SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-11(c) or Section
240.14a-12
ACME ELECTRIC CORPORATION
JOHN B. DRENNING, SECRETARY
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
...................................................................
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:
...................................................................
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>
<PAGE>
September 17, 1997
Dear Shareholder:
The Annual Meeting of Shareholders of Acme Electric Corporation will
be held at the Buffalo Hilton at 120 Church Street, Buffalo, New York, on
Friday, October 31, 1997, at 9:00 a.m. Beverages and pastries will be
served at 8:30 a.m. prior to the Meeting.
We hope that you can attend the Meeting. However, whether or not you
plan to attend, please complete, sign, date and return the accompanying
proxy card as soon as possible. It is important that your shares be
represented. The enclosed envelope requires no postage when mailed within
the United States. If you attend the Meeting, you may revoke your proxy if
you wish and vote personally.
The formal Notice and the Proxy Statement which accompany this letter
contain details of the business to be conducted at the Meeting, including
the election of directors, and ratification of the reappointment of Price
Waterhouse LLP as the Company's independent auditors for 1998. We urge you
to read carefully the description of these proposals in the Proxy Statement
and to vote for their adoption.
Sincerely,
/s/
Robert J. McKenna
Chairman and CEO
<PAGE>
<PAGE>
(ACME ELECTRIC CORPORATION LOGO)
400 Quaker Road
East Aurora, New York 14052
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 31, 1997
To the Shareholders of
ACME ELECTRIC CORPORATION
The Annual Meeting of Shareholders of Acme Electric Corporation will
be held at 9:00 a.m., Friday, October 31, 1997, at the Buffalo Hilton, 120
Church Street, Buffalo, New York, for the following purposes:
1. To elect a board of six directors;
2. To ratify the reappointment of Price Waterhouse LLP as
independent auditors of the Company for 1997; and
3. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
Shareholders of record at the close of business on September 12,
1997, will be entitled to notice of, and to vote at, the Meeting or any
adjournment thereof.
The Board of Directors has authorized the solicitation of proxies.
Unless otherwise directed, the proxies will be voted for the election of
the six persons listed in the attached proxy statement to form the Board of
Directors of the Company, subject to any changes in the nominees as set
forth in the proxy statement; for the ratification of the reappointment of
independent auditors; and on any other business that may properly come
before the Annual Meeting as the named proxies in their best judgment shall
decide.
By Order of the Board of Directors
John B. Drenning, Secretary
September 17, 1997
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD, AND
PROMPTLY RETURN IT IN THE ENCLOSED STAMPED ENVELOPE. IF YOU
ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND
VOTE YOUR SHARES DIRECTLY IF YOU SO DESIRE.
<PAGE>
<PAGE>
(ACME ELECTRIC CORPORATION LOGO)
400 Quaker Road
East Aurora, New York 14052
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Acme
Electric Corporation for use at the Annual Meeting of its shareholders to
be held at the Buffalo Hilton, 120 Church Street, Buffalo, New York, at
9:00 a.m. on Friday, October 31, 1997, and at any adjournment thereof.
This proxy statement and form of proxy are being mailed to shareholders
beginning on September 17, 1997.
A shareholder returning the enclosed proxy shall have the power to
revoke it in writing at any time before it is voted by notifying Robert J.
McKenna or Daniel K. Corwin at the offices of the Company at 400 Quaker
Road, East Aurora, New York 14052, and any shareholder attending the
Meeting may vote in person whether or not he or she has filed a proxy. If
not revoked, the proxy will be voted in accordance with its terms.
Where a shareholder specifies a choice with respect to the
propositions set forth in the proxy, his or her shares will be voted in
accordance with the instructions given. If no specific instructions are
given, his or her shares will be voted FOR the election of the nominees for
Director of the Company, and FOR the ratification of the reappointment of
Price Waterhouse LLP as independent auditors. The named proxies may vote
in their discretion upon such other matters as may properly come before the
Meeting. Shares represented at the Meeting by proxy or in person will be
counted for the purpose of establishing a quorum. If shares are not
represented at the Meeting by proxy or in person, they will not be counted
for the purpose of a quorum nor toward the vote required for approval of
the proposals. Abstentions and broker non-votes will also be counted
towards the quorum, but will not be counted as votes for or against a
proposal.
