SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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
Comtech Telecommunications Corp.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
----------------------------------
2) Aggregate number of securities to which transaction applies: N/A
----------------------------------
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): N/A
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4) Proposed maximum aggregate value of transaction: N/A
----------------------------------
5) Total fee paid: N/A
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
----------------------------------
2) Form, Schedule, or Registration Statement No.:
---------------------
3) Filing Party:
----------------------------------
4) Date Filed:
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<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
November 12, 1998
To Our Stockholders:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Stockholders of Comtech Telecommunications Corp.
The meeting will be held at 10:00 a.m. on December 15, 1998 at the Mariott
Hotel, 1350 Old Walt Whitman Road, Melville, New York 11747. Copies of the
Notice of Annual Meeting of Stockholders, Proxy Statement and proxy card are
enclosed.
I believe that the annual meeting provides an excellent opportunity for
stockholders to become better acquainted with Comtech and its directors and
officers. I hope that you will be able to attend.
It is important that your shares are voted at this meeting. Whether or not you
are able to attend in person, the prompt execution and return of your enclosed
proxy card in the envelope provided will both assure that your shares are
represented at the meeting and minimize the cost of proxy solicitations.
Sincerely,
FRED KORNBERG
Chairman, Chief
Executive Officer
and President
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 15, 1998
The Annual Meeting of Stockholders of COMTECH TELECOMMUNICATIONS CORP. (the
"Company") will be held at the Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747, on Tuesday, December 15, 1998 at 10:00 a.m., local
time, for the following purposes:
1. To elect two directors;
2. To ratify the selection of auditors for the current fiscal year; and
3. To transact such other business as may properly come before the
meeting.
All stockholders are invited to attend the meeting. Stockholders of record at
the close of business on November 9, 1998, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
J. Preston Windus, Jr.
Secretary
November 12, 1998
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. ACCORDINGLY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE PROXY CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOU
CONVENIENCE.
- --------------------------------------------------------------------------------
<PAGE>
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Comtech
Telecommunications Corp. (the "Company") for use at the Annual Meeting of
Stockholders to be held on December 15, 1998, and at any adjournment thereof
(the "Annual Meeting"). It may be revoked at any time before exercise by
delivering a written notice of revocation to the Secretary of the Company, by
executing a subsequent proxy and presenting it to the Secretary of the Company,
or by attending the Annual Meeting and voting in person. All proxies will be
voted in accordance with the stockholders' instructions, and if no directions
are specified, the proxies will be voted for the nominees for election as
directors and in favor of the matters set forth in the accompanying Notice of
Annual Meeting. A stockholder may choose to strike the names of the proxy
holders named in the enclosed proxy and insert other names.
Only holders of record of the Company's Common Stock, par value $.10 (the
"Common Stock"), at the close of business on November 9, 1998 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting, with each
holder having one vote per share. As of the Record Date, a total of 2,673,504
shares of Common Stock were outstanding. It is anticipated that the mailing to
stockholders of this Proxy Statement and the enclosed proxy will commence by
November 12, 1998.
The presence, in person or by proxy, of the holders of record at the close of
business on the Record Date of a majority of the outstanding shares of Common
Stock will constitute a quorum at the Annual Meeting. Directors will be elected
by a plurality of the votes cast (i.e., the two nominees receiving the greatest
number of votes will be elected as directors). The ratification of the selection
of auditors will require the affirmative vote of a majority of the shares
present at the Annual Meeting and entitled to vote on such proposals.
Abstentions and broker non-votes with respect to any proposal (which occur when
a nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) will be counted for purposes of determining the presence or absence of a
quorum. Abstentions also will be counted in determining the number of shares
present and entitled to vote on such proposal, but broker non-votes are not
counted as entitled to vote thereon.
1
<PAGE>
PRINCIPAL STOCKHOLDERS OF COMTECH TELECOMMUNICATIONS CORP.
To the Company's knowledge, the following persons individually, or as a group,
beneficially own more than 5% of the Company's outstanding Common Stock (its
only outstanding class of voting securities) as of November 2, 1998. Except as
indicated below, each person has sole voting and dispositive power with respect
to these shares.
