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>
LETTER TO SHAREHOLDERS
September 16, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of Acme Electric Corporation will be
held at the Adam's Mark Hotel, 120 Church Street, Buffalo, New York, at 9:00
a.m. on Friday, October 29, 1999. 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
PricewaterhouseCoopers LLP as the Company's independent auditors for 2000. 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, President and CEO
<PAGE>
PROXY CARD
PROXY
ACME ELECTRIC CORPORATION
This Proxy Solicited By The Board of Directors
The undersigned hereby appoints ROBERT J. McKENNA AND MICHAEL A. SIMON,
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 29, 1999, at 9:00 a.m. EST at the Adam's Mark Hotel,
120 Church Street, Buffalo, New York, and at any adjournment thereof, for the
following purposes:
(PLEASE DATE AND SIGN ON THE REVERSE SIDE)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
ACME ELECTRIC CORPORATION
October 29, 1999
Please Detach and Mail In The Envelope Provided
-------------------------------------------------------------------------
_X_ Please mark your votes as in this example.
(1) To elect a board of five 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 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.)
(2) To ratify the reappointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP ___ ___ ___
as independent auditors of the Company;
and
(3) To transact 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 UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR RATIFICATION OF THE
REAPPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
Signature _______________ Signature _________________ Dated _____________
NOTE: Please sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian, or a corporation
official, please give full title. Each joint owner must sign the proxy.
<PAGE>
PROXY STATEMENT
(Logo)
400 Quaker Road
East Aurora, New York 14052
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1999
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 29, 1999, at the Adam's Mark Hotel, 120
Church Street, Buffalo, New York, for the following purposes:
1. To elect a board of five directors;
2. To ratify the reappointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for 2000; 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 10, 1999,
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 five
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
PricewaterhouseCoopers LLP as 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 15, 1999
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>
(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 Adam's Mark Hotel, 120 Church Street, Buffalo, New York, at 9:00
a.m. on Friday, October 29, 1999, and at any adjournment thereof. This proxy
statement and form of proxy are being mailed to shareholders on or about
September 15, 1999.
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
Michael A. Simon 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 PricewaterhouseCoopers 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. Votes withheld, abstentions
and broker non-votes will be counted towards the quorum, but will not be
counted as votes for or against a proposal.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record at the close of business on September 10, 1999,
will be entitled to vote at the Meeting. As of that date, there were
outstanding 5,073,656 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 19, 1999, based upon
information believed to be reliable.
Title of Name and Address Shares Beneficially Percent of
Class of Owner Owned Class
- -------------------------------------------------------------------------------
- ----
Common First Carolina Investors, Inc. 1,000,000 (1) 19.71
Stock 1130 East Third Street, Suite 410
Charlotte, NC
(1) First Carolina Investors, Inc. has sole voting power and sole dispositive
power with respect to these shares.
<PAGE>
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 five 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 30, 1998.
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. Votes withheld and 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 13, 1999.
NOMINEES FOR ELECTION AS DIRECTORS
Principal Occupation and Business Shares of
Experience During the Past Five Common Stock
Nominee Years and Other Directorships Beneficially Owned
- ----------------------------------------------------------------------------
Robert D. Batting Director, President and Chief Sole Beneficial Ownership:
Age 58 Executive Officer, Kenney 2,769
Director Since Manufacturing Company, a Shared Beneficial Ownership:
1995 manufacturer of consumer 0
durable/hardware products, Right to Acquire: 4,889.09
since July 1997. Prior Percent of Class: .15
thereto, Vice President and
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, President Sole Beneficial Ownership:
Age 58 and Chief Executive Officer, 1,465
Director Since Moog Inc., manufacturer of Shared Beneficial Ownership:
1988 fluid controls for aerospace 300
and industrial applications, Right to Acquire: 10,192.91
since 1996. Director, Percent of Class: . 24
Astronics Corporation, M&T
Bank Corp., Seneca
Foods Corp., National Fuel
Gas Company.
