Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
COMPUDYNE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
[ ] 2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
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 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 No.:
3) Filing Party:
CompuDyne Corporation
4) Date Filed:
April 24, 2000
COMPUDYNE CORPORATION
7249 National Drive
Hanover, MD 21076
(410) 712-0275
April 20,2000
Dear CompuDyne Shareholders:
The following pages contain the formal notice of the 2000 Annual
Meeting
and the Proxy Statement. Please be sure to complete, date, sign
and
return the enclosed proxy card promptly to ensure that your
shares will
be voted.
Enclosed is CompuDyne's Annual Report for the year ended December
31,
1999. This report describes in detail the Corporation's
operations and
results for the past year.
You are invited to attend CompuDyne's Annual Meeting to be held
Monday,
May 22, 2000 at 11:00 a.m. (EST) at The Best Western Hotel, 6755
Dorsey
Road, Dorsey, Maryland 21075 in the Dorsey Banquet Room.
Sincerely,
Martin A. Roenigk
Chairman
COMPUDYNE CORPORATION
Notice of 2000 Annual Meeting of Shareholders
to be held Monday, May 22, 2000
The 2000 Annual Meeting of Shareholders of CompuDyne Corporation
(the
"Corporation") will be held Monday, May 22, 2000, at 11:00 a.m.
(EST)
at The Best Western Hotel, 6755 Dorsey Road, Dorsey, Maryland,
21075
in the Dorsey Banquet Room, for the following purposes:
1. To elect two directors to serve until the 2003
Annual
Meeting of Shareholders;
2. To amend the Corporation's Articles of Incorporation
to
increase the number of authorized shares of stock;
3. To ratify the appointment by the Board of Directors
of the
firm of Deloitte & Touche LLP as independent
auditors of
the Corporation for the fiscal year ending December
31,
2000; and
4. To transact such other business as may properly come
before the meeting or any adjournment or
adjournments
thereof.
The Board of Directors has fixed the close of business on April
5, 2000
as the record date for the determination of shareholders entitled
to
notice of, and to vote at, the meeting. The stock transfer books
will
not be closed.
The Board of Directors solicits the accompanying proxy of
CompuDyne
Corporation. Reference is made to the following proxy statement
for
further information relating to the business to be transacted at
the
meeting. The Board of Directors urges you to execute and return
promptly the enclosed proxy. You are, of course, cordially
invited to
attend the meeting and to personally vote your shares.
By Order of the Board of
Directors
William C. Rock, Secretary
April 20, 2000
_________________________________________________________________
_______
IMPORTANT
To assure your representation at the meeting, please date and
execute
the enclosed Proxy in accordance with the instructions contained
therein and return immediately. A return envelope, which
requires no
postage if mailed in the United States, is enclosed for that
purpose.
_________________________________________________________________
_______
COMPUDYNE CORPORATION
7249 National Drive
Hanover, Maryland 21076
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors furnishes this Proxy Statement to
shareholders of
CompuDyne Corporation, a Nevada corporation ("CompuDyne" or the
"Corporation"), in connection with the solicitation of proxies
for use
at the 2000 Annual Meeting of Shareholders of the Corporation to
be held
Monday, May 22, 2000 at 11:00 a.m. (EST) at The Best Western
Hotel,
6755 Dorsey Road, Dorsey, Maryland 21075 in the Dorsey Banquet
Room.
The approximate date on which this Proxy Statement and the
enclosed form
of proxy are first to be sent to shareholders is April 20, 2000.
SOLICITATION OF PROXIES
The expenses of the solicitation of the proxies for the meeting,
including the cost of preparing, assembling and mailing the
notice
and Proxy Statement, proxy and return envelopes, the handling and
tabulation of proxies received, and charges of brokerage houses
and
other institutions, nominees or fiduciaries in forwarding such
documents
to beneficial owners, will be paid by the Corporation. In
addition to
the mailing of the proxy material, such solicitation may be made
in
person or by telephone by directors, officers or regular
employees of
the Corporation.
The enclosed proxy is revocable at any time before it is
exercised. A
proxy may be revoked by filing with the Secretary of the
Corporation a
revoking instrument or a duly executed proxy bearing a later
date. The
powers of the proxy holders will be suspended if the person
executing
the proxy attends the meeting in person and so requests.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has fixed April 5, 2000 as the record date
(the
"Record Date") for determining shareholders entitled to notice of
and to
vote at the meeting. On the Record Date, there were 5,451,166
shares of
Common Stock, par value $.75 per share ("Common Stock"), of the
Corporation outstanding and eligible to vote on all corporate
issues.
The presence in person or by proxy of a majority of the issued
and
outstanding shares entitled to vote will constitute a quorum for
the
purpose of conducting the meeting. Abstentions and broker
nonvotes
are counted as present in determining whether the quorum
requirement is
satisfied.
The holders of Common Stock of record at the close of business on
April
5, 2000 will be entitled to vote on all matters presented at the
meeting. Common Stock shareholders will be entitled to one vote
for
each share of Common Stock held. There will be no cumulative
voting
for the election of directors. A plurality of the votes cast by
all
shareholders entitled to vote thereon at a meeting at which a
quorum
is present is required to elect directors (Proposal No. 1). The
affirmative vote of a majority of the votes cast by all
shareholders
entitled to vote thereon at a meeting at which a quorum is
present is
required to increase the authorized shares (Proposal No. 2), to
ratify
the appointment by the Board of Directors of the independent
auditors
(Proposal No. 3) and to act upon any other matter as may properly
come
before the meeting or any adjournment thereof. Abstentions and
broker
nonvotes will not be included in the vote total in the election
of
directors and will have no effect on the outcome of the vote. An
abstention from voting will have the practical effect of voting
against
any of the other matters since it is one less vote for approval.