Amount of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ -------------------- ----------------
Fred Kornberg (1) 165,000 6.2
105 Baylis Road
Melville, New York 11747
James A. Mitarotonda (2) 40,000 1.5
c/o Barington Capital
888 Seventh Avenue
New York, New York 10019
Edmund H. Shea, Jr. (2) 58,528 2.2
655 Brea Canyon Road
Walnut, CA 91789
Barington Capital Group, L.P. (2) 46,893 1.8
888 Seventh Avenue - 17th Floor
New York, NY 10019
Gary Gelman 193,150 7.2
c/o American Claims Evaluation, Inc.
One Jericho Plaza
Jericho, NY 11753
- ----------
(1) Does not include 2,000 shares held in a trust for which Mr. Kornberg is a
trustee, and has a 1% ownership in, and for which he disclaims beneficial
ownership.
(2) According to a Schedule 13D, as amended, filed with the Securities and
Exchange Commission ("SEC") by Messrs. James A. Mitarotondo and Edmund H.
Shea, Jr. and Barington Capital Group, L.P. ("Barington"), each has sole
power to vote and dispose of the number of shares set forth opposite their
name, but may be deemed to constitute a "group" within the meaning of SEC
Rule 13d-5(b) by virtue of their intention to consult with each other from
time to time and exchange information concerning the Company and their
respective investments in the Company's Common Stock. Mr. Mitarotonda is
the Chairman of the general partner of Barington.
ELECTION OF DIRECTORS
Under the Company's Certificate of Incorporation, the Board of Directors is
divided into three classes, with the number of directors in each class fixed by
the Board of Directors, and with the term of office of one class expiring each
year. There are presently six Board members, two in the class holding office
until the Annual Meeting, two in the class holding office until the next
succeeding Annual Meeting, and two in the class holding office until the second
succeeding Annual Meeting.
Certain information concerning the directors who are being nominated for
reelection at the meeting and the incumbent directors whose terms of office
continue after the Annual Meeting and executive officers of the Company named in
the section "Executive Compensation" and all directors and executive officers as
a group, is set forth below.
While the Board of Directors has no reason to believe that either Messrs.
Kornberg or Weiner will not be available as a candidate for election, should
such a situation arise, the enclosed proxy may be voted for the election of
another nominee or nominees in the discretion of the persons acting pursuant to
the proxy.
2
<PAGE>
Under an amendment to the Company's By-Laws adopted earlier this year,
nominations of individuals for election to the Board of Directors may be made at
an Annual Meeting by any stockholder who is eligible to vote for the election of
directors at such Annual Meeting, provided that such stockholder gave timely
written notice of such nominations to the Secretary of the Company and was a
stockholder of record at the time such notice was given. With respect to the
Annual Meeting of Stockholders to be held on December 15, 1998, such notice must
be received at the Company's principal executive offices prior to the close of
business on the tenth day following the mailing of this proxy Statement to
stockholders. For subsequent Annual Meetings, such written notice must be
received not more than 120 days or less than 90 days prior to the anniversary
date of the immediately preceding Annual Meeting, unless the Annual Meeting at
which such nominations are to be made is not being held within 30 days of such
anniversary date, in which case notice must be received not more than 90 days
nor less than 60 days prior to the date of the Annual Meeting. Such notice must
include the written consent of each individual to be nominated and the
information with respect to the proposed nominees and the nominating stockholder
required under the By-Laws.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
Shares
Served Beneficially
For Term As Owned Percent
Principal Expiring Director October 16, of
Name Occupation Age In Since 1998 Class
---- ---------- --- -------- -------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg (2) Chairman, Chief 62 3 years 1971 165,000 6.2
Executive Officer
& President
of the Company
Sol S. Weiner (1)(3)(4) President, Sol S. 79 3 years 1980 25,000 *
Weiner Investments,
Inc.
