VICON INDUSTRIES, INC.
89 Arkay Drive
Hauppauge, NY 11788
(516) 293-2200
Notice of Annual Meeting of Shareholders
To Be Held on April 24, 1997
To the Shareholders of Vicon Industries, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of Vicon
Industries, Inc. (the "Company"), a New York corporation, will be held at the
Company's new corporate headquarters located at 89 Arkay Drive, Hauppauge, New
York 11788, on April 24, 1997 at 10:00 a.m. local time for the following
purposes, all of which are more completely described in the accompanying proxy
statement:
1. To elect three directors for terms expiring in 2000; and
2. To approve the 1996 Incentive Stock Option Plan covering 200,000
shares of Common Stock; and
3. To approve the 1996 Non-Qualified Stock Option Plan for Outside
Directors covering 50,000 shares of Common Stock; and
4. To ratify the selection of KPMG Peat Marwick, independent certified
public accountants, as auditors for the Company for the fiscal year
ending September 30, 1997; and
5. To receive the reports of officers and to transact such business as
may properly come before the meeting.
Shareholders entitled to notice of and to vote at the Annual Meeting are
shareholders of record at the close of business on February 28, 1997 fixed by
action of the Board of Directors.
The Company's proxy statement is submitted herewith. The Annual Report to
Shareholders for the year ended September 30, 1996 is included with the proxy
statement.
By Order of the Board of Directors,
Melville, New York Arthur D. Roche
March 3, 1997 Secretary
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so that your shares
may be voted in accordance with your wishes and in order that the presence of a
quorum may be assured. The prompt return of your signed proxy, regardless of the
number of shares you hold, will aid the Company in reducing the expense of
additional proxy solicitation. The giving of such proxy does not affect your
right to vote in person in the event you attend the meeting.
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VICON INDUSTRIES, INC.
89 Arkay Drive
Hauppauge, New York 11788
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the Annual Meeting of Shareholders to
be held on April 24, 1997 at 10:00 a.m., and any and all adjournments thereof,
is solicited on behalf of the Board of Directors of Vicon Industries, Inc. (the
"Company").
Any shareholder executing a proxy retains the right to revoke it by notice
in writing to the Secretary of the Company at any time prior to its use. The
cost of soliciting the proxy will be borne by the Company.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of electing three
directors of the class whose term of office expires in 2000; approving the 1996
Incentive Stock Option Plan; approving the 1996 Non-Qualified Stock Option Plan
for Outside Directors; ratifying the selection of auditors; receiving the
reports of officers; and transacting such other business as may properly come
before the meeting.
The two persons named in the enclosed proxy have been selected by the
Board of Directors and will vote shares represented by valid proxies. They have
indicated that, unless otherwise specified in the proxy, they intend to vote FOR
the election of three directors whose term of office expires in 2000; FOR the
approval of the 1996 Incentive Stock Option Plan; FOR the approval of the 1996
Non-Qualified Plan for Outside Directors; and FOR ratification of the selection
of auditors.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received at the Company's principal executive
office no later than November 1, 1997, and must comply with all other legal
requirements in order to be included in the Company's proxy statement and form
of proxy for that meeting. Proposals of security holders not meeting the
requirements of Rule 14a-8 of Regulation 14A must comply with the requirements
set forth in the Company's Bylaws relating to business conducted at the Annual
Meeting of Shareholders.
This proxy statement and the enclosed proxy card are being furnished to
shareholders on or about March 7, 1997.
