SCHEDULE 14A INFORMATION
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
ARTESYN TECHNOLOGIES, INC.
(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 the 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 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 No.:
3) Filing Party:
4) Date Filed:
<PAGE>
ARTESYN TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 6, 1999
To the Stockholders:
The Annual Meeting of the Stockholders of Artesyn Technologies, Inc. (the
"Company") will be held on Thursday, May 6, 1999, at 10:00 A.M., local time, at
Pete's Grand Terrace, 7880 Glades Road, Boca Raton, Florida 33434, for the
following purposes:
1. To elect 11 directors to hold office until the Company's Annual
Meeting of Stockholders in 2000 and until their respective
successors have been duly elected and qualified;
2. To consider and act upon a proposal to amend the Company's 1990
Outside Directors' Stock Option Plan; and
3. To transact such other business as may properly come before the
meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 15, 1999
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Company's Annual Meeting of Stockholders (the "Meeting").
Only stockholders of record at the close of business on this date will be
entitled to notice of, and to vote at, the Meeting and any adjournment(s)
thereof.
By Order of the Board of Directors
RICHARD J. THOMPSON
Secretary
March 23, 1999
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE POSTAGE PREPAID ENVELOPE WHICH HAS BEEN PROVIDED, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE PROXY MAY BE REVOKED BY YOU
AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE MEETING YOU MAY,
IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE YOUR RIGHT TO VOTE
YOUR SHARES IN PERSON.
<PAGE>
PROXY STATEMENT
ARTESYN TECHNOLOGIES, INC.
7900 GLADES ROAD, SUITE 500
BOCA RATON, FLORIDA 33434
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Artesyn Technologies, Inc., a Florida
corporation (the "Company"), to be voted at the Company's 1999 Annual Meeting
of Stockholders (the "Meeting") and at any adjournment(s) thereof for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The Meeting is to be held on Thursday, May 6, 1999, at Pete's
Grand Terrace, 7880 Glades Road, Boca Raton, Florida 33434, at 10:00 A.M.,
local time.
The principal executive offices of the Company are located at 7900 Glades
Road, Suite 500, Boca Raton, Florida 33434 (telephone no.: 561-451-1000). The
enclosed proxy and this Proxy Statement are being sent to stockholders of the
Company on or about March 23, 1999.
QUORUM; VOTES REQUIRED
Proxies in the form enclosed with this Proxy Statement are being solicited
by, and on behalf of, the Company's Board of Directors. The persons named in
the proxy have been designated as proxies by the Company's Board of Directors.
If a quorum, consisting of a majority of the outstanding shares of the
Company's common stock, $.01 par value per share (the "Common Stock"), is
present at the Meeting, in person or by proxy, (i) the nominees for director
shall be elected by the affirmative vote of a plurality of the shares cast on
such matter at the Meeting; (ii) the proposal to approve and adopt the
amendments to the Company's 1990 Outside Directors' Stock Option Plan (the
"Outside Directors' Plan") to increase the authorized number of options (and
the shares of Common Stock issuable upon the exercise thereof) which may be
granted thereunder and to extend the date upon which the Outside Directors'
Plan expires shall be approved upon the favorable vote of the holders of at
least a majority of the total number of shares of Common Stock cast on such
matter at the Meeting; and (iii) all other matters to come properly before the
Meeting shall, subject to applicable law, be approved if the number of votes
cast in favor of the matter at the Meeting exceeds the number of votes cast
opposing the matter.
Abstentions and shares of record held by a broker or nominee ("Broker
Shares") that are voted on any matter will be included in determining the
existence of a quorum. Broker Shares that are not voted on any matter
("non-voted Broker Shares") will be treated as shares as to which voting power
has been withheld by the beneficial owners of such shares and, therefore, as
shares not entitled to vote on a proposal, and will not be included in
determining the existence of a quorum. Abstentions will be counted as votes
cast at the Meeting, but will not be counted as votes cast for or against any
given matter. Because only a plurality of shares is required for the election
of directors, abstentions and non-voted Broker Shares will not have an effect
on the outcome of the election of the nominees for directors. Because an
affirmative vote of a majority of the votes cast at the Meeting is required to
approve the amendments to the Outside Directors Plan, an abstention will have
the effect of a vote against such amendments, but non-voted Broker Shares will
not have an effect on the approval of the amendments to the Outside Directors
Plan. A "withheld" vote will be treated as equivalent to an abstention.
<PAGE>
Shares represented by properly executed proxies received by the Company
will be voted at the Meeting in the manner specified therein or, if no
specification is made, will be voted (i) "FOR" the election of all the nominees
for director named herein; and (ii) "FOR" the proposal to approve the
amendments to the Outside Directors' Plan. In the event that any other matters
are properly presented at the Meeting for action, the persons named in the
proxy will vote the proxies (which confer authority upon them to vote on any
such matters) in accordance with their judgment.
REVOCATION AND SOLICITATION
Any proxy given pursuant to this solicitation may be revoked by a record
stockholder at any time before it is exercised by written notification
delivered to the Secretary of the Company, by voting in person at the Meeting
or by executing another proxy bearing a later date. Attendance by a stockholder
at the Meeting does not alone serve to revoke his or her proxy.
The costs of soliciting proxies will be borne by the Company. The
solicitation of proxies will be made primarily by mail, but, in addition, may
be made by directors, officers and employees of the Company, personally or by
telephone, facsimile or other means of communication. Such directors, officers
and employees will not be additionally compensated, but they may be reimbursed
for reasonable out-of-pocket expenses, in connection with such solicitations.
The Company will reimburse brokers, custodians, nominees and fiduciaries for
their out-of-pocket and clerical expenses in transmitting proxies and related
materials to beneficial owners. The Company has retained D.F. King & Co. to
assist in soliciting proxies for a fee of approximately $6,000 plus
reimbursement of reasonable out-of-pocket expenses.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
January 1, 1999 ("fiscal year 1998"), which contains the Company's audited
financial statements for fiscal year 1998, is being mailed with this Proxy
Statement to all persons who were stockholders of record as of the close of
business on March 15, 1999.
RECORD DATE; OUTSTANDING SHARES
The Board of Directors has fixed the close of business on March 15, 1999
as the record date for the determination of stockholders of the Company who are
entitled to receive notice of, and to vote at, the Meeting. At the close of
business on that date, an aggregate of 36,912,885 shares of Common Stock were
issued and outstanding, each of which is entitled to one vote on each matter to
be voted upon at the Meeting. The Company's stockholders do not have cumulative
voting rights. The Company has no other class of voting securities entitled to
vote at the Meeting.
2
<PAGE>
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the close of business on March 15,
1999 certain information as to the stockholders which are known by the Company
beneficially to own more than 5% of its Common Stock (based solely upon filings
by said holders with the Securities and Exchange Commission ("Commission") on
Schedule 13D or Schedule 13G pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")):
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
- ------------------- ----------------------- -------------
<S> <C> <C>
Dresdner Bank AG(2)
Jurgen-Ponto-Platz 1
60301 Frankfurt, Germany
Dresdner RCM Global Investors LLC(2)
Dresdner RCM Global Investors U.S. Holdings LLC(2)
Four Embarcadero Center
San Francisco, California 94111 ................ 5,659,650 15.33%
Eagle Asset Management, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716 .................. 2,388,119 6.47%
Albert O. Nicholas(3)
Nicholas Company, Inc.(4)
700 North Water Street
Milwaukee, Wisconsin 53202 ..................... 2,268,400 6.15%
</TABLE>
- ----------------
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
(2) Dresdner RCM Global Investors LLC ("Dresdner RCM") is a registered
investment adviser. In its capacity as investment adviser, Dresdner RCM
has discretionary authority to dispose of or to vote securities that are
under its management, and as a result may be deemed to have beneficial
ownership of such securities. However, Dresdner RCM does not have any
economic interest in such securities.