ELECTION OF DIRECTORS (Proposal No. 1)
Directors and Nominees
Pursuant to the Bylaws of the Corporation, the Board of
Directors, has
fixed the number of directorships at seven. The directors are
divided
into three classes, each class serving for a term of three years.
To
the extent practical, one-third of the members of the Board of
Directors
are elected by the shareholders annually. Mr. Millard H. Pryor,
Jr. was
nominated by the Board of Directors and was elected by the
Corporation's
shareholders in May 1997 for a term of three years expiring at
the 2000
Annual Meeting. Mr. Miles P. Jennings, Jr. was nominated by the
Board of
Directors and was elected by the Corporation's shareholders in
May 1997
for a term of three years expiring at the 2000 Annual Meeting.
The Board has nominated and recommends that shareholders elect
nominees
Millard H. Pryor, Jr. and Miles P. Jennings, Jr. to serve as
directors
of the Corporation for a term of three years until the 2003
Annual
Meeting of Shareholders and until their successors are elected
and
qualified.
Unless authority to vote is withheld, the enclosed proxy will be
voted
FOR the election of Millard H. Pryor, Jr. and Miles P. Jennings,
Jr.,
who management believes are willing and available to serve the
Corporation in such capacities. There is no family relationship
between
Mr. Pryor and Mr. Jennings and any director or executive officer
of the
Corporation.
Information with respect to each person nominated for election as
a
director and each other person who will continue as a director
after the
meeting follows.
Age, Principal Occupation or Position, Year
First
Directorships of Other Publicly Owned Corporations Elected
Director
__________________________________________________
________________
NOMINEES FOR TERM OF OFFICE TO EXPIRE IN 2003:
Miles P. Jennings, Jr., 54 (2) 1997
Mr. Jennings is a Vice President-Investments
of Advest, Inc., a brokerage firm, and has
served in such capacity since May 1996.
Prior to that time he was Vice President-
Investments of Prudential Securities, Inc.
(investment brokerage) from September 1992
until May 1996.
Millard H. Pryor, Jr., 65 (1)(2)(3) 1985
Mr. Pryor is a Managing Director
of Pryor & Clark Company, an investment holding
company, and has served in such capacity since
June 1993. He presently serves as a director of
Corcap (a holding company). He also serves as a
director of The Hartford Funds (financial services)
and Infodata Systems Inc. (computer software).
Age, Principal Occupation or Position, Year
First
Directorships of Other Publicly Owned Corporations Elected
Director
__________________________________________________
________________
DIRECTORS WHOSE TERM OF OFFICE EXPIRES IN 2002:
David W. Clark, Jr., 62 (2)(3) 1985
Mr. Clark is a Managing Director of
Pryor & Clark Company, an investment holding
company, and has served in such capacity since
June 1993. He presently serves as a Director
of Corcap, Inc. (a holding company).
Checkpoint Systems, Inc. (manufacturing)
and SS&C Technologies Corp. (software development).
Philip M. Blackmon, 52 1995
Mr. Blackmon was appointed Executive Vice President
and Director of CompuDyne in January 1995.
Mr. Blackmon has been employed by Quanta Systems
Corporation ("Quanta"), a subsidiary of CompuDyne,
for over five years, having served as its President
since 1992 and its Vice President since 1987.
David M. Jones, 34 (2)(3) 1999
Mr. Jones is a Principal of William Blair
Mezzanine Capital Partners III, the General
Partner of William Blair Mezzanine Capital Fund I,
William Blair Mezzanine Capital Fund II and
William Blair Mezzanine Capital Fund III
(an investment firm), and has served in such
capacity since 1993.
DIRECTORS WHOSE TERM OF OFFICE EXPIRES IN 2001:
Martin A. Roenigk, 58 (1) 1995
Mr. Roenigk was elected Chairman of the
Board of Directors, President and
Chief Executive Officer of CompuDyne in August 1995.
He has also served as a Director of Corcap, Inc.
(a holding company) since August 1995.He is the
Chairman of Quanta Systems Corporation,
Quanta SecurSystems, Norment Industries and Norshield.
Alan Markowitz, 49 (1)(3) 1995
Mr. Markowitz has been a private investor since 1998.
Prior to that time he served as President of Paragon
Financial Services (financial services) since 1990.
__________________________________
(1) A member of the Executive Committee of the Board of
Directors.
(2) A member of the Audit Committee of the Board of
Directors.
(3) A member of the Compensation and Stock Option Committee
of the
Board of Directors.
Since August 1995, Messrs. Pryor, Roenigk and Markowitz have
served as
the Executive Committee of the Board of Directors which
Committee, with
certain exceptions, has the powers exercisable by the Board of
Directors
when it is not in session. Messrs. Pryor, Clark, Jennings and
Jones
have served as the Audit Committee of the Board of Directors
which
Committee has the responsibility to review the overall control
systems
of the Corporation, to advise the Board of Directors with respect
to the
engagement of independent auditors who are to audit the books and
records
of the Corporation and to approve the scope of any audit to be
conducted.
Messrs. Pryor, Clark, Jones and Markowitz have served as the
Compensation
and Stock Option Committee of the Board of Directors which
Committee has
the authority to determine the compensation of officers of the
Corporation and to grant restricted stock awards, stock options
and stock
bonus awards to the employees of the Corporation. The Board of
Directors
does not have a standing nominating committee.
On February 2, 1996, the Board of Directors adopted the 1996
Stock Option
Plan for Non-Employee Directors ("Director Plan"), subject to
shareholder
approval which was granted at the 1996 Annual Meeting of
Shareholders.