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VOTING SECURITIES
The Company has one class of capital stock, consisting of common stock,
par value $.01 per share, of which each outstanding share entitles its holder to
one vote. Cumulative voting is not provided under the Company's Certificate of
Incorporation or Bylaws. Shareholders entitled to vote or to execute proxies are
shareholders of record at the close of business on February 28, 1997. As of
February 28, 1997, there were 2,802,728 shares outstanding.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. In the event that there are not sufficient votes
for a quorum or to approve any proposal at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit the further solicitation of
proxies.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a shareholder to vote for the election of the
nominees proposed by the Board, or to withhold authority to vote for one or more
of the nominees being proposed. Under New York law and the Company's Certificate
of Incorporation and Bylaws, directors are elected by a plurality of shares
voted, without regard to either (i) broker non-votes, or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the matters being proposed for shareholder action as set forth in
Proposals 2 and 3, the proxy card being provided by the Board of Directors
enables a shareholder to check the appropriate box on the proxy card to: (i)
vote "FOR" for the plan; (ii) vote "AGAINST" the plan; or (iii) vote to
"ABSTAIN" from voting such plan. An affirmative vote of holders of a majority of
the Common Stock entitled to vote thereon is required to constitute shareholder
approval. Shares as to which the "ABSTAIN" box has been selected on the proxy
card, or for which there has been a broker non-vote, will have the effect of a
vote against the matter for which the "ABSTAIN" box has been selected.
Concerning the ratification of independent auditors and all other matters
that may properly come before the Annual Meeting, by checking the appropriate
box, a shareholder may (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or
(iii) "ABSTAIN" with respect to the item. Under the Company's Certificate of
Incorporation and Bylaws, unless otherwise required by law, the ratification of
independent auditors and all other matters shall be determined by a majority of
the votes cast affirmatively or negatively, without regard to broker non-votes
or proxies marked "ABSTAIN" as to the matter.
Proxies solicited hereby will be returned to the Board, and will be
tabulated by inspectors of election designated by the Board, who will not be
employed, or a director of, the Company or any of its affiliates.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to each person, known to the
Company to be a "beneficial owner" (as defined in regulations of the Securities
and Exchange Commission) of more than five percent of the Company's Common Stock
as of January 31, 1997, except for Mr. Chu Chun and the shares beneficially
owned by the Company's Directors, Chief Executive Officer, highly compensated
executive officers, and all Directors and all officers as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned (1) of Class
- ------------------- ---------------------- --------
Chugai Boyeki (America) Corp.
55 Mall Drive
Commack, NY 11725
and
Chugai Boyeki Company, Ltd.
2-15-13 Tsukishima
Chuo-ku
Tokyo, Japan 104 548,715 17.6%
Chu S. Chun
C/O I.I.I Companies, Inc.
915 Hartford Turnpike
Shrewsbury, MA 01545 300,557 (6) 9.7%
Hanshin Securities Co., Ltd.
34-7 Yoido-Dong
Youngdungpo-Gu
Seoul 150-010, Korea 143,000 4.6%
- -------------------------------------------------------------------
C/O Vicon Industries, Inc.
Michael D. Katz 271,400 (2) 8.7%
Kenneth M. Darby 225,239 (3) 7.2%
Donald N. Horn 124,300 (2) 4.0%
Arthur D. Roche 103,967 (4) 3.3%
Arthur V. Wallace 61,695 2.0%
Kazuyoshi Sudo 14,000 (2) .5%
Milton F. Gidge 7,000 (2) .2%
Peter F. Barry 5,600 (2) .2%
Peter F. Neumann 3,000 .1%
W. Gregory Robertson -- --
Total all officers and
directors as a group
(14 persons) 885,251 (5) 28.5%
(1) The nature of beneficial ownership of all shares is sole voting and
investment power.
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(2) Includes currently exercisable options to purchase 5,000 shares.
(3) Includes currently exercisable options to purchase 136,032 shares.
(4) Includes currently exercisable options to purchase 65,000 shares.
(5) Includes currently exercisable options to purchase 293,832 shares.
(6) Mr. Chun has shared voting and dispositive power over 300,557
shares but disclaims beneficial ownership as to all but 48,400
shares. 196,757 shares are owned by International Industries
Inc. Profit Sharing Plan and 55,400 by immediate family members.
(7) The above excludes options granted under the 1996 Stock Option Incentive
Plan, which is subject to shareholder approval, as follows:
Kenneth M. Darby 38,000
Arthur D. Roche 25,000
Other Officers 15,000
78,000
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PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors is composed of ten directors who are elected for
staggered terms of three years each. Directors serve until their successors are
elected and qualified. No person being nominated as a director is being proposed
for election pursuant to any agreement or understanding between any person and
Vicon Industries, Inc.
