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Securities Exchange Act of 1934
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240 14a-14
SYMBOL TECHNOLOGIES, INC.
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[X] No fee required.
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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:
_______________________________________________________
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
SYMBOL TECHNOLOGIES, INC.
One Symbol Plaza
Holtsville, New York 11742-1300
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 10, 1999
____________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Symbol
Technologies, Inc. (the "Corporation") will be held at 10:00 A.M., local
time, on May 10, 1999 at Symbol Technologies, Inc., World Headquarters, One
Symbol Plaza, Holtsville, NY, for the following purposes:
1. To elect nine directors of the Corporation to serve until the next
annual meeting of shareholders and until the election and
qualification of their respective successors;
2. To vote upon a proposal to amend the Corporation's Certificate of
Incorporation;
3. To vote upon a proposal to amend the 1997 Employee Stock Option
Plan;
4. To vote upon a proposal to approve the adoption of a new Executive
Bonus Plan;
5. To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as auditors for fiscal year 1999;
and
6. To transact such other business as may properly come before the
meeting.
Only holders of record of the Corporation's Common Stock at the close of
business on March 15, 1999 are entitled to notice of, and to vote at, the
meeting and any adjournment thereof. Such shareholders may vote in person or
by proxy. The stock transfer books of the Corporation will not be closed.
Shareholders who find it convenient are cordially invited to attend the
meeting in person. If you are not going to do so and wish that your shares
be voted, you are requested to fill in, sign, date and return the
accompanying proxy in the enclosed envelope or provide your instructions by
telephone or via the Internet. No postage is required if mailed in the
United States.
By Order of the Board of Directors,
Leonard H. Goldner
Secretary
Dated: March 16, 1999
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SYMBOL TECHNOLOGIES, INC.
One Symbol Plaza
Holtsville, New York 11742-1300
____________________
PROXY STATEMENT
____________________
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Symbol Technologies,
Inc. (the "Corporation") of proxies to be used at the Annual
Meeting of Shareholders of the Corporation to be held at 10:00
A.M., local time on May 10, 1999, at Symbol Technologies, Inc.,
World Headquarters, One Symbol Plaza, Holtsville, New York, and
at any adjournment thereof. If proxy cards in the accompanying
form are properly executed and returned or instructions are
provided by telephone or via the Internet, the shares of Common
Stock represented thereby will be voted as instructed. If no
instructions are given, such shares will be voted (1) for the
election as directors of the nominees of the Board of Directors
named below, (2) in favor of the proposal to amend the
Corporation's Certificate of Incorporation, (3) in favor of the
proposal to amend the 1997 Employee Stock Option Plan, (4) in
favor of the proposal to approve the adoption of a new Executive
Bonus Plan, (5) to ratify the appointment of Deloitte & Touche
LLP as the Corporation's auditors for fiscal 1999, and (6) in
the discretion of the proxies named in the proxy card on any
other proposals to properly come before the meeting or any
adjournment thereof. Any proxy may be revoked by a shareholder
prior to its exercise upon written notice to the Secretary of
the Corporation, or by the vote of a shareholder cast in person
at the meeting. The approximate date of mailing of this Proxy
Statement and the accompanying proxy is April 1, 1999.
VOTING
Holders of record of the Corporation's Common Stock on
March 15, 1999, will be entitled to vote at the Annual Meeting
or any adjournment thereof. As of that date, there were
58,901,621 shares of Common Stock outstanding and entitled to
vote and a majority, or 29,450,811 of these shares, will
constitute a quorum for the transaction of business. Share
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amounts in this Proxy Statement have been adjusted, as
appropriate, to reflect the three for two stock split which was
effective on April 1, 1997 and the three for two stock split
which was effective on April 3, 1998. Each share of Common Stock
entitles the holder thereof to one vote on all matters to come
before the meeting, including election of directors. Directors
are elected by a plurality of votes cast. The affirmative vote
of a majority of the votes present or represented and entitled
to vote is required for all other matters. Abstentions, broker
non-votes, and withheld votes are considered for quorum
purposes, however such votes will not be considered "votes cast"
or "affirmative votes".
The closing price of the Corporation's Common Stock on the
New York Stock Exchange on March 15, 1999 was $46.00 per share.
NOMINEES FOR ELECTION
The following information is supplied with respect to the
nominees for election as directors of the Corporation:
Name Age Presently Held With Director
the Corporation Since
Jerome Swartz 58 Chairman of the Board of Directors, 1975
Chief Executive Officer and Director
Harvey P. Mallement 58 Director 1977
Frederic P. Heiman 59 Director, Former Executive
Vice President 1981
Raymond R. Martino 60 Vice Chairman of the 1983
Board of Directors
Saul P. Steinberg 59 Director 1985
Lowell C. Freiberg 59 Director 1985
George Bugliarello 71 Director 1992
Charles B. Wang 54 Director 1994
Tomo Razmilovic 56 President, Chief Operating 1995
Officer and Director
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Dr. Swartz co-founded and has been employed by the
Corporation since it commenced operations in 1975. He has been
the Chairman of the Board of Directors and Chief Executive
Officer of the Corporation for more than the past fifteen years.
Dr. Swartz was an industry consultant for the prior 12 years in
the areas of optical and electronic systems and instrumentation
and has a total of some 160 issued and pending U.S. patents and
technical papers to his credit. He is a member of the Board of
Trustees of Polytechnic University and a member of the Board of
Directors of the Stony Brook Foundation. He is also a fellow of
the Institute of Electrical and Electronic Engineers.
Mr. Mallement has been one of the Managing General Partners
of Harvest Partners, Inc., a private equity and leveraged buyout
investment management company, since its inception in April
1981. He is an officer and director of seven privately held
companies.
Dr. Heiman served as Executive Vice President of the
Corporation from July 1986 until December 31, 1998. He is
currently employed by the Corporation on a part-time and
consulting basis. He was previously employed by Intel
Corporation, a manufacturer of semiconductor components, from
May 1982 until July 1986, in a number of positions, the most
recent of which was as its Director of Corporate Planning. Dr.
Heiman is the inventor or co-inventor of 24 issued U.S. patents,
including basic elements of the MOS integrated circuit chip,
which became the basis of much of the modern revolution in
computer and electronics communications and the first silicon
storage tube used in display and scanning applications.
Mr. Martino was the Corporation's President and Chief
Operating Officer from December 1983 until June 1994. He is
currently the Corporation's Vice Chairman of the Board of
Directors and is employed by the Corporation on a part-time and
consulting basis. Mr. Martino is also a member of the Board of
Directors of Checkpoint Systems, Inc.
Mr. Steinberg founded and has been the Chief Executive
Officer and a Director of Reliance Group Holdings, Inc.
("Reliance") and predecessors of Reliance since 1961. Reliance
is a holding company whose principal business is the ownership
of property and casualty insurance companies. He is also a
member of the Board of Trustees of the University of
Pennsylvania and Chairman of the Wharton School Board of
Overseers. Mr. Steinberg is also a Director of Reliance
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Insurance Company, Reliance Financial Services Corporation and
Zenith National Insurance Corp.
Mr. Freiberg has been employed by Reliance and its
predecessors since 1969. Since 1998, Mr. Freiberg has been its
Executive Vice President and Chief Financial Officer and for
more than the previous five years, he served as the Senior Vice
President and Chief Financial Officer of Reliance. He is a
member of the Board of Directors of LandAmerica Financial Group,
Inc.
Dr. Bugliarello has been Chancellor of Polytechnic
University since July 1994. For the prior 21 years, he was
President of Polytechnic University. He has been a member of
several scientific organizations including past Chairman of the
Board of Science and Technologies for International Development
of the National Academy of Sciences. He is a member of the
National Academy of Engineering and is also the U.S. Member of
the Science for Stability Steering Group of the Scientific
Affairs Division of NATO. He is a member of the Board of
Directors of several organizations including the Long Island
Lighting Company, Comtech Laboratories and Spectrum Information
Technologies, Inc. In January 1995, Spectrum Information
Technologies, Inc. filed for bankruptcy under Chapter 11 of the
U.S. Bankruptcy Code from which it emerged in 1998.
Mr. Wang has been the Chief Executive Officer of Computer
Associates International, Inc. since 1976. He has been the
Chairman of the Board since 1980. Computer Associates is the
world's leading business software company with fiscal 1998
revenues exceeding $4.7 billion.
Mr. Razmilovic has been President and Chief Operating
Officer of the Corporation since October 1995. He was
previously Senior Vice President, Worldwide Sales and Services.
He first joined the Corporation in 1989. Prior thereto, he was
President of ICL International, a major European computer
manufacturer and he also led its industry marketing and software
development divisions.
