par value $.001 per share (the "Common Stock"). At the Annual
Meeting, each stockholder of record at the close of business on September 24,
1999 will be entitled to one vote for each share of Common Stock owned on
that date as to each matter presented at the Annual Meeting. On September 24,
1999, 9,269,163 shares of Common Stock were outstanding. A list of
stockholders eligible to vote at the Annual Meeting will be available for
inspection at the Annual Meeting and for a period of ten days prior to the
Annual Meeting during regular business hours at the principal executive
offices of the Company at the address specified above.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons appointed in the accompanying form
of proxy intend to vote at the Annual Meeting for the election of the eight
nominees named below as directors of the Company to serve until the next
Annual Meeting of Stockholders or until their successors have been elected
and qualified. If any nominee is unable to be a candidate when the election
takes place, the shares represented by valid proxies will be voted in favor
of the remaining nominees. The Board of Directors currently has nine members,
eight of whom are nominees for re-election. The Board of Directors does not
currently anticipate that any nominee will be unable to be a candidate for
election.
STOCKHOLDER APPROVAL
The affirmative vote of a plurality of the votes of the shares of
Company's outstanding Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote on the election of directors is
required to elect the directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THESE
NOMINEES.
INFORMATION REGARDING NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors currently has nine members, all of whom are
nominees for reelection except Shelly A. Harrison. The following information
with respect to the principal occupation or employment, other affiliations
and business experience of each of the eight nominees has been furnished to
the Company by such nominee. Except as indicated, each of the nominees has
had the same principal occupation for the last five years.
David E. Hershberg, 62, founded the Company in 1994 and has served as
Chief Executive Officer and Chairman of the Board of Directors since its
inception. From 1976 to 1994, Mr. Hershberg was the President of Satellite
Transmission Systems, Inc. ("STS"), a provider of satellite ground segment
systems and networks, which he founded and which became a subsidiary of
California Microwave, Inc. ("CMI"), and which is currently a subsidiary of L3
Communications. From 1990 to 1994, Mr. Hershberg also served as Group
President of the Satellite Communications Group of CMI, where he also had
responsibility for EFData, Inc., a manufacturer of satellite communications
modems and for Viasat Technology Corp. ("Viasat"), a manufacturer of
communications systems which specialized in portable and mobile satellite
communications equipment. Mr. Hershberg headed the Space Communications
division of ITT Corporation from 1968 to 1972, and the Systems Division of
Comtech Systems, Inc. ("Comtech") from 1972 to 1976. Mr. Hershberg is a
Director of Primus Telecommunications Group, Inc. ("Primus"), a
telecommunications company providing long distance services. He holds a
B.S.E.E. from Rensselaer Polytechnic Institute, an M.S.E.E. from Columbia
University and an M.S. in Management Science from Stevens Institute of
Technology.
Kenneth A. Miller, 54, has served as President and a Director since
joining the Company in November 1994. From 1978 to 1994, he held various
positions with STS, and succeeded Mr. Hershberg as President of that company
in 1994. During his tenure at STS, Mr. Miller developed and implemented
satellite communications systems and networks for customers in the United
States and overseas. Prior to his employment at STS, Mr. Miller was Manager
of Satellite Systems at Comtech and a Satellite Communications Staff Officer
with the United States Army. Mr. Miller holds an M.B.A. from Hofstra
University and a B.S.E.E. from the University of Michigan.
2
<PAGE>
Donald G. Woodring, 52, has served as Vice President--Network and Systems
Analysis and a Director since joining the Company in October 1994. From 1982
to 1994, he was Assistant Vice President for System Analysis at STS. From
1980 to 1982, he was employed by the SHAPE Technical Center and from 1972 to
1980 was employed by the U.S. Department of Defense. Mr. Woodring holds a
B.S. from Penn State University and an M.S.E.E. from Catholic University.
Stephen C. Yablonski, 52, has served as Vice President--Commercial Systems
and a Director since joining the Company in April 1995. From 1988 to 1995, he
was employed by STS, most recently as Vice President and General Manager of
the Commercial Systems and Networks Division. Prior to that he was Vice
President of Engineering at Argo Communications, a telecommunications
services provider. Mr. Yablonski holds a B.S.E.E. from Brown University and
an M.S.E.E. from the University of Pennsylvania.
Herman Fialkov, 77, has been a Director of the Company since January 1995.