The three nominees proposed for election to a term expiring in 2000 at the
Annual Meeting are Messrs. Kenneth M. Darby, Peter F. Neumann, and Kazuyoshi
Sudo. In the event that any such nominee is unable or declines to serve for any
reason, it is intended that proxies will be voted for the election of the
balance of those nominees named and for such other persons as shall be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve.
Unless authority to vote for the nominees is withheld, it is intended that
the shares represented by the enclosed proxy will be voted FOR the three
nominees named in the Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF ALL NOMINEES NAMED IN THIS PROXY STATEMENT
Information with Respect to Nominees and Continuing Directors
The following sets forth the names of nominees and continuing directors,
their ages, a brief description of their recent business experience, including
present occupations and employment, certain directorships held by each and the
year in which each became a director of the Company.
Nominees and Their Director
Principal Occupations Since Age
Kenneth M. Darby
President
Vicon Industries, Inc. 1987 51
Peter F. Neumann
President, Flynn-Neumann
Agency, Inc. 1987 62
Kazuyoshi Sudo
Sr. Executive Vice President
Chugai Boyeki (America) Corp. 1987 54
Continuing Directors whose Term of Office Expires in 1998
Milton F. Gidge
Retired Chairman, Credit Policy
Lincoln Savings Bank 1987 67
Michael D. Katz, M.D.
President
Katz, Rosenthal, Ganz, & Snyder
M.D.P.C. 1993 58
W. Gregory Robertson
President
TM Capital Corp. 1991 52
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Arthur V. Wallace
Vice President
Pro/Four Video Products, Inc.
Retired Executive Vice President
Vicon Industries, Inc. 1974 71
Continuing Directors whose Term of Office Expires in 1999
Donald N. Horn
Chairman of the Board
Vicon Industries, Inc.
President
Pro/Four Video Products, Inc. 1967 68
Peter F. Barry
Consultant
Retired Senior Vice President
Grumman Corporation 1984 67
Arthur D. Roche
Executive Vice President
Vicon Industries, Inc. 1992 58
Mr. Darby has served as Chief Executive Officer since April, 1992 and as
President since October, 1991. Mr. Darby also served as Chief Operating Officer
and as Executive Vice President, Vice President, Finance and Treasurer of the
Company. He first joined the Company in 1978 as Controller after more than nine
years at KPMG Peat Marwick, a major public accounting firm.
Mr. Neumann has been President of Flynn-Neumann Agency, Inc., an insurance
brokerage firm, since 1971. He has also served as a director of Reliance Federal
Savings Bank since 1978.
Mr. Sudo is Sr. Executive Vice President and Chief Executive Officer of
Chugai Boyeki (America) Corp., a distributor of electronic, chemical and optical
products, a position he has held since April 1996. Previously he was Treasurer
from 1985.
Mr. Gidge is a retired executive officer of Lincoln Savings Bank for whom
he served from 1976 to 1994 as Chairman, Credit Policy. He has also been a
director since 1980 of Interboro Mutual Indemnity Insurance Co., a general
insurance mutual company, and a Director of Intervest Corporation of New York, a
mortgage banking Company, since 1988.
Mr. Katz is a practicing physician in New York. He is the President of
Katz, Rosenthal, Ganz, & Snyder M.D.P.C. He has served in that capacity since
1970.
Mr. Robertson is President of TM Capital, a financial services company, an
organization he founded in 1989. From 1985 to 1989, he was employed by Thompson
McKinnon Securities Inc., as head of investment banking and public finance.
Mr. Wallace, who joined the Company in 1970, was Executive Vice President
from 1979 until he retired in September, 1990. Mr. Wallace is currently Vice
President of Pro/Four Video Products, Inc., a manufacturer of professional video
products for the broadcast industry.
Mr. D. Horn founded the Company in 1967 and has served as Chairman of the
Board since its inception. He also served as Chief Executive Officer from the
Company's inception until April 1992 and as President to September, 1991. Mr.