Dresdner RCM is a wholly owned subsidiary of Dresdner RCM Global Investors
US Holdings LLC ("DRCM Holdings"). DRCM Holdings is a wholly owned
subsidiary of Dresdner Bank AG ("Dresdner"), an international banking
organization. As such, DRCM Holdings and Dresdner may be deemed to have
beneficial ownership of shares as to which Dresdner RCM is deemed to have
beneficial ownership. In addition, Dresdner may be deemed to have beneficial
ownership of shares held by its other subsidiaries which may not be deemed
to be beneficially owned by Dresdner RCM or DRCM Holdings.
Dresdner RCM holds 5,639,650 shares of Common Stock (or 15.27%), with sole
voting power with respect to 3,651,650 of such shares, no voting power with
respect to 1,988,000 of such shares, sole dispositive power with respect to
5,529,650 of such shares, and shared dispositive power with respect to
110,000 of such shares. Other wholly owned subsidiaries of Dresdner hold an
additional 20,000 shares of Common Stock (which, when added to the 5,639,650
shares of Common Stock held by Dresdner RCM, equal 5,659,650 or 15.33%),
including sole voting power and sole dispositive power with respect to such
shares, which Dresdner may also be deemed beneficially to own.
(3) Albert O. Nicholas is the chief executive officer, chairman, a director and
majority shareholder of Nicholas Company, Inc. ("Nicholas Inc."). In such
capacities, he exercises dispositive power over and may, therefore, be
deemed beneficially to own the 2,268,400 shares of Common Stock owned by
Nicholas Inc.
(4) Nicholas Inc. is a registered investment adviser which owns 2,268,400
shares of Common Stock for and on behalf of its advisory clients. Pursuant
to agreements with its advisory clients, Nicholas Inc. has sole
dispositive power with respect to such 2,268,400 shares of Common Stock.
3
<PAGE>
OWNERSHIP BY MANAGEMENT
The following table sets forth, as of the close of business on March 15,
1999, certain information concerning beneficial ownership of the Common Stock
of the Company by each nominee for election as a director of the Company (all
of whom are presently directors), each of the Named Executives (as defined
below), and all directors and executive officers as a group (based solely upon
information furnished by such persons):
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK
- ---- -------------------------- -------------
<S> <C> <C>
Lawrence J. Matthews ................................................. 1,046,029 2.8%
Ronald D. Schmidt .................................................... 1,024,135(3) 2.8%
John M. Steel ........................................................ 908,185(4) 2.5%
Joseph M. O'Donnell .................................................. 701,227 1.9%
Bert Sager ........................................................... 408,927(5) 1.1%
Richard J. Thompson .................................................. 283,687 *
Phillip A. O'Reilly .................................................. 161,721 *
Louis R. DeBartelo ................................................... 76,949 *
Robert J. Aebli ...................................................... 71,929 *
Dr. Fred C. Lee ...................................................... 61,104 *
Stephen A. Ollendorff ................................................ 60,100 *
Edward S. Croft, III ................................................. 58,081 *
Lewis Solomon ........................................................ 40,000 *
A. Eugene Sapp, Jr. .................................................. 25,000 *
All directors and executive officers as a group (20 persons) ......... 5,366,381 13.9%
</TABLE>
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* Represents less than 1%.
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
(2) Includes the following shares subject to currently exercisable options
and/or that may be acquired upon the exercise of options within 60 days of
March 15, 1999: Mr. Matthews-20,000; Mr. Schmidt-10,000; Mr.
O'Donnell-625,865; Mr. Sager-99,221; Mr. Thompson-255,312; Mr.
O'Reilly-99,221; Mr. DeBartelo-58,566; Mr. Aebli-57,500; Dr. Lee-20,000; Mr.
Ollendorff-53,000; Mr. Croft-50,000; Mr. Solomon-30,000; Mr. Sapp-20,000;
and all directors and executive officers as a group (20 persons)-1,622,220.
(3) Includes 12,926 shares which are owned of record by Mr. Schmidt's wife,
with respect to which Mr. Schmidt disclaims beneficial ownership, and
432,000 shares which are owned by the Schmidt Family Limited Partnership,
a limited partnership of which Mr. Schmidt is a general partner.
(4) Includes 266,000 shares which are owned of record by Mr. Steel's wife, with
respect to which Mr. Steel disclaims beneficial ownership.
(5) Includes 34,068 shares which are beneficially owned by Mr. Sager's wife as
trustee under a trust for Mrs. Sager's mother, with respect to which Mr.
Sager disclaims beneficial ownership, and 203,860 shares which are owned
by Sager Holdings Limited Partnership, a limited partnership of which Mr.
Sager is both a limited partner and a stockholder of the corporate general
partner.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act, directors and executive
officers of the Company and beneficial owners of greater than 10% of the
Company's Common Stock are required to file certain reports with the Securities
and Exchange Commission in respect of their ownership of Company securities.
The Company believes that during fiscal year 1998, other than with respect to
one report required to be filed by Eoin Gilley, Managing Director - Europe, and
one report required to be filed by Hartmut Liebel, Treasurer, all such required
reports were timely filed. Each of Messrs. Gilley and Liebel did not file a
Form 3 on a timely basis.
4
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
The entire Board of Directors is to be elected at the Meeting. The
Company's By-laws provide that the maximum number of directors is 12 with the
exact number to be fixed by the Board of Directors. By resolution of the Board
of Directors, the number of directors has been set at 11. The 11 persons listed
below, all of whom have consented to being named in this Proxy Statement and to
serving if elected, have been nominated to serve as directors of the Company
until the annual meeting of stockholders to be held in 2000 and until their
respective successors have been duly elected and qualified. All of the nominees
are currently directors of the Company and were elected by the stockholders at
the Company's 1998 Annual Meeting of Stockholders.
Proxies in the accompanying form will be voted at the Meeting in favor of
the election of each of the nominees listed on the accompanying form of proxy,
unless authority to do so is withheld as to an individual nominee or nominees
or all nominees as a group. Proxies cannot be voted for a greater number of
persons than the number of nominees named. In the unexpected event that any of
such nominees should become unable to, or for good reason will not, serve as a
director, it is intended that proxies will be voted for the election of
substitute nominee(s). Directors will be elected by a plurality of the votes
cast therefor by the holders of shares of Common Stock (assuming a quorum
exists).
Set forth below is certain information with respect to each nominee for
election as a director of the Company at the Meeting (based solely upon
information furnished by such persons):
<TABLE>
<CAPTION>
YEAR OF
AGE FIRST PRINCIPAL OCCUPATIONS
(AS OF ELECTION DURING PAST FIVE YEARS;
NAME 3/15/99) AS A DIRECTOR OTHER DIRECTORSHIPS
- ---- ---------- --------------- -----------------------
<S> <C> <C> <C>
Edward S. Croft, III 56 1980 Since August 1996, Managing Director of Croft &
(1)(3) Bender LLC, a private investment banking firm;
from April 1996 to August 1996, President of
Croft & Co., a financial advisory firm; for more
than five years prior to April 1996, Managing
Director of The Robinson-Humphrey Company,
Inc., an investment banking firm; director of Just
for Feet, Inc., an athletic footwear retailer.
Dr. Fred C. Lee 52 1997 From February 1986 to December 29, 1997, a
(1)(3) director of Zytec Corporation ("Zytec"); since
1977, Professor at Virginia Polytechnic Institute
and State University ("VPI") and director of the
Virginia Power Electronics Center at VPI.
Lawrence J. Matthews 70 1997 For more than the past five years, retired executive.