Proxies will be solicited by mail and may also be solicited by
officers and employees of the Company by telephone or telegraph, without
additional compensation. The Company will request persons, such as banks,
brokers, nominees and fiduciaries, holding stock in their names for others,
to forward proxy material to their principals and request authority for the
execution of the proxies. The Company will reimburse such persons and
entities for their expenses in so doing. The total cost of soliciting
proxies on behalf of the Board of Directors will be borne by the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record at the close of business on September 12,
1997, will be entitled to vote at the Meeting. As of that date, there were
outstanding 5,043,480 shares of the common stock. The holders of common
stock are entitled to one vote per share.
The following is the only shareholder owning of record or, to the
knowledge of Management, beneficially, more than five percent (5%) of the
outstanding voting securities of the Company as of August 15, 1997, based
upon information believed to be reliable.
Title of Name and Address Shares Beneficially Percent of
Class of Owner Owned Class
- ---------------------------------------------------------------------------
Common Pioneering Management Corporation 500,500(1) 9.95
Stock 60 State Street
Boston, MA
(1) Persons who are officers of Pioneering Management Corporation have
sole voting power and shared dispositive power for 500,500 shares and
no shared voting power or sole dispositive power.
Proposal Number One
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the
direction of the Board of Directors elected by the shareholders. The Board
has responsibility for establishing broad corporate policies and for the
overall performance of the Company rather than day-to-day operating
details. Members of the Board of Directors are kept informed of the
Company's business by various reports and documents sent to them monthly,
as well as by reports presented at meetings of the Board and its committees
by officers and employees of the Company and its subsidiaries.
A Board of six Directors is to be elected to serve until the next
annual meeting of shareholders and until their successors have been elected
and qualified. Each nominee was selected on the recommendation of the
Nominating Committee of the Board. All nominees have expressed a
willingness to serve as a Director during the coming year.
All of the nominees named on the following pages were elected to the
Board of Directors at the annual meeting of shareholders held on October
31, 1996. Unless the proxy is otherwise marked, the proxy shall be voted
for election of these nominees. Directors shall be elected by a plurality
of the votes cast at the Annual Meeting. Broker non-votes will be counted
as being represented at the Meeting, but will not otherwise have an effect
on the outcome of the vote for the election of directors. Withholding an
affirmative vote from a particular nominee will not prevent that person
from being elected to the Board of Directors.
The Management has no reason to believe that any of the nominees will
not be available for election as a Director. However, should any nominees
become unavailable, the proxy may be voted for such other person or persons
as shall be nominated by the Board of Directors following recommendations
by the Nominating Committee.
The following information is presented with respect to the nominees
for the office of Director and for all Executive Officers and Directors as
a group, as of August 15, 1997.
NOMINEES FOR ELECTION AS DIRECTORS
Principal Occupation and Business
Experience During the Past Five Common Stock
Nominee Years and Other Directorships Beneficially Owned
Robert D. Batting Director, President and Sole BeneficialOwnership:
Age 56 Chief Executive Officer, 0 Shares
Director Since Kenney Manufacturing Shared Beneficial Ownership:
May 1995 Company, a manufacturer 0 Shares
of consumer durable/ Right to Acquire:
hardware products, since 769.48 Shares
July 1997. Prior thereto, Percent of Class:
Vice President and .02
General Manager, Brown &
Sharpe Manufacturing Co.,
a manufacturer of industrial
measurement devices, since
1995. Prior thereto,
President, Clearing/Niagara,
Inc., a manufacturer of
industrial press equipment,
since 1991.
Robert T. Brady Director, Chairman, Sole Beneficial Ownership:
Age 56 President and Chief 0 Shares
Director Since Executive Officer, Shared Beneficial Ownership:
1988 Moog Inc., manufacturer 300 Shares
of fluid controls for Right to Acquire:
aerospace and industrial 4,769.48 Shares
applications, since 1996. Percent of Class:
Prior thereto, Director, .10
President and Chief
Executive Officer, Moog, Inc.
since 1988. Director,
Astronics Corporation, First
Empire State Corp., Seneca
Foods Corp, National Fuel
Gas Corp.