Randall L. Clark Chairman, Dunn Tire Sole Beneficial Ownership:
Age 56 Corporation, tire 2,624
Director Since distribution company, Shared Beneficial Ownership:
1995 since 1996. Principal, 0
Buffalo Ventures, Inc., Right to Acquire: 6,034.07
investment banking company Percent of Class: .17
since 1996. Prior thereto,
Executive Vice President
and Chief Operating Officer,
Pratt & Lambert United, Inc.,
a manufacturer of paints
and chemical products, from
1992 until 1995.
Terry M. Manon Senior Vice President, Air Sole Beneficial Ownership:
Age 48 Handling Products, Trane 1,465
Director Since Company, manufacturer of Shared Beneficial Ownership:
1994 air handling systems, since 0
1996. Prior thereto, Vice Right to Acquire: 6,192.91
President, Air Handling Percent of Class: .15
Systems Division, Trane
Company, since 1987.
Robert J. McKenna Chairman, President and Sole Beneficial Ownership:
Age 51 Chief Executive Officer of 20,526
Director Since Acme Electric Corporation, Shared Beneficial Ownership:
1993 since 1994. Director, *0
Astronics Corporation Right to Acquire: 33,750
Percent of Class: 1.07
All Executive Officers Sole Beneficial Ownership: 38,700
and Directors as a Shared Beneficial Ownership: 6,932
Group (10 Persons) Right to Acquire: **100,308.98
Percent of Class: 2.88
*Does not include 80,000 shares held in the Company's Retirement Plan for
Employees of the Company (see Pension Plan) as to which shares Mr. McKenna has
shared voting and investment powers in his capacity as Chairman of the Pension
Committee.
**Includes shares which are exercisable under the 1989 Stock Option Plan, the
1996 Directors' Stock Option Plan, and 1998 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. 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. Batting, Clark and Manon.
Two meetings of the Audit Committee were held during fiscal year 1999.
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 1999.
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 1999. Members of this Committee are Messrs. Brady, 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 2000 Annual Meeting of Shareholders should submit such
recommendation in writing to the Secretary of the Company at its East Aurora
address on or before May 18, 2000.
Each non-employee member of the Board of Directors receives payments in
the form of stock options under the 1996 Directors' Stock Option Plan. 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. In addition, non-employee
directors are eligible to be selected as participants in the 1998 Stock Option
Plan. During fiscal year 1999, options to purchase 2,000 shares of the Common
Stock of the Company at an exercise price of $4.00 per share were granted to
each non-employee director.
During fiscal year 1999, 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 Board of Directors can also make individual awards based on their
assessment of contributions to the tactical and strategic goals set by the
Chief Executive Officer 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 and is distributed as a
percentage of base salary. The MIP has a maximum allowable payout of 40% of
salary.
Every other 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 closing price of Acme stock on
the day of the grant, creating recipient value only as the stock increases in
market price. Stock options granted under 1998 Stock Option Plan to certain
executive officers in fiscal year 1999 are shown in the table of Option Grants
in Last Fiscal Year on page 9. With the approval of the 1998 Stock Option Plan
by the shareholders at the 1998 Annual Meeting of Shareholders, the granting
of options under the 1989 Stock Option Plan ceased.
Compensation of the Chief Executive Officer
The Chief Executive Officer's salary was determined by the Committee, in
accordance with the above stated philosophy.
An incentive payment was made to the CEO based on fiscal 1999 earnings
exceeding the required return threshold on beginning shareholder equity, as
established by the Board of Directors.
The Committee believes that both annual and long-term compensation for the
last three years reflect this statement on philosophy.
Submitted by the Compensation Committee: Robert D. Batting Robert T.