Pursuant to agreements between Reliance and the
Corporation, Reliance currently has the right to designate one
person to the Corporation's Board of Directors. Reliance has
designated Mr. Steinberg.
-5-
MEETINGS OF THE BOARD
During the fiscal year ended December 31, 1998 the Board of
Directors held six meetings and once took action by unanimous
written consent. Other than Mr. Wang, who attended four
meetings of the Board of Directors, each director attended 75%
or more of the aggregate of (1) the total number of meetings of
the Board of Directors and (2) the total number of meetings held
by all the committees of the Board on which such director
served.
The Board of Directors has an Audit Committee consisting of
Messrs. Mallement and Bugliarello. The primary functions of the
Audit Committee are to review the Corporation's financial
statements, to recommend the appointment of the Corporation's
independent auditors and to review the overall scope of the
audit. The Audit Committee held two meetings in 1998.
The Board of Directors has a Compensation/Stock Option
Committee consisting of Messrs. Freiberg and Steinberg. The
primary functions of this Committee are to review the salaries,
benefits and any other compensation of the Corporation's senior
executive officers, to make recommendations to the Board of
Directors with respect to these matters and to administer the
Corporation's stock option plans. During 1998 the Committee
held five meetings and once took action by unanimous written
consent.
The Board of Directors has a Nominating Committee
consisting of Messrs. Swartz, Steinberg and Wang. The primary
function of this Committee is to review and recommend to the
Board potential candidates for election to the Board of
Directors. The Committee did not meet in 1998. Shareholders
wishing to recommend candidates for consideration by the
Committee can do so by providing written notice to the Secretary
of the Corporation no later than December 31 of the year
preceding the date of the meeting at its corporate offices in
Holtsville, New York, giving the candidate's name, biographical
data and qualifications. Any such recommendation should be
accompanied by a written statement from the individual of his or
her consent to be nominated as a candidate and, if nominated and
elected, to serve as a director.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with
respect to the Common Stock of the Corporation beneficially
owned by any person who is known to the Corporation to be the
beneficial owner of more than 5% of the Corporation's voting
securities:
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership(1) Common Stock
Saul P. Steinberg and 8,074,427(2) 13.7
Reliance Financial Services
Corporation.
Park Avenue Plaza
New York, New York 10055
Prudential Insurance Company
Of America 4,470,970(3) 7.6
751 Broad Street
Newark, New Jersey 07102-3777
Jennison Associates LLC 4,345,270(4) 7.4
466 Lexington Avenue
New York, New York 10017
Forstmann-Leff Associates, Inc. 3,863,468(5) 6.5
55 East 52nd Street
New York, New York 10055
Amvescap PLC 3,622,750(6) 6.2
11 Devonshire Square
London, EC2M 4YR
England
Edward C. Johnson III, 3,495,650(7) 5.9
Abagail P. Johnson and
F.M.R. Corp.
82 Devonshire Street
Boston, Massachusetts
_______________
(1) The table identifies any persons having sole voting and
investment power with respect to the shares set forth
opposite their names as of February 1, 1999 except as
otherwise disclosed in the footnotes to the table,
according to information publicly filed or otherwise
furnished to the Corporation.
-7-
(2) Of the Common Stock shown, 8,051,927 shares are
beneficially owned by Reliance Financial Services
Corporation ("Reliance Financial"). Reliance Financial is
a wholly owned subsidiary of Reliance. Approximately 44%
of the common voting stock of Reliance is owned by Saul P.
Steinberg, members of his family and affiliated trusts. As
a result of his stock holdings in Reliance, Mr. Steinberg
may be deemed to control Reliance Financial and to be a
beneficial owner of the shares beneficially owned by
Reliance Financial. Sole voting and dispositive power with
respect to such shares are held as follows: Reliance
Insurance Company, a subsidiary of Reliance Financial,
7,231,202 shares; United Pacific Insurance Company, a
subsidiary of Reliance Insurance Company, 375,000 shares;
Reliance National Indemnity, a subsidiary of Reliance
Insurance Company, 445,725 shares. Mr. Steinberg disclaims
beneficial ownership of the 8,051,927 shares beneficially
owned by Reliance Financial. Includes 22,500 shares Mr.
Steinberg beneficially owns which may be acquired within 60
days of February 1, 1999, pursuant to the exercise of
options and a warrant held by him.
(3) The number of shares beneficially owned as of December 31,
1998 according to a statement on Schedule 13G filed with
the Securities and Exchange Commission. Prudential
Insurance Company of America ("Prudential"), an insurance
company, has sole power to vote or direct the vote and
dispose of or direct the disposition of 672,750 of such
shares, shared power to vote or direct the vote of
3,534,545 of such shares and shared power to dispose of or
direct the disposition of 3,798,220 of such shares.
Prudential may have direct or indirect voting and/or
investment discretion over 4,470,970 shares which are held
for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates. Jennison
Associates LLC ("Jennison") is 100% owned by Prudential,
however Jennison does not file jointly with Prudential,
therefore, an undetermined number of shares of the
Corporation's Common Stock reported on Jennison's 13G may
be included in the 13G filed by Prudential.
-8-
(4) The number of shares beneficially owned as of December 31,
1998 according to a statement on Schedule 13G filed with
the Securities and Exchange Commission. Jennison, an
investment advisor, has sole power to vote or direct the
vote of 1,905,500 of such shares, shared power to vote or
direct the vote of 2,176,095 of such shares and shared
power to dispose of or direct the disposition of 4,345,270
of such shares. Jennison is 100% owned by Prudential,
however, Jennison does not file jointly with Prudential,
therefore, an undetermined number of shares of the
Corporation's Common Stock reported as being owned by
Jennison may be included as being owned by Prudential. No
one client owns more than 5% of such shares.
(5) The number of shares beneficially owned as of December 31,
1998 according to a statement on Schedule 13G filed with
the Securities and Exchange Commission. Forstmann-Leff
Associates, Inc., an investment advisor, has sole power to
vote or direct the vote of 1,431,157 of such shares and
sole power to dispose of or to direct the disposition of
1,710,007 of such shares. Forstmann-Leff Associates, Inc.
and subsidiaries, investment advisors, have shared power to
vote or direct the vote of 1,350,811 of such shares and
shared power to dispose of or to direct the disposition of
2,153,461 of such shares. No one client owns more than 5%
of such shares.
(6) The number of shares beneficially owned as of December 31,
1998 according to a statement on Schedule 13G filed with
the Securities and Exchange Commission. Amvescap PLC and
its subsidiaries, investment advisors, have shared power to
vote or direct the vote and shared power to dispose of or
to direct the disposition of all of such shares. No one
client owns more than 5% of such shares.
(7) The number of shares beneficially owned as of December 31,
1998 according to a statement on Schedule 13G filed with
the Securities and Exchange Commission. Of such shares,
3,452,050 are beneficially owned by Fidelity Management &
Research Company, an investment advisor ("Fidelity"),
43,600,000 are beneficially owned by Fidelity Management
Trust Company, a bank ("FMT"). Fidelity and FMT are wholly
owned subsidiaries of FMR Corp. ("FMR"). Approximately 49%
of the voting power of FMR, is owned by Edward C. Johnson
III, members of his family and trusts for their benefit.
Mr. Johnson, members of his family and associated trusts
form a controlling group with respect to the common
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voting stock of FMR. Mr. Johnson serves as Chairman and
Abigail P. Johnson is a Director of FMR. Mr. Johnson owns
12.0% and Abigail P. Johnson owns 24.5% of the aggregate
outstanding voting stock of FMR. Mr. Johnson and FMR have
sole power to vote or direct the vote of 7,200 of such
shares and sole power to dispose of or to direct the
disposition of 3,495,650 of such shares. No one client
owns more than 5% of such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of
February 1, 1999 with respect to the Common Stock of the
Corporation beneficially owned by (i) all directors and
nominees, (ii) the executive officers listed in the following
Summary Compensation Table, and (iii) all executive officers and
directors as a group:
Name of Individual of Amount and Nature of Percent of
Identity of Group Beneficial Ownership(1) Common Stock
Jerome Swartz.......... 2,371,880(2) 4.0
Harvey P. Mallement.... 68,850(3) *
Frederic Heiman........ 139,626(4) *
Raymond R. Martino..... 169,155 *
Saul P. Steinberg...... 8,074,427(5) 13.7
Lowell C. Freiberg..... 64,125(6) *
George Bugliarello..... 25,875(7) *
Charles B.Wang......... 56,250(8) *
Tomo Razmilovic........ 651,321(9) 1.1
Leonard H. Goldner..... 325,097(10) *
Kenneth V. Jaeggi...... 24,000(11) *
Richard M. Feldt....... 115,091(12)
All executive officers 12,690,372(13) 21.6
and directors as a group.