Randall L. Clark Chairman, Dunn Tire Sole Beneficial Ownership:
Age 54 Corporation, tire 1,000 Shares
Director Since distribution company, Shared Beneficial Ownership:
May 1995 since 1996. Principal, 0 Shares
Buffalo Ventures, Inc., Right to Acquire:
investment banking company 769.48 Shares
since 1996. Prior thereto Percent of Class:
Executive Vice President .03
and Chief Operating Officer,
Pratt & Lambert United, Inc.,
a manufacturer of paints
and chemical products, from
1992 until 1995.
G. Wayne Hawk Retired Chairman, Acme Sole Beneficial Ownership:
Age 69 Electric Corporation, 33,038 Shares
Director Since since 1994. Prior Shared Beneficial Ownership:
1980 thereto, Chairman, 0 Shares
Acme Electric Right to Acquire:
Corporation, since 1993. 769.48 Shares
Prior thereto, Chairman Percent of Class:
and Chief Executive .67
Officer since 1992. Prior
thereto, President and
Chief Executive Officer
since 1991. Director,
Comptek Research, Inc.
Terry M. Manon Senior Vice President, Sole Beneficial Ownership:
Age 46 Air Handling Products, 0 Shares
Director Since Trane Company, manu- Shared Beneficial Ownership:
August 1994 facturer of commercial 0 Shares
and industrial air Right to Acquire:
handling systems, since 769.48 Shares
1996. Prior thereto, Percent of Class:
Vice President, Air .02
Handling Systems Division,
Trane Company, since 1987.
Robert J. McKenna Chairman, President Sole Beneficial Ownership:
Age 49 and Chief Executive 10,521 Shares
Director Since Officer of Acme Shared Beneficial Ownership:
1993 Electric Corporation, 0 Shares
since 1994. Prior Right to Acquire:
thereto, President 2,500 Shares
and Chief Executive Percent of Class:
Officer, since 1993. .26
Prior thereto,
President and Chief
Operating Officer,
since 1992. Director,
Astronics Corporation.
All Executive Officers Sole Beneficial Ownership: 50,547 Shares
and Directors as a Shared Beneficial Ownership: 17,932 Shares
Group (10 Persons) Right to Acquire: 25,697.4 Shares
Percent of Class: 1.85
*Includes shares which are exercisable under the 1981 Incentive Stock
Option Plan, the 1989 Stock Option Plan, and the 1996 Directors' Stock
Option Plan.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has appointed from its members Executive, Audit,
Compensation and Nominating Committees which have the responsibilities and
authority described below.
The Executive Committee has, during the interval between meetings of
the Board of Directors, the authority to exercise all the powers of the
Board delegated to it by the Board in the management and direction of the
business and affairs of the Company. One meeting of the Executive
Committee was held in fiscal year 1997. Members of this Committee are
Messrs. Brady, Clark and McKenna.
The Audit Committee has the responsibility, among other things, to
(i) recommend the selection of the Company's independent auditors, (ii)
review the adequacy of the audit by the independent auditors, (iii) review
the financial statements which are the subject of the independent auditors'
certification, and (iv) review the effectiveness of the Company's internal
auditing procedures. Members of this Committee are Messrs. Brady, Hawk and
Manon. Two meetings of the Audit Committee were held during fiscal year
1997.
The Compensation Committee has the responsibility, among other
things, to (i) review and make recommendations on the compensation rate for
executive officers of the Company, and (ii) review incentive compensation
plans and make recommendations as to the adoption of these plans. Members
of this Committee are Messrs. Batting, Brady and Clark. Two meetings of
the Compensation Committee were held during fiscal year 1997.
The Nominating Committee has the responsibility, among other things,
to (i) study and make recommendations as to the size and composition of the
Board, (ii) make nominations to the Board prior to the Annual Meeting, and
(iii) search for potential candidates and make recommendations as to
candidates for membership on the Board. Two meetings of the Nominating
Committee were held during fiscal year 1997. Members of this Committee are
Messrs. Batting, Clark and McKenna. The Nominating Committee will consider
nominees for the Board recommended by shareholders. A shareholder wishing
to recommend such nominees for election at the 1998 annual meeting of
shareholders should submit such recommendation in writing to the Committee
at the Company's address on or before June 30, 1998.