The Board of Directors approved an amendment to the Director Plan
to
increase the number of options granted to each Non-Employee
Director
subject to shareholder approval which was granted at the 1998
Annual
Meeting of Shareholders. The purpose of the Director Plan is to
promote
the interests of CompuDyne and its shareholders by encouraging
Non-Employee Directors of the Corporation to have a direct and
personal
stake in the performance of the Corporation's Common Stock.
Under the
current Director Plan, as amended on May 20, 1998, on each date
that a
Non-Employee Director of the Corporation is first elected as a
director
of the Corporation by the shareholders of the Corporation or
appointed
as a director by the Board of Directors in accordance with the
Bylaws of
the Corporation and subsequently reelected as a director by the
shareholders of the Corporation, such Non-Employee Director shall
automatically be granted a stock option to purchase 1,000 shares
of
Common Stock of the Corporation upon the terms and conditions
specified
in the Director Plan. In addition, on the date of each meeting of
the
Board of Directors each Non-Employee Director of the Corporation
attending such meeting (in person or by telephone) shall
automatically
be granted a stock option to purchase 500 shares of Common Stock
of the
Corporation in the Director Plan. The maximum number of options
that
may be granted in any one calendar year to any one Non-Employee
Director
pursuant to the Director Plan shall be options for 4,000 shares
of
Common Stock. No options shall be granted for action taken by
the Board
of Directors by unanimous written consent. No Non-Employee
Director
shall be entitled to receive any options if the grant of such
options
would exceed the maximum number of shares that may be delivered
under
the Director Plan. In addition to the grant of options,
commencing with
the first quarter of 1999, each Non-Employee Director receives a
$1,000
retainer per quarter, payable on the first day of the quarter,
and
$1,000 for each meeting attended. The directors will continue to
be
reimbursed for reasonable expenses incurred for attending the
meeting.
During 1999, the Board of Directors held three regular meetings,
one
telephonic meeting and acted by the unanimous written consent of
its
members on seven occasions. No meetings were held by the
Executive
Committee and one meeting was held by the Audit Committee. No
meetings
were held by the Compensation and Stock Option Committee, but
such
Committee acted by the unanimous written consent of its members
on six
occasions. All directors of the Corporation attended at least
75% of
the aggregate of the meetings of the Board of Directors and the
number
of committee meetings on which he served, excluding Mr.
Markowitz.
EXECUTIVE OFFICERS
The following table sets forth information with respect to each
executive officer of the Corporation who served during 1999.
Mr. Roenigk was elected Chairman of the Board of Directors, Chief
Executive Officer and President of CompuDyne in August 1995.
Mr. Blackmon was appointed Executive Vice President of the
Corporation
in January 1995. Mr. Robison was appointed Chief Executive
Officer of
Norment Industries ("Norment"), a wholly owned subsidiary of
CompuDyne,
in November 1998 and Chief Executive Officer of Norment. Mr.
Robison
was appointed President of Quanta SecurSystems, Inc.,
("SecurSystems"),
a wholly owned subsidiary of CompuDyne, in July 1996. Prior to
being
appointed President of Quanta SecurSystems, Mr. Robison served
as
President of Shorrock Electronic Systems, Inc. (now Quanta
SecurSystems)
since May 1990. Mr. Lucynski was appointed President of Norment
Industries ("Norment"), a wholly owned subsidiary of CompuDyne,
in
November 1998 and President of Norshield Corporation
("Norshield") a
wholly owned subsidiary of CompuDyne in January 2000. Prior to
that
time he served as Executive Vice President and Vice President
Construction Operations of Norment since 1996 and 1991,
respectively.
Mr. Deasey was appointed President of CorrLogic Corporation
("CorrLogic"), a wholly owned subsidiary of CompuDyne, in
September
1999 and President of Sysco Security Systems in January 2000. He
was
appointed Vice President of Sales and Marketing in May of 1999.
Prior
to that he served as General Manager of Shorrock Integrated
Systems, a
Division of Shorrock Security, a subsidiary of Rentokill, PLC.
Name and Age Office Business
Experience
Martin A. Roenigk, 57 Chairman, President,
Chief Executive Officer of: See
above
CompuDyne Corporation
Chairman of:
Quanta Systems, Inc.
Quanta SecurSystems, Inc.
Norment Industries
Norshield, Inc.
Philip M. Blackmon, 52 Executive Vice President of: See
above
CompuDyne Corporation
President and Chief Executive
Officer of:
Quanta Systems, Inc.
J. Kevin Robison, 49 Chief Executive Officer of: See
above
Norment Industries
President of:
Quanta SecurSystems
Jon R. Lucynski, 50 President of: See
above
Norment Industries
Norshield Corporation
Michael Deasey, 48 President of: See
above
CorrLogic Corporation
Sysco Security Systems
Corporate Vice President:
Sales and Marketing
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS WITH MANAGEMENT
_____________________________________________________________
The following table sets forth the total annual compensation of
the
Corporation's Chairman, President and Chief Executive Officer and
its
executive officers whose salary and bonuses exceeded $100,000 in
1999
("named executive officers"):
SUMMARY COMPENSATION TABLE
[S] [C] [C] [C] [C] [C]
[C]
Long Term
Compensation
Annual Compensation Awards
Payout
Securities
Restricted Underlying
All Other
Salary Bonus Stock Awards Options/SARs
Compensation
Name and Year ($) ($) ($) (#)(1)
($)(2)
Principal
Position
Martin A. Roenigk
Chairman, President
& CEO
1999 200,000 100,000 0 0
19,016
1998 153,906 50,000 0 0
4,827
1997 120,000 40,000 0 0
3,944
Philip M. Blackmon(3)
Executive Vice President
President: Quanta Systems
1999 109,990 35,000 (3) 0
10,745
1998 117,790 25,000 (3) 0
2,945
1997 109,990 30,000 (3) 0
2,945
J.Kevin Robison (1)(4)
CEO-Norment Industries
President: Quanta SecurSystems
1999 190,000 100,000 0 0
4,515
1998 130,417 40,000 0 35,000
4,246
1997 125,000 0 0 0
2,957
Jon R. Lucynski (1)(4)(5)
President-Norment Industries
Norshield Corporation
1999 180,000 115,000 0 30,000
9,481
1998 139,809 63,603 0 45,000
3,236
Michael Deasey (6)
President- CorrLogic,
Incorporated, Sysco Security
Systems
1999 125,000 35,000 0 50,000
0
(1) In September 1998, Mr. Robison was awarded a non-qualified
option to
purchase up to 35,000 shares of the Corporation's Common
Stock for
$2.50 per share in accordance with the terms and conditions
of the
Corporation's 1996 Stock Incentive Compensation Plan for
Employees.