</TABLE>
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
AND CERTAIN EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Shares
Served Beneficially
Term As Owned Percent
Principal Expires Director October 16, of
Name Occupation Age In Since 1998 Class
---- ---------- --- -------- -------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard Goldberg (1)(2)(5) Partner, Proskauer 62 2 years 1983 16,785 *
Rose LLP
George Bugliarello (1)(3)(4)(5) Chancellor, 71 2 years 1977 18,400 *
Polytechnic
University of N.Y.
Gerard R. Nocita (1)(2)(3)(5) Private Investor 62 1 year 1993 18,000 *
John B. Payne (1)(4) President and CEO 63 1 year 1993 26,700 1.0
of Nucomm, Inc.
Richard L. Burt (1) Vice President; 57 -- -- 44,947 1.7
President of
Comtech Systems, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Shares
Served Beneficially
Term As Owned Percent
Principal Expiring Director October 16, of
Name Occupation Age In Since 1998 Class
---- ---------- --- -------- -------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Glenn F. Higgins (1) Vice President; 64 -- -- 15,600 *
President of
Comtech Antenna
Systems, Inc.
J. Preston Windus, Jr. (1) Vice President; 55 -- -- 35,000 1.3
Chief Financial
Officer and
Secretary; President
of Comtech PST Corp.
Robert L. Mc Collum Vice President; 49 -- -- 51,000 1.9
President of Comtech
Communications Corp.
All present directors and
officers (10 persons) 416,432 15.0
</TABLE>
- ----------
* Less than one percent
(1) Includes the following shares of Common Stock with respect to which such
persons have the right to acquire beneficial ownership within sixty days
from such date: Mr. Weiner 4,000 shares; Mr. Goldberg 4,000 shares; Dr.
Bugliarello 4,000 shares; Mr. Nocita 6,000 shares; Dr. Payne 6,000 shares;
Mr. Burt 35,976 shares; Mr. Higgins 8,500 shares; Mr. Windus 33,000 shares
and all directors and officers as a group 101,476 shares. These respective
shares were deemed to be outstanding for purposes of calculating the
respective percentages owned.
(2) Member of Executive Committee.
(3) Member of Audit Committee.
(4) Member of Executive Compensation Committee.
(5) Member of Nominating Committee
Dr. Bugliarello has been Chancellor of Polytechnic University since 1994 and was
President of the University from 1978 to 1994. He is also a director of KeySpan
Energy, Symbol Technologies Inc., and Spectrum Information Technologies.
Mr. Goldberg has been a partner since 1990 in the law firm of Proskauer Rose
LLP, which renders legal services to the Company. Prior to that, Mr. Goldberg
had been a partner in the law firm of Botein Hays & Sklar since 1966. He is also
a director of Schein Pharmaceutical, Inc.
Mr. Kornberg has been Chief Executive Officer and President of the Company for
more than the past five years.
Mr. Nocita is a private investor. He was Treasurer of the Incorporated Village
of Patchogue from 1993 to 1996. He was affiliated with the Company since its
inception in 1967 until 1993.
Dr. Payne has been President and CEO of Nucomm, Inc. since 1990. Nucomm, Inc.
produces products for satellite news gathering services. From 1973 through 1990
he had been President and CEO of Communications Technologies, Inc.
4
<PAGE>
Mr. Weiner is President of Sol S. Weiner Investments, Inc. Previously he was
Managing Director of Stenhouse, Weiner, Sherman, Ltd., commodity pool managers,
from 1982 to 1994. He is also a director of Universal Automotive Industries,
Inc.
During the past fiscal year, the Audit Committee of the Board of Directors held
two meetings. The functions of the Committee include recommending to the Board
the engagement of independent auditors, directing investigations into matters
relating to audit functions, reviewing the plan and results of audits with the
Company's auditors, reviewing the Company's internal accounting controls and
approving services to be performed by the Company's auditors and related fees.
The Executive Compensation Committee of the Board of Directors considers and
authorizes remuneration arrangements for senior management; the Committee also
constitutes the Stock Option Committee of the Board of Directors, which
administers the Company's Incentive Stock Option Plans. The Committee held four
meetings during the past fiscal year.
The Executive Committee of the Board of Directors did not hold any meetings
during the past fiscal year. Except as limited by law, the Executive Committee
has the authority to act upon all matters requiring Board approval.