Horn retired from the Company on December 31, 1993 and is currently President of
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Pro/Four Video Products, Inc. a manufacturer of professional video products for
the broadcast industry. Mr. Horn is the father of Peter A. Horn, a Vice
President of the Company.
Mr. Barry is a retired executive of Grumman Corp., an aerospace
manufacturer, for whom he served from August 1988 to March 1991 as Senior Vice
President of Washington D.C. operations. Previously, he served since 1974 as
President of Hartman Systems, Inc., a manufacturer of electronic controls and
display devices for military applications.
Mr. Roche joined the Company as Executive Vice President and co-participant
in the Office of the President in August 1993. For the six months earlier, Mr.
Roche provided consulting services to the Company. In October, 1991, Mr. Roche
retired as a partner of Arthur Andersen & Co., an international accounting firm
which he joined in 1960.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors has a number of standing committees including the
executive committee, the compensation committee and the audit committee.
The executive committee consists of Messrs. Horn, Gidge, Darby, and Roche,
of whom Messrs. Gidge and Horn are nonemployee directors. The committee meets in
special situations when the full Board cannot be convened. The committee also
recommends candidates to the Board as nominees for election at the Annual
Meeting. Directors are selected on the basis of recognized achievements and
their ability to bring skills and experience to the deliberations of the Board.
The committee will consider written shareholder recommendations for candidates
at the next Annual Meeting of Shareholders, which are submitted not later than
November 1, 1997 to the Company's principal executive offices and are addressed
to the Chairman of the Board of Directors. The Committee did not meet during the
past year.
The compensation committee, whose present members are Messrs. Neumann,
Robertson and Wallace, held one meeting during the last fiscal year. The
function of the compensation committee is to establish and approve the
appropriate compensation for Mr. Darby, recommend the award of stock options,
and to review the recommendations of the President with respect to the
compensation of all other officers.
The audit committee consists of Messrs. Gidge, Barry, and Sudo, each of
whom are nonemployee directors. The audit committee reviews the internal
financial controls of the Company and the objectivity of its financial
reporting. The committee meets with appropriate financial personnel from the
Company and independent certified public accountants in connection with their
audits. The committee recommends to the Board the appointment of independent
certified public accountants to serve as the Company's auditors, subject to
ratification by the shareholders. The independent certified public accountants
have complete and free access to the committee at any time. The committee met
twice during the last fiscal year.
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business through various reports and documents sent to
them, as well as through operating and financial reports made at Board and
committee meetings by Messrs. Darby and Roche and other officers.
Meetings of the Board of Directors are held generally eight times during
the year in addition to an organizational meeting following the conclusion of
the Annual Meeting of Shareholders. The Board held eleven meetings in the
Company's 1996 fiscal year,
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including all regularly scheduled and annual meetings. No Board member attended
fewer than 75% of the aggregate of (1) the total number of meetings of the Board
(held during the period for which he was a director) and (2) the total number of
meetings held by all committees on which he served (during the periods that he
served).
Directors, except the Chairman of the Board and employee directors, are
each compensated at the rate of $600 per meeting and $300 per committee meeting
attended in person. The Chairman of the Board is compensated at the rate of
$1,000 per Board meeting and $300 per committee meeting attended in person.
Effective January 1, 1997, the directors and Chairman will be compensated at
annual rates of $6,000 and $10,000 respectively. Committee fees will be $500 per
meeting attended in person.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Chugai Boyeki Company, Ltd. (Chugai), a Japanese
Corporation, which owns 19.6% of the outstanding shares of the Company, have
been conducting business with each other for approximately sixteen years whereby
the Company imports certain video products and lenses through Chugai and also
sells its products to Chugai who resells the products principally in Asian and
European markets. In fiscal 1996, the Company purchased approximately $9.2
million of products through Chugai and sold products to Chugai for resale
totaling approximately $2.1 million. Kazuyoshi Sudo, a director, is Treasurer of
Chugai Boyeki (America) Corp., a U.S. subsidiary of Chugai.