Such options will be fully exercisable in 2003 and shall
expire on
September 22, 2008. In November 1998, Mr. Lucynski was
awarded a
non-qualified option to purchase 45,000 shares, of the
Corporation's
Common Stock for $4.31 per share in accordance with the
terms and
conditions of the Corporation's 1996 Stock Incentive
Compensation Plan
for Employees. Such options will be fully exercisable in
2003 and
shall expire on November 29, 2008. In May of 1999 Mr.
Lucynski was
awarded a non-qualified option to purchase 30,000 shares, of
the
Corporation's Common Stock for $7.38 per share in accordance
with the
terms and conditions of the Corporation's 1996 Stock
Incentive
Compensation Plan for Employees. Such options will be fully
exercisable in 2004 and shall expire on May 3, 2009. On May
1, 1998
Mr. Deasey was awarded a non-qualified option to purchase
50,000 shares
of the Corporation's Common Stock for $2.56. Such options
will be fully
exercisable in 2000 and will expire May 1, 2008.
(2) Matching contributions made by CompuDyne in CompuDyne's
401(k)
Retirement Savings Plan and Employee Stock Purchase Plan,
may also
include car allowances and life insurance.
(3) On November 12, 1992, the CompuDyne Board of Directors
authorized the
sale of 100,000 shares of CompuDyne Common Stock to Philip
M. Blackmon
at a price of $.40 per share, the fair market value at such
time.
Under a Stock Purchase Agreement, dated August 1, 1993,
entered into
pursuant to such authorization, Mr. Blackmon purchased 25%
of such
shares on each of August 1, 1993, 1994, 1995 and 1996 at
$.40 per share
by giving CompuDyne five-year non-recourse promissory notes
in the
amount of $10,000, collateralized by the stock and bearing
interest at
2% per annum over the rate designated by the First National
Bank of
Maryland as its prime commercial rate. On May 1, 1998, the
Board of
Directors, by unanimous consent, approved an amendment to
the Stock
Purchase Agreement extending the maturity date to seven
years from the
amendment date. In addition, the payment provisions of the
Agreement
were changed to allow the obligor to make payment of
principal and
interest either in cash or by the tender to the Company of
that number
of shares of CompuDyne Common Stock equal to the result
obtained by
dividing the total amount of principal and interest due by
the fair
market value of the stock. Mr Blackmon exercised his right
to tender
shares of CompuDyne Common Stock as payment of the
promissory notes.
Mr. Blackmon surrendered 6,483 shares in fulfilment of his
obligation.
As of December 31, 1999, the fair market value of the
original 100,000
shares issued was $800,000 based upon CompuDyne Common Stock
as
reported on the NASDAQ.
On December 14, 1995, Mr. Blackmon was awarded a Restricted
Stock Award
in accordance with the terms and conditions as set forth in
a Restricted
Stock Award Agreement under the CompuDyne Corporation 1986
Stock
Incentive Compensation Plan under which Mr. Blackmon
received 10,250
shares of CompuDyne Common Stock at a fair market value on
the date of
grant of $1.625 per share, or an aggregate fair market value
of $16,656
on date of grant and aggregate fair market value of $82,000
at December
31, 1999. Mr. Blackmon, as the holder of shares issued
under the Stock
Purchase Agreement and Restricted Stock Award Agreement, is
entitled to
vote and to receive any dividends paid on the CompuDyne
Common Stock.
(4) In December 1998, the Board of Directors, in accordance with
the
provisions of the CompuDyne Corporation 1986 Stock Incentive
Compensation Plan Benefit Plan (the "1986 Plan) and the
CompuDyne
Corporation 1996 Stock Incentive Compensation Plan for
Employees (the
"1996 Plan"), granted the Compensation Committee more
flexibility to
determine the disposition of options, including the length
of the
exercise period and the vesting schedule, held by employees
after
such employees' retirement or termination of employment. In
December
1998, the Compensation Committee approved the amendment of
the Stock
Option Agreements under the 1986 Plan and the 1996 Plan for
Mr. Robison
and Mr. Lucynski to extend the option exercise period and
vesting
schedule upon a change of control in the Corporation or its
subsidiaries. In the event of a change in control, the
employees'
options will be fully exercisable immediately, and any
unexercised
portion of the options will terminate at the close of
business on the
day six months following the date on which the optionee
ceases to be an
employee or upon the expiration of the term of the option,
whichever
shall first occur.
(5) Mr. Lucynski was elected President of Norment in November
1998.
Norment was acquired by CompuDyne on November 30, 1998. All
compensation reported in the table for Mr. Lucynski reflect
monies
paid by Norment and CompuDyne for the 12-month period ended
December
1998. CompuDyne's portion in 1998 of the salary paid in
December 1998
was $17,239 and the 401(k) contribution was $310. Mr.