(1)(3)
Joseph M. O'Donnell 52 1994 Co-Chairman of the Board of Directors of the
(4) Company since December 29, 1997; from February
1997 to December 29, 1997, Chairman and since
July 1994, Chief Executive Officer and President
of the Company; from March 1994 to June 1994,
Managing Director of O'Donnell Associates, a
consulting firm; from October 1993 to February
1994, Chief Executive Officer of Savin
Corporation, an office products distributor;
director of Boca Research, Inc., a manufacturer of
data communications, multimedia and networking
products.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
YEAR OF
AGE FIRST PRINCIPAL OCCUPATIONS
(AS OF ELECTION DURING PAST FIVE YEARS;
NAME 3/15/99) AS A DIRECTOR OTHER DIRECTORSHIPS
- ---- ---------- --------------- -----------------------
<S> <C> <C> <C>
Stephen A. Ollendorff 60 1984 Practicing attorney for more than the past five years;
(3)(4) presently Of Counsel to Kirkpatrick & Lockhart
LLP; from December 1990 to January 1999, Of
Counsel to Hertzog, Calamari & Gleason; from
1983 to present, Vice President, then President,
then Chairman and Chief Executive Officer and
director of Acorn Holding Corp., a manufacturer
of microcrystalline silicon wafers; and director of
Pharmaceutical Resources, Inc., a manufacturer of
generic drugs.
Phillip A. O'Reilly 72 1988 For more than the past five years, retired executive.
(1)(2)
Bert Sager 73 1968 Since 1949, a practicing attorney; director of Acorn
(2)(3) Holding Corp., a manufacturer of microcrystalline
silicon wafers.
A. Eugene Sapp, Jr. 62 1997 Since prior to 1990, President, Chief Operating
Officer and director of SCI Systems, Inc., an
electronics contract manufacturer; director of
V-Band Corporation, a manufacturer of computer
systems.
Ronald D. Schmidt 62 1997 Co-Chairman of the Board of Directors of the
(1)(4) Company since December 29, 1997; from January
1984 to December 29, 1997, an executive officer
(including Chairman of the Board and Chief
Executive Officer) and director of Zytec, which
was merged with CPI Acquisition Corp. (a
wholly-owned subsidiary of the Company) on
December 29, 1997, with Zytec surviving as a
wholly-owned subsidiary of the Company.
Lewis Solomon 65 1995 Since August 1990, Chairman of G&L of Syosset,
(2)(3)(4) Inc., a financial consulting firm; from April 1986 to
February 1997, Chairman of Cybernetic Services,
Inc., a servicer of moving message signs which
filed a petition under Chapter 7 of the United
States Bankruptcy Code in April 1997; director of
Anadigics, Inc., a manufacturer of gallium
arsenide semiconductors; director of Anacomp,
Inc., a manufacturer of magnetic products; and
director of Terayon Communications, Inc., a
manufacturer of cable and wireless modems.
John M. Steel 54 1997 Since December 29, 1997, Vice President of the
Company; from January 1984 to December 29,
1997, executive officer and director of Zytec.
</TABLE>
- ----------------
(1) Member of the Audit Committee.
(2) Member of the Compensation and Stock Option Committee.
(3) Member of the Nominating Committee.
(4) Member of the Executive Committee.
6
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RE-ELECTION
OF ALL OF THE 11 NOMINEES NAMED ABOVE AS DIRECTORS OF THE COMPANY.
BOARD OF DIRECTORS; COMMITTEES OF THE BOARD
The Company's Board of Directors met four times during fiscal year 1998.
During fiscal year 1998, no director who was a director for the entire year,
other than A. Eugene Sapp, Jr., attended fewer than 75% of the total number of
meetings of the Board of Directors and of the committee(s) of the Board on
which he served. Mr. Sapp did not attend fewer than 75% of the total number of
meetings of the Company's Board of Directors, but did attend fewer than 75% of
the total number of meetings of the Board of Directors and of the committees of
the Board on which he served. The Board of Directors has established four
standing committees, consisting of a Compensation and Stock Option Committee,
an Audit Committee, a Nominating Committee and an Executive Committee. The
following are the current functions of such committees.
The Compensation and Stock Option Committee, which held four meetings
during fiscal year 1998, sets and approves salary levels of all corporate
officers and has primary responsibility for the administration of the Company's
1990 Performance Equity Plan (the "Performance Plan"), including the granting
of options thereunder. See "Compensation and Stock Option Committee Report on
Executive Compensation" below. This committee also administers the Company's
1996 Employee Stock Purchase Plan. The Chairman of this committee is Phillip A.
O'Reilly.
The Audit Committee, which held three meetings during fiscal year 1998,
reviews the internal and external audit functions of the Company and makes
recommendations to the Board of Directors with respect thereto. It also has
primary responsibility for the formulation and development of the auditing
policies and procedures of the Company and for making recommendations to the
Board of Directors with respect to the selection of the Company's independent
auditing firm. The Chairman of this committee is Edward S. Croft, III.
The Nominating Committee, which held one meeting during fiscal year 1998,
recommends nominees to fill vacancies on the Board of Directors and considers
responsible recommendations by the Company's stockholders of candidates to be
nominated as directors of the Company. The Nominating Committee, acting by
unanimous written consent in early 1999, considered and recommended the 11
nominees named herein to the Board. All recommendations of candidates by
stockholders must be in writing and addressed to the Secretary of the Company
and must be received by the Company not less than 50 days nor more than 75 days
prior to that year's annual meeting. By accepting a stockholder recommendation
for consideration, the Nominating Committee does not undertake to adopt or take
any other action concerning the recommendation or to give the proponent thereof
its reasons for any action or failure to act. The Chairman of this committee is
Bert Sager.
The Executive Committee, which held one meeting during fiscal year 1998,
was established by the Board of Directors in October 1997. The purpose of this
committee is to exercise all the powers and authority of the full Board of
Directors in the management of the Company except as such authority may be
limited by the Florida Business Corporation Act or other applicable law. The
Chairman of this committee is Joseph M. O'Donnell.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee consists of Phillip A.
O'Reilly, Bert Sager, and Lewis Solomon. None of the committee members are, or
were ever, executive officers or employees of the Company. During the last
fiscal year, none of the executive officers of the Company served on the board
of directors or on the compensation committee of any other entity, any of whose
executive officers served on the Board of Directors of the Company.
7
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company ("Outside Directors") are
compensated for their services by payment of an annual fee of $24,000 plus
$1,500 per day for each Board of Directors meeting attended and $750 per day
for each committee meeting attended (and an additional $250 per day for each
committee meeting at which such person acted as chairman) with a maximum
payment of $2,500 per day for attendance at meetings of the Board of Directors
and as chairman at meetings of committees of the Board of Directors.
During fiscal year 1998, options to purchase 10,000 shares of Common Stock
were granted by the Company to each of the Outside Directors of the Company at
an exercise price equal to the fair market value of the Company's Common Stock
on such grant date pursuant to the Company's Outside Directors' Plan. Under
such plan, each Outside Director is granted an option, exercisable over 10
years, to purchase 10,000 shares of Common Stock each time that such person is
elected or re-elected by the stockholders to serve as a director of the Company
provided that such Outside Director owns a certain amount of Common Stock.
An Outside Director who had served as a director prior to August 15, 1996,
and serves as a director for five or more years is entitled to receive certain
annual benefits under the Company's Outside Directors' Retirement Plan. The
annual benefits commence on the later of such Outside Director's retirement
from the Board of Directors or attainment of age 70 and continue for a number
of years equal to the number of years the Outside Director served on the
Company's Board of Directors. Effective January 1, 1998, the base amount of
such benefit is $12,000, adjusted pursuant to a cost of living index to each
Outside Director's particular retirement date. Once a director has begun to
receive the benefits as so adjusted, no further adjustments will be made for
the remainder of the period of time such Outside Director receives the benefit.