In 1968, Mr. Fialkov started the venture capital firm of Geiger & Fialkov and
has been involved in venture investments since that time. He has been a
General Partner of PolyVentures Associates I, L.P., a high technology venture
capital fund since 1987. From 1972 to 1983, he was President and later
Chairman of Standard Microsystems Corporation, a manufacturer and provider of
large-scale integrated circuits and local area network products. He also is a
Director of Primus and a Trustee of Polytechnic University. Mr. Fialkov holds
a B.Ad.E. from New York University.
Benjamin Duhov, 70, has been a Director of the Company since January 1996.
He is a Consultant and the President of Stamford Consulting Group which
provides consulting services to the aerospace industry. He worked for
Thomson-CSF S.A. from June 1975 to October 1993, and for CBS Laboratories,
which was devoted to technical developments in the television and defense
industries, from 1972 to 1975. Mr. Duhov holds a B.S.E.E. from Washington
University.
C. J. Waylan, 58, has been a Director of the Company since January 1997.
He currently serves as President, Chief Executive Officer and Director at
Constellation Communications, Inc., a satellite communications provider of
voice, data, positioning and other services to mobile and fixed-site users.
From May 1996 to September 1997, Dr. Waylan served as Executive Vice
President of NextWave Telecom Inc. ("NextWave"), a provider of wireless
personal telecommunications services. Prior to joining NextWave, Dr. Waylan
worked for GTE Corporation from February 1981 to April 1996, where he served
as Executive Vice President for GTE Mobilnet and President of GTE Spacenet
Corporation. Dr. Waylan also is a Director of Stanford Telecommunications,
Inc., a communications technology company. Dr. Waylan holds a B.S. from the
University of Kansas and an M.S.E.E. and a Ph.D. from the Naval Postgraduate
School.
A. Robert Towbin, 64, has been a Director of the Company since November
1997 and has been a Managing Director of C.E. Unterberg, Towbin (formerly
Unterberg Harris), an investment banking firm, since September 1995. From
January 1994 to August 1995 he was the President and Chief Executive Officer
of the Russian-American Enterprise Fund, a U.S. Government owned investment
fund. From 1987 to 1994, he was employed as a Managing Director of Lehman
Brothers. From 1977 to 1986, Mr. Towbin held various executive positions with
L.F. Rothschild, Unterberg, Towbin, an investment banking firm. He also is a
Director of Bradley Real Estate, Inc., Globalstar Telecommunications Ltd.,
Gerber Scientific, Inc. and K&F Industries Inc. Mr. Towbin holds a B.A. from
Dartmouth College.
COMMITTEES OF THE BOARD
The Audit Committee of the Board of Directors consists of Mr. Fialkov and
Mr. Towbin and reviews, acts on and reports to the Board of Directors with
respect to various auditing and accounting matters,
3
<PAGE>
including the selection of the Company's auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of the Company's
independent auditors and the accounting practices of the Company.
The Compensation Committee of the Board of Directors consists of Mr.
Fialkov and Dr. Waylan and determines the salaries and incentive compensation
of the officers of the Company and provides recommendations for the salaries
and incentive compensation of the other employees and the consultants of the
Company. The Compensation Committee also administers various incentive
compensation, stock and benefit plans.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1999, the Board of Directors held three regular meetings and
three special meetings. There was no meetings of the Audit Committee and no
meetings of the Compensation Committee during fiscal 1999. All directors
attended 75% or more of the meetings of the Board of Directors (except that
Mr. Fialkov was unable to attend two meetings of the Board of Directors).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the requirements of Section 16 of the Securities Exchange Act of
1934, as amended, the Company's Directors, executive officers, and any
persons holding more than ten percent of the Company's Common Stock are
required to report their ownership of the Company's Common Stock and any
changes in that ownership to the Securities and Exchange Commission and the
Nasdaq National Market Surveillance Department. Specific due dates for these
reports have been established and the Company is required to report in this
Proxy Statement any failure to file by these dates during 1999. Based solely
on its review of such forms received by it from such persons for their 1999
transactions, the Company believes that except as described below all
Directors, officers and beneficial owners of more than ten percent of the
Company's Common Stock were in compliance with all such filing requirements.
Francis J. Hughes, an officer of the Company, failed to file on a timely
basis a Form 3 with respect to his initial beneficial ownership of the
Company's Common Stock at the time Mr. Hughes became an officer of the
Company. A filing on Form 3, with respect to this transaction, has since been
made for Mr. Hughes.