Lucynski was
nominated President of Norshield Corporation in January,
2000.
(6) Mr. Deasey was elected Vice President of Sales and Marketing
in May of
1999. In September of 1999, Mr. Deasey was elected President
of
CorrLogic. Mr. Deasey was elected President of Sysco
Security Systems
in January, 2000.
Option Grants in Last Fiscal Year
(Individual Grants)
[S] [C] [C] [C]
[C]
Number of
Securities % of Total
Underlying Options Granted Exercise or
Options To Employees in Base Price
Expiration
Name Granted(#) 1999 ($/Share)
Date
Jon R. Lucynski(A) 30,000 19 % $7.38
5/2/2009
(A) On May 3, 1999 the Compensation and Stock Option Committee
awarded a
non-qualified stock option for 30,000 shares of CompuDyne
Common
Stock to Mr. Lucynski under the 1996 Stock Incentive
Compensation
Plan for Employees at an exercise price of $7.38 (the fair
market
value of such shares at the date of grant). Such options
first
become exercisable on the first anniversary of the grant
date, with
20% of the underlying shares becoming exercisable at that
time, an
additional 20% of the option shares become excisable on
each
successive anniversary date, with full vesting on the
fifth
anniversary date.
FISCAL YEAR-END OPTION VALUES
[S] [C] [C]
Number of
Securities Underlying Value of
Unexercised
Unexercised Options In-The-Money
Options
At December 31, 1999 (#) At December 31,
1999 ($)
Name Exercisable/Unexercisable
Excercisable/Unexercisable(1)
Martin A. Roenigk 200,000/0
$1,300,000/$0
J. Kevin Robison 24,000/16,000
$152,880/$101,920
7,000/28,000
$38,500/$154,000
Jon R. Lucynski 0/30,000
$0/$18,600
0/36,000
$0/$132,840
Michael Deasey 25,000/40,000
$136,000/$217,600
(1) The difference between the exercise price of the options
($1.50 per
share for Mr. Roenigk, $1.625 and $2.50 for Mr. Robison and
$7.38 and
$4.31 for Mr. Lucynski and $2.56 for Mr.Deasey and the fair
market value
of CompuDyne Common Stock at December 31, 1999 of $8.00 per
share).
OWNERSHIP OF COMMON AND PREFERRED STOCK
As of April 5, 2000, there were 5,451,166 shares of CompuDyne
Common Stock
issued and outstanding. In addition, there were 105,997 treasury
shares held
by the Company which are not considered outstanding under Nevada
law.
The following table sets forth, as of April 5, 2000, the amount
and nature
of the beneficial ownership of CompuDyne Common Stock by each
person who is
known by CompuDyne to hold of record or beneficially more than 5%
of any
class of voting securities of CompuDyne and by each director,
each executive
officer and by all directors and executive officers as a group.
[S] [C] [C]
[C]
Amount and
Nature of Title
Beneficial of
Percentage of
Name and Address (1) Ownership Class
Class Owned
William Blair Mezzanine
Capital Fund II
222 West Adams Street
Chicago, Illinois 60606 1,373,431(2) Common Stock
25.1 %
Martin A. Roenigk 886,337 (3)(5) Common Stock
34.6 %
Alan Markowitz 566,215 (4) Common Stock
10.3 %
Philip Blackmon 93,517 (5) Common Stock
1.7 %
Michael Deasey 65,000 (4) Common Stock
1.2 %
Miles P. Jennings, Jr. 61,775 (4) Common Stock
1.3 %
J. Kevin Robison 31,771 (4)(5) Common Stock
*
Jon R. Lucynski 29,297 (4) (5) Common Stock
*
David W. Clark, Jr. 21,041 (4) Common Stock
*
Millard H. Pryor, Jr. 17,792 (4) Common Stock
*
David M. Jones None(2)
All Directors and Executive Officers
as a group (9 persons) 2,772,745 (4) Common Stock
50.8 %
* less than one percent
______________________________________
(1) The address of each person listed in the table above,
excluding
William Blair Mezzanine Capital Fund II, LLP and David
Jones, is
CompuDyne Corporation, 7249 National Drive, Hanover,
Maryland
21076.
(2) On December 3, 1998, (effective November 30, 1998)
CompuDyne
acquired Norment and Norshield. In connection with this
purchase, CompuDyne issued 1,075,507 shares of
unregistered
Common Stock, a warrant to purchase 297,924 shares of
Common
Stock immediately exercisable at $3.25 per share, and a
subordinated note in the principal amount of $9,000,000
which
matures in 2005 to William Blair Mezzanine Capital Fund
II (the
"Fund"). The Fund is entitled to have one representative
nominated as a member of CompuDyne's Board of Directors
until
the Fund's $9,000,000 Senior Subordinated Note is repaid
in full
and the Fund's holdings of Common Stock represent less
than 10%
of CompuDyne's issued and outstanding Common Stock.
David M.
Jones is the Fund's nominee to serve on CompuDyne's Board
of
Directors.
(3) Assumes exercise of non-qualified stock options granted
to Mr.
Roenigk for 200,000 shares of CompuDyne Common Stock at
an
exercise price of $1.50 per share. Such options are
immediately
exercisable and expire on August 21, 2005.
(4) Includes CompuDyne Common Stock held by directors and
officers
or by certain members of their families (for which the
directors
and officers have sole or shared voting or investment
power)
and shares of Common Stock which they have the right to
acquire
within 60 days of April 5, 2000.