Each non-employee member of the Board of Directors receives payments
in the form of stock options pursuant to a standard arrangement. Under
this arrangement, each quarter non-employee directors are entitled to
receive an option to purchase shares of the Common Stock of the Company at
30% of the fair market value of such shares when the option is granted.
The number of shares subject to each option is determined by dividing the
nominal amount of quarterly fees of $2,500 by 70% of the fair market value
of each share. Fair market value is the average of the high and low sales
prices of a share on the New York Stock Exchange on the most recent prior
trading day.
During fiscal year 1997, the Board of Directors held four meetings.
Each Director attended 75% or more of the Board meetings and meetings of
the Committees of the Board on which such Director served.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is made up of
only outside directors and oversees the Company's executive compensation
programs. After consideration of the Committee's recommendations, the full
Board of Directors reviews and approves the salaries of all elected
officers. Any directors who are full-time employees are excused from
voting on their own compensation. The Committee also oversees the other
elements of executive compensation, including annual incentive awards and
stock options.
General Philosophy
The philosophy of the Company is that annual compensation should
adjust to Company performance, and long-term incentives should align with
creating shareholder value. The Committee believes that operating criteria
should determine annual cash incentive compensation, and market-based
criteria, as measured by the market price of the Company's common stock,
are better tied to performance periods longer than a year. Individual
compensation should reflect operating unit performance for division
executives and Company performance for selected elected officers, with the
purpose being to attract and retain qualified executives.
Salaries
Salaries are based upon a commercially available study of the durable
goods manufacturing sector for companies of a similar size. Salary
payments are primarily intended to reward current and past performance
based upon job experiences and comparison to peers both inside and outside
the Company.
Annual Incentive Awards
Annual incentive awards are designed to motivate and reward the
individual for personal contributions to the success of the Company. The
Executive Incentive Plan (EIP) rewards selected elected officers based upon
return on equity. A minimum threshold based on recognized financial return
rates, which incorporate investment risk, must be met before any payments
are made. A percentage of pre-tax earnings above the threshold is
distributed as a percentage of base salary. The EIP has a maximum
allowable payment of 60% of salary.
The Board of Directors can also make individual awards based on their
assessment of contribution to the tactical and strategic goals set by the
CEO and approved by them at the beginning of the year.
The Management Incentive Plan (MIP) rewards key managers and officers
based upon their respective division's operating profit, net asset
utilization and sales growth. The MIP pays only for improvement over the
previous year's actual results and is distributed as a percentage of base
salary. The MIP has a maximum allowable payout of 40% of salary.
Every other non-union employee of the Company participates in an
annual incentive plan.
Stock Options
Stock options accomplish the objective of further motivating
executives to create shareholder value. Options are reviewed on an annual
basis. Options are granted with an exercise price equal to the fair market
value of Acme stock on the day preceding the date of grant, creating
recipient value only as the stock increases in market price. Options
accrue in equal amounts over a four-year period and can be exercised over a
ten-year period. An amendment of the 1989 Stock Option Plan was approved
at the annual meeting of shareholders held on October 28, 1994, to apply a
formula for the award of further options following each year of profitable
operation and to increase the number of shares subject to the Plan from
225,000 to 450,000. Options in accordance with the formula were granted as
of September 1, 1995.
Compensation of the Chief Executive Officer
The Chief Executive Officer's salary was determined by the Committee,
in accordance with the above stated philosophy.
No incentive payments have been made to the CEO since the threshold
on beginning shareholder's equity was not attained.
Stock options to purchase 10,000 shares were granted to the CEO upon
joining the Company in 1992 and 10,000 shares were granted on September 1,
1995, in accordance with the 1989 Stock Option Plan.
The Committee believes that both annual and long-term compensation
for the last three years reflects this statement on philosophy.