COMPENSATION OF DIRECTORS
Each of Mr. Fialkov and Dr. Waylan receives a fee of $500 per month as
members of the Compensation and Audit Committees. Other directors do not
receive any cash compensation for their service as members of the Board of
Directors, although they are reimbursed for certain expenses incurred in
connection with attendance at Board and Committee meetings.
Stock Option Grant. Under the Automatic Option Grant component of the
Company's 1997 Stock Incentive Plan (the "1997 Plan"), each individual who
first becomes a non-employee Board member on or after August 7, 1997 will
receive an option grant for 15,000 shares of Common Stock on the date such
individual joins the Board, provided such individual has not been in the
prior employ of the Company and provided he is not serving as a member of the
Board pursuant to contractual rights granted to certain groups of
stockholders in connection with their purchase of stock in the Company.
4
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
The executive officers of the Company as of June 30, 1999 were the
following:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------- ----- ----------------------------------------------------------------
<S> <C> <C>
David E. Hershberg .. 62 Chief Executive Officer and Chairman of the Board of Directors
Kenneth A. Miller ... 54 President and Director
Donald G. Woodring .. 52 Vice President--Network and Systems Analysis and Director
Stephen C. Yablonski 52 Vice President--Commercial Systems and Director
Ray Stuart ........... 61 Vice President--International Marketing
Paul J. Johnson ...... 44 Vice President--Contracts and Corporate Secretary
Andrew C. Melfi ...... 45 Vice President and Chief Financial Officer
Burt H. Liebowitz ... 62 President and Chief Operating Officer--NetSat Express
William M. Bartens .. 32 Chief Financial Officer--NetSat Express
Gary C. Gomes ........ 53 Executive Vice President--NetSat Express
Francis J. Hughes .... 49 Vice President--NetSat Express
</TABLE>
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Ray Stuart has served as Vice President--International Marketing since
joining the Company in July 1995. From 1989 to 1995, he was employed by
Comsat RSI, a satellite communications equipment supplier, most recently as
Vice President of Business Development. Mr. Stuart holds a B.S.E.E. from
Mississippi State University.
Paul J. Johnson has served as Vice President--Contracts since joining the
Company in October 1996. From 1991 to 1996, he was Director of Contracts for
STS. He holds a B.B.A. from St. Bonaventure University.
Andrew C. Melfi has served as Vice President since September 1997 and as
Chief Financial Officer since joining the Company in January 1996. From 1982
to 1995 he was the Controller of STS. From 1980 to 1982, he was the Assistant
Controller of Dorne and Margolin, Inc., a designer and manufacturer of
antennas. Mr. Melfi holds an M.B.A. and a B.B.A. in accounting from Dowling
College.
Burt H. Liebowitz has served as President and Chief Operating Officer of
NetSat Express since April 1999. From 1992 to 1999 he served as Vice
President of Technology and Chief Technical Officer for Loral Orion
responsible for the development of VSAT products and enterprise software
support for Orion's international networking and Internet access business.
Prior to joining Loral Orion, Mr. Liebowitz was Principal Engineer at the
MITRE Corporation, a non-profit company that provides systems engineering
consulting services to government agencies from 1989 to 1992. From 1982 to
1989 Mr. Liebowitz was President of the Sombers Group, a software development
and consulting company where he also served as principal consultant in the
design of distributed systems. Mr. Liebowitz is the author of two books on
distributed processing, and numerous articles on the development of highly
reliable, high performance computing and communications systems. He holds two
patents on TDMA/
5
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DAMA systems for satellites. Mr. Liebowitz holds a B.E.E. and M.S. in
Mathematics from Rensselaer Polytechnic Institute, and an M.S.E.E. from
Polytechnic Institute of Brooklyn.
William M. Bartens has served as Chief Financial Officer and Treasurer of
NetSat Express since May 1999 and he served as Controller of the Company from
October 1997 to April 1999. From October 1996 through September 1997 he was
an Audit Manager at Ernst & Young LLP and held various audit staff positions
with Ernst & Young LLP from January 1991 through September 1996. Mr. Bartens
holds an M.S. in Accounting from Long Island University -C.W. Post and a B.A.
in Economics from the State University of New York at Stony Brook.