(consisting of 18 individuals)
____________________
* Less than 1%
(1) The persons identified in this table have sole voting and
investment power with respect to the shares set forth
opposite their names, except as otherwise disclosed in the
footnotes to the table, according to information furnished
to the Corporation by each of them.
(2) Represents (i) 1,891,875 shares which may be acquired
pursuant to the exercise of options (ii) 10,144 shares
owned by his wife, (iii) 51,305 shares held in trust of
which Dr. Swartz is the income beneficiary and his children
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are the residual beneficiaries, and (iv) 418,556 shares
owned by Dr. Swartz. Dr. Swartz disclaims beneficial
ownership of the shares held by or for the benefit of
members of his family.
(3) Represents 22,500 shares that may be acquired pursuant to
the exercise of options and a warrant within 60 days of
February 1, 1999 and 46,350 shares owned by Mr. Mallement.
(4) Represents 120,336 shares which may be acquired pursuant to
the exercise of options within 60 days of February 1, 1999
and 19,290 shares owned jointly by Dr. Heiman and his wife.
(5) Represents 22,500 shares that may be acquired by Mr.
Steinberg pursuant to the exercise of options and a warrant
within 60 days of February 1, 1999 and 8,051,927 shares
owned by Reliance Financial and its subsidiaries. See
"Principal Shareholders."
(6) Represents 28,125 shares that may be acquired pursuant to
the exercise of options and warrants within 60 days of
February 1, 1999 and 36,000 shares owned by Mr. Freiberg.
Mr. Freiberg disclaims beneficial ownership of the shares
owned by Reliance Financial. See "Principal Shareholders."
(7) Represents 22,500 shares that may be acquired pursuant to
the exercise of options and a warrant within 60 days of
February 1, 1999 and 3,375 shares owned jointly by Dr.
Bugliarello and his wife.
(8) Represents 33,750 shares that may be acquired pursuant to
the exercise of options and a warrant within 60 days of
February 1, 1999 and 22,500 shares owned by Mr. Wang.
(9) Represents 600,678 shares that may be acquired pursuant to
the exercise of options within 60 days of February 1, 1999
and 50,643 shares owned by Mr. Razmilovic.
(10) Represents 205,125 shares that may be acquired pursuant to
the exercise of options within 60 days of February 1, 1999,
of which 41,250 are held in trust for the benefit of
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his wife and children and for which his wife is co-trustee
and 119,972 shares owned by Mr. Goldner. Mr. Goldner
disclaims beneficial ownership of the shares held by this
trust.
(11) Represents 22,500 shares that may be acquired pursuant to
the exercise of options within 60 days of February 1, 1999
and 1,500 shares owned by Mr. Jaeggi.
(12) Represents 86,969 shares that may be acquired pursuant to
the exercise of options within 60 days of .February 1, 1999
and 28,122 shares owned by Mr. Feldt.
(13) Includes an aggregate of 3,645,511 shares which may be
acquired pursuant to the exercise of options and warrants
within 60 days of February 1, 1999.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934
requires the Corporation's directors and executive officers, and
persons who own more than 10% of a registered class of the
Corporation's equity securities, to file with the Securities and
Exchange Commission and the New York Stock Exchange, reports of
ownership and reports of changes in ownership of Common Stock
and other equity securities of the Corporation and to furnish
the Corporation with copies of all Section 16(a) forms they
file.
Based on a review of the copies of such reports furnished
to the Corporation, the Corporation believes that, during 1998
executive officers, directors and greater than 10% shareholders
complied with all filing requirements applicable to them.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Corporation's Compensation/Stock Option Committee (the
"Committee") is composed entirely of outside directors. Messrs.
Freiberg and Steinberg are the current members of the Committee.
Neither has ever been an officer or employee of the Corporation.
-12-
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
A primary role of the Committee is to oversee compensation
practices for the Corporation's senior executive officers. The
Committee's responsibilities include reviewing the salaries,
benefits and other compensation of the Corporation's senior
executive officers, making recommendations to the full Board of
Directors with respect to these matters and administering the
Corporation's stock option plans. In its oversight capacity,
the Committee is dedicated to ensuring that the Corporation's
financial resources are used effectively to support the
achievement of its short- and long-term business objectives.
The Committee has available to it an outside compensation
consultant and access to independent compensation data.
In the course of its executive compensation decision
making, the Committee adheres to several guiding principles.
Specifically, the Committee takes the position that the
executive compensation program should:
? Target pay levels at rates that are competitive in light
of market practices so as to ensure that the Corporation
is positioned to attract and retain high performing
management talent, particularly in the areas of
technology in which it competes.
? Reflect a pay-for-performance orientation, linking
overall compensation paid to senior executives with the
Corporation's financial performance.
? Encourage share ownership on the part of key employees
with the objective of aligning the interests of
management and investors, thereby promoting the
maximization of shareholder value.
The Corporation's total compensation program is described
below. The Committee believes that the Corporation's executive
compensation program is structured to appropriately recognize
the performance and contribution of individual officers and to
attract and retain top quality management talent. The Committee
further believes that the executive compensation program is
effective in supporting the Corporation's business goals and
human resource strategies.
-13-
Description of Compensation Policies
It is the Corporation's policy to pay its senior executives
at levels that reflect the Corporation's financial performance
relative to comparable organizations. This policy is
implemented by means of a coordinated, total pay program
comprised of discrete elements that reward individual value
added to the Corporation, provide motivation to achieve
corporate financial targets that are consistent with shareholder
expectations, and encourage long-term share ownership by senior
executives. These elements exist in the context of a reward
system that includes base salary, a bonus plan and stock option
awards.
The Corporation, with the assistance of outside consulting
firms, periodically conducts comparisons of the compensation
practices of approximately 30 selected companies. This panel
consists of "high tech" companies with which the Corporation
believes it competes in attracting and retaining employees.
Eleven of the panel companies are included in the S&P Technology
Sector Index. The Corporation seeks to target the total
compensation (e.g. base salary, annual bonus and stock options)
paid to its senior executives at approximately the 75th
percentile of the total compensation paid for comparable
positions at the panel companies, after adjusting by regression
analysis for the different magnitude of revenues.
Based on a review of Internal Revenue Service regulations,
the Committee believes that all compensation paid in 1998 and
payable in 1999 to its senior executive officers (including Dr.
Swartz) will be fully deductible by the Corporation. The
Committee will continue to review the Corporation's compensation
programs and may revise these programs as it deems necessary.
Relationship of Executive Compensation to Performance
Base Salary
Executive officers' base salaries are reviewed each year.
Dr. Swartz' annual base salary was last reviewed in July 1998
and at that time was increased by 10%, effective July 1, 1998.
Accordingly, his current base salary is $873,400. Dr. Swartz'
base salary will again be reviewed in July 1999.
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In assessing the extent to which executive salary increases
are warranted, the Committee considers a number of factors,
including performance on the job, external market pay practices,
the incremental value the executive adds to the Corporation and
the executive's level of experience and expertise. Adjustments
in base salary are generally not based upon the financial
performance of the Corporation. In the case of Dr. Swartz, the
Committee considered his effectiveness as Chairman of the Board
and Chief Executive Officer of the Corporation as well as his
many noteworthy contributions to the Corporation. These
contributions include 110 issued U.S. patents which he has
assigned to the Corporation and which provide competitive
advantages to the Corporation and have also generated
significant licensing revenues that have materially added to the
Corporation's profitability.
Executive Bonus Plan
The Corporation promotes a pay-for-performance philosophy
wherein a significant element of annual compensation is directly
linked to the financial performance of the Corporation.
Effective January 1, 1995, the Committee adopted and the Board
of Directors and shareholders ratified the creation of an
Executive Bonus Plan (the "Executive Bonus Plan"), the purpose
of which is to directly tie the level of annual executive
incentive compensation to the financial performance of the
Corporation. All executive officers of the Corporation
participate in the Executive Bonus Plan. The Committee has full
authority to construe, interpret and administer the Executive
Bonus Plan, as well as to determine the extent, if any, to which
operating performance standards have been met. The Committee
also has authority to modify (prior to the beginning of the
calendar year for which the targets will be applicable) the
specific targets for the performance goals under the Executive
Bonus Plan.