Submitted by the Compensation Committee:
Robert D. Batting Robert T. Brady Randall L. Clark<PAGE>
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- --------------------- -------
ALL(3)
OTHER RESTRICTED SECURITIES OTHER
NAME AND FISCAL ANNUAL STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL YEAR SALARY BONUS COMPENSATION(1) AWARD(S) OPTIONS(2) PAYOUTS SATION
POSITION END ($) ($) ($) ($) (#) ($) ($)
___________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.J. McKenna 6/30/97 262,625 --- --- --- --- --- 1,566
Chairman/ 6/30/96 250,000 --- --- --- 10,000 --- 907
President/CEO 6/30/95 215,000 --- --- --- --- --- 578
D.K. Corwin 6/30/97 149,334 --- --- --- --- --- 927
V.President/GM 6/30/96 142,000 --- --- --- 5,000 --- 669
Electronics Div. 6/30/95 135,000 --- --- --- --- --- 538
J.E. Gleason 6/30/97 128,861 --- --- --- --- --- 891
V.President/GM 6/30/96 121,700 6,377 --- --- 5,000 --- 535
Aerospace Div. 6/30/95 117,000 19,434 --- --- --- --- 530
N.T. Arena 6/30/97 118,861 14,834 --- --- --- --- 400
V.President/GM 6/30/96 44,452 --- --- --- --- --- ---
Power Distribu- 6/30/95 --- --- --- --- --- --- ---
tion Products
Division
D G. Anderson 6/30/97 97,997 4,018 --- --- --- --- 318
Secretary, 6/30/96 93,080 1,626 --- --- --- --- 289
Treasurer and 6/30/95 87,750 --- --- --- --- --- 289
General Counsel
<FN>
1. No individual listed had annual perquisites with aggregate value exceeding 10 percent of salary,
plus bonus.
2. All grants were incentive stock options granted under the Company's 1989 Stock Option Plan based
on fiscal 1995 Company performance.
3. The amounts reflected in this column are the value of group term-life insurance. The Company has
no defined contribution plans or long-term incentive plans.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------------------------------------- ------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercises
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 5% ($) 10% ($)
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
R.J. McKenna None -- -- -- -- --
D.K. Corwin None -- -- -- -- --
J.E. Gleason None -- -- -- -- --
N.T. Arena None -- -- -- -- --
D.G. Anderson None -- -- -- -- --
<FN>
1. The Company does not have a stock-appreciation-rights plan.
</FN>
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND F/Y-END OPTION VALUES
<CAPTION>
VALUE OF UNEXERCISED
SHARES ACQUIRED VALUE NUMBER OF UNEXERCISED IN-THE-MONEY
ON EXERCISE REALIZED OPTIONS AT F/Y-END (#) OPTIONS AT F/Y-END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
_______________________________________________________________________________________________
<S> <C> <C> <C> <C>
R.J. McKenna 2,500 $8,125 2,500/7,500 $ 0/$0
D.K. Corwin None --- 9,250/3,750 $14,000/$0
J.E. Gleason None --- 4,250/3,750 $ 5,250/$0
N.T. Arena None --- 0/0 $ 0/$0
D.G. Anderson 4,000 10,000 1,850/750 $ 350/$0
</TABLE>
1. Supplemental Requirement Information:
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
D.K. Corwin Sole Beneficial Ownership: 0 Shares
Shared Beneficial Ownership: 4,962 Shares
Right to Acquire: 9,250 Shares
Percent of Class: .28
J.E. Gleason Sole Beneficial Ownership: 5,988 Shares
Shared Beneficial Ownership: 0 Shares
Right to Acquire: 4,250 Shares
Percent of Class: .20
N.T. Arena Sole Beneficial Ownership: 0 Shares
Shared Beneficial Ownership: 1,170 Shares
Right to Acquire: 0 Shares
Percent of Class: .02
D.G. Anderson Sole Beneficial Ownership: 0 Shares
Shared Beneficial Ownership:10,960 Shares
Right to Acquire: 1,850 Shares
Percent of Class: .25
<PAGE>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
(CHART)
June 92 June 93 June 94 June 95 June 96 June 97
Acme Electric Corp.$100.00 $170.00 $170.00 $610.00 $152.50 $132.50
S & P 500 Index $100.00 $113.63 $115.23 $145.27 $183.04 $246.43
Peer Group
Companies $100.00 $145.68 $146.08 $241.33 $276.93 $395.23
______________________________________________________________________
Peer group companies include the S & P Electrical Equipment group,with
General Electric excluded because of its weighted effect, the S & P
Electronics (Instrumentation) group,
the S & P Electronics (Semiconductor) group, and the S & P Electronics
(Defense) group.