Gary C. Gomes has served as Executive Vice President of NetSat Express
since January 1997 and he served as Vice President of the Company from
September 1995 to December 1996. From October 1994 to September 1995, Mr.
Gomes served as a consultant to the Company. Prior to that, he was Senior
Vice President of Marketing at STS, where he was employed from March 1983 to
September 1995. From 1971 to 1981, he was employed by Fairchild Industries,
Inc., a provider of services to the aerospace industry. Mr. Gomes holds a
B.A. in Mathematics and Economics from California Western University, an
M.S.I.A. from Carnegie Mellon's Graduate School of Industrial Administration
and a J.D. from the Law School of the University of Pennsylvania.
Francis J. Hughes has served as Vice President of Engineering & Operations
of NetSat Express since November 1998 and he served as Director of Technology
of NetSat Express from January 1997 to October 1998. From 1980 to 1997 he was
employed at STS, most recently as Director of Product Engineering responsible
for the development of MPEG2 digital video products, RF conversion products,
embedded microprocessor products, and Software development. From 1972 to 1980
Mr. Hughes served as a Digital Engineer at Comtech.
6
<PAGE>
SUMMARY COMPENSATION TABLE (1)
The following table sets forth information concerning the compensation
paid by the Company for services rendered during the fiscal years ended June
30, 1999, 1998 and 1997 to: (i) the Company's Chief Executive Officer and
(ii) the other four executive officers whose base salary during fiscal 1999
was at least $100,000 (together, the "Named Executive Officers"). None of the
Named Executive Officers who were named in the Company's Proxy Statement for
the fiscal year ended June 30, 1999 resigned or were dismissed.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS (2)
- ---------------------------------------------- ------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
David E. Hershberg,
Chairman and Chief Executive Officer .......... 1999 $190,964 -- $6,400
1998 165,000 -- 6,400
1997 165,000 -- 6,000
Kenneth A. Miller,
President ..................................... 1999 177,305 15,000 6,400
1998 160,000 -- 6,400
1997 160,000 85,500 6,000
Stephen C. Yablonski,
Vice President--Commercial Systems ........... 1999 134,421 10,000 5,597
1998 120,000 -- 3,600
1997 120,000 149,340 --
Ray Stuart,
Vice President--International Marketing ...... 1999 130,387 7,000 5,417
1998 126,000 5,000 5,040
1997 126,000 69,469 5,040
Donald G. Woodring,
Vice President--Network and Systems Analysis .. 1999 113,269 8,000 4,364
1998 100,000 -- 4,000
1997 100,000 71,250 4,000
</TABLE>
- ------------
(1) Other compensation in the form of perquisites and other personal
benefits has been omitted as the aggregate amount of such perquisites
and other personal benefits constituted the lesser of $50,000 or 10%
of the total annual salary and bonus of the Named Executive Officer
for such year. The Company did not award a bonus to any of its
executive officers during fiscal 1999.
(2) Includes annual registrant contributions to the Company's 401(k)
plan.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR(1)
The following table sets forth certain information regarding the option
grants made pursuant to the 1997 Plan during fiscal 1999 to each of the Named
Executive Officers. The Company has never granted any stock appreciation
rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
OF STOCK PRICE
NUMBER OF APPRECIATION FOR
SECURITIES PERCENTAGE OF OPTION TERM(4)
UNDERLYING OPTIONS TOTAL OPTIONS EXERCISE EXPIRATION ---------------------
NAME GRANTED GRANTED(2) PRICE(3) DATE 5% 10%
- --------------------- ------------------ --------------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David E. Hershberg .. -- -- -- -- -- --
Kenneth A. Miller ... 15,000 4.9% $5.06 11/27/08 $47,733 $120,965
Stephen C. Yablonski 10,000 3.3 5.06 11/27/08 31,822 80,643
Ray Stuart ........... 7,000 2.3 5.06 11/27/08 22,275 56,450
Donald G. Woodring ... 8,000 2.6 5.06 11/27/08 25,457 64,515
</TABLE>
- ------------
(1) Each option grant becomes exercisable in four equal annual
installments commencing one year after the date of the option grant.
(2) Based on an aggregate of 305,150 options granted to employees in
fiscal 1999, including options granted to the Named Executive
Officers.