(5) See Note 2 to the Summary Compensation Table under
"Executive
Compensation and Other Transactions With Management."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 3, 1998 (effective November 30, 1998), CompuDyne
entered into
and consummated a Stock Purchase Agreement by and between Apogee
Enterprises, Inc., ("Apogee") and CompuDyne, to purchase all of
the
capital stock of Norment Industries, Inc., ("Norment") and
Norshield
Corporation, ("Norshield") from Apogee. Norment and Norshield,
headquartered in Montgomery, Alabama, operate a number of
separate
businesses which collectively are engaged in the design,
manufacture,
installation and distribution of locks, bullet resistant glass,
metal
window surrounds, electronic control systems and similar products
that
are integrated into detention security systems under the names
Norment
Industries, Norshield, SESCO, EMSS, Airteq and Trentech. The
consideration paid to Apogee for the stock of Norment and
Norshield was
$22.5 million. In connection with this acquisition, CompuDyne
issued to
William Blair Mezzanine Capital Fund II (the "Fund") 1,075,507
unregistered shares of Common Stock, a warrant to purchase
297,924 shares
of Common Stock immediately exercisable at $3.25 per share, and a
subordinate note in the principal amount of $9,000,000 which
matures in
2005. In addition, CompuDyne arranged a borrowing facility with
LaSalle National Bank.
In December 1998, the Board of Directors, in accordance with the
provision of Section 11(a) of the CompuDyne Corporation 1986
Stock
Incentive Compensation Plan (the "1986 Plan") and Section 11(a)
of the
Plan, granted the Compensation Committee more flexibility to
determine
the disposition of options, including the length of the exercise
period
and the vesting schedule, held by employees after such employees'
retirement or termination of employment. In December 1998, the
Committee, approved the amendment of the Stock Option Agreements
under
the 1986 Plan and the Plan for Mr. Robison and Mr. Lucynski and
certain
key employees of MicroAssembly to extend the option exercise
period and
vesting schedule upon a change of control of the Corporation or
its
subsidiaries. See Note 4 under Summary Compensation Table.
Pursuant to a November 30, 1998 Subordinated Loan and Investment
Agreement between CompuDyne and the Fund, and a November 30, 1998
Corporate Governance and Shareholders Agreement between
CompuDyne, Martin
A. Roenigk and the Fund, in connection with the acquisition of
Norment,
the Fund is entitled to have one representative nominated as a
member of
CompuDyne's Board of Directors until the Fund's $9,000,000 Senior
Subordinated Note is repaid in full and the Fund's holdings of
Common
Stock represent less than 10% of the CompuDyne's issued and
outstanding
Common Stock. Mr Jones is the Fund's nominee.
On November 30, 1998, the Committee granted options for 45,000
shares of
CompuDyne Common Stock to Mr. Lucynski in connection with the
acquisition of Norment and Norshield. Such options were issued
in
accordance with the terms and conditions of the Plan at a price
of $4.31
per share.
In 1997 and 1998, the Corporation issued options to purchase
shares of
Common Stock to its non-employee directors pursuant to the
Director Plan
(see "Directors and Nominees" above) at exercise prices ranging
from
$1.69 to $2.875 per share. In 1999 the Corporation issued options
to
purchase shares of Common Stock to its non-employee directors
pursuant
to the Director Plan (see "Directors and Nominees" above) at
exercise
prices ranging from $5.19 to $8.25 per share.
On July 11, 1996 and September 23, 1998, the Committee granted
options
to Mr. Robison to purchase 40,000 shares and 35,000 shares,
respectively, of CompuDyne Common Stock in accordance with the
terms and
conditions of the 1996 Stock Incentive Compensation Plan for
Employees
(the "Plan") at a price of $1.625 per share and $2.56 per share,
respectively, (100% of the fair market value of such shares at
the date
of grant).
EXECUTIVE COMPENSATION:
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The Committee's Responsibilities: The Compensation and Stock
Option
Committee of the Board (the "Committee") has responsibility for
setting
and administering the policies which govern executive and stock
compensation. The Committee is composed entirely of outside
directors.
Reports of the Committee's actions and decisions are presented to
the
full Board. The purpose of this report is to summarize the
philosophical
principles, specific program objectives and other factors
considered by
the Committee in reaching its determinations regarding the
executive
compensation of the Named Executive Officers.
Compensation Philosophy: The Committee has approved principles
for the
management compensation program which:
+ Encourage strong financial and operational performance of
the
Company;
+ Emphasize performance-based compensation, which balances
rewards
for short- term and long-term results;
+ Focus executives on "beating the competition" through
regular
comparison of CompuDyne performance relative to peer
companies;
+ Link compensation to the interests of shareholders by
providing
stock incentives and encouraging significant share
holdings; and
+ Provide a competitive level of total compensation necessary
to
attract and retain talented and experienced executives.
The Committee considers stock ownership by management to be an
important
means of linking management's interests directly to those of
shareholders. Effective July, 2000, CompuDyne will adopt stock
ownership
guidelines for its top 15 executives. The amount of stock
encouraged to
be owned increases with the level of responsibility of each
executive,
with the Chief Executive Officer expected to own stock with a
value at
least equal to two times base salary. Shares that the executives
have
the right to acquire through the exercise of stock options are
not
included in the calculation of stock ownership for purposes of
these
guidelines. Participants are expected to reach their respective
stock
ownership goals over a five-year period.