CERTAIN TRANSACTIONS
Mr. Ollendorff, a director of the Company, was Of Counsel to the law firm
of Hertzog, Calamari & Gleason during fiscal year 1998. Hertzog, Calamari &
Gleason acted as counsel for the Company in fiscal year 1998 and received fees
in such fiscal year for various legal services rendered to the Company.
Mr. Croft, a director of the Company, is currently Managing Director of
Croft & Bender LLC, which provided certain financial advisory services to the
Company in fiscal year 1997 and which received $150,000 in fees in fiscal year
1998 from the Company.
Mr. Sager, a director of the Company, provided limited legal services to
the Company in fiscal year 1998.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended
January 1, 1999, January 2, 1998 ("fiscal year 1997"), and January 3, 1997
("fiscal year 1996"), in respect of compensation earned by the Chief Executive
Officer and by the other four most highly compensated executive officers (whose
salary and bonus earned in fiscal year 1998 exceeded $100,000) of the Company
serving at the end of fiscal year 1998 (the "Named Executives").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ---------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS(#)(3) COMPENSATION($)
- --------------------------- ---- --------- ----------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. O'Donnell 1998 462,535 -0- -0- 75,000 30,800(4)
Co-Chairman, Chief 1997 376,539 409,117 -0- 74,000 30,250(4)
Executive Officer and 1996 344,615 238,427 -0- 154,965 27,751(4)
President
Richard J. Thompson 1998 226,423 -0- -0- 45,000 13,068(5)
Vice President-Finance, 1997 186,154 140,639 -0- 44,000 12,486(5)
Chief Financial Officer 1996 170,449 99,305 -0- 72,312 9,371(5)
and Secretary
Louis R. DeBartelo 1998 229,615 -0- -0- 30,000 16,695(6)
President-North America 1997 205,846 44,293 -0- 37,500 15,398(6)
Commercial 1996 194,739 61,736 -0- 51,066 12,619(6)
Robert J. Aebli 1998 174,693 49,015 -0- 15,000 17,456(7)
President-Communication 1997 157,000 133,230 -0- 15,000 16,837(7)
Products 1996 156,073 36,741 -0- 27,500 13,583(7)
John M. Steel(8) 1998 210,312 -0- -0- -0- 11,664(9)
Vice President 1997 N/A N/A N/A N/A N/A
1996 N/A N/A N/A N/A N/A
</TABLE>
- ----------------
(1) Includes amounts awarded under the Company's annual Executive Incentive
Plan to Named Executives.
(2) Includes only those perquisites which are, in the aggregate, greater than
or equal to the lesser of $50,000 or 10% of annual salary and bonus.
(3) Represents options awarded under various stock option plans.
(4) Includes insurance premiums paid by the Company in the amounts of $20,000,
$20,000, and $20,001 with respect to two life insurance policies for the
benefit of Mr. O'Donnell, including a whole-life policy and a hybrid
policy in fiscal years 1998, 1997 and 1996, respectively. Also includes
$6,000, $5,500 and $3,000 in premiums paid by the Company with respect to
health insurance for the benefit of Mr. O'Donnell and contributions of
$4,800, $4,750 and $4,750 to the Company's 401(k) plan in fiscal years
1998, 1997 and 1996, respectively.
(5) Includes contributions in the amounts of $4,800, $4,750 and $4,750 by the
Company to the Company's 401(k) plan for the benefit of Mr. Thompson, and
also includes insurance premiums in the amounts of $8,268, $7,736 and
$4,621 paid by the Company with respect to term life insurance and health
insurance for the benefit of Mr. Thompson in fiscal years 1998, 1997 and
1996, respectively.
(6) Includes contributions in the amounts of $4,800, $4,750 and $4,750 by the
Company to the Company's 401(k) plan for the benefit of Mr. DeBartelo and
insurance premiums in the amounts of $11,895, $10,648 and $7,869 by the
Company with respect to term life insurance and health insurance for the
benefit of Mr. DeBartelo in fiscal years 1998, 1997 and 1996,
respectively.
(7) Includes contributions in the amounts of $4,800, $4,750 and $4,750 by the
Company to the Company's 401(k) plan for the benefit of Mr. Aebli and
insurance premiums in the amounts of $12,656, $12,087 and $8,833 paid by
the Company with respect to term life insurance and health insurance for
the benefit of Mr. Aebli in fiscal years 1998, 1997 and 1996,
respectively.
(8) In fiscal years 1997 and 1996 Mr. Steel was an executive officer of Zytec
which was merged with CPI Acquisition Corp. (a wholly-owned subsidiary of
the Company) on December 29, 1997.
(9) Includes a contribution in the amount of $4,800 by the Company to the
Company's 401(k) plan for the benefit of Mr. Steel and insurance premiums
in the amount of $6,864 paid by the Company with respect to term life
insurance and health insurance for the benefit of Mr. Steel in fiscal year
1998.
9
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning stock
options granted to the Named Executives in fiscal year 1998.
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL OPTIONS
NUMBER OF GRANTED TO GRANT DATE
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
NAME OPTIONS GRANTED(#) FISCAL YEAR(%)(1) PER SHARE($) DATE VALUE($)(2)
- ---- --------------------- ----------------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Joseph M. O'Donnell ......... 75,000 6.78 16.00 07/22/03 546,870
Richard J. Thompson ......... 45,000 4.07 16.00 07/22/03 328,122
Louis R. DeBartelo .......... 30,000 2.71 16.00 07/22/03 218,748
Robert J. Aebli ............. 15,000 1.36 16.00 07/22/03 109,374
John M. Steel ............... -0- -0- N/A N/A N/A
</TABLE>
- ----------------
(1) Represents the percentage of total options granted to employees of the
Company in fiscal year 1998.
(2) Based upon the Black-Scholes option pricing model adopted for use in
valuing executive stock options. The actual value, if any, a Named
Executive may realize will depend upon the excess of the market price of
the Common Stock over the exercise price on the date the option is
exercised. There is, therefore, no assurance that the value realized by a
Named Executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under the model are based upon
certain assumptions which the Company believes are reasonable, such as a
risk-free rate of return of 5.3%, stock price volatility of 70%, future
dividend yield of 0% and expected life of 2.7 years. The values do not
take into account certain features of the stock plans which may affect
such values, such as conditions to exercisability and nontransferability.
OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES TABLE
The following table sets forth certain information with respect to stock
options exercised by the Named Executives in fiscal year 1998 and certain
information with respect to exercisable and non-exercisable stock options held
on January 1, 1999 by the Named Executives. The table also includes the value
of "in-the-money" stock options which represents the spread between the
exercise price of the existing stock options and the year-end trading price of
the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD ON HELD ON
SHARES JANUARY 1, 1999(#) JANUARY 1, 1999(1)($)
ACQUIRED ON VALUE ------------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE NOT EXERCISABLE EXERCISABLE NOT EXERCISABLE
- ---- ----------- ----------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. O'Donnell ..... -0- -0- 625,865 75,000 4,439,423 -0-
Richard J. Thompson ..... -0- -0- 255,312 45,000 1,503,116 -0-
Louis B. DeBartelo ...... 17,500 122,282 58,566 30,000 2,532 -0-
Robert J. Aebli ......... -0- -0- 57,500 15,000 189,144 -0-
John M. Steel ........... -0- -0- -0- -0- -0- -0-
</TABLE>
- ----------------
(1) Based upon the closing price of the Common Stock on January 1, 1999 of
$14.00.