(3) The exercise price may be paid in one or more of the following forms:
(i) cash or check made payable to the Company, (ii) shares of Common
Stock held for the requisite period necessary to avoid a charge to
the Company's earnings for financial reporting purposes and valued at
fair market value on the date of exercise or (iii) through a special
sale and remittance procedure through a broker.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten-year option term. The
assumed 5% and 10% rates of stock appreciation are mandated by rules
of the Securities and Exchange Commission and do not represent the
Company's estimate of the future market price of the Common Stock.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the value of unexercised options at the end of
fiscal 1999.
<TABLE>
<CAPTION>
NUMBER OF NET VALUES OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS(1)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ------------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David E. Hershberg .. -- -- -- -- -- --
Kenneth A. Miller ... -- -- 40,650 59,850 $281,936 $176,492
Stephen C. Yablonski -- -- 122,365 19,975 621,194 85,478
Ray Stuart ........... -- -- 49,788 31,680 228,001 118,280
Donald G. Woodring .. -- -- 49,875 29,375 234,947 125,409
</TABLE>
- ------------
(1) Based upon the market price of $9.875 per share, which was the
closing selling price per share of Common Stock on the Nasdaq
National Market on June 30, 1999, less the option exercise price
payable for such shares.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
In January 1997, the Company entered into three-year employment agreements
with each of Messrs. Hershberg and Miller (the "Executive Agreements").
Messrs. Hershberg and Miller are required to devote their full-time efforts
to the Company as Chairman of the Board and Chief Executive Officer, and as
President, respectively. The Company is required to compensate Messrs.
Hershberg and Miller at annual rates of $165,000 and $160,000, respectively
(which amounts are reviewed annually by the Board of Directors and are
subject to increase at their discretion). Effective November 1998, such
employment agreements increased to annual rates of $210,000 and $190,000 for
Messrs. Hershberg and Miller, respectively. Messrs. Hershberg and Miller are
entitled to all employee benefits generally made available to executive
officers. If the Company terminates the Executive Agreements other than for
disability or cause, the Company will have the following obligations: (i) if
the termination is after the end of the initial three-year term, the Company
must pay the terminated executive one-twelfth of his then applicable annual
base salary as severance pay and (ii) if the termination is before the end of
the initial three-year term, the Company must pay to the terminated
executive, as they become due, all amounts otherwise payable if he had
remained employed by the Company until the end of the third year of the
Executive Agreements. If their employment is terminated other than for cause
following a change of control of the Company, each of Messrs. Hershberg and
Miller will be entitled to receive: (i) a cash payment equal to three times
his respective annual base salary plus fringe benefits and bonus, (ii) a cash
payment equal to three times the Company's 401(k) contribution for such
executive and (iii) medical benefits for one year for the executive and his
dependents. In addition, all stock options will become immediately
exercisable upon a change of control. A "change in control" is defined in the
Executive Agreements as the acquisition of the Company by merger or asset
sale, or a change in control whether effected by a tender offer or a proxy
contest.
The Compensation Committee as Plan Administrator of the 1997 Plan will
have the authority to provide for the accelerated vesting of the shares of
Common Stock subject to outstanding options held by
9
<PAGE>
any executive officer or the shares of Common Stock subject to direct
issuances held by any such individual, in connection with certain changes in
control of the Company or the subsequent termination of the executive
officer's employment following the change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Mr. Fialkov and Dr.
Waylan. Neither of these individuals was an officer or employee of the
Company at any time during the 1999 fiscal year or at any other time. No
executive officer of the Company serves as a member of the board of directors
or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or
Compensation Committee.
10
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
establishing the base salary and incentive cash bonus programs for the
Company's executive officers and administering certain other compensation
programs for such individuals, subject in each instance to review by the full
Board of Directors. The Compensation Committee also is responsible for the
administration of the 1997 Plan under which grants may be made to executive
officers. The Board of Directors has reviewed and is in accord with the
compensation paid to executive officers in 1999.
GENERAL COMPENSATION POLICY. The fundamental policy of the Compensation
Committee is to provide the Company's executive officers with competitive
compensation opportunities based upon their contribution to the development
and financial success of the Company and their personal performance. It is
the Compensation Committee's objective to have a portion of each executive
officer's compensation contingent upon the Company's performance as well as
upon his own level of performance. Accordingly, the compensation package for
each executive officer is comprised of two elements: (i) base salary which
reflects individual performance and is designed primarily to be competitive
with salary levels in the industry and (ii) long-term stock-based incentive
awards which strengthen the mutuality of interests between the executive
officers and the Company's stockholders.