Chu S. Chun, who controls 10.7% of the outstanding shares of the Company,
also owns Chun Shin Industries, Inc. (CSI). CSI is a 50% partner with the
Company in Chun Shin Electronics, Inc. (CSE), a joint venture company which
assembles certain Vicon products in South Korea. During fiscal 1996, CSE sold
approximately $5.8 million of product to the Company through I.I.I. Companies,
Inc. (I.I.I.), a U.S. based company controlled by Mr. Chun. I.I.I. arranges the
importation and provides short term financing on all the Company's product
purchases from CSE and other Korean suppliers. CSE also sold approximately $1.7
million of product to CSI which sells Vicon product exclusively in Korea. In
addition, I.I.I. purchased approximately $900,000 of products directly from the
Company during fiscal 1996 for resale to CSI.
Peter F. Neumann, a director of the Company, is a principal in the
insurance brokerage firm of Bradley and Parker, which is the agent for a
majority of the Company's commercial insurance. The premium paid for such
insurance amounted to approximately $109,000 in fiscal 1996.
W. Gregory Robertson, a director of the Company, is President of TM
Capital Corporation, an investment banking firm which provides investment
banking services to the Company on a periodic basis. Services rendered to the
Company during fiscal 1996 amounted to $40,000.
During 1996, the Company purchased approximately $72,000 of products from
Pro/Four Video Products, Inc., in which Donald N. Horn and Arthur V. Wallace,
directors of the Company, have an ownership interest.
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OFFICERS OF THE COMPANY
In addition to Messrs. Darby and Roche, the Company has four other
officers. They are:
John L. Eckman, age 47 Vice President, U.S. Sales
Peter A. Horn, age 41 Vice President, Compliance and
Quality Assurance
Yacov A. Pshtissky, age 45 Vice President, Engineering
Gregory Stempkoski, age 36 Vice President, Export Sales
Mr. Eckman joined the Company in August 1995 as Eastern Regional Manager.
He was promoted to Vice President, U.S. Sales in July, 1996. Prior to joining
the Company, he was Director of Field Operations for Cardkey Systems, Inc. with
whom he was employed for twelve years.
Mr. P. Horn joined the Company in January, 1974 and has been employed in
various technical capacities. In 1986 he was appointed Vice President,
Engineering and in May, 1990 as Vice President, New Products and Technical
Support Services; in September 1993, he was appointed Vice President, Marketing
and in 1994 as Vice President, Product Management; and in 1995 as Vice
President, Compliance and Quality Assurance.
Mr. Pshtissky, who joined the Company in September, 1979 as an Electrical
Design Engineer, was promoted to Director of Electrical Product Development in
March, 1988 and to Vice President, Engineering, May, 1990.
Mr. Stempkoski joined the Company in June, 1986 as an Inside Sales
Administrator. In October 1990, he was promoted to International Sales Manager
and in October, 1996 he was promoted to Vice President, Export Sales.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Neumann, Robertson, and Wallace, none of whom are or ever have been officers of
the Company except Wallace who retired as Executive Vice President in 1990. See
the section entitled "Certain Relationships and Related Transactions" included
elsewhere herein, for a discussion of certain other relationships maintained by
Mr. Neumann and Mr. Robertson with the Company.
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EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee's compensation policies applicable to the
Company's executive officers for the last completed fiscal year were to pay a
competitive market price for the services of such officers, taking into account
the overall performance and financial capabilities of the Company and the
officer's individual level of performance.
Mr. Darby makes recommendations to the Compensation Committee as to the
base salary and incentive compensation of all executive officers other than Mr.
Darby. The Committee reviews these recommendations with Mr. Darby, and after
such review, determines compensation. In the case of Mr. Darby, the Compensation
Committee makes its determination after direct negotiation with such officer.
For each executive officer, the Committee's determinations are based on the
committee's conclusions concerning each officer's performance and comparable
compensation levels in the CCTV Industry and the Long Island area for similarly
situated officers at other companies. The overall level of performance of the
Company is taken into account but is not specifically related to the base salary
of these executive officers. Also, the Company has established an incentive
compensation plan for all of its executive officers, which provides a specified
bonus to each officer upon the Company's achievement of certain annual
profitability targets.