EMPLOYMENT AND TERMINATION ARRANGEMENTS
On June 29, 1994, the Company and Joseph M. O'Donnell, Co-Chairman, Chief
Executive Officer and President of the Company, entered into an employment
agreement which provides that Mr. O'Donnell was to receive a base salary at the
rate of $250,000 per year for the first year of his employment and $300,000 per
year thereafter. The base salary is to be reviewed by the Board of Directors
periodically. In addition, the agreement provided that Mr. O'Donnell was
eligible to receive an incentive payment each year of employment in an amount
equal to up to 50% of his base salary for such year, payable 50% in cash and
50% in stock. Such incentive payment was subsequently increased to up to 60% of
base salary by the Compensation and Stock Option Committee. Mr. O'Donnell is
also eligible for additional payments in the discretion of the Compensation and
Stock Option Committee, awarded in accordance with the terms of the Company's
annual Executive Incentive Plan. The agreement also provided for the grant to
Mr. O'Donnell of stock options, the grant and terms of
10
<PAGE>
which are contingent upon Mr. O'Donnell's purchase of certain amounts of Common
Stock in the open market. Under the terms of the agreement, Mr. O'Donnell was
also entitled to reimbursement of certain relocation expenses, and health,
disability and life insurance benefits. The Company also has agreed to cause
Mr. O'Donnell to be nominated as a director throughout the term of his
employment. The employment agreement's initial term expired on July 26, 1997,
but is renewable each successive year thereafter for an additional one-year
term unless either party provides notice of termination. As of the date of this
proxy statement, no such notice of termination had been provided by either
party.
Upon any event of earlier termination of the agreement, Mr. O'Donnell is
entitled to receive his base salary through the date of termination. In the
event of Mr. O'Donnell's death or "disability" (as defined in the agreement),
he is entitled to receive his base salary for an additional year from the date
of termination, except that payments for the additional year will be offset by
certain Company-sponsored insurance benefits payable during such period, plus
any pro rated incentive payment under the Company's annual Executive Incentive
Plan to which he may be entitled. In the event that Mr. O'Donnell's employment
is terminated by the Company without "cause" (as defined in the agreement) or
by Mr. O'Donnell due to the Company's "substantial breach" (as defined in the
agreement), Mr. O'Donnell is entitled to receive his base salary for the number
of months he was employed by the Company plus six months, but for no more than
18 months total, except that, under certain circumstances, if the Company makes
a lump-sum payment of $50,000 to Mr. O'Donnell, then the total number of months
is 12. Mr. O'Donnell is also entitled to receive any pro rated incentive
payment to which he may be entitled and reimbursement of expenses of
outplacement-related services up to $45,000. In the event of the Company's
termination of the agreement without "cause", or termination of the agreement
by Mr. O'Donnell due to the Company's "substantial breach", following a "change
of control" (as defined in the agreement), Mr. O'Donnell is entitled to receive
a lump-sum payment equal to the lesser of (a) the product of the sum of his
base salary and the amount of his last incentive payment multiplied by two and
(b) the maximum amount that would be permitted without the imposition of
certain taxes, or the loss of certain tax deductions, under the Internal
Revenue Code of 1986, as amended (the "Code"), within 10 days from the date of
termination. In the event the Company does not renew Mr. O'Donnell's agreement,
Mr. O'Donnell shall generally be entitled to receive his base salary for an
additional year from the date of termination.
Richard J. Thompson, Vice President-Finance, Chief Financial Officer and
Secretary of the Company, entered into a letter agreement with the Company on
April 28, 1994, which provides that if Mr. Thompson's employment is terminated
without "cause" (as defined in the agreement), or if he resigns within 30 days
after a substantial reduction in his responsibilities, duties or compensation,
Mr. Thompson shall be entitled to receive an amount equal to his annual base
salary plus any incentive payment he may have earned, as well as insurance and
other employee benefits, for a period of 12 months from termination. Such
payments are payable to Mr. Thompson as they would have been paid had his
employment continued without termination. The agreement further provides that
upon such termination all stock options previously granted to Mr. Thompson
shall remain outstanding until the 90th day following the 12-month period
during which he is entitled to receive post-termination compensation, except
that options granted under the 1981 Stock Option Plan shall be reissued under
the Performance Plan at an exercise price equal to the closing price of the
Common Stock as of the date of the agreement, and the Company will compensate
Mr. Thompson for any loss caused by such repricing. The agreement further
provides that Mr. Thompson is eligible for the compensation described therein
following his execution of a release of the Company from all claims he may have
against the Company, its officers and directors.
Certain options granted to the Named Executives become immediately
exercisable in the event of a "change of control" and certain other options
become immediately exercisable if a Named Executive's employment is terminated
within six months after a "change of control" of the Company pursuant to the
terms of the option plan under which the options were granted.
11
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") of the
Company's Board of Directors is comprised of three individuals, each of whom is
an Outside Director. The Committee is responsible for establishing the overall
philosophy of the Company's executive compensation program and overseeing the
executive compensation plans developed to execute the Company's compensation
strategy.
THE COMPANY'S EXECUTIVE COMPENSATION STRATEGY
The Company's executive compensation program has been designed to promote
stockholder interests and to:
* Link key executives' compensation to the Company's business
objectives;
* Reward teamwork and individual performance for achieving annual
business results;
* Provide motivation to key executives to excel by offering
competitive incentive and total compensation;
* Promote human resources goals to attract, hire and retain quality
talent; and
* Balance short and long-term considerations through compensation
for achievement of annual goals that are consistent with long-term
objectives.
It is the Company's intention to ensure that all compensation paid to its
executives is tax deductible under Section 162(m) of the Code. Although Section
162(m) of the Code imposes limits on deductibility for compensation to certain
executives exceeding $1 million per year, the Company does not currently
anticipate any limitations of this deduction.
COMPENSATION OF EXECUTIVE OFFICERS
The Company's executive compensation program includes two principal
elements: annual cash compensation and long-term awards. The Company uses
competitive survey data of companies in the technology industry with comparable
revenue levels in assessing cash compensation and long-term awards.
Annual cash compensation includes both base salaries and annual incentive
awards pursuant to the Company's Executive Incentive Plan ("EIP"). Executives'
base salaries are evaluated each year based upon an assessment of competitive
market data of comparable companies, as discussed above. Subject to the
applicable terms of any employment agreement, executives are eligible for
adjustments in base salary based upon an assessment of individual performance
and changes in principal job duties and responsibilities. In fiscal year 1998,
based upon assessments of individual performance, the Company awarded an
increase in base salary to Messrs. O'Donnell, Thompson, Steel, DeBartelo and
Aebli.
Executives are eligible to receive annual incentive awards under the EIP.
Each executive participating in the plan has a targeted annual incentive award,
based upon competitive practice which represents a stated percentage of the
executive's base salary. The performance of executives with corporate-wide
responsibilities is evaluated based upon the achievement of corporate financial
targets measured by the Company's net income and revenue growth. The
performance of executives with divisional and/or subsidiary responsibility is
evaluated based upon the achievement of divisional or subsidiary financial
targets measured by divisional net income, revenue growth and cash flow. The
financial targets for fiscal year 1998 were developed from the Company's annual
planning process. The
12
<PAGE>
Committee reviews and approves the targets each year based upon fairness,
degree of difficulty and reasonableness. Further, the Company must achieve a
minimum net income performance threshold before corporate executives are
entitled to receive a financial target payout under the EIP. For
division/subsidiary participants, the division must achieve a minimum net
income performance threshold before the respective division/subsidiary
executives are entitled to receive a financial target payout under the EIP.
There may be no incentive payout if the Company is not profitable on a
company-wide basis.
Aggregate annual incentive awards are limited to no more than 10% of the
Company's net income, excluding extraordinary items, before total after-tax
cost of the aggregate executive annual incentive payout, unless otherwise
approved by the Committee and Board of Directors.
Long-term incentive compensation includes payments under the Performance
Plan. The Performance Plan permits the Company to grant non-qualified stock
options to selected executives at a price no less than the fair market value of
the Common Stock on the date of grant.