FACTORS. The principal factors which the Compensation Committee considered
in ratifying the components of each executive officer's compensation package
for 1999 are summarized below. The Compensation Committee may, however, in
its discretion apply entirely different factors in setting executive
compensation for future years.
o BASE SALARY. The base salary for each executive officer is determined
on the basis of the following factors: experience; personal
performance; the salary levels in effect for comparable positions
within and outside the industry; and internal base salary comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Compensation Committee deems
appropriate.
o BONUS. While it is the general policy of the Company not to award
performance-based cash bonuses, from time to time, the Committee may
authorize cash bonuses if such bonuses are deemed to be in the best
interest of the Company. The circumstances for such awards may vary but
may include bonus payments pursuant to the terms of negotiated
employment arrangements.
o LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through stock option grants. The grants are designed to align the
interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage the
Company from the perspective of an owner with an equity stake in the
Company. Each grant allows the individual to acquire shares of the
Company's Common Stock at a fixed price per share over a specified
period of time (up to 10 years). Each option generally becomes
exercisable in installments over a four-year period, contingent upon
the executive officer's continued employment with the Company.
Accordingly, the option will provide a return to the executive officer
only if the executive officer remains employed by the Company during
the vesting period, and then only if the market price of the underlying
shares appreciates over the option term.
The number of shares subject to each option grant is set at a level
intended to create a meaningful opportunity for stock ownership based on the
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term
11
<PAGE>
and the individual's personal performance in recent periods. The Compensation
Committee also considers the number of unvested options held by the executive
officer in order to maintain an appropriate level of equity incentive for
that individual. However, the Compensation Committee does not adhere to any
specific guidelines as to the relative option holdings of the Company's
executive officers. There were 85,650 stock options granted to executive
officers in fiscal 1999.
CEO COMPENSATION. In setting the compensation payable to the Company's
Chief Executive Officer, the Compensation Committee seeks to achieve two
objectives: (i) establish a level of base salary competitive with that paid
by companies within the industry which are of comparable size to the Company
and by companies outside of the industry with which the Company competes for
executive talent, and (ii) make a significant percentage of the total
compensation package contingent upon the Company's performance and stock
price appreciation. In fiscal 1999, Mr. Hershberg did not receive any
long-term stock-based incentive awards.
The base salary established for Mr. Hershberg on the basis of the
foregoing criteria was intended to provide a level of stability and certainty
each year. Accordingly, this element of compensation was not affected to any
significant degree by Company performance factors.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally disallows a tax
deduction to publicly held companies for compensation exceeding $1 million
paid to certain of the corporation's executive officers. The limitation
applies only to compensation which is not considered to be performance-based.
The non-performance based compensation paid to the Company's executive
officers for the 1999 fiscal year did not exceed the $1 million limit per
officer, nor is it expected that the non-performance based compensation to be
paid to the Company's executive officers for fiscal 2000 will exceed that
limit. The 1997 Plan is structured so that any compensation deemed paid to an
executive officer in connection with the exercise of option grants made under
that plan with an exercise price equal to the fair market value of the option
shares on the grant date will qualify as performance-based compensation which
will not be subject to the $1 million limitation. Because it is very unlikely
that the cash compensation payable to any of the Company's executive officers
in the foreseeable future will approach the $1 million limit, the
Compensation Committee has decided at this time not to take any other action
to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Compensation Committee will reconsider this
decision should the individual compensation of any executive officer ever
approach the $1 million level.
THE COMPENSATION COMMITTEE
MR. HERMAN FIALKOV
DR. C.J. WAYLAN
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PERFORMANCE GRAPH
Set forth below is a graph comparing the annual percentage change in the
Company's cumulative total stockholder return on its Common Stock from August
8, 1997 (the date public trading of the Company's stock commenced) to the
last day of the Company's last completed fiscal year (as measured by dividing
(i) the sum of (A) the cumulative amount of dividends for the measurement
period, assuming dividend reinvestment, and (B) the excess of the Company's
share price at the end over the price at the beginning of the measurement
period, by (ii) the share price at the beginning of the measurement period)
with the cumulative total return so calculated of the Nasdaq Stock Market
(U.S.) Index and a Self-Constructed Peer Group Index. The Peer Group consists
of the following companies: (I) Andrew Corporation, (II) Scientific-Atlanta,
Inc., (III) SSE Telecom, Inc., (IV) STM Wireless, Inc., (V) Vertex
Communication Corporation and (VI) ViaSat, Inc. California Microwave, Inc. is
no longer in the Peer Group because it is no longer in the business of
satellite communication system integration.