The Nominating Committee identifies and evaluates candidates for election as
members of the Board of Directors and reports its findings to the full Board.
The Nominating Committee held one meeting during the past fiscal year.
The Board of Directors held five meetings during the past fiscal year.
SELECTION OF AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
auditors for the current fiscal year, subject to ratification by the
stockholders. If the stockholders do not ratify such selection, it will be
reconsidered by the Board. Representatives of KPMG Peat Marwick LLP are expected
to be present at the Annual Meeting of Stockholders, with the opportunity to
make a statement, should they so desire, and to be available to respond to
appropriate questions.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon will be
required to ratify the selection of KPMG Peat Marwick LLP as the Company's
auditors for the current fiscal year.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
auditors.
EXECUTIVE COMPENSATION
Summary Compensation Table for the Fiscal Years Ended July 31, 1998, 1997 and
1996
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------- ------------------------------
Name Fiscal Options Restricted
and Principal Position Year Salary Bonus Other (No. of Shares) Stock Awards
- ---------------------- ------ ------ ----- ----- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg (2) 1998 $240,000 $44,940 * 100,000 ---
Chairman, Chief Executive 1997 210,000 5,400 * --- ---
Officer and President 1996 185,000 990 * --- ---
J. Preston Windus, Jr. (3) 1998 150,000 56,700 * 40,000
Vice President, Chief Financial 1997 130,000 16,300 * --- ---
Officer and Secretary; 1996 115,000 2,500 * 5,000 ---
President of Comtech PST Corp.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Richard L. Burt (3) 1998 150,000 19,600 * 40,000 ---
Vice President; President 1997 130,000 --- * --- ---
of Comtech Systems, Inc. 1996 115,000 12,500 --- 5,000 ---
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------- ------------------------------
Name Fiscal Options Restricted
and Principal Position Year Salary Bonus Other (No. of Shares) Stock Awards
- ---------------------- ------ ------ ----- ----- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Glenn F. Higgins (1)(3) 1998 100,000 --- * 2,000 ---
Vice President; President of 1997 98,400 --- --- --- ---
Comtech Antenna Systems, Inc. 1996 96,425 3,427 11,481 --- ---
Robert L. McCollum (3) 1998 135,000 --- * 40,000
Vice President; President of 1997 110,000 9,800 * --- ---
Comtech Communications Corp.
</TABLE>
- ----------
* Less than 10% of the total salary and bonus reported for such officer.
(1) Mr. Higgins' amount in fiscal 1996 represents payments for unused accrued
vacation and an automobile allowance.
(2) Mr. Kornberg is employed pursuant to an agreement which was amended and
restated in January 1998 and which provides, among other things, for his
employment until 2003; provided, however, that the employment period shall
be automatically extended for successive two-year periods unless either
party gives notice of non-extension to the other at least six months in
advance of the then scheduled termination date; at a current basic
compensation of $240,000 per annum plus such additional amounts, if any,
as the Board of Directors may from time to time determine and incentive
compensation, not to exceed his basic compensation, equal to 3.5% of the
Company's pre-tax income plus such additional amounts as the Board of
Directors may from time to time determine. Fifty percent of any such
incentive compensation is payable to Mr. Kornberg in the November
following the fiscal year to which such compensation relates, the balance
is payable on the first anniversary of the initial 50% payment. If Mr.
Kornberg voluntarily terminates his employment with the Company other than
after a Change in Control (as defined in his employment agreement), or if
the Company terminates his employment due to disability or for cause, he
will forfeit his right to receive accrued but unpaid incentive
compensation. If a Change in Control of the Company occurs, Mr. Kornberg
is entitled to terminate his employment and receive a lump sum payment
(subject to possible adjustments to avoid the characterization of the
payment as excess parachute payments and the consequent imposition of
taxes under Section 280G of the Internal Revenue Code of 1986) equal to
the sum of (i) his then basic compensation for the balance of the
employment period or three times his basic compensation, whichever is
greater, (ii) accrued but unpaid incentive compensation with respect to
prior fiscal years and (iii) if he so elects, the market value less the
applicable exercise price, of any stock option then held by him. The
aggregate of (i), (ii) and (iii), as of October 26, 1998, would have been
$1,778,720. Mr. Kornberg would also be entitled to receive benefits under
the Company's benefit plans, or substantially equal benefits, for the
remainder of the employment period.