Peer Companies: Advanced Micro Devices Loral Corp.
AMP Inc. Motorola Inc.
E-Systems Inc.* Nat'l Semiconductor Corp.
EG&G Inc. Perkin-Elmer Corp.
Emerson Electric Co. Raychem Corp.
Grainger (W.W.) Inc. Tektronix Inc.
Hewlett-Packard Co. Texas Instruments Inc.
Honeywell Inc. Thomas & Betts Corp.
Intel Corp. Westinghouse Electric Corp.
*E-Systems Inc. was acquired by Raytheon June 19,
1995, and, therefore is not included in the
calculation of cumulative total returns after June
1994.
EMPLOYMENT AGREEMENTS
Mr. McKenna joined the Company on September 21, 1992, subject to an
agreement to provide a severance period of six months at full salary
should his employment be terminated, except for good cause. In
addition, Messrs McKenna, Corwin and Anderson are subject to agreements
providing for continuation of employment in the event of a change of
control for periods of up to three years. Under the agreements, Messrs
McKenna, Corwin and Anderson must preserve confidential Company
information and refrain from any activities that may compete with the
Company's business. The terms of these agreements are automatically
extended unless either party gives timely notice to the other of intent
to not extend each such agreement. Under the agreements, Messrs
McKenna, Corwin and Anderson receive a base salary as determined by the
Board of Directors plus bonus, which amounts may not be reduced during
the term of the agreements.
1981 INCENTIVE STOCK OPTION PLAN
On October 30, 1992, the Board of Directors approved the extension
to a ten-year life of all options granted to executive officers,
directors and other key employees. No further options may be granted
under the Plan.
1989 STOCK OPTION PLAN
The 1989 Stock Option Plan (the "1989 Plan") was approved by the
shareholders at the Annual Meeting held on October 27, 1989. The 1989
Plan supplements the 1981 Incentive Stock Option Plan.
Under the 1989 Plan, certain individuals are granted for a period of
up to ten years, beginning with the date of grant, options to purchase
specified amounts of the Company's Common Stock for 100% of the full
market value of the stock, subject to option, on the day preceding the
grant. Individuals covered by the Plan include executive officers,
directors and other key employees subject to review by the Board of
Directors. The number of shares granted to each individual is also
subject to review by the Board of Directors. An amendment to the 1989
Plan was approved at the annual meeting of shareholders held on October
28, 1994, to apply a formula for the award of further options following
each year of profitable operation and to increase the number of shares
subject to the Plan from 225,000 to 450,000. Options in accordance with
the formula were last granted as of September 1, 1995.
1996 DIRECTORS' STOCK OPTION PLAN
The 1996 Directors' Stock Option Plan (the "1996 Plan") was approved
by the Company's shareholders on October 31, 1996. The effective date
of the Plan is June 15, 1996. The principal features of the Plan are as
follows.
The purpose of the Plan is to facilitate ownership in the Company by
nonemployee directors of the Company by providing them with a convenient
means to purchase common stock of the Company ("Common Stock") and,
thereby, to share in its progress and success. Currently, five
directors participate in the Plan.
The grant of Options under the Plan occurs automatically on the
first day of each quarter of a calendar year to each eligible director
in lieu of Director Fees attributable to service as a director during
such quarter. A total of 50,000 shares of Common Stock are available
for grant under the Plan.
The Purchase Price of each share of Common Stock subject to an
Option is equal to 30% of the Fair Market Value (determined as provided
in the Plan) of a share of Common Stock on the date the Option is
granted. The number of shares of Common Stock subject to the Option
will be equal to the Director Fees for the preceding quarter, divided by
70% of the Fair Market Value of a share of Common Stock on the date the
Option is granted. The discount amount for the number of shares granted
replaces the value of the cash Director Fees that would otherwise be
due. Each eligible director will accrue Director Fees of $2,500 each
quarter of credit toward the grant of Options under the Plan.
An Option becomes exercisable in full six months after the date of
grant, and, to the extent not previously exercised, will expire ten
years after the date of grant or, in some cases, earlier pursuant to
provisions in the Plan relating to a director's termination of service.