Brady Randall L. Clark
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
Payouts
------------------------- ---------------------- ---
- ----
Other Restricted Securities
Fiscal Annual Stock Underlying
LTIP All Other
Name and Year Salary Bonus Compensation Award(s) Options
Payouts Compensation
Principal Position End ($) ($) ($) ($) (#)
($) ($)
(1) (2) (3)
(4) (5)
________________________________________________________________________________
________________________
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
R.J. McKenna 6/30/99 287,000 123,008 --- --- 45,000 -
- -- 2,592
Chairman/ 6/30/98 278,000 138,374 --- --- 15,000 -
- -- 1,566
President/CEO 6/30/97 262,625 --- --- --- --- -
- -- 1,566
D.K. Corwin 6/30/99 160,000 --- --- --- 10,000 -
- -- 1,697
V.President/GM 6/30/98 155,189 46,347 --- --- 5,000 -
- -- 1,612
Electronics Div.6/30/97 149,334 --- --- --- --- -
- -- 927
J.E. Gleason 6/30/99 138,701 55,480 50,005 --- 10,000 -
- -- 1,176
V.President/GM 6/30/98 134,645 53,858 --- --- 5,000 -
- -- 599
Aerospace Div. 6/30/97 128,861 --- --- --- --- -
- -- 891
N.T. Arena 6/30/99 134,000 4,922 --- --- 10,000 -
- -- 1,376
V.President/GM 6/30/98 130,000 --- --- --- 5,000 -
- -- 607
Power Distribution 6/30/97 118,861 14,834 --- --- --- -
- -- 400
Products Division
<FN>
1. Bonuses accrued at June 30 and paid within the subsequent ninety-day period.
2. Annual perquisites with aggregate value exceeding 10 percent of salary and
bonus. Amount reported includes relocation reimbursement of $42,171.
3. All grants were incentive stock options granted under the Company's 1998 or
1989 Stock Option Plans based on fiscal 1998 and 1997 Company performance.
4. The Company has no long-term incentive plans.
5. The amounts reflected in this column are the value of group term-life
insurance. The Company has not contributed to any defined contribution
plans.
</FN>
</TABLE>
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Potential Realizable
Value at Assumed
Annual
Rates of Stock
Price
Appreciation for
Individual Grants
Option Term
------------------------------------------------- -------
- --------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)(1)(2) Year ($/Sh) Date 5%
($) 10% ($)
________________________________________________________________________________
________________________
<S> <C> <C> <C> <C> <C>
<C>
R.J. McKenna 45,000 48.4% $4.00 08/31/2008
113,201 286,874
D.K. Corwin 10,000 10.8% $4.00 08/31/2008
25,156 63,750
J.E. Gleason 10,000 10.8% $4.00 08/31/2008
25,156 63,750
N.T. Arena 10,000 10.8% $4.00 08/31/2008
25,156 63,750
<FN>
1. The Company does not have a stock appreciation rights plan.
2. Options became 50% exercisable on December 1, 1998, and 100% exercisable on
September 1, 1999.
</FN>
</TABLE>
<PAGE>
<TABLE>
Aggregated Option Exercises In Last Fiscal Year And F/Y-End Option Values
<CAPTION>
Shares Acquired Value Number of Unexercised Value of
Unexercised In-the-Money
on Exercise Realized Options at F/Y-End (#) Options at F/Y-
End ($)
Name (#) ($) Exercisable/Unexercisable
Exercisable/Unexercisable
________________________________________________________________________________
________________________
<S> <C> <C> <C> <C>
R.J. McKenna None --- 33,750/36,250
$32,344/$32,344
D.K. Corwin None --- 18,000/10,000
$11,688/$7,188
J.E. Gleason None --- 13,000/10,000
$8,876/$7,188
N.T. Arena None --- 6,250/8,750
$7,188/$7,188
</TABLE>
1. Supplemental Requirement Information:
Shares of Common Stock Beneficially Owned
D.K. Corwin Sole Beneficial Ownership: 0
Shared Beneficial Ownership: 5,422
Right to Acquire: 18,000
Percent of Class: .46
J.E. Gleason Sole Beneficial Ownership: 6,481
Shared Beneficial Ownership: 0
Right to Acquire: 13,000
Percent of Class: .38
N.T. Arena Sole Beneficial Ownership: 0
Shared Beneficial Ownership: 1,270
Right to Acquire: 6,250
Percent of Class: .15
<PAGE>
Comparison of 5-Year Cumulative Total Return
(Graph)
June 94 June 95 June 96 June 97 June 98 June 99
Acme Electric Corp.$100.00 $358.82$ 89.71 $ 77.94 $ 56.61 $ 63.98
S & P 500 Index $100.00 $126.07 $158.85 $213.97 $278.51 $341.88
Peer Group $100.00 $167.58 $191.92 $274.99 $277.39 $431.85
___________________________________________________________________________
Peer Companies:
Advanced Micro Devices Intel Corp. Raychem Corp.