The Compensation Committee grants options to executive officers to connect
compensation to the performance of the Company. Options are exercisable in the
future at the fair market value at the time of grant, so that an officer granted
an option is rewarded by the increase in the price of the Company's stock. The
Committee grants options based on significant contributions of an executive
officer to the performance of the Company.
In addition, in determining the salary compensation of Mr. Darby as CEO,
the Committee considered the responsibility assumed by him in formulating and
implementing a management and operating restructuring plan.
Compensation Committee
Peter F. Neumann, Chairman, W. Gregory Robertson
and Arthur V. Wallace
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EXECUTIVE COMPENSATION
The following information is set forth with respect to all compensation
paid by the Company to its Chief Executive Officer and its most highly
compensated executive officers other than the CEO whose annual compensation
exceeded $100,000, for each of the past three fiscal years.
SUMMARY COMPENSATION TABLE
Annual Long Term
Compensation Compensation
Fiscal
Name and Year Ended Options All Other
Principal Position September 30, Salary No. of Shares Compensation
Kenneth M. Darby 1996 $195,000 95,000 $34,750 (2)
Chief Executive Officer 1995 $195,000 - $ 3,000 (1)
1994 $195,000 59,194 $ 3,000 (1)
Arthur D. Roche 1996 $150,000 25,000 $15,875 (3)
Executive Vice President 1995 $150,000 - -
1994 $150,000 50,000 -
No listed officer received other non-cash compensation amounting to more
than 10% of salary.
(1) Represents life insurance policy payment.
(2) Represents life insurance policy payment of $3,000 and bonus in the form
of 16,933 shares of common stock issued from treasury.
(3) Bonus in the form of 8,467 shares of common stock issued from treasury.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Individual Grants Value at Assumed
Annual Rates of Stock
% of Total Price Appreciation
No. of granted to Exercise For Option Term
Options Employees In Price Expiration
Name Granted Fiscal Year Per Share Date 5% 10%
- ----------------- -------- ------------ --------- ---------- ------- ------
Kenneth M. Darby 95,000 39% 1.6875 11/00 $44,300 $97,900
Arthur D. Roche 25,000 10% 1.6875 11/00 $11,700 $25,800
Options granted in the year ended September 30, 1996 were either issued under
the 1994 Incentive Stock Option Plan or reissued under the 1986 Incentive Stock
Option Plan. The options granted above are exercisable as follows: up to 30% of
the shares at the grant date, and additional 30% of the shares on the first
anniversary of the grant date, and the balance of the shares on the second
anniversary of the grant date, except that no option is exercisable after the
expiration of five years from the date of grant.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised In-
Number of Unexercised Options the-Money Options at
As of September 30, 1996 September 30, 1996 (1)
----------------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
Kenneth M. Darby 114,392 66,500 $66,800 $54,000
Arthur D. Roche 57,500 17,500 $37,300 $14,200
No options were exercised by any of the above-named officers during the year
ended September 30, 1996.
(1) Calculated based on $2.50 per share closing market value at September 30,
1996.
(2) In October 1996, the Board of Directors approved (subject to shareholder
approval) the 1996 Incentive Stock Option Plan and granted options at $2.50
per share to the executive officers as follows:
Kenneth M. Darby 38,000
Arthur D. Roche 25,000
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EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
Mr. Darby has entered into an employment contract with the Company that
entitles him to receive an annual salary of $225,000 through fiscal year 2001.
Mr. Roche has an employment agreement with the Company that provides an annual
salary of $170,000 through September 30, 1999. Each of these agreements provide
for payment in an amount up to three times the average annual compensation for
the previous five years if there is a change in control without Board of
Director approval (as defined in the agreements).
Messrs. D. Horn and Wallace (current directors) each have insured deferred
compensation agreements with the Company which provide that upon reaching
retirement age, total payments of $917,000 and $631,000, respectively, will be
made in monthly installments over a ten year period. The full deferred
compensation payment is subject to such individuals' adherence to certain
non-compete covenants. Mr. Wallace began receiving payments under the agreement
in October, 1990. Mr. Horn began receiving payments under the agreement in
January, 1994.