Each Option shall be evidenced by a written Option Agreement
executed by the Company and the director. Stock must be paid for in
full in cash when purchased upon the exercise of excess of the Fair
Market Value of the Common Stock over the Purchase Price, and the
Company will be entitled to a deduction in the same amount.
Options are not transferable other than by will or by the laws of
descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended (the
"Code").
PENSION PLAN
Executive officers of the Company, including those named in the
Summary Compensation Table, are covered by the Company's Pension Plan
for Salaried Employees ("Salaried Plan"). Messrs McKenna, Corwin and
Anderson are also covered by the Supplemental Executive Retirement Plan
("Supplemental Plan"). These Plans provide for regular monthly payments
to retirees. Normal retirement age under the Plans is 65. The normal
monthly retirement benefit under the Salaried Plan is 1.0 percent of
base salary for each year of credited service at December 31, 1991, plus
1.5 percent of base salary earned in each year of credited service after
December 31, 1991. The Plans also provide for early and disability
retirement. The normal monthly retirement benefit is reduced by up to
one-half of one percent for each month between the date benefits begin
and a participant's normal retirement date in the event of early
retirement. The disability retirement benefit is the benefit accrued by
a participant to the disability retirement date. Benefits are not
subject to any deduction for Social Security or other payments. The
cost of the Plans is borne by the Company.
The table below illustrates the estimated amount of annual pension
payments under the Salaried Plan for an employee whose career average
annual compensation and years of service are as specified:
CAREER
AVERAGE BASE 10 YEARS 20 YEARS 30 YEARS
SALARY OF SERVICE OF SERVICE OF SERVICE
------------ ---------- ---------- ----------
$ 55,000 $ 6,716 $ 13,432 $ 20,148
90,000 11,168 22,336 33,504
140,000 17,528 35,056 52,584
190,000 23,888 48,200 71,664
250,000 31,520 63,040 94,560
300,000 37,880 75,760 113,640
For the purpose of determining the pension benefits payable under
the Salaried Plan, estimated years of credited service as of the end of
calendar year 1996 covered by the Plans for officers are as follows:
Mr. McKenna, 4 years; Mr. Corwin, 25 years; Mr. Gleason, 29 years; Mr.
Anderson, 13 years; and Mr. Arena, 1 year.
The normal monthly retirement benefit under the Supplemental Plan is
one-twelfth of the product of two percent of annual base salary at
retirement multiplied by years of credited service to a maximum of 30
years, less the benefit payable under the Salaried Plan.
The table below illustrates the maximum total amount of annual
pension payments under both the Salaried Plan and the Supplemental Plan
for an employee whose annual base salary at retirement and years of
service are specified:
BASE SALARY 10 YEARS 20 YEARS 30 YEARS
AT RETIREMENT OF SERVICE OF SERVICE OF SERVICE
------------- ---------- ---------- ----------
$ 55,000 $11,000 $ 22,000 $ 33,000
90,000 18,000 36,000 54,000
140,000 28,000 56,000 84,000
190,000 38,000 76,000 114,000
250,000 50,000 100,000 150,000
300,000 60,000 120,000 180,000
Benefits are presently being paid under the Supplemental Plan. The
Company has purchased, and is the beneficiary of, insurance on the lives
of participants under the Supplemental Plan. Under the insurance
program, if the assumptions made as to mortality experience, policy
dividends and other factors are realized, the proceeds of the policies
will reimburse the Company for all costs, including benefits, insurance
premiums and a factor for the use of the Company's money. It is
expected, therefore, that without additional costs to the Company over
the life of the Supplemental Plan, the Supplemental Plan will aid the
Company in continuing to attract, retain and motivate key employees.
Messrs. McKenna, Corwin and Anderson are eligible to receive benefits
under the Supplemental Plan. For the purposes of the above tables, the
term "base salary" refers to the column of the Summary Compensation
Table on page 8 labeled "Salary."
EMPLOYEE SAVINGS AND PROTECTION PLAN
Employees of the Company are eligible to participate in the
Company's Employee Savings and Protection Plan on the first of the month
following employment. Under the Plan, participants may contribute up to
twelve (12) percent of their gross earnings for investment in cash,
stock and mutual investment funds. The Company bears the cost of
operating the Plan, but does not make matching contributions.