EG&G Inc. Loral Corp. E-Systems
Emerson Electric Co. Magnetek Inc. SL Industries Inc.
Hewlett-Packard Co. Motorola Inc. Tektronix Inc.
Honeywell Inc. Nat'l Semiconductor Corp. Texas Instruments Inc.
Hubbell Inc. -CL B PE Corp. Thomas & Betts Corp.
<PAGE>
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. McKenna has a three-year employment agreement with the Company. Each
of Messrs. Corwin, Gleason and Arena has a two-year employment agreement. The
terms of the agreements are automatically extended unless either party gives
timely notice to the other not to extend. Under the agreements, the executives
receive a base salary, plus bonus, as determined by the Board of Directors. In
the event of a breach of agreement by the Company following a change in control
of the Company (as defined in the agreement), each is entitled to receive, for
the remainder of the term of his agreement, an amount equal to his base salary
at the time of breach plus a bonus. In addition, each is entitled to receive
continued medical, dental, and disability and life insurance benefits for life
or until he accepts other full-time employment. Over the term of each
agreement, contributions will continue to be made on behalf of each officer to
the Company's Pension Plan for Salaried Employees and, in the case of Messrs.
McKenna and Corwin, to the Supplemental Executive Retirement Plan. Mr. McKenna
is also entitled to severance benefits equivalent to six months' salary (except
for termination for cause) and to the continuation of certain other benefits
during the remainder of the term of his agreement. Under the agreements, the
officers must preserve confidential Company information and refrain from any
activities that may compete with the Company's business.
1989 STOCK OPTION PLAN
Upon approval of the 1998 Stock Option Plan by the shareholders at the
1998 Annual Meeting of Shareholders, the granting of options under the 1989
Plan ceased.
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 purpose of the 1996 Plan
is to facilitate ownership in the Company by non-employee directors of the
Company by providing them with a convenient means to purchase Common Stock of
the Company and, thereby, to share in its progress and success. Currently,
four directors participate in the 1996 Plan.
The grant of options under the 1996 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 1996
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 1996 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 for credit toward the grant of options under the 1996 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 1996
Plan relating to a director's termination of service.
Each option will 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 options. Upon exercise, the optionee will
recognize ordinary income in an amount equal to the 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.
1998 STOCK OPTION PLAN
The 1998 Stock Option Plan (the "1998 Plan") was approved by the Company's
shareholders on October 30, 1998. The purpose of the Plan is to advance the
interests of the Company and its shareholders by providing a long-term
incentive compensation program that will be an incentive to key employees and
non-employee directors of the Company and its subsidiaries whose contributions
are important to the continued success of the Company and its subsidiaries and
enhance their ability to attract and retain in their employ and as directors
highly qualified persons for the successful conduct of their businesses.
Under the 1998 Stock Option Plan, certain individuals are granted, for a
period of up to ten years, beginning with the date of the grant, options to
purchase specified amounts of the Company's Common Stock for 100% of the fair
market value of the stock, subject to option, on the date of the Option's
grant. A total of 500,000 shares of Common Stock are available for grant of
options under the Plan.
PENSION PLAN
Executive officers of the Company, including those named in the Summary
Compensation Table, are covered by the Retirement Plan for Employees of the
Company ("Pension Plan"). Messrs. McKenna and Corwin 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 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 normal retirement benefit under the Pension Plan is one percent of the
average monthly base salary for each year of credited service at December 31,
1991, plus 1.5 percent of monthly W-2 wages earned in each year of credited
service after December 31, 1991. The Internal Revenue Code of 1986, as
amended, limits the amount of benefits payable under the Pension Plan, as well
as the amount of compensation used to determine those benefits. For benefits
accruing in plan years beginning after 1997, no more than $160,000 (indexed for
inflation) in annual compensation may be taken into account.