Each year the Committee reviews and approves annual salaries, annual
incentive awards, grants of long-term incentives and the performance targets
and criteria established for both the annual and long-term incentive plans. In
addition, the Committee reviews the performance of the Company and its
divisions and subsidiaries and exercises the final authority in approving the
payout of executive incentive awards. The Committee has engaged executive
compensation consultants and used competitive compensation data.
In the beginning of fiscal year 1998, the Committee reviewed and approved
the financial targets to be included in the fiscal year 1998 EIP for the Chief
Executive Officer and the Company's other executives. Based upon the
Committee's review of the Company's performance by the Chief Executive Officer
and the Company's other executives following conclusion of the 1998 fiscal
year, the Company granted no award to the Chief Executive Officer, granted an
award of $49,015 to Robert Aebli based on his division's performance (and
awards to certain other executives in that division) and granted no other
awards to any other executive under the 1998 EIP.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. O'Donnell's base salary during fiscal year 1998 was increased to
$473,300. The base salary of Mr. O'Donnell was based upon an assessment of
competitive market data of comparable companies, as described above. Mr.
O'Donnell received no annual incentive award in fiscal year 1998 under the EIP.
On July 22, 1998, the Company, pursuant to the EIP, granted Mr. O'Donnell
non-qualified stock options to purchase 75,000 shares of Common Stock at an
exercise price of $16.00 per share. The terms of these options are five years
and are exercisable as follows: (i) 50% vesting any time after July 22, 1999
provided that the closing price of a share of Common Stock is equal to $20.00
for any 20 of 30 consecutive trading days after the date of such grant, (ii)
100% vesting any time after July 22, 2000 provided that the closing price of a
share of Common Stock is equal to $24.00 per share for any 20 of 30 consecutive
trading days after the date of such grant, and (iii) to the extent not
previously exercisable, 100% on May 21, 2003.
MEMBERS OF THE COMPENSATION AND STOCK OPTION COMMITTEE:
Phillip A. O'Reilly, Chairman
Bert Sager
Lewis Solomon
13
<PAGE>
STOCK PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder return
(assuming reinvestment of dividends) on the Company's Common Stock, over the
most recent five-year period up to and including December 31, 1998, with the
cumulative total return of companies on the Russell 2000/registered trademark/
Index and the S&P SmallCap Electrical Equipment Index (the "Electrical
Equipment Index"), a published line-of-business index. In light of the
Company's continued focus on its power conversion business, the Electrical
Equipment Index was selected by the Company because the Company believes the
Electrical Equipment Index provides a meaningful comparison to the Company's
performance.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
DEC-93 DEC-94 DEC-95 DEC-96 DEC-97 DEC-98
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Artesyn Technologies, Inc. ....................... $100 $146 $497 $843 $978 $605
Russell 2000 ..................................... $100 $ 98 $126 $147 $180 $175
S&P SmallCap Electrical Equipment Index .......... $100 $116 $146 $166 $204 $206
</TABLE>
14
<PAGE>
PROPOSAL II: APPROVAL AND ADOPTION OF AN AMENDMENT
TO THE OUTSIDE DIRECTORS' PLAN
GENERAL
In February 1999, the Board, by unanimous written consent, adopted,
subject to stockholder approval, amendments to the Outside Directors' Plan (the
"Plan Amendment") providing for (i) an increase in the authorized number of
options (and the shares of Common Stock issuable upon exercise thereof) under
the Outside Directors' Plan from 500,000 to 1,000,000 shares and (ii) an
extension of the expiration date of the Outside Directors' Plan from April 30,
2001 to April 30, 2009.
The following summary of the Outside Directors' Plan, as amended by the
proposed amendment, does not purport to be complete, and is subject to, and
qualified in its entirety by, reference to the full text of the proposed
amended Outside Directors' Plan annexed hereto as Exhibit A.
The purpose of the Outside Directors' Plan is to advance the interests of
the Company by affording eligible directors an opportunity to acquire or
increase their ownership interests in the Company and thus encourage continued
service and additional incentives to achieve the Company's growth objectives.
SUMMARY OF THE OUTSIDE DIRECTORS' PLAN
The Company has, subject to approval of the Plan Amendment, reserved for
issuance under the Outside Directors' Plan 1,000,000 shares of Common Stock
upon exercise of options granted or to be granted. Options granted under the
Outside Directors' Plan may only be granted to directors who are not employees
of the Company or its subsidiaries (currently 9 directors). Such options do not
qualify as incentive stock options within the meaning of Section 422 of the
Code. Outside Directors will be granted options to purchase 10,000 shares of
Common Stock on the date each eligible director is initially elected to the
Board and thereafter on the earlier of the date on which the stockholders
reelect such director at succeeding annual meetings or any adjournments thereof
or June 30th of each year. All grants to Outside Directors are subject to such
director owning on the date of a grant a number of shares of Common Stock
having a fair market value as of the last day in the preceding fiscal year
equal to three times the cash compensation paid to such director by the Company
for serving on the Board (or, if such director served less than a full year in
the preceding fiscal year, three times the average cash compensation paid to
the other Outside Directors) during such preceding fiscal year.
The Outside Directors' Plan provides that the exercise price of each
option will be the fair market value of the Common Stock on the date of grant
of the option. Such fair market value shall be the closing sales price of the
Common Stock as reported by The Nasdaq Stock MarketSM or otherwise reported by
the National Association of Securities Dealers, Inc. on the date of grant of
the option. If the Common Stock is not traded as described above, the fair
market value of the Common Stock shall be determined by the Company by any
method which it deems appropriate.
All options granted under the Outside Directors' Plan are exercisable in
full on the first anniversary of the date of grant, provided the Outside
Director has not voluntarily resigned or been removed "for cause" prior to the
first anniversary date. All options are exercisable until the tenth anniversary
of the date of grant and remain exercisable regardless of whether the Outside
Director continues to serve as a member of the Board.
No options may be granted under the Outside Directors' Plan after the
termination date (as amended) of the plan, but options granted prior to such
termination date may extend beyond and be exercisable after such date. Payment
for shares as to which an option is exercised shall be made in cash. Options
are not transferable other than by will or by the laws of descent and
distribution.
The Board is empowered under the Outside Directors' Plan to make any
amendment it deems advisable, without requiring further stockholder approval,
including any amendments to comply with
15
<PAGE>
the rules under Section 16 of the Exchange Act, but not more frequently than
once every six months. Stockholder approval for the Plan Amendment is required
by the rules of The Nasdaq Stock MarketSM, to which the Company is subject.
PLAN BENEFITS
The following table sets forth the dollar value of benefits and the number
of shares of Common Stock underlying options which the Company anticipates
granting during fiscal year 1999 under the Outside Directors Plan assuming the
Plan Amendment is approved.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(1)(2) NUMBER OF OPTIONS(3)
- ----------------- ------------------ --------------------
<S> <C> <C>
Non-Executive Director Group .......... $699,102 90,000
</TABLE>
- ----------------
(1) Based upon the Black-Scholes option pricing model adopted for use in
valuing stock options. The actual value, if any, an Outside Director may
realize will depend upon the excess of the market price of the Common
Stock over the exercise price on the date the option is exercised. There
is, therefore, no assurance that the value realized by an Outside Director
will be at or near the value estimated by the Black-Scholes model. The
estimated values under the model are based upon certain assumptions which
the Company believes are reasonable, such as a risk-free rate of return of
4.1%, stock price volatility of 70%, future dividend yield of 0% and
expected life of four years. The values do not take into account certain
features of the stock plans which may affect such values, such as
conditions to exercisability and nontransferability.
(2) Based upon the closing price of the Common Stock on January 1, 1999 of
$14.00.
(3) Based on the current number of Outside Directors (9) each receiving 10,000
options.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OUTSIDE DIRECTORS' PLAN
The following is a brief summary of the Federal income tax aspects of
awards to be made under the Outside Directors' Plan based upon the Code and
other statutes, regulations and interpretations in effect on the date hereof.