Compensation Methodology: CompuDyne strives to provide a
comprehensive
executive compensation program that is competitive and
performance-based
in order to attract and retain superior executive talent. Each
year the
Committee reviews market data and assesses CompuDyne's
competitive
position for three components of executive compensation: (1) base
salary,
(2) annual incentives, and (3) long-term incentives. The Company
utilizes
publicly available compensation surveys in security industry and
general
industry publications to assist in bench marking the
competitiveness of
its compensation programs. Because the Committee believes that
the
Company's direct competition for executive talent is broader than
the
companies that are included in the Performance Peer Group
established
for purposes of comparing shareholder returns (see Stock
Performance
Graph on page 14 for more information), these surveys may include
companies in the Performance Peer Group as well as others in the
security industry and in General Industry Groupings. The
compensation
survey data typically reflect adjustments for each company's
relative
revenue, asset base, employee population and capitalization along
with
the scope of managerial responsibility and reporting
relationships.
Components of Compensation:
+ BASE SALARY: Annual base salary is designed to
compensate
executives for their level of responsibility and sustained
individual
performance. The Committee approves in advance all salary
increases for
executive officers. The goal is to compensate executives within
the
mid-level of the range of base salaries paid by companies in the
security industry.
+ ANNUAL INCENTIVES: Annual incentive awards for the
Named
Executive Officers are provided in order to promote the
achievement of
CompuDyne's business objectives. Each year the Committee
considers the
Company's prior year's performance and objectives, as well as
it's
expectations for CompuDyne in the upcoming year. Bearing in mind
these
considerations, the Committee sets certain Company performance
criteria
or goals which must be met before payments are made.
Additionally,
individual performance goals may be established for each
participant.
Participants receive no payments unless minimum thresholds are
achieved.
Payments may range from 0% to 200% of the guideline annual
incentive,
with payments increasing as performance improves.
The Committee establishes a fixed percentage of annual
salary or
a dollar amount as an executive's guideline annual incentive
opportunity,
based partly on comparative survey data on annual incentives paid
in the
security industry. The guideline amount increases with the level
of
responsibility of the executive. Annual incentive awards for 1999
were
based on meeting objectives for one or more of three principal
measurements:
- Earnings Before Interest, Taxes and Corporate
Allocation
("Contribution") at the business unit level;
- Earnings Per Share ("EPS") at the corporate level;
and
- For 2000 and beyond, a setting of objectives for
individual
senior managers and senior management as a group.
For 1999 CompuDyne achieved the target award level. As a result,
the
annual incentive approved by the Committee for each Named
Executive
Officer was 100% of the guideline incentive opportunity. The
Bonus
column of the Summary Compensation Table on page 6 contains the
annual
incentive earned for 1999 for each of the Named Executive
Officers.
+ LONG-TERM INCENTIVE COMPENSATION: The Committee reviews and
approves
all long-term incentive awards. In 1999 these awards were in the
form
of stock options. These awards provide compensation to executives
only
if shareholder value increases. In determining the number of
stock
options awarded, the Committee reviewed surveys of similar awards
made
to individuals in comparable positions at other companies and the
executive's past performance. They also consider the number of
long-term
incentive awards previously granted to the executive.
- Stock Options: Options have an exercise price equal
to the
fair market value of common stock on the date of
grant
and typically vest over a period of five years. They
are
partially exercisable after one year, and extend for
ten
years.
Chief Executive Officer Compensation: The Committee directors
meet
annually, in private, to review Mr. Roenigk's performance. The
Committee
uses this performance evaluation in considering Mr. Roenigk's
compensation. The Chief Executive Officer participates in the
same
programs and receives compensation based on the same factors as
the
other executive officers. However, Mr. Roenigk's overall
compensation
reflects a greater degree of policy and decision-making authority
and a
higher level of responsibility with respect to the strategic
direction
and financial and operational results of the Company. The Chief
Executive Officer's compensation components are:
+ BASE SALARY: As a result of CompuDyne's acquisition of
Norment Industries in 1998, and CompuDyne's performance
in
1999, Mr. Roenigk received a raise of $46,904 in 1999.
+ ANNUAL INCENTIVE: Annual incentive compensation for Mr.
Roenigk is based upon relative attainment of the annual
performance goals for the Company, and on Mr. Roenigk's
individual objectives as determined by the Committee.
Based
on these criteria, Mr. Roenigk was awarded $100,000
representing 100% of his guideline incentive for
performance
in 1999.
+ LONG-TERM INCENTIVE AWARD: Mr. Roenigk did not receive
any
stock option awards in 1999.
Omnibus Budget Reconciliation Act of 1993: This Act has had no
material
impact upon CompuDyne's ability to take a tax deduction for
annual
compensation in excess of $1 million paid to any of the Named
Executive
Officers since there has been no annual compensation in excess of
$1
million. Therefore, the Committee has determined that it is not
necessary to seek shareholder approval to amend any current
compensation
plan at this time to comply with this Act.
Compensation Committee Interlocks and Insider Participation:
There are none.
Respectfully submitted by the members of the Compensation and
Stock
Option Committee of the Board of Directors:
Millard Pryor, Chair
David Clark
David Jones
Alan Markowitz
STOCK PERFORMANCE GRAPH
FIVE-YEAR CUMULATIVE RETURN
PERFORMANCE
GRAPH
CompuDyne's Performance Peer Group is composed of six of the
major
security companies of various size and represent its competitors.
1 ) Assuming that the value of the investment in CompuDyne
Common
Stock and each index was $100 on December 31, 1994 and
all
dividends were reinvested, this graph compares
CompuDyne's
cumulative total return (i.e. based on common stock
price and
dividends), plotted on an annual basis, with the Russell
2000
National Market and CompuDyne's Performance Peer Group's
cumulative total return.