(3) Mr. Windus, Mr. Burt, Mr. Higgins and Mr. McCollum are eligible to
receive, in addition to their respective base compensation amounts, a
percentage of the relevant subsidiary's pre-tax profits based principally
upon the attainment of various goals. These goals which may include target
levels of sales, pre-tax profits, customer orders or cash flow, are
developed by senior management and submitted to the Executive Compensation
Committee for annual approval. Mr. McCollum became an executive officer of
the Company effective August 1, 1996.
7
<PAGE>
OPTION GRANTS IN THE FISCAL YEAR ENDED JULY 31, 1998
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Potential Realizable Value at
Underlying Grantd to Exercise Assumed Annual Rates of
Options Employees in Price Expiration Stock Price Appreciation
Granted(1) Fiscal Year ($/Share)(2) Date for option term(3)
---------- ----------- ------------- ---------- -----------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg............... 100,000 25.72% $4.50 01/14/08 $283,000 $717,200
J. Preston Windus, Jr....... 40,000 10.29% 4.50 01/14/08 113,200 286,880
Richard L. Burt............. 40,000 10.29% 4.50 01/14/08 113,200 286,880
Glenn F. Higgins............ 2,000 .51% 4.50 01/14/08 5,660 14,344
Robert McCollum............. 40,000 10.29% 4.50 01/14/08 113,200 286,880
</TABLE>
(1) The options granted to Mr. Kornberg will expire on January 14, 2008,
subject to earlier expiration in the event Mr. Kornberg's employment with
the Company terminates, and may not be exercised unless they have vested.
The options will vest on December 15, 2008, subject to accelerated vesting
in 25,000 share increments if, prior to March 31, 2001, the market value
of the Company's Common Stock for any 20 consecutive day trading period
exceeds successive thresholds of $10, $15, $20 and $30. The options
granted to each of Mr. Windus, Mr. Burt, Mr. Higgins and Mr. McCollum will
expire on January 14, 2008, subject to earlier expiration in the event an
individual's employment with the Company terminates, and may not be
exercised unless they have vested. The options will vest on December 15,
2008, subject to accelerated vesting based upon the achievement of net
income and cash flow targets for the subsidiary headed by the recipient
during 1998, 1999 and 2000 fiscal years. Pursuant to such accelerated
vesting, 9,000 of the options granted to Mr. Windus and 12,000 of the
options granted to Mr. Burt have vested to date.
(2) The exercise price is the market price on the date the options were
granted.
(3) In accordance with SEC rules, these columns show gains that might exist
for the respective options, assuming the market price of Comtech's Common
Stock appreciates from the date of grant over a period of ten years at the
annualized rates of five and ten percent, respectively. If the stock price
does not increase above the exercise price at the time of exercise,
realized value to the named executives from these options will be zero.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED JULY 31, 1998
AND OPTION VALUES AS OF JULY 31, 1998
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money Options at
Acquired Options at July 31, 1998 July 31, 1998(2)
on Value --------------------------- ---------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred Kornberg --- $ --- -- 100,000 $ --- $ 200,000
J. Preston Windus, Jr. --- --- 32,000 43,000 78,040 99,110
Richard L. Burt 34,976 35,984 75,287 76,808
Glenn F. Higgins 5,000 13,460 7,900 2,600 14,805 6,120
Robert Mc Collum --- --- --- 40,000 --- 80,000
</TABLE>
- ----------
(1) "Value Realized" is calculated by determining the difference between the
fair market value of the Common Stock on the date the options are
exercised and the exercise price of the options.
(2) "In-the-Money Options" would be options outstanding at the end of July 31,
1998 for which the fair market value of the Common Stock on such date
($6.50) exceeded the exercise price of the options.