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STOCK PERFORMANCE GRAPH
This graph compares the return of $100 invested in the Company's stock on
October 1, 1991, with the return on the same investment in the AMEX Market Value
Index and the AMEX High Technology Index.
COMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN AMONG
VICON INDUSTRIES, AMEX MARKET VALUE INDEX
AND AMEX TECHNOLOGY INDEX*
(The following table was represented by a chart in the printed material)
AMEX High
Vicon AMEX Market Technology
Date Industries Inc. Value Index Index
10/01/91 100 100 100
10/01/92 133 101 94
10/01/93 78 123 111
10/01/94 81 123 116
10/01/95 83 145 155
10/01/96 111 153 196
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PROPOSAL 2. APPROVAL OF THE VICON INDUSTRIES, INC.
1996 INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has established the Vicon
Industries, Inc. 1996 Incentive Stock Option Plan (the "Incentive Option Plan").
The purpose of the Incentive Option Plan is to advance the interests of the
Company and its shareholders by providing certain officers and other key
employees of the Company, whose judgement, initiative and efforts are key to the
successful conduct of the business of the Company and its subsidiaries, with an
additional incentive to perform in a superior manner as well as to attract
people of experience and ability. Officers and other full time employees of the
Company and its subsidiaries are eligible to receive incentive stock options
under the Incentive Option Plan. Directors who are not employees of the Company
or its subsidiaries are not eligible to receive awards under the Incentive
Option Plan. The following is a summary of the material features of the
Incentive Option Plan.
The Incentive Option Plan authorizes the granting of incentive stock
options for 200,000 shares of Common Stock to such officers and full time
employees of the Company and its subsidiaries as the Committee (the "Committee")
may determine. The Committee consists of members of the Company's Compensation
Committee who are outside directors, none of whom are eligible to receive
options under the Incentive Option Plan. The Committee selects the officers and
employees to whom options are to be granted and the number of shares to be
granted. All awards of options by the Committee are subject to the approval of
the Board of Directors.
Options granted under the Incentive Option Plan afford tax benefits upon
compliance with certain conditions which do not result in tax deductions to the
Company pursuant to Section 422 of the Internal Revenue Code. Shareholder
approval of the Incentive Option Plan is required for stock options granted
under this plan to qualify for incentive stock option treatment under the Code.
Incentive stock options granted under the Incentive Option Plan may be
exercised within five years from the date of grant and such exercise prices may
not be less than 100% of the fair market value on the date the option is granted
or in the case of an employee owning more than 10% of the Common Stock of the
Company not less than 110% of the fair market value on the date the option is
granted. Further, the fair market value of stock with respect to which incentive
stock options are exercisable for the first time by any employee in any given
calendar year may not exceed $100,000, such value being determined at the time
the options are granted.
No incentive stock option granted in connection with the Incentive Option
Plan will be exercisable after the date on which the optionee ceases to perform
services for the Company except that in the event of death, options may be
exercised for up to one year thereafter, and upon retirement options may be
exercisable for up to three months following the date an optionee ceases to
perform services.
Stock purchased through the exercise of options granted under the
Incentive Option Plan may be paid in whole or in part through the surrender of
previously held shares of Common Stock at the fair market value thereof. No
options may be granted under the Incentive Option Plan after ten years from the
effective date of the Incentive Option Plan.
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The Board of Directors may amend the Incentive Option Plan in any respect,
provided, however, that stockholder approval shall be required for any amendment
which: (i) increases the maximum number of shares for which options may be
granted under the Incentive Option Plan; (ii) reduces the exercise price at
which incentive stock options may be granted; (iii) extends the period during
which options may be granted or exercised beyond the times originally
prescribed; or (iv) changes the persons eligible to participate in the Incentive
Option Plan.
An optionee shall have no right as a stockholder with respect to any
shares covered by an option until the date of issuance of a stock certificate of
such shares. Nothing in the Incentive Option Plan or in any award of options
granted confers on any person any right to continue in the employ of the Company
or its subsidiaries, or to continue to perform services for the Company or its
subsidiaries, or interferes in any way with the right of the Company or its
subsidiaries to terminate such person's services as an officer or other employee
at any time.