2 ) CompuDyne's Performance Peer Group Includes:
1. Armor Holdings (AH)
2. BI Incorporated (BIAC)
3. Printrak (AFIS)
4. Sensormatic Electronics (SRM)
5. Wackenhut Corporation (WAK/B)
AMENDMENT OF THE CORPORATION'S ARTICLES OF INCORPORATION TO
INCREASE THE
NUMBER OF AUTHORIZED SHARES OF THE CORPORATION'S COMMON
STOCK
(Proposal No. 2)
Pursuant to Article 5th of the Corporation's Articles of
Incorporation, the Corporation currently has 12,000,000 shares of
stock
authorized, divided into 10,000,000 shares of Common Stock, par
value
$0.75 per share and 2,000,000 shares of Preference Stock without
par
value. As of April 5, 2000, there were 5,451,166 shares of the
Corporation's Common Stock issued and outstanding, leaving
4,625,434
shares of Common Stock currently available for future issuance.
As of
the same date, no shares of Preference Stock were issued or
outstanding.
The Board of Directors has unanimously approved a resolution to
amend
Article 5th of the Corporation's Articles of Incorporation to
increase
the number of authorized shares of Common Stock to 15,000,000
shares.
The text of the proposed amended portion of Article 5th of the
Corporation's Articles of Incorporation is as follows:
Article 5th. The aggregate of shares of Capital Stock which
the
Corporation shall be authorized to issue is 17,000,000 shares.
2,000,000 shares shall be Preference Stock, without Par Value,
and
15,000,000.shares shall be Common Stock having a Par Value of
$0.75 per
share.
The Board of Directors believes it is desirable to have the
additional authorized shares of Common Stock available for future
financing and acquisition transactions, stock dividends and stock
splits, employee benefit plans and other general corporate
purposes.
Increasing the authorized number of shares of Common Stock to
15,000,000
would provide for 9,5625,434 authorized shares of Common Stock
available
for future issuance. Having an increased number of authorized
shares of
Common Stock available for issuance in the future will give the
Corporation increased flexibility and may allow such shares to be
issued
without the expense and delay of a special shareholders meeting.
All
authorized but unissued shares of Common Stock, including the
additional
shares of Common Stock authorized by the proposed amendment to
the
Articles of Incorporation, will be available for issuance without
further action by the shareholders, unless such action is
required by
applicable law or the rules of the National Association of
Securities
Dealers applicable to the Corporation as a result of the
Corporation's
shares being listed by NASDAQ on the National Market System. The
Board
of Directors does not intend to seek additional approval by
shareholders
for the issuance of additional shares unless required to do so by
applicable laws or rules.
The additional shares of Common Stock for which
authorization is
sought would be part of the existing class of Common Stock, and
if and
when issued, would have the same rights and privileges as the
shares of
Common Stock currently outstanding. Each share of Common Stock
is
entitled to one vote and to dividends as declared by the Board of
Directors. Upon liquidation each share of Common Stock is
entitled to
an equal share in all of the assets of the Company after payment
of
creditors. There are no conversion, redemption or sinking fund
privileges, and all shares of Common Stock outstanding are fully
paid
and non-assessable. Shareholders do not have preemptive rights
with
respect to any offering or sale by the Corporation of any shares
of the
capital stock of the Corporation or any securities convertible
into any
such shares. These provisions cannot be changed without the vote
of the
holders of a majority of the then outstanding shares of Common
Stock
The Corporation presently has no plans, arrangements or
understandings
for the issuance of additional shares of Common Stock.
Management is,
however, currently investigating market conditions generally to
determine whether or not it would be in the Corporation's best
interest
to issue additional shares of Common Stock later this year to
raise
capital for general, unspecified corporate purposes. In
connection with
that investigation, the Corporation may, prior to the meeting,
engage
financial advisors to assist it.
The affirmative vote of the holders of at least a majority of the
outstanding shares of the Corporation's Common Stock entitled to
vote
at the Annual Meeting is required to adopt Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal No.3)
On March 3, 2000, the Board of Directors approved the appointment
of
Deloitte & Touche LLP as independent auditors for the Corporation
for
the year ending December 31, 2000 subject to ratification of such
appointment by the shareholders.
Unless otherwise indicated, properly executed proxies will be
voted in
favor of ratifying the appointment of Deloitte & Touche LLP,
independent
certified public accountants, to audit the books and accounts of
the
Corporation for year ending December 31, 2000. Representatives
of
Deloitte & Touche LLP will be present at the Annual Meeting.
They will
be given an opportunity to make a statement if they desire to do
so, and
will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR Proposal No.3.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors and executive officers, and
persons
who own more than 10% of the Corporation's Common Stock, to file
with
the SEC initial reports of ownership and reports of changes in
ownership
of Common Stock and other equity securities of the Corporation on
Forms
3, 4 and 5. Officers, directors and 10% shareholders are required
by SEC
regulations to furnish the Corporation with copies of all Forms
3, 4,
and 5 they file.
Based solely on a review of the copies of such reports furnished
to the
Corporation and written representations that no other reports
were
required, during the fiscal year ended December 31, 1999, the
Corporation believes all Section 16(a) filing requirements
applicable to
its officers, directors and 10% beneficial owners were complied
with.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter
before
the meeting, and does not know of any other matter which anyone
else
proposes to present for action at the meeting. However, if any
other
matters properly come before such meeting, or any adjournment
thereof,
the persons named in the accompanying form of proxy or their duly
constituted substitutes acting at the meeting will be deemed
authorized
to vote or otherwise act thereon in accordance with their
judgment on
such matters.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals for the 2001 Annual Meeting of Shareholders
must
be received at the principal executive offices of the
Corporation, 7249
National Drive, Hanover, Maryland 21076, no later than December
11, 2000
for inclusion in the 2001 Proxy Statement and form of proxy.
Shareholders are requested by the Board of Directors to execute
and
deliver the enclosed proxy.