COMPARISON OF 23 MONTH CUMULATIVE TOTAL RETURN*
AMONG GLOBECOMM SYSTEMS INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[GRAPHIC OMITTED]
* $100 INVESTED ON 8/8/97 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
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PROPOSAL 2
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Ernst & Young LLP, independent public auditors of the Company since
November 27, 1996, as auditors of the Company to serve for the year ending
June 30, 2000, subject to the ratification of such appointment by the
stockholders at the Annual Meeting. A representative of Ernst & Young LLP
will attend the Annual Meeting of Stockholders with the opportunity to make a
statement if he or she so desires and will also be available to answer
inquiries.
STOCKHOLDER APPROVAL
The affirmative vote of a plurality of the Company's outstanding Common
Stock represented and voting at the Annual Meeting is required to ratify the
appointment of Ernst & Young LLP as independent auditors of the Company to
serve for the year ending June 30, 2000.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 24, 1999, certain
information with respect to the beneficial ownership of shares of Common
Stock of: (i) all stockholders known by the Company to be the beneficial
owners of more than 5% of its outstanding Common Stock, (ii) each director,
nominee for director and Named Executive Officer of the Company and (iii) all
directors and executive officers of the Company as a group. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to
shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE
BENEFICIALLY OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) OUTSTANDING
- -------------------------------------------- ---------------- -------------
<S> <C> <C>
David E. Hershberg........................... 955,000(3) 10.3%
Kenneth A. Miller ........................... 298,904(4) 3.2%
Stephen C. Yablonski ........................ 126,027(5) 1.3%
Ray Stuart .................................. 64,842(6) *
Donald G. Woodring .......................... 169,265(7) 1.8%
Herman Fialkov............................... 42,901 *
Shelley A. Harrison.......................... 43,790(8) *
Benjamin Duhov .............................. 5,700 *
C.J. Waylan ................................. 28,500(9) *
A. Robert Towbin ............................ 17,590(10) *
All current directors and executive officers
as a group (16 persons)..................... 1,896,106(11) 19.4%
</TABLE>
- ------------
* Represents less than 1%.
(1) Except as otherwise indicated, (i) the stockholders named in the
table have sole voting and investment power with respect to all
shares beneficially owned by them and (ii) the address of all
stockholders listed in the table is: c/o GSI, 45 Oser Avenue,
Hauppauge, New York 11788.
(2) The number of shares of Common Stock outstanding as of September 24,
1999 is 9,269,163. Amounts shown for each stockholder include (i) all
shares of Common Stock owned by each stockholder and (ii) shares of
Common Stock underlying options, warrants and rights of first refusal
exercisable within 60 days of September 24, 1999.
(3) Includes 171,000 shares of Common Stock held by Deerhill Associates,
a family partnership of which Mr. Hershberg is General Managing
Partner. Mr. Hershberg disclaims beneficial ownership of the shares
held by Deerhill Associates except to the extent of his proportionate
pecuniary interest therein. Excludes 342,000 shares of Common Stock
held by certain members of Mr. Hershberg's family, over which Mr.
Hershberg no longer reports beneficial ownership.
(4) Includes 28,500 shares of Common Stock held by Mr. Miller's wife, of
which Mr. Miller disclaims beneficial ownership and 64,125 shares of
Common Stock issuable upon exercise of stock options. Excludes 25,650
shares of Common Stock held by certain other members of Mr. Miller's
family, over which Mr. Miller no longer reports beneficial ownership.
(5) Consists of 1,525 shares of Common Stock held by Mr. Yablonski's wife
and son of which Mr. Yablonski disclaims beneficial ownership and
124,502 shares of Common Stock issuable upon exercise of stock
options.
15
<PAGE>
(6) Consists of 64,842 shares of Common Stock issuable upon exercise of
stock options.
(7) Includes 19,950 shares of Common Stock held by certain members of Mr.
Woodring's family of which Mr. Woodring disclaims beneficial
ownership and 53,437 shares of Common Stock issuable upon exercise of
stock options.