Under the Executive Bonus Plan, the Committee each year,
establishes corporate financial performance objectives
(exclusive of extraordinary revenues and charges), expressed in
terms of earnings per share. Three levels of performance are
identified: threshold performance, at which the minimum award
(one-half a participant's target bonus) will be earned and below
which no award will be earned; target performance, at which the
target award will be earned; and maximum performance, at which
the maximum award (twice a participant's target bonus) will be
-15-
earned and above which no additional award will be earned. For
1999, threshold performance has been established at results
equal to 85% of the Corporation's 1999 Business Plan; target
performance has been established at results equal to 100% of the
1999 Business Plan; and maximum performance has been established
at results equal to or greater than 115% of the 1999 Business
Plan.
Each participant in the Executive Bonus Plan has been
assigned a target bonus representing a percentage of the
participant's base salary. The target bonuses for 1999 for
Messrs. Swartz, Razmilovic, Goldner, Jaeggi and Feldt are 100%,
100%, 50%, 50% and 50%, respectively, which is in conformity
with their individual employment agreements and their levels of
responsibility. The target bonuses for other participants in the
Executive Bonus Plan are established by Messrs. Swartz and
Razmilovic based on the individual's performance and relative
level of responsibility. They range from 35% to 45% of base
salary.
Messrs. Swartz and Razmilovic's bonuses will be determined
solely on the basis of corporate financial performance. In
the case of all other participants, 25% of their bonuses will be
based on individual performance during the year with the
remainder being based on corporate financial performance. In
1998, 1997 and 1996, all participants in the Executive Bonus
Plan received as their actual bonus payment an amount equal to
161.9%, 112.5% and 112.5% of their target bonus, respectively
(less adjustments in certain instances for individual
performance). Subject to shareholder approval at the 1999
Annual Meeting of Shareholders, the Corporation has adopted a
new executive bonus plan substantially similar to the existing
Executive Bonus Plan. If approved by shareholders, the new plan
would replace the current Executive Bonus Plan.
Stock Options
The Corporation reinforces the importance of producing
satisfactory returns to shareholders over the long term through
the operation of its stock option plans. Stock options provide
employees with the opportunity to acquire an equity interest in
the Corporation, and to participate in the creation of
shareholder value as reflected in growth in the price of the
Corporation's Common Stock.
-16-
Option exercise prices are equal to 100% of the fair market
value of the Corporation's Common Stock on the date of option
grant. This ensures that participants will derive benefits only
as shareholders realize corresponding gains. To encourage a
long-term decision making perspective, options are assigned a 10
year term and generally become exercisable over four to five
years following a two-year waiting period.
The Committee grants additional options to selected
employees based on an assessment of competitive compensation
practices, particularly in high technology industries,
individual contribution and performance. The Committee believes
that in granting such stock options, it is effectively
reinforcing the Corporation's objective of insuring a strong
link between employee rewards and shareholder interests. In
1998, the Committee determined that it was appropriate and
desirable in January, to grant Dr. Swartz an option to purchase
375,000 shares of Common Stock at an exercise price of $24.88
per share (the "January Option") and in October, to grant Dr.
Swartz an option to purchase 205,000 shares of Common Stock at
an exercise price of $45.56 (the "October Option") in light of
Dr. Swartz' contributions and the Corporation's strong financial
performance in 1997 and 1998 respectively and anticipated strong
performance in subsequent years. The exercise price of the
January Option and the October Option both were equal to the
fair market value of the Corporation's Common Stock on the date
such options were granted. The right to purchase 150,000 shares
under the January Option were to vest on January 1, 2000,
112,500 were to vest on January 1, 2001 and 112,500 were to vest
on January 1, 2002 subject to accelerated vesting in the event
the Corporation's Common Stock closed on the New York Stock
Exchange at a price at or above $50 per share for 20 out of 25
consecutive trading days. The January Option vested on December
14, 1998 in accordance with this accelerated vesting provision.
The right to purchase 82,000 shares under the October Option
will vest on October 19, 2000, 61,500 will vest on October 19,
2001 and 61,500 will vest on October 19, 2002.
Stock Ownership and Option Retention Program
Effective January 1, 1995, the Committee established for
executive officers a stock ownership and option retention
program which it administers. The Committee firmly believes
that the long term interests of the Corporation's shareholders
are best served when management maintains a significant, equity-
-17-
based interest in the Corporation. The Committee considers both
vested, unexercised options and shares owned as meaningful
expressions of such interest. Accordingly, the Committee
developed a program with target levels of equity interest for
each executive officer. Under the program, without prior
permission of the Committee, unless and until an executive has
attained the minimum requirements described below, there will
exist significant limitations on an executive's freedom to
reduce his equity position. Executive officers must agree to
participate in the program to be eligible to receive option
awards after January 1, 1995. All current executive officers
have agreed to participate in the program.
The program limits the exercise of vested options (other
than in the last year of the term of an option) unless the
executive meets and will continue to meet the equity interest
requirement described below after the exercise and sale of
shares acquired upon exercise. The equity interest requirement
provides that the combined value of the Corporation's Common
Stock and vested options held by the executive, each valued at
the then market price of the Corporation's Common Stock, must be
equal to or greater than a designated multiple of target cash
compensation (annual base salary plus target bonus) ("TCC").
If the equity interest requirement is satisfied, the
program allows for the exercise of vested options but within
strict limits. At least 50% of the net after tax proceeds
obtainable upon the exercise of any option (other than options
awarded after January 1, 1994 in connection with an executive's
initial hire or initial promotion to an executive officer
position, or options already held by persons who were promoted
to an executive officer position after January 1, 1994) must be
retained in the form of shares of the Corporation's Common Stock
unless and until the executive then owns shares of Common Stock
having a market value equal to a specified multiple of his base
salary.
Equity Interest Share Ownership
Position Requirement Requirement
Chairman of the Board 7 times TCC 5 times Base Salary
President 5 times TCC 3 times Base Salary
Senior Vice President 3 times TCC 2 times Base Salary
Vice President 2 times TCC 1 times Base Salary
-18-
Summary
The Committee is responsible for recommending to the Board,
for its approval, compensation decisions affecting the
Corporation's senior executive officers. The Committee ensures
that the overall compensation offered to senior executive
officers is consistent with the Corporation's interest in
providing competitive pay opportunities, reflective of its pay-
for-performance orientation, encourages share ownership on the
part of executives and is generally supportive of the
Corporation's short-and long-term business goals. The Committee
will continue to actively monitor the effectiveness of the
Corporation's senior executive compensation plans and assess the
appropriateness of senior executive pay levels to assure prudent
application of the Corporation's resources.
Compensation /Stock Option Committee
Lowell C. Freiberg, Chairman
Saul P. Steinberg
MANAGEMENT REMUNERATION AND TRANSACTIONS
The following Summary Compensation Table sets forth
compensation information with respect to the Corporation's Chief
Executive Officer and the four other executive officers who in
1998 were the most highly paid executive officers, for services
rendered in all capacities during the fiscal years ended
December 31, 1998, 1997 and 1996.
-19-
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term Compensation
Name and
Principal Other Annual Securities Underlying All Other
Position Year Salary Bonus(E) Compensation(F) Options (No.) Compensation
<S> <C> <C> <C> <C> <C> <C>
Jerome Swartz 1998 $849,185(B) $1,374,931 $0 580,000 $96,061(G)
Chairman of the 1997 $757,962(C) $ 852,707 $0 405,000 $56,652(G)
Board, Chief 1996 $689,052(C) $ 775,184 $0 573,750 $52,496(G)
Executive Officer
and Director
Tomo Razmilovic 1998 $589,667(B) $954,671 $0 325,000 $ 4,800(H)
President and 1997 $500,032(C) $421,902 $100,000 243,000 $ 4,750(H)
Chief Operating 1996 $437,500(C) $369,147 $0 191,250 $ 4,750(H)
Officer and
Director
Leonard H. Goldner 1998 $356,754(B) $288,792 $0 37,500 $ 4,800(H)
Senior Vice 1997 $291,200(C) $147,420 $0 101,250 $ 4,750(H)
President and 1996 $248,872(C) $125,991 $0 22,500 $ 4,750(H)
General Counsel
and Secretary
Kenneth V. Jaeggi 1998 $348,619(B) $282,207 $0 22,500 $ 4,800(H)
Senior Vice 1997 $206,250(D) $116,016 $ 66,797 150,000 $135,110(I)
President and 1996 --- --- --- --- ---
Chief Financial
Officer(A)
Richard M. Feldt 1998 $339,454(B) $274,788 $0 30,000 $ 4,800(H)
Senior Vice 1997 $309,795(C) $174,260 $0 78,750 $ 27,290(J)
President and 1996 $288,758(C) $156,335 $0 0 $197,588(J)
Operations
-20-
<FN>
______________
A Mr. Jaeggi commenced employment with the Corporation in May
1997.