8
<PAGE>
Executive Compensation Committee Report
Compensation Policies. The principal goal of the Company's compensation
program as administered by the Executive Compensation Committee is to help the
Company attract, motivate and retain the executive talent required to develop
and achieve the Company's strategic and operating goals with a view to
maximizing shareholder value. The key elements of this program and the
objectives of each element are as follows:
Base Salary. Base salaries paid to the Company's executive officers are
intended to be competitive with those paid to executives holding comparable
positions in the marketplace. Individual performance and the performance of the
Company or the applicable operating subsidiary are considered when setting
salaries within the range for each position. Annual reviews are held and
adjustments are made based on attainment of individual goals in a manner
consistent with operating and financial performance.
Bonuses. Annual cash bonuses are intended to motivate performance by
creating the potential to earn annual incentive awards that are contingent upon
personal and business performance. Excluding the Chief Executive Officer,
bonuses are paid to the Company's executive officers pursuant to the Company's
Incentive Compensation Plan for Subsidiary Presidents and Key Employees (the
"Incentive Compensation Plan"). Each of the Company's executive officers other
than the Chief Executive Officer is a President of one of the Company's
operating subsidiaries. Under the Incentive Compensation Plan, the President of
each of these subsidiaries is entitled to receive a bonus of up to a fixed
percentage of each subsidiary's pre-tax profit each year, subject to the
attainment of subsidiary pre-tax profit, new order, and cash flow targets and
personal performance targets that are proposed by senior management and
established by the Executive Compensation Committee.
Long Term Incentives. The Company provides its executive officers with
long-term incentive compensation through grants of stock options under the
Company's stock option plan. The grant of stock options aligns the executive's
interests with those of the Company's stockholders by providing the executive
with an opportunity to purchase and maintain an equity interest in the Company
and to share in the appreciation of the value of the Company's Common Stock. In
fiscal 1998, options to purchase an aggregate of 122,000 shares of the Company's
Common Stock were granted to the Company's four executive officers other than
the Chief Executive Officer. Each of these options will vest in full thirty days
prior to its expiration on the tenth anniversary of the date of grant, subject
to accelerated vesting based upon the achievement of net income and cash flow
targets for the subsidiary headed by the recipient during the 1998, 1999 and
2000 fiscal years, thereby tying the receipt of long-term compensation directly
to performance of the business for which the recipient is responsible. Of the
options that were subject to accelerated vesting, options in the aggregate of
21,000 shares vested in 1998.
CEO's Compensation. As discussed in Note (2) to the Summary Compensation
Table in "Executive Compensation", the Company and Mr. Kornberg amended and
restated his employment agreement in January 1998. Pursuant to such agreement,
Mr. Kornberg received a base salary of $240,000 for fiscal 1998 and bonus of
$44,940 equal to 3.5% of the Company's pre-tax income required under the
agreement. In addition, Mr. Kornberg was awarded an option to purchase an
aggregate of 100,000 shares of the Company's Common Stock, which option will
vest in full 30 days prior to its expiration on the tenth anniversary of the
date of grant, subject to accelerated vesting in 25,000 share increments if the
average per share market value of the Company's Common Stock for any 20
consecutive day trading period prior to March 31, 2001 exceeds successive
thresholds of $10, $15, $20 and $30.
The Executive Compensation Committee
George Bugliarello, Chairman
John B. Payne
Sol S. Weiner
9
<PAGE>
COMPENSATION OF DIRECTORS
Each Director who is not a salaried employee of the Company receives an annual
retainer of $8,000, plus $500 for each Board meeting attended by them (up to an
additional $2,000 per annum). Effective beginning with fiscal year 1999, the
annual retainer will be $10,000 and they will receive an additional $1,250 for
each Board meeting attended by them (up to an additional $5,000 per annum).
Under the Company's 1993 Incentive Stock Option Plan, each director who is not
already an employee of the Company receives an option grant to purchase 1,000
shares of Common Stock on each August 1st during the term of the Plan. The
exercise price of all such options is equal to the stock's fair market value on
such date.