The summary is not intended to be exhaustive, and does not describe state or
local tax consequences.
Any option granted under the Outside Directors' Plan is not intended to
qualify as an "incentive stock option", as that term is defined in Section 422
of the Code. Neither the option holder nor the Company will incur any Federal
income tax consequences upon the grant of an option under the Outside
Directors' Plan. Generally the option holder will recognize, on the date of
exercise, ordinary compensation income in an amount equal to the excess, if
any, of the fair market value of the shares of Common Stock on the date of
exercise over the exercise price thereof.
On a subsequent sale of any shares obtained upon the exercise of an
option, the participant will recognize capital gain or loss equal to the
difference, if any, between the amount realized and his or her tax basis in the
shares. The tax basis of the shares, for purposes of computing taxable gain or
loss, will be the sum of the exercise price and the amount of ordinary income
recognized on the date of exercise.
For Federal income tax purposes, the Company is generally entitled to a
deduction in an amount equal to the ordinary compensation recognized by the
option holder, to the extent that such income is considered reasonable
compensation under the Code. Generally, the Company will be entitled to claim
such deduction in the fiscal year containing the last day of the calendar year
in which the option is exercised.
APPROVAL
Assuming a quorum is present at the Meeting, approval of the Plan
Amendment will require the favorable vote of the holders of at least a majority
of the total number of shares of Common Stock cast on such matter at the
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION OF
PROPOSAL II.
16
<PAGE>
INDEPENDENT AUDITORS
Pursuant to a recommendation of the Audit Committee, the Board of
Directors has selected and retained the firm of Arthur Andersen LLP to act as
independent certified public accountants for the Company for the fiscal year
ending December 31, 1999. Representatives of Arthur Andersen LLP are expected
to be present at the Meeting, to have the opportunity to make a statement, if
they so desire, and will be available to respond to appropriate questions.
Arthur Andersen LLP was retained as the Company's independent certified public
accountants beginning in March 1991.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors has no
knowledge of any business which will be presented for consideration at the
Meeting, other than as described above. If any other matter or matters are
properly brought before the Meeting or any adjournment(s) thereof, it is the
intention of the persons named in the accompanying form of proxy to vote all
proxies on such matters in accordance with their judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
In accordance with the Company's By-laws and Rules 14a-4(c) and 14a-5(e)
promulgated under the Exchange Act, the Company hereby notifies its
stockholders that it did not receive notice by February 6, 1999, of any
proposed matter to be submitted for stockholder vote at the Meeting, and,
therefore, any proxies received in respect of the Meeting will be voted in the
discretion of the Company's management on other matters which may properly come
before the Meeting.
Any proposal which is intended to be presented by any stockholder for
action at the 2000 Annual Meeting of Stockholders must be received in writing
by the Secretary of the Company at 7900 Glades Road, Suite 500, Boca Raton,
Florida 33434, not later than November 23, 1999 in order for such proposal to
be considered for inclusion in the Proxy Statement and form of Proxy relating
to the 2000 Annual Meeting of Stockholders.
The Company further notifies its stockholders that if the Company does not
receive notice by February 6, 2000 of a proposed matter to be submitted for
stockholders vote at the 2000 Annual Meeting of Stockholders, then any proxies
held by members of the Company's management in respect of such Meeting may be
voted at the discretion of such management members on such matter if it shall
properly come before such Meeting, without any discussion of such proposed
matter in the proxy statement to be distributed in respect of such Meeting.
By Order of the Board of Directors
RICHARD J. THOMPSON
Secretary
Dated: March 23, 1999
17
<PAGE>
EXHIBIT A
ARTESYN TECHNOLOGIES, INC.
(FORMERLY COMPUTE PRODUCTS, INC.)
1990 OUTSIDE DIRECTORS STOCK OPTION PLAN
(AMENDED AS OF MARCH 8, 1999)
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Artesyn Technologies, Inc.
(c) "Compensation" shall mean, for any Eligible Director, the amount
of cash actually paid to such Director as compensation for his or her
service on the Board and any committees thereof including, without
limitation, all amounts paid to such Director in connection with his or her
attendance at any meetings of the Board or committees thereof.
(d) "Date of Grant" shall mean the date an Eligible Director is
initially elected to the Board of Directors and for each respective fiscal
year of the Company thereafter, the earlier of (i) June 30, or (ii) the
date on which the Stockholders of the Company shall elect directors at an
Annual Meeting of such Stockholders or any adjournment thereof; provided
that a Date of Grant shall not occur more frequently than annually.
(e) "Deemed Value" shall mean, with respect to each share of Stock
owned by an Eligible Director on any Date of Grant, the Fair Market Value
of a share of Stock on the last day of the fiscal year of the Company
immediately preceding such Date of Grant.
(f) "Effective Date of the Plan" shall mean the original date of
adoption by the stockholders of the Company.
(g) "Eligible Director" shall mean any Director of the Company who is
not an employee of the Company or its subsidiaries.
(h) "Fair Market Value" shall mean the closing sales price, or the
mean between the closing high "bid" and low "asked" prices, as the case may
be, of the Stock in the over-the-counter market on the day on which such
value is to be determined, as reported by the National Association of
Securities Dealers Automated Quotation System or successor national
quotation service. If the Stock is listed on a national securities
exchange, "Fair Market Value" shall mean the closing price of the Stock on
such national securities exchange on the day on which such value is to be
determined, as reported in the composite quotations for securities traded
on such exchange provided by the National Association of Securities Dealers
or successor national quotation service. In the event no such quotations
are available for the day in question, "Fair Market Value" shall be
determined by reference to the appropriate prices on the next preceding day
for which such prices are reported.
(i) "Option" shall mean an Eligible Director's stock option to
purchase Stock granted pursuant to the provisions of Article V hereof.
(j) "Optionee" shall mean an Eligible Director to whom an Option has
been granted hereunder.
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(k) "Option Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.
(l) "Plan" shall mean the Artesyn Technologies, Inc. 1990 Outside
Directors Stock Option Plan, the terms of which are set forth herein.
(m) "Stock" shall mean the common stock, par value $.01 per share, of
the Company or, in the event that the outstanding shares of Stock are
hereafter changed into or exchanged for different stock or securities of
the Company or some other corporation, such other stock or securities.
(n) "Stock Option Agreement" shall mean an agreement between the
Company and the Optionee under which the Optionee may purchase Stock in
accordance with the Plan.
ARTICLE II
THE PLAN
2.1 NAME. This Plan shall be known as the "Artesyn Technologies, Inc.
1990 Outside Directors Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its stockholders by affording Eligible Directors of the Company an
opportunity to acquire or increase their proprietary interests in the Company,
and thereby to encourage their continued service as directors and to provide
them additional incentives to achieve the growth objectives of the Company.
2.3 EFFECTIVE DATE. The Effective Date of the Plan is the date of adoption
by the stockholders of the Company.
2.4 TERMINATION DATE. The Plan shall terminate on April 30, 2009 and no
further Options shall be granted hereunder thereafter.
ARTICLE III
ARTICLE III PARTICIPANTS
Each Eligible Director shall participate in the Plan, provided that he is
elected to a regular term as such a member at an Annual Meeting of
Stockholders, or any adjournment thereof.
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 LIMITATIONS. Subject to any antidilution adjustment pursuant to the
provisions of Section 4.2 hereof, the maximum number of shares of Stock which
may be issued and sold hereunder shall not exceed 1,000,000 shares of Stock.
Shares of Stock subject to an Option may be either authorized and unissued
shares or shares issued and later acquired by the Company; provided however,
the shares of Stock with respect to which an Option has been exercised shall
not again be available for Option hereunder. If outstanding Options granted
hereunder shall terminate or expire for any reason without being wholly
exercised prior to the end of the period during which Options may be granted
hereunder, new Options may be granted hereunder covering such unexercised
shares.