B Includes $10,000 in contributions to the Corporation's
401(k) deferred compensation plan.
C Includes $9,500 in contributions to the Corporation's
401(k) deferred compensation plan.
D Includes $6,000 in contributions to the Corporation's
401(k) deferred compensation plan.
E Represents amounts earned and accrued pursuant to the
Corporation's Executive Bonus Plan. Amounts indicated are
earned and accrued in the fiscal year indicated but are
generally paid in the first quarter of the next succeeding
year.
F Includes special one-time bonus awards. Not included are
the amounts of certain perquisites and other personal
benefits provided by the Corporation since such amounts do
not exceed the lesser of (i) $50,000 or (ii) 10% of the
total annual salary and bonus reported in the table for any
named executive officer.
G Represents (i) $4,750 in 1996 and 1997 and $4,800 in 1998
for contributions to the Corporation's 401(k) deferred
compensation plan, and (ii) $15,246 in 1996, $19,402 in
1997 and $21,002 in 1998 for (a) premiums paid on his
behalf on term life insurance policies for which members of
his family are the beneficiaries and (b) the estimated
dollar value of the economic benefit to Dr. Swartz for
insurance premium payments made by the Corporation on
split-dollar whole life policies for which the Corporation
will eventually recover all premiums paid, and (iii) a non-
reimbursable expense allowance of $20,000 in 1996 and
$40,000 in 1997 and 1998.
H Represents contributions to the Corporation's 401(k)
deferred compensation plan.
I Represents $3,000 in 1997 in contributions to the
Corporation's 401(k) deferred compensation plan and
$132,110 for reimbursement of expenses associated with Mr.
Jaeggi's relocation to the Long Island area
-21-
J Represents (i) $4,750 in 1996 and 1997 in contributions to
the Corporation's 401(k) deferred compensation plan, (ii)
$22,540 in 1997 in retroactive tax adjustments in
connection with Mr. Feldt's relocation to the Long Island
area, and (iii) $192,838 in 1996 for reimbursement of
expenses associated with Mr. Feldt's relocation to the Long
Island area.
In 1995, Dr. Swartz and the Corporation entered into an
employment agreement which terminates on June 30, 2000, pursuant
to which Dr. Swartz will receive an annual base salary of
$873,400 through June 30, 1999. His base salary will be
reviewed in July 1999. Dr. Swartz also participates in the
Corporation's Executive Bonus Plan. The target amount of his
bonus is 100% of his base salary. In addition, if his
employment with the Corporation is terminated for any reason
(other than due to his death or disability or for cause or his
voluntary resignation), Dr. Swartz will receive payments equal
to one year's annual base salary and bonus during the last
completed fiscal year immediately preceding any such
termination.
In 1995, Mr. Razmilovic and the Corporation entered into an
employment agreement which terminates on December 31, 2000,
pursuant to which Mr. Razmilovic will receive an annual base
salary of $605,000 through June 30, 1999, subject to annual
renegotiation thereafter. Mr. Razmilovic also participates in
the Corporation's Executive Bonus Plan. In 1999, the target
amount of his bonus is 100% of his base salary. In addition, if
his employment with the Corporation is terminated for any reason
(other than due to his death or disability or for cause or his
voluntary resignation), Mr. Razmilovic will receive payments
equal to one year's annual base salary and bonus during the last
completed fiscal year immediately preceding any such
termination.
In 1995, Mr. Goldner and the Corporation entered into an
employment agreement which terminates on October 31, 2000,
pursuant to which Mr. Goldner will receive an annual base salary
of $378,000 for the year ending December 31, 1999, subject to
annual renegotiation thereafter. Mr. Goldner also participates
in the Corporation's Executive Bonus Plan. In 1999, the target
amount of his bonus is 50% of his base salary. In addition, if
his employment with the Corporation is terminated for any reason
(other than due to his death or disability or for cause or his
-22-
voluntary resignation), Mr. Goldner will receive payments equal
to one year's annual base salary and bonus during the last
completed fiscal year immediately preceding any such
termination.
Mr. Martino and the Corporation have entered into an
employment agreement which terminates on December 31, 2000
pursuant to which he is employed on a part-time and consulting
basis, assisting the Chairman of the Board and President. His
salary during this period is $150,000 per annum. In February
1998, Mr. Martino was awarded options pursuant to the 1997
Employee Stock Option Plan to purchase 15,000 shares of the
Corporation's Common Stock at an exercise price of $29.25 per
share (the fair market value of the Corporation's Common Stock
on the date the option was granted). 6,000 of these options
will vest on January 1, 2000, 4,500 will vest on January 1, 2001
and 4,500 will vest on January 1, 2002.
Dr. Heiman and the Corporation have entered into an
employment agreement which commenced on January 1, 1999 and
terminates on December 31, 2009 pursuant to which he is employed
on a part-time and consulting basis, assisting the Chairman of
Board and President. His salary during this period is $150,000
per annum.
Directors who are not employees of the Corporation receive
an annual retainer of $12,500, payable in quarterly installments
as well as a fee of $2,500 for each Board of Directors meeting
attended or each meeting of a committee which is not held in
conjunction with a Board of Directors meeting. The Chairman of
the Audit Committee and the Compensation/Stock Option Committee
also each receive an annual retainer of $5,000 payable in
quarterly installments. Directors who are employees receive no
additional compensation for serving as directors or for
attending Board or committee meetings. The Corporation
reimburses Directors for expenses incurred in connection with
attending meetings of the Board of Directors or committees of
the Board.
Directors who are not employees of the Corporation
participate in the Corporation's 1994 Directors' Stock Option
Plan (the "1994 Plan"). Pursuant to the 1994 Plan, when a
person is initially elected to the Board of Directors, he is
awarded an option to purchase 10,000 shares. Moreover,
commencing in 1994, every person who has been a Director for
more than 11 months is, upon re-election at the annual meeting
of shareholders, granted an option to purchase 2,500 shares of
the Corporation's Common Stock. Each option has a term of ten
-23-
years, becomes exercisable in two equal annual installments
beginning on the first anniversary of the date of grant and has
an exercise price equal to 100% of the fair market value of
shares of the Corporation's Common Stock on the date of grant.
Pursuant to the 1994 Plan, in 1998 Messrs. Mallement, Steinberg,
Freiberg, Bugliarello and Wang each received options to purchase
2,500 shares. If re-elected at the 1999 Annual Meeting, Messrs.
Mallement, Steinberg, Freiberg, Bugliarello and Wang will each
be awarded an option to purchase an additional 2,500 shares.
In addition, in January 1998 Messrs. Mallement, Steinberg,
Freiberg, Bugliarello and Wang were awarded warrants to purchase
15,000 shares of Common Stock at an exercise price of $24.88 per
share (the fair market value of the Corporation's Common Stock
on the date the warrants were granted). The warrants have a
term of ten years and become exercisable in four equal annual
installments beginning on January 1, 1999.
Option Grants
Currently, the Corporation maintains two stock option
plans, the 1990 Non-Executive Stock Option Plan (the "1990
Plan") and the 1997 Employee Stock Option Plan (the "1997 Plan")
pursuant to which options may be granted to employees of the
Corporation. The 1990 Plan and the 1997 Plan authorize the
Compensation/Stock Option Committee of the Board of Directors to
grant options, from time to time, to key employees of the
Corporation and of its subsidiaries (and in the case of the 1997
Plan, key officers, including those who are executive officers
of the Corporation). Under the 1997 Plan, no individual may be
awarded options to purchase more than 1% of the outstanding
shares of Common Stock in any calendar year. Certain of the
options, by their terms, as determined by the Committee at the
time of grant, may be qualified under the Internal Revenue Code
of 1986 (the "Code") as Incentive Stock Options ("ISO's") and
certain of the options may be non-qualified options. No option
granted under the 1990 Plan or the 1997 Plan is exercisable for
a period exceeding ten years. No ISO granted under the 1997
Plan to owners of 10% or more of the Common Stock of the
Corporation is exercisable for a period exceeding five years.
The exercise price of an option under the Plans must be at least
100% of the fair market value of the underlying Common Stock on
the date of grant.