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index and the Nasdaq Stock Market Telecommunications
Stock Index for the period of five years commencing July 31, 1993 and ending
July 31, 1998. The graph and table assume that $100 was invested on July 31,
1993 in the Company's Common Stock, the Standard & Poor's 500 Stock Index and
the Nasdaq Stock Market Telecommunication Stock Index and that all dividends
were reinvested.
- --------------------------------------------------------------------------------
[The following table was depicted as a line graph in the printed materials.]
Comtech S&P 500 Nasdaq Telecom
------- ------- --------------
1993 $100 $100 $100
1994 47 105 101
1995 30 133 120
1996 48 154 119
1997 45 235 160
1998 87 280 269
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its facilities in Melville, New York from a partnership
controlled by the Company's Chairman and Chief Executive Officer. The lease, as
amended, provides for the Company's exclusive use of the premises for an initial
term of ten years. The Company has the option to extend the term of the lease
for an additional ten-year period, and a right of first refusal in the event of
a sale of the facility. The annual rental under the lease ($439,000 in fiscal
1998) is subject to adjustments.
The Company leases its St. Cloud, Florida facility from a partnership in which
J. Preston Windus, Jr., Vice President, Secretary and CFO of the Company, is a
general partner. The annual rental under the lease ($205,000 in fiscal 1998) is
subject to adjustments.
10
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at the
meeting. If other matters do come before the meeting, the persons acting
pursuant to the proxy will vote on them in their discretion.
Proxies may be solicited by mail, telephone, telegram, and personally by
directors, officers and other employees of the Company. The cost of soliciting
proxies will be borne by the Company.
Certain information regarding the Company's executive officers has been omitted
from this Proxy Statement in accordance with applicable regulations because such
information is set forth in the Company's Annual Report on Form 10-K for fiscal
1998.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, if any, to file with the
Securities and Exchange Commission ("SEC") reports of ownership, and reports of
changes in ownership, of equity securities of the Company. Such persons are also
required to furnish the Company with copies of all such reports that they file.
Based solely on such reports and written representations of the Company's
directors and executive officers, the Company believes that during the two
fiscal year period ended July 31, 1998. the Company's executive officers and
directors complied with all applicable Section 16(a) filing requirements.
Proposals of stockholders intended to be presented at next year's Annual Meeting
must be received by the Company no later than July 15, 1999 to be included in
the proxy material for such meeting.
By order of the Board of Directors
J. Preston Windus, Jr.
Secretary
Date: November 12, 1998
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Fred Kornberg and J. Preston Windus, Jr.
and each of them with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Comtech Telecommunications Corp. (the "Company") to
be held on December 15, 1998 at 10:00 a.m., local time, and at any adjournment
or adjournments thereof, hereby revoking any proxies heretofore given, to vote
all shares of Common Stock of the Company held or owned by the undersigned as
directed on the reverse side of this proxy card, and in their discretion upon
such other matters as may come before the meeting.
This proxy will be voted as specified and, unless otherwise specified in
the spaces provided, this proxy will be voted FOR the election of directors and
FOR the proposal referred to in item 2 hereon.
(To be Signed on Reverse Side.)
<PAGE>
Please Detach and Mail in the Envelope Provided
|X| Please mark your
votes as in this
example
FOR WITHHELD
Proposal 1 - Election of |_| |_| Nominees: Fred Kornberg
Directors. Sol S. Weiner
For nominees listed at right (except
as marked to the contrary below.)
- ------------------------------------
FOR AGAINST ABSTAIN
Proposal 2 - Ratification of selection |_| |_| |_|
of KPMG Peat Marwick LLP
as auditors
This proxy will be voted or withheld from being voted in accordance with the
instructions specified. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED FOR THE NOMINEES LISTED AT LEFT AND
FOR APPROVAL OF PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
_____________________________ __________________________ Dated ___________, 1998
Please SIGN HERE SIGNATURE (IF HELD JOINTLY)
NOTE: Please sign exactly as name appears hereon. When signing as executor,
administrator, attorney, trustee or guardian, please give your full title
as such. If a corporation, please sign in full corporation name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If a joint tenancy, please have
both tenants sign.