(8) Consists of 42,750 shares of Common Stock issuable upon exercise of
stock options.
(9) Includes 28,500 shares of Common Stock issuable upon exercise of
stock options.
(10) Includes 1,000 shares held in trust by Mr. Towbin for a member of his
family, of which Mr. Towbin disclaims beneficial ownership and 10,000
shares of Common Stock issuable upon the exercise of stock options.
(11) See Notes (3) through (10) above.
16
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CERTAIN TRANSACTIONS
From July 1, 1998 through September 24, 1999 the Company granted executive
officers and directors of the Company and employees, some of whom are
immediate family members of the Company's executive officers, a total of
338,150 stock options for the purchase of the Company's Common Stock with
exercise prices ranging from $4.375 to $10.00 per share.
In August 1999, NetSat Express, Inc. completed a private placement
yielding gross proceeds of $10,000,0000. C.E. Unterberg, Towbin acted as
placement agent for such transation. A. Robert Towbin, a Director of the
Company, serves as a Managing Director of C.E. Unterberg, Towbin. C.E.
Unterberg, Towbin was paid an investment advisor fee of $500,000 and issued
warrants for 100,000 shares of NetSat Express, Inc. common stock at $6 per
share relating to this private placement.
STOCKHOLDER PROPOSALS
Pursuant to the stockholder proposal rules recently adopted by the
Commission, if the Company has not received notice prior to August 26, 1999
of any matter a stockholder intends to propose for a vote at the 1999 Annual
Meeting of Stockholders, then a proxy solicited by the Board of Directors may
be voted on such matter in the discretion of the proxy holder, without
discussion of the matter in the proxy statement soliciting such proxy and
without such matter as a separate item on the proxy card.
The deadline for stockholders to submit proposals to be considered for
inclusion in the Company's Proxy Statement for next year's Annual Meeting of
Stockholders is anticipated to be June 11, 2000. Such proposals may be
included in next year's Proxy Statement, if they comply with certain rules
and regulations promulgated by the Commission. Stockholder proposals must be
mailed to the attention of the Company's Secretary at the Company's principal
executive offices located at 45 Oser Avenue, Hauppauge, New York 11788.
OTHER MATTERS
Management knows of no matters that are to be presented for action at the
Annual Meeting other than those set forth above. If any other matters
properly come before the Annual Meeting, the persons named in the enclosed
form of proxy will vote the shares represented by proxies in accordance with
their best judgment on such matters.
Proxies will be solicited by mail and may also be solicited in person or
by telephone by some regular employees of the Company. The Company may also
consider the engagement of a proxy solicitation firm. Costs of the
solicitation will be borne by the Company.
By Order of the Board of Directors
/s/ Paul J. Johnson
Paul J. Johnson
Secretary
Hauppauge, New York
October 15, 1999
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<PAGE>
(Form of Proxy)
GLOBECOMM SYSTEMS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - November 17, 1999
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Globecomm Systems Inc. hereby appoints David E.
Hershberg and Kenneth A. Miller, and each of them, with full power of
substitution, proxies to vote the shares of common stock which the undersigned
could vote if personally present at the Annual Meeting of Stockholders of
Globecomm Systems Inc. to be held at the offices of Globecomm Systems Inc., 45
Oser Avenue, Hauppauge, New York 11788, on November 17, 1999, telephone number
516-231-9800, at 10:00 a.m. (eastern standard time), or any adjournment thereof.
1. ELECTION OF DIRECTORS (for terms as described in the Proxy Statement)
|_| FOR all nominees below |_| WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees below
Benjamin Duhov, Herman Fialkov, David E. Hershberg,
Kenneth A. Miller, A. Robert Towbin, C. J. Waylan,
Donald G. Woodring and Stephen C. Yablonski.
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below.
2. RATIFICATION OF ACCOUNTANTS
|_| FOR |_| AGAINST |_| ABSTAIN WITH RESPECT TO
proposal to ratify the selection of Ernst & Young LLP, as independent
auditors of the Company as described in the Proxy Statement.
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please date and sign exactly as your name appears hereon. If shares are
held jointly, each stockholder should sign. Executors, administrators,
trustees, etc. should use full title and, if more than one, all should
sign. If the stockholder is a corporation, please sign full corporate
name by an authorized officer.
--------------------------
Signature of Stockholder
---------------------------
Print name
Dated:_______________________