ISO's must comply with certain provisions of the Code
relating to, among other matters, the maximum amount that can be
vested by an optionee in any one calendar year and the minimum
exercise price of an ISO. The 1990 Plan terminates on April 30,
2000 and the 1997 Plan terminates on February 9, 2007
</FN>
</TABLE>
-24-
<TABLE>
The following table shows, as to each individual named in the Summary Compensation Table,
certain information with respect to stock options granted to such individuals under all stock option
plans administered by the Corporation:
<CAPTION>
Potential Realizable Value as Assumed Annual
Individual Grants in 1998 Rates of Stock Price Appreciation for Option Term(A)
Number of %of Total
Securities Options
Underlying Granted to Exercise 5% 10%
Options Employees in or Base Expiration Stock Dollar Stock Dollar
Name Granted (No.)(B) Fiscal Year(E) Price(F) Date Price(G) Gain Price(G) Gain
<S> <C> <C> <C> <C> <C> <C> <C> <C>
All
Shareholders ---- ---- ---- ---- $52.18 $1,183,820,865 $ 83.08 $2,999,388,897
Jerome Swartz 375,000(C) 16.40 $24.88 1/4/08 $40.52 $ 5,866,408 $ 64.52 $ 14,866,629
205,000(D) 8.96 $45.56 10/18/08 $74.22 $ 5,874,072 $118.18 $ 14,886,053
CEO's Gain as
% of All
Shareholders
Gain .992% .992%
Tomo Razmilovic 225,000(C) 9.84 $24.88 1/04/08 $40.52 $ 3,519,845 $ 64.52 $ 8,919,977
100,000(D) 4.37 $45.56 10/18/08 $74.22 $ 2,865,401 $118.18 $ 7,261,489
Leonard H. Goldner 37,500(C) 1.64 $24.88 1/04/08 $40.52 $ 586,641 $ 64.52 $ 1,486,663
Kenneth V. Jaeggi 22,500(C) .98 $24.88 1/04/08 $40.52 $ 351,984 $ 64.52 $ 891,998
Richard M Feldt 30,000(C) 1.31 $24.88 1/04/08 $40.52 $ 469,313 $ 64.52 $ 1,189,330
</TABLE>
-25-
A Total dollar gains based on the assumed annual rates of
appreciation of exercise price of each option. The gain derived
by all shareholders is based on the outstanding number of shares
at December 31, 1998. The actual value, if any, an executive will
realize will depend on the excess of the market price on the date
the option is actually exercised. There can be no assurance that
the value actually realized by an executive or any shareholder
will be at or near the values estimated in this table.
B If a change in control of the Corporation were to occur, all of
the then unvested portion of each option would become immediately
exercisable.
C All options vested on an accelerated basis on December 14, 1998,
pursuant to the terms thereof.
D 40% vest on October 19, 2000, 30% vest on each of October 19, 2001
and October 19, 2002.
E Based on 2,287,100 options granted to all employees in 1998.
F 100% of the closing price of the Corporation's Common Stock on the
date of grant.
G The stock price represents the price of the Corporation's Common
Stock if the assumed annual rates of stock price appreciation are
achieved over the term of the options. In the case of all
shareholders, the weighted average share price of the options
awarded to Dr. Swartz was used.
-26-
Option Exercises and Fiscal Year-End Values
<TABLE>
Shown below is information with respect to the unexercised options to purchase the
Corporation's Common Stock as of December 31, 1998 and the value realized upon the
exercise in 1998 of any option by the individuals named in the Summary Compensation
Table.
<CAPTION>
Number of Number of Securities Underlying Value of Unexercised
Shares Unexercised Options In-The-Money Options
Acquired on Value Held at December 31, 1998 Held at December 31, 1998(A)
Name Exercise in 1998 Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Jerome Swartz(B) 0 $ 0 1,961,250 1,139,875 $98,936,175 $45,498,055
Tomo Razmilovic 196,159 $4,954,429 464,665 547,188 $20,165,041 $21,467,637
Leonard H. Goldner(C) 0 $ 0 220,200 131,625 $11,697,402 $ 5,649,399
Kenneth V. Jaeggi 0 $ 0 22,500 150,000 $ 878,906 $ 6,290,625
Richard M. Feldt 92,656 $2,981,716 55,469 129,375 $ 2,406,943 $ 5,727,537
<FN>
A Based on the closing price of the Corporation's Common Stock on the New York Stock
Exchange on that date of $63.94.
B Includes options to purchase 692,500 shares held by trusts for the benefit of his
children. 187,500 of these options are exercisable and 505,000 are unexercisable. The
value of these exercisable options was $7,324,219 and the value of these unexercisable
options was $18,822,188. Dr. Swartz disclaims beneficial ownership of the options
held by these trusts.
C Includes options to purchase 75,000 shares held by a trust for the benefit of his wife
and children and for which his wife is co-trustee. 18,750 of these options are
exercisable and 56,250 are unexercisable. The value of these exercisable options was
$732,422 and the value of these unexercisable options was $2,358,984. Mr. Goldner
disclaims beneficial ownership of the shares owned by this trust.
</FN>
</TABLE>
-27-
Employees of the Corporation and certain of its
subsidiaries are eligible to participate in a 401(k) deferred
compensation plan after 90 days of service. A participant may
elect to make pre-tax contributions, subject to certain
limitations, with a maximum contribution of $10,000 in 1999 and
1998. The first 6% contributed by each participant during each
pay period is eligible for a matching 50% contribution by the
Corporation. There is immediate vesting of the individual's
contribution and 100% vesting of the Corporation's contribution
after one year of service. Amounts accumulated under this plan
are normally paid to a participant on retirement or termination
of employment and depend, among other factors, on the amounts
contributed by the participant, the manner in which
contributions have been invested, and the amount of any prior
withdrawal.
The Corporation maintains an Executive Retirement Plan (the
"Retirement Plan"), which is a non-qualified deferred
compensation arrangement for a select group of senior management
employees of the Corporation. Participants are selected by the
Compensation/Stock Option Committee of the Board of Directors.
Under the Retirement Plan, the maximum benefit payable to a
participant is the participant's average compensation (base
salary plus bonus) for the three year period ending on the date
the participant ceases to be a full time employee of the
Corporation multiplied by five (the "Benefit Ceiling Amount").
After five successive years of participation in the Retirement
Plan, a participant is entitled to 50% of the Benefit Ceiling
Amount. After each additional year of participation in the
Retirement Plan up to five additional years of participation, a
participant is entitled to an additional 10% of the Benefit
Ceiling Amount. Benefits are normally payable in equal monthly
installments over a ten year period after retirement, beginning
after the participant attains age 65 (or age 62 with 20 years or
more of credited service). However, upon death or disability,
payment is accelerated and made in a lump sum but the amount is
reduced to the then present value of the benefit payments which
would have been made under the normal mode of payment. Messrs.
Swartz, Razmilovic, Goldner, Jaeggi and Feldt are participants
in the Retirement Plan.
The following table illustrates the estimated annual
retirement benefits payable under the Retirement Plan to a
participant at specified average compensation levels and years
of service. There is no offset in benefits under the Retirement
Plan for Social Security benefits. However, benefits payable
under the Retirement Plan will be reduced by the value of any
retirement income of the participant attributable to
contributions by the Corporation to any qualified pension plan
adopted by the Corporation (excluding the Corporation's current
401(k) deferred compensation plan)
-28-
PENSION PLAN TABLE
3 Years Average Years of Service
Annual Compensation 5 10
$ 400,000 $100,000 $ 200,000
800,000 200,000 400,000
1,200,000 300,000 600,000
1,600,000 400,000 800,000
2,000,000 500,000 1,000,000
As of January 1, 1999, Messrs. Swartz, Razmilovic, Goldner,
Jaeggi and Feldt had 20, 6, 8, 1 and 3 years, respectively, of
credited service. Mr. Razmilovic became a participant in the
Corporation's Executive Retirement Plan in October 1995. He
will not receive credit under the Plan for his prior service to
the Corporation but in lieu thereof, he will receive, for the
first five years of participation in the Plan, two years of
credited service for each year of employment after October 1995.
Shareowner Return Performance Presentation
Set forth below is a graph comparing the yearly percentage
change in the cumulative total shareowner return on the
Corporation's Common Stock against the cumulative total return
of the S&P Composite-500 Stock Index and the S&P Technology
Sector Index for the period of five years commencing January 1,
1994 and ending December 31, 1998, assuming in each case a fixed
investment of $100 at the respective closing prices on December
31, 1993 and reinvestment on a quarterly basis of all dividends.