Contributions to the Plan by executive officers are included in the
amounts shown as "Salary" in the Summary Compensation Table.
All directors and officers of the Company filed necessary disclosure
reports regarding transactions in the Company's stock during the 1997
fiscal year.
Proposal Number Two
REAPPOINTMENT OF INDEPENDENT AUDITORS
Subject to shareholder approval, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed the firm of Price
Waterhouse LLP as independent auditors to examine the Company's
financial statements for its fiscal year ending June 30, 1998. Price
Waterhouse LLP and its predecessors have served as the Company's
independent auditors for many years.
As in prior years, a representative of Price Waterhouse LLP will be
present at the Meeting with the opportunity to make a statement and
respond to questions.
<PAGE>
VOTE REQUIRED TO RATIFY APPOINTMENT
Ratification of the appointment of the independent auditors requires
the affirmative vote of a majority of the shares present in person or by
proxy and voting at the Meeting. If the shareholders should not ratify
the appointment of Price Waterhouse LLP, the Board of Directors will
reconsider the appointment.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE 1998 FISCAL YEAR. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY
OTHERWISE IN THEIR PROXIES.
PROPOSALS BY SECURITY HOLDERS
Any proposals of shareholders intended to be presented at the 1998
Annual Meeting of Shareholders must be received by the Company by May
20, 1998, in order to be considered for inclusion in the proxy statement
and form of proxy for that meeting.
COST OF SOLICITATION
The Corporation will pay the expenses of soliciting proxies for the
Meeting. Solicitations of proxies may be made by personal calls upon, or
telephone or telegraphic communications with, shareholders or their
representatives by directors, officers and employees of the Corporation,
none of whom will be compensated specially for these services.
OTHER MATTERS
The Board of Directors and Management do not know of any other matters
that may properly come before the Meeting. If any other business is
properly presented at the Meeting for action, the persons named in the
proxy will vote thereon according to their best judgment of such matters.
Shareholders are urged to forward their proxies without delay. A
prompt response will be greatly appreciated.
East Aurora, New York By Order of the Board of Directors
September 17, 1997 John B. Drenning, Secretary
<PAGE>
PROXY
ACME ELECTRIC CORPORATION
This Proxy Solicited By The Board of Directors
The undersigned hereby appoints ROBERT J. McKENNA AND DANIEL K. CORWIN,
and each of them, the proxies of the undersigned with full power of
substitution, to vote all shares of stock which the undersigned may be
entitled to vote at the Annual Meeting of the Shareholders of ACME ELECTRIC
CORPORATION to be held Friday, October 31, 1997, at 9:00 a.m. EST at the
Buffalo Hilton, 120 Church Street, Buffalo, New York, and at any
adjournment thereof, for the following purposes:
(PLEASE DATE AND SIGN ON THE REVERSE SIDE)
<PAGE>
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
ACME ELECTRIC CORPORATION
October 31, 1997
Please Detach and Mail In The Envelope Provided
- -------------------------------------------------------------------------
_X_ Please mark your votes as in this example.
(1) To elect a board of six directors:
___ FOR all nominees listed at right Nominees:
(except as marked to the contrary below) Robert D. Batting
Robert T. Brady
___ WITHHOLD authority to vote for all Randall L. Clark
nominees listed at right G. Wayne Hawk
Terry M. Manon
(Instruction: To withhold authority to vote for Robert J. McKenna
any individual nominee, strike a line through
the nominee's name at right.)
FOR AGAINST ABSTAIN
(2) To ratify the reappointment of Price ___ ___ ___
Waterhouse LLP as independent auditors
of the Company; and
(3) To transaction such other business as may properly come before the
meeting, or any adjournment thereof, hereby giving to each of my said
proxies, power, authority and discretion to act as fully as I might do
if personally present. The named proxies, or any of them, shall have
and may exercise all powers hereunder.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDESIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR RATIFICATION OF THE
REAPPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
Signature _____________ Signature _____________ Dated _____________
NOTE: Please sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian, or a corporation
official, please give full title. Each joint owner must sign proxy.