The annual 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 Pension Plan. The benefits of certain individuals
covered by the Supplemental Plan may be subject to limitations. The table
below illustrates the maximum total amount of annual pension payments, computed
on a straight life annuity basis, under both the Pension Plan and the
Supplemental Plan for an employee whose annual base salary at retirement and
years of service are as 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
350,000 70,000 140,000 210,000
The term "base salary" used in the above table refers to the column of the
Summary Compensation Table on page 8 labeled "Salary."
For the purpose of determining the pension benefits payable under the
Pension Plan and the Supplemental Plan, estimated years of credited service as
of the end of the calendar year 1998 covered by the Plans for executive
officers named in the Summary Compensation Table are as follows: Mr. McKenna,
6 years; Mr. Corwin, 27 years; Mr. Gleason, 31 years; and Mr. Arena, 3 years.
The estimated annual benefits payable under the Pension Plan upon
retirement at normal retirement age for Messrs. Gleason and Arena are $63,000
and $37,000, respectively. The combined estimated annual benefits payable
under the Pension Plan and the Supplemental Plan upon retirement at normal
retirement age for Messrs. McKenna and Corwin are $124,000 and $99,000,
respectively. The above annual benefits were computed on a straight life
annuity basis and assume continued employment to age 65 with no increase in
compensation covered by the Plans.
Benefits are presently being paid to some individuals covered under the
Supplemental Plan. The Company has purchased, and is the beneficiary of,
insurance on the lives of participants under the Supplemental Plan. The
proceeds of the policies will reimburse the Company for some or all costs,
including Supplemental Plan benefits, insurance premiums and a factor for the
use of the Company's money. It is expected that the Supplemental Plan will aid
the Company in continuing to retain and motivate key employees. Messrs.
McKenna and Corwin will be eligible to receive benefits under the Supplemental
Plan.
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.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and change in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Directors, officers and greater-than-
10% shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on review of copies
of such reports furnished to the Company and written representations that no
other reports were required, the Company believes that all Section 16(a) filing
requirements applicable to its officer, directors and greater-than-10%
shareholders were complied with during the fiscal year ended June 30, 1999.
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
PricewaterhouseCoopers LLP as independent auditors to examine the Company's
financial statements for its fiscal year ending June 30, 2000.
PricewaterhouseCoopers LLP and its predecessors have served as the Company's
independent auditors for many years.
As in prior years, a representative of PricewaterhouseCoopers LLP will be
present at the Meeting with the opportunity to make a statement and respond to
questions.
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 PricewaterhouseCoopers LLP, the Board of Directors will reconsider the
appointment.
The Board of Directors recommends a vote FOR ratification of the
appointment of PricewaterhouseCoopers LLP as independent auditors of the
Company for the 2000 fiscal year. Proxies solicited by the Board of Directors
will be so voted unless shareholders specify otherwise in their Proxies.
PROPOSALS BY SECURITY HOLDERS
Notice of any matter intended to be presented by a shareholder for action
at the 2000 Annual Meeting of Shareholders must be given to the Secretary of
the Company at its office in East Aurora, New York, by personal delivery or
certified mail and must comply with the advance notice procedures and
information requirements set forth in the By-Laws of the Company. Notice of
such matter must be received not later than May 18, 2000, nor before April 18,
2000.
In order to be considered for inclusion in the Company's proxy statement
for the 2000 Annual Meeting under regulations of the Securities and Exchange
Commission, a shareholder proposal must be received by the Company not later
than May 18, 2000.
COST OF SOLICITATION
The Company will pay the expenses of soliciting proxies for the Meeting.
Solicitations of proxies may be made by personal calls upon, or telephone or
other electronic communications with, shareholders or their representatives by
directors, officers, employees and agents of the Company. Directors, officers
and employees are not compensated specially for these services.
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. In addition, Innisfree M&A Incorporated has been engaged to assist in
the solicitation of proxies for an estimated fee of $15,000.
OTHER MATTERS
The Board of Directors does not know of any other matters that may 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 15, 1999 John B. Drenning, Secretary