-29-
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SYMBOL TECHNOLOGIES, INC. THE S&P INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX
Cumulative Total Return
12/93 12/94 12/95 12/96 12/97 12/98
Symbol Technologies, Inc. 100 170 218 244 313 795
S&P 500 100 101 139 171 229 294
S&P Technology Sector 100 117 168 238 300 519
* $100 INVESTED ON 12/31/93 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-30-
PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
On February 18, 1998 the Board of Directors approved,
subject to approval by the shareholders at the Annual Meeting,
an increase in the number of shares of authorized Common Stock
from 100,000,000 to 300,000,000 shares. This increase would be
accomplished by adopting an amendment (the "Amendment") to the
Certificate of Incorporation of the Corporation. As of February
1, 1999, 58,926,958 shares of Common Stock were issued and
outstanding and 7,714,185 shares were issued and held by the
Corporation as treasury shares. In addition, 12,074,568 shares
are reserved for issuance under the Corporation's various
existing warrant agreements and stock option plans so that as of
such date there were only 21,284,289 shares (in addition to the
shares held as treasury shares) available for issuance. The
Amendment would increase the number of authorized, unissued and
unreserved shares of Common Stock by an additional 200,000,000
shares. The text of the Amendment is set forth in Annex A to
this Proxy Statement.
The Board of Directors believes that it is in the best
interest of the Corporation and its shareholders that there be a
sufficient reserve of authorized but uncommitted shares of
Common Stock, so it can rapidly take advantage of opportunities
that become available, including acquisitions, financings and
stock dividends or splits, among others.
The Corporation currently has no agreements or arrangements
for the issuance of shares of Common Stock other than the
issuance of shares of Common Stock pursuant to warrant
agreements or stock option plans. Authorized shares of Common
Stock in excess of those shares outstanding (including, if
authorized the additional shares of Common Stock provided in the
Amendment) will remain available for general purposes, such as
acquisitions, equity financings, stock splits, stock dividends,
management incentive and stock option plans. Such issuances may
not require shareholders approval. Under certain circumstances,
the Board of Directors could create impediments to, or frustrate
persons seeking to effect, a takeover or transfer of control of
the Corporation by causing such shares to be issued to a holder
or holders who might side with the Board of Directors in
opposing a takeover bid that the Board of Directors determines
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is not in the best interest of the Corporation and its
shareholders. As of this date, the Board of Directors is
unaware of any specific effort to accumulate the Corporation's
shares or to obtain control of the Corporation by means of a
merger, tender offer, solicitation in opposition to management
or otherwise.
If approved by the shareholders at the Annual Meeting, the
increase in the number of shares of Common Stock would become
effective upon the filing of the Amendment with the Secretary of
State in the State of Delaware which filing should take place
shortly after the Annual Meeting.
The affirmative vote of the holders of a majority of the
outstanding shares of the Corporation's Common Stock present or
represented and entitled to vote at the meeting will be required
for the approval of this proposal. The Board of Directors
recommends that you vote FOR the proposal to approve the
foregoing amendment to the Corporation's Certificate of
Incorporation.
PROPOSAL TO AMEND THE
1997 EMPLOYEE STOCK OPTION PLAN
The Board of Directors, subject to shareholder approval,
has amended 1997 Plan to increase the authorized number of
shares that may be issued under the 1997 Plan by an additional
1,687,500 shares to a total of 4,500,000 shares. As of March 1,
1999, options to purchase 0 shares had been exercised and there
were outstanding options to purchase 2,694,988 shares so that as
of such date there were only 117,512 shares available for grant
under the 1997 Plan. The number of shares covered by the
outstanding options does not include additional options to
purchase an aggregate of 235,000 shares which were issued
subject to approval by the shareholders of the foregoing
amendment to the 1997 Plan including options to purchase
110,000, 72,000, 25,000, 18,000, and 15,000 awarded to Messrs.
Swartz, Razmilovic, Goldner, Jaeggi and Feldt respectively). The
exercise price of such options will be the closing price of the
Corporation's Common Stock on the date shareholder approval of
the amendment to the 1997 Plan has been obtained. If the
foregoing amendment is not approved by shareholders, all such
options will be canceled.
The Board of Directors believes that, as a result of the
Corporation's anticipated continued growth, it will be necessary
to hire additional management personnel. In view of these
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personnel needs, and in light of the present level of
remuneration paid to management (see "Management Remuneration
and Transactions") and the present level of management's equity
in the Corporation (see "Security Ownership of Management), the
Board of Directors is of the opinion that it is appropriate that
stock options continue to be a major component of the
Corporation's management remuneration package and that
accordingly, the number of shares of the Corporation's Common
Stock available for the grant of stock options to key employees
and officers under the 1997 Plan should be increased by an
additional 1,687,500 shares of Common Stock to a total of
4,500,000. Accordingly, on February 18, 1999 the Board of
Directors, subject to shareholder approval, amended the 1997
Plan to provide that the aggregate number of shares that have
been purchased and that may henceforth be purchased pursuant to
the exercise of options under the 1997 Plan shall not exceed
4,500,000 shares.
Options under the 1997 Plan may be granted to officers and
key employees of the Corporation selected by the
Compensation/Stock Option Committee of the Board. Shares of
Common Stock issued upon the exercise of options under the 1997
Plan may be reserved or made available from the Corporation's
authorized and unissued shares or from shares reacquired and
held in the Corporation's treasury. A more complete summary of
the material terms of the 1997 Plan, as amended, is set forth in
Annex B to this Proxy Statement.
The closing sale price of the Corporation's Common Stock as
quoted on the New York Stock Exchange on March 15, 1999 was
$46.00 per share.
The affirmative vote of the holders of a majority of the
outstanding shares of the Corporation's Common Stock present or
represented and entitled to vote at the meeting will be required
for the approval of this proposal. The Board of Directors
recommends that you vote FOR the proposal to approve the
foregoing amendment to the 1997 Plan.
PROPOSAL TO APPROVE THE
ADOPTION OF THE NEW EXECUTIIVE BONUS PLAN
Effective February 18, 1999, subject to shareholder
approval, the Compensation/Stock Option Committee ("the
Committee") adopted and the Board of Directors ratified the
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creation of a new executive bonus plan (the "Executive Bonus
Plan"), substantially similar to and intended to replace the
executive bonus plan approved by the shareholders in 1995.
Under IRS regulations performance based compensation plans
require periodic shareholder approval. As with the previous
plan, the purpose of the proposed Executive Bonus Plan is to tie
the level of annual executive incentive compensation to the
financial performance of the Corporation. All executive
officers of the Corporation will participate in the Executive
Bonus Plan. The Committee has full authority to construe,
interpret and administer the Executive Bonus Plan, as well as to
determine the extent, if any, to which operating performance
standards have been met. The Committee will also have authority
to modify (prior to the beginning of the calendar year for which
the targets will be applicable) the specific targets for the
performance goals under the Executive Bonus Plan.
Under the proposed Executive Bonus Plan, the Committee will
each year, establish corporate financial performance objectives
expressed in terms of earnings per share diluted. For purposes
of the plan, earnings per share shall be calculated without
regard to any changes in accounting standards or principles and
any unusual or infrequent items that in accordance with
Generally Accepted Accounting Principles are disclosed
separately in the Corporation's financial statements because
they are material. Three levels of performance will be
identified: threshold performance, at which the minimum award
will be earned and below which no award will be earned; target
performance, at which the target award will be earned and;
maximum performance, at which the maximum award (twice a
participant's target bonus) will be earned and above which no
additional award will be earned. For 1999, threshold performance
has been established at results equal to 85% of the
Corporation's 1999 Business Plan; target performance has been
established at results equal to 100% of the 1999 Business Plan;
and maximum performance has been established at results equal to
or greater than 115% of the 1999 Business Plan.
Each participant in the Executive Bonus Plan has been
assigned a target bonus representing a percentage of the
participant's base salary. The target bonuses for 1999 for
Messrs. Swartz, Razmilovic, Goldner, Jaeggi, and Feldt are 100%,
100%, 50%, 50% and 50%, respectively, which is consistent with
past practice and in conformity with their individual employment
agreements. The target bonuses for all other participants in the
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proposed Executive Bonus Plan are established by Messrs. Swartz
and Razmilovic based on the individual's performance and
relative level of responsibility. They range from 35% to 45% of
base salary.
Messrs. Swartz and Razmilovic's bonuses will be determined
solely on the basis of corporate financial performance. In the
case of all other participants, 25% of their target bonus will
be based on individual performance during the year with the
remainder being based on corporate financial performance.
In the event the proposed Executive Bonus Plan is not
approved by shareholders, the existing plan will continue and a
new plan will be submitted to shareholders for approval at the
Annual Meeting of Shareholders to be held in 2000.
The Executive Bonus P1an is being submitted for shareholder
approval so that the amounts paid thereunder meet the
requirements under the Internal Revenue Code to be deductible by
the Corporation. Approval by the affirmative vote of the holders
of a majority of the shares of Common Stock of the Corporation
outstanding and entitled to vote is required for adoption of the
Executive Bonus Plan. Accordingly, your Board of Directors
recommends a vote FOR the approval of the adoption of the
Executive Bonus Plan.