An optionee will not be deemed to have received taxable income upon the
grant or exercise of any incentive stock option, provided that the shares of
common stock are not disposed of by the Optionee for at least one year after the
date of exercise and two years after the date of grant. No compensation
deduction may be taken by the Company as a result of the grant or exercise of
incentive stock options.
Options for 104,000 shares have been granted under the 1996 Incentive
Option Plan to employees at $2.50 per shares as follows:
Kenneth M. Darby 38,000
Arthur D. Roche 25,000
Other Officers 15,000
Other Employees 26,000
-------
104,000
Unless marked to the contrary, the shares represented by the enclosed
proxy will be voted FOR the approval of the 1996 Incentive Stock Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE 1996 INCENTIVE STOCK OPTION PLAN.
PROPOSAL 3. APPROVAL OF THE VICON INDUSTRIES, INC.
1996 NON-QUALIFIED STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
The Board of Directors of the Company has adopted the Vicon Industries,
Inc. 1996 Non-Qualified Stock Option Plan for Outside Directors (the "Directors'
Option Plan"). The following is a summary of the material terms of the
Directors' Option Plan.
The Directors' Option Plan provides for the granting of non-qualified
options for a total of 50,000 shares of Common Stock to members of the Board of
Directors of the Company who are not also serving as employees of the Company or
any of its subsidiaries as the Committee (the "Committee") may determine. The
Committee consists of members of the Company's Compensation Committee who are
outside directors. Options granted under this plan must be ratified by the Board
of Directors.
The exercise price per share of each option will be equal to the fair
market value of the shares of Common Stock on the date the option is granted.
Options will become exercisable one year from the date of grant. All options
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granted under the Directors' Option Plan expire upon the earlier of five years
following the date of grant or three months following the date the optionee
ceases to be a director. Upon retirement or death, all options previously
granted become exercisable within one year.
Upon exercise, an optionee will be deemed to have received income upon
exercise of the stock option in an amount equal to the amount by which the
exercise price is exceeded by the fair market value of the Common Stock. The
amount of any ordinary income deemed to have been received by an optionee upon
the exercise of a non-qualified stock option will be a deductible expense of the
Company for tax purposes.
No options have been granted under this plan.
Unless marked to the contrary, the shares represented by the enclosed
proxy will be voted FOR the approval of the 1996 Stock Option Plan for
Outside Directors'.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE 1996 STOCK OPTION PLAN FOR OUTSIDE
DIRECTORS'.
PROPOSAL 4. APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick as
auditors for the fiscal year ending September 30, 1997, and further directed
that management submit the Board's selection of auditors to the shareholders at
the Annual Meeting for ratification. KPMG Peat Marwick, a nationally known firm
of independent certified public accountants, has audited the Company's financial
statements since 1973. The Company is not aware of any relationship with KPMG
Peat Marwick or any of its associates, other than the usual relationship that
exists between independent certified public accountants and client.
KPMG Peat Marwick will have a representative at the Annual Meeting of
Shareholders, who will have an opportunity to make a statement, if they should
so desire, and will be available to respond to appropriate questions. KPMG Peat
Marwick has provided no services other than audit and tax services in connection
with the examination of the Company's financial statements. The Board of
Directors of the Company recommends that you vote in favor of the selection of
KPMG Peat Marwick as the Company's auditors.
Unless marked to the contrary, the shares represented by the enclosed
proxy will be voted FOR the ratification of KPMG Peat Marwick as the
independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of this date, management is not aware of any matters to be presented
for action at the Annual Meeting, other than those referred to in the Notice of
Annual Meeting of Shareholders, but the proxy form included with this proxy
statement, if executed and returned, gives discretionary authority to management
with respect to any other matters that may come before the meeting.
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MISCELLANEOUS
Solicitation of proxies is being made by mail and may also be made in
person or by telephone or telegraph by officers, directors and regular employees
of the Company.
The cost of the solicitation will be borne by the Company.
By order of the Board of Directors
Melville, New York Arthur D. Roche
March 3, 1997 Secretary
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