4.2 ANTIDILUTION. In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another
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corporation by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock splitup or
stock dividend:
(a) The rights under outstanding Options granted hereunder, both as to
the number of subject shares and the Option price, shall be adjusted
appropriately; and
(b) Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation is
involved, each outstanding Option granted hereunder shall terminate, but
the Optionee shall have the right, immediately prior to such dissolution,
liquidation, merger or combination, to exercise his Option, in whole or in
part, to the extent that it shall not have been exercised, without regard
to the date on which such Option would otherwise have become exercisable
pursuant to Sections 5.4 and 5.5.
The foregoing adjustments and the manner of application thereof shall be
determined solely by the Board, and any such adjustment may provide for the
elimination of fractional share interests. The adjustments required under this
Article shall apply to any successor or successors of the Company and shall be
made regardless of the number or type of successive events requiring
adjustments hereunder.
ARTICLE V
OPTIONS
5.1 OPTION GRANT, NUMBER OF SHARES AND AGREEMENT.
(a) Subject to the provisions of Section 5.1(b) hereof, each Eligible
Director shall automatically be granted an Option to purchase Ten Thousand
(10,000) shares of Stock on each Date of Grant. Each Option so granted
shall be evidenced by a written Stock Option Agreement, dated as of the
Date of Grant and executed by the Company and the Optionee, stating the
Option's duration, time of exercise, and exercise price. The terms and
conditions of the Option shall be consistent with the Plan.
(b) Notwithstanding the provisions of Section 5.1(a) hereof, an
Eligible Director shall not be entitled to receive a grant of an Option on
any Date of Grant unless the Deemed Value of all shares of Stock owned by
such Eligible Director on such Date of Grant shall be no less than three
hundred percent (300%) of (i) such Director's Compensation during the
preceding fiscal year of the Company or (ii) if such Director has not
previously served, or served for less than a full fiscal year, the average
of all Eligible Directors' Compensation during the preceding fiscal year of
the Company, as determined by the Board and provided to such Director in
writing at least 10 days prior to the relevant Date of Grant. An Eligible
Director, who shall not be entitled to receive a grant of an Option on any
particular Date of Grant as a result of the limitation set forth in this
Section 5.1(b), shall not be precluded from receiving a grant of an option
pursuant to Section 5.1(a) hereof on any subsequent Dates of Grant on which
the limitation set forth herein shall be satisfied.
5.2 OPTION PRICE. The Option Price of the Stock subject to each Option
shall be the Fair Market Value of the Stock on its Date of Grant.
5.3 EXERCISE PERIOD. The period for the exercise of each Option shall
expire on the tenth anniversary of the Date of Grant.
5.4 OPTION EXERCISE.
(a) Any Option granted under the Plan shall only become exercisable in
full on the first anniversary of the Date of Grant, provided that the
Eligible Director has not voluntarily resigned,
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or been removed "for cause", as a member of the Board of Directors on or
prior to the first anniversary of the Date of Grant. An Option shall remain
exercisable after its exercise date at all times during the Exercise
Period, regardless of whether the Optionee thereafter continues to serve as
a member of the Board.
(b) An Option may be exercised at any time or from time to time during
the term of the Option as to any or all full shares which have become
exercisable in accordance with this Section, but not as to less than 25
shares of Stock unless the remaining shares of Stock that are so
exercisable are less than 25 shares of Stock. The Option price is to be
paid in full in cash upon the exercise of the Option. The holder of an
Option shall not have any of the rights of a Stockholder with respect to
the shares of Stock subject to the Option until such shares of Stock have
been issued or transferred to him upon the exercise of his Option.
(c) An Option shall be exercised by written notice of exercise of the
Option, with respect to a specified number of shares of Stock, delivered to
the Company at its principal office, and by cash payment to the Company at
said office of the full amount of the Option price for such number of
shares. In addition to, and prior to the issuance of a certificate for
shares pursuant to any Option exercise, the Optionee shall pay to the
Company in cash the full amount of any federal and state withholding or
other employment taxes applicable to the taxable income of such Optionee
resulting from such exercise.
5.5 NONTRANSFERABILITY OF OPTION. Unless otherwise provided in the
relevant Stock Option Agreement, options may not be transferred by an Optionee
otherwise than by will or the laws of descent and distribution. Unless
otherwise provided in the relevant Stock Option Agreement, during the lifetime
of an Optionee, his Option may be exercised only by him (or by his guardian or
legal representative, should one be appointed). In the event of the death of an
Optionee, any Option held by him may be exercised by his legatee(s) or other
distributee(s) or by his personal representative.
ARTICLE VI
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof unless, in the opinion of counsel to the Company, there has
been compliance with all applicable legal requirements. An Option granted under
the Plan may provide that the Company's obligation to deliver shares of Stock
upon the exercise thereof may be conditioned upon the receipt by the Company of
a representation as to the investment intention of the holder thereof in such
form as the Company shall determine to be necessary or advisable solely to
comply with the provisions of the Securities Act of 1933, as amended, or any
other federal, state or local securities laws.
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time terminate the Plan, and may at any time and from
time to time and, in any respect amend or modify the Plan.
ARTICLE VIII
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall neither affect any other stock option,
incentive or other compensation plans in effect for the Company or any of its
subsidiaries, nor shall the adoption of the Plan preclude the Company from
establishing any other forms of incentive or other compensation plan for
directors of the Company.
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ARTICLE IX
MISCELLANEOUS
9.1 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors and assigns of the Company.
9.2 SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
9.3 HEADINGS, ETC., NO PART OF PLAN. Headings of articles and paragraphs
hereof are inserted for convenience and reference, and do not constitute a part
of the Plan.
9.4 COMPLIANCE WITH SECTION 16 OF THE SECURITIES, ACT OF 1934. As of
September 24, 1996, the Plan is intended to be governed by the provisions of
Rule 16b-3 under Section 16 of the Securities Exchange Act of 1934, as amended
by Release Number 34-37260, and shall not be subject to the phase-in period for
such amendment after such date.
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ARTESYN TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING TO BE HELD ON MAY 6, 1999
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of ARTESYN TECHNOLOGIES, INC., a Florida
corporation (the "Company"), hereby constitute(s) and appoint(s) PHILLIP A.
O'REILLY and BERT SAGER, and each of them, with full power of substitution in
each, as the agent, attorneys and proxies of the undersigned, for and in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of the Company to be held at Pete's Grand Terrace, 7880 Glades
Road, Boca Raton, Florida, on May 6, 1999 at 10:00 A.M. (local time), and any
adjournment(s) thereof, all of the shares of stock which the undersigned would
be entitled to vote if then personally present at such meeting in the manner
specified and on any other business as may properly come before the Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON
THE REVERSE SIDE. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR
ITEMS 1 AND 2 AND AT THE PROXIES' DISCRETION, UPON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT(S) THEREOF.
(Continued and to be signed and dated on the reverse side.)
<PAGE>
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
listed below to vote for all nominees
listed below
Nominees: Edward S. Croft, III, Fred C. Lee, Lawrence J. Matthews, Joseph M.
O'Donnell, Stephen A. Ollendorff, Phillip A. O'Reilly, Bert Sager, A.
Eugene Sapp, Jr., Ronald D. Schmidt, Lewis Solomon, John M. Steel
*EXCEPTIONS_____________________________________________________________________
2. To consider and act upon a proposal to amend the Company's 1990 Outside
Directors' Stock Option Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s)
thereof and as set forth in Rule 14a-4c of the Securities Exchange Act
of 1934, as amended.
Please sign exactly as name appears to
the left. When shares are held by joint
tenants, both should sign. When signed
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated_______________________________1999
________________________________________
Signature
________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK. [ ]