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, independent certified public
accountants, were selected by the Board of Directors to audit
the financial statements of the Corporation for the fiscal year
ended December 31, 1998 and the Board of Directors and Audit
Committee have recommended that they be retained to audit the
financial statements of the Corporation for the current fiscal
year. Representatives of Deloitte & Touche LLP are expected to
be present at the Annual Meeting of Shareholders. They will
have an opportunity to make a statement at the meeting if they
so desire and are expected to be available to respond to
appropriate questions raised orally by shareholders. In the
event shareholders do not ratify the appointment of Deloitte &
Touche LLP as the Corporation's independent accountants for the
current year, such appointment will be reconsidered by the Audit
Committee and the Board of Directors. The Board recommends that
you vote FOR the proposal to retain Deloitte & Touche LLP to
audit the financial statements of the Corporation for fiscal
1999.
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OTHER BUSINESS
The Board of Directors of the Corporation knows of no other
matters that may be presented at the Annual Meeting. However,
if any other matters properly come before the meeting or any
adjournment thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment
of the persons named therein.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the
next annual meeting of the Corporation's shareholders must be
received by the Corporation for inclusion in the Corporation's
Proxy Statement on or prior to December 1, 1999.
Under the By-laws of the Corporation notice of proposals of
shareholders intended to be presented in person at the next
annual meeting of the Corporation's shareholders must be
received by the Corporation in writing on or prior to December
31, 1999. The Chairman of the meeting may refuse to allow the
transaction of any business not presented in accordance with the
foregoing.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report to Shareholders of the Corporation for
the year ended December 31, 1998 is being furnished
simultaneously herewith. Such report and the financial
statements included therein are not to be considered a part of
this Proxy Statement
THE CORPORATION WILL MAKE AVAILABLE AT NO COST, UPON THE
WRITTEN REQUEST OF A SHAREHOLDER, A COPY OF THE CORPORATION'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1998 (WITHOUT EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. COPIES OF EXHIBITS TO THE CORPORATION'S
FORM 10-K WILL BE MADE AVAILABLE, UPON WRITTEN REQUEST OF A
SHAREHOLDER AND THE PAYMENT TO THE CORPORATION OF THE REASONABLE
COSTS OF REPRODUCTION AND MAILING. REQUESTS SHOULD BE DIRECTED
TO SYMBOL TECHNOLOGIES, INC., ONE SYMBOL PLAZA, HOLTSVILLE, NEW
YORK, 11742-1300, ATTENTION: TREASURER
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SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying
form has been or will be borne by the Corporation. In addition
to solicitation by mail, arrangements may be made with brokerage
houses and other custodians, nominees and fiduciaries to send
proxies and proxy material to their principals, and the
Corporation may reimburse them for any attendant expenses.
It is important that your shares be represented at the
meeting. If you are unable to be present in person, you are
respectfully requested to sign the enclosed Proxy and return it
in the enclosed stamped and addressed envelope or provide your
instructions by telephone or via the Internet as promptly as
possible.
By Order of the Board of
Directors
Leonard H. Goldner
Secretary
Dated: March 16, 1999
Holtsville, New York
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ANNEX A
TEXT OF PROPOSED AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The section (a) of Article FOUR of the Corporation's
Certificate of Incorporation is proposed to be amended.
Sections (b) and (c) of Article FOUR, relating to the
Corporation's authorized Preferred Stock will remain unchanged.
If the proposed amendment is approved by shareholders, Section
(a) of Article FOUR will be as follows:
"FOURTH. The total number of shares of stock which the
Corporation shall have the authority to issue is three hundred
and ten million (310,000,000), consisting of three hundred
million (300,000,000) shares of common stock, par value $.01 per
share (the "Common Stock") and ten million (10,000,000) shares
of preferred stock, par value $1.00 per share (the "Preferred
Stock").
-38-
ANNEX B
Terms of the 1997 Plan
Under the 1997 Plan, as amended subject to shareholder
approval, options to purchase 4,500,000 shares may be issued.
The 1997 Plan is administered by a committee consisting of at
least two "disinterested" directors within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, (the
"Committee") selected by the Board of Directors. The Board has
designated the Committee, consisting of Messrs. Freiberg and
Steinberg, to administer the 1997 Plan. Within the applicable
limits of the 1997 Plan, the Committee shall have full authority
to select from among eligible individuals those to whom options
shall be granted under the 1997 Plan, the number of shares
subject to each option and the price, terms and conditions of
any options to be granted thereunder. The Board of Directors
shall have full authority to amend the 1997 Plan, provided,
however, that any amendment which (i) increases the number of
shares which may be the subject of stock options granted under
the 1997 Plan, (ii) expands the class of individuals eligible
to receive options under the 1997 Plan, (iii) increases the
period during which options may be granted or the permissible
term of options under the 1997 Plan, or (iv) decreases the
minimum exercise price of such options, shall only be adopted by
the Board of Directors subject to shareholder approval. No
amendment to the 1997 Plan shall, without the consent of the
holder of an existing option, materially and adversely affect
his rights under such option.
Officers and key employees of the Corporation and
directors, officers and key employees of its subsidiaries
(including any partnership of which the Corporation or any
subsidiary of the Corporation is a general partner) are eligible
to receive options under the 1997 Plan. The exercise price of
any option must be no less than 100% (or, in the case of an
incentive stock option granted to a 10% shareholder, 110%) of
the fair market value of the shares purchasable thereunder on
the date of grant.
Payment for shares purchased upon the exercise of options
may be made (i) in cash or certified check, (ii) by transfer to
the Corporation of a number of shares of the Corporation's
Common Stock whose aggregate market value is equal to the
aggregate option price, (iii) by delivering to the Corporation
(a) irrevocable instructions to deliver the stock certificates
representing the shares for which the option is being exercised
directly to a broker, and (b) instructions to the broker to sell
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such shares and promptly deliver to the Corporation the portion
of sale proceeds equal to the aggregate option exercise price,
or (iv) a combination of these methods of payment.
No option may be exercisable for more than ten years from
the date of grant; an incentive stock option granted to a 10%
shareholder may not be exercisable for more than five years from
the date of grant. Moreover, to qualify as incentive stock
options, the aggregate fair market value, determined as of the
date of grant, of the shares which may first become exercisable
by any individual in any calendar year, under the 1997 Plan and
under any other plans of the Corporation and its subsidiaries
pursuant to which incentive stock options may be granted, may
not exceed $100,000. The maximum number of shares purchasable
under any option or options granted pursuant to the 1997 Plan to
any individual in any calendar year may not exceed one percent
of the then issued and outstanding shares of Common Stock of the
Corporation.
Under the 1997 Plan, both incentive and non-incentive stock
options may be granted. For federal income tax purposes, a
holder of an option designated as not qualifying as an incentive
stock option will generally realize taxable income upon the
exercise of an option, and at that time the Corporation will
then be allowed a deduction from its income equal to the excess
of (a) the market value, at the time of such exercise, of the
shares acquired pursuant to such exercise over (b) the aggregate
option exercise price for such shares. Generally, no
realization of taxable income to the optionee will result from
the exercise of an incentive stock option and the Corporation
will not receive any deduction in connection with such exercise.
Although the gain upon exercise may subject the holder to
taxation under the alternate minimum tax. At the time of the
sale of the shares acquired upon the exercise of an incentive
stock option the optionee will then realize taxable income equal
to the sale price less the exercise price.
Options may generally not be transferred except to the
extent that options may be exercised by an executor or
administrator provided, however, with the prior approval of the
Committee, options granted under the 1997 Plan may be
transferred to an optionee's spouse, children, grandchildren or
a trust or partnership established for the benefit of such
persons. Subsequent transfers of such transferred options are
prohibited. Under the 1997 Plan, options lapse if the optionee
ceases to be an employee of the Corporation or its subsidiaries.
However, if the cessation of employment is due to retirement,
disability or death of the optionee, options may be exercised
-40-
within three months of the holder's retirement or within one
year of the holder's death or disability, provided, however,
that no option may be exercisable after its normal expiration
date.
The 1997 Plan terminates on February 9, 2007. The 1997
Plan may be altered, suspended or discontinued at any time by
the Board of Directors, provided that no such action may,
without the consent of an optionee, materially and adversely
affect his rights under any outstanding options. Options are
subject to adjustment to protect against dilution in certain
events, including the recapitalization or reorganization of the
Corporation, its merger into or consolidation with another
corporation, stock splits and stock dividends.
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