VICON INDUSTRIES, INC.
89 Arkay Drive
Hauppauge, NY 11788
(516) 952-2288 (CCTV)
Notice of Annual Meeting of Shareholders
To Be Held on April 23, 1998
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 corporate headquarters located at 89 Arkay Drive, Hauppauge, New York
11788, on April 23, 1998 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 2001; and
2. To ratify the selection of KPMG Peat Marwick LLP, independent certified
public accountants, as auditors for the Company for the fiscal year
ending September 30, 1998; and
3. 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 27, 1998 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, 1997 and first quarter report of
fiscal year 1998 are included with the proxy statement.
By Order of the Board of Directors,
Hauppauge, New York Arthur D. Roche
March 2, 1998 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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PROXY STATEMENT FOR 1998 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 23, 1998 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 2001; 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 2001 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 27, 1998, 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 3, 1998.
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 27, 1998. As of
February 27, 1998, there were 3,056,058 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.
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 of January 31, 1998, 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 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 Company, Ltd
and Affiliates
2-15-13 Tsukishima
Chuo-ku
Tokyo, Japan 104 548,715 16.8%
Chu S. Chun
C/O I.I.I. Companies, Inc
915 Hartford Turnpike
Shrewsbury, MA 01545 204,507 (6) 6.3
- - -------------------------------------------------------------------------------
C/O Vicon Industries, Inc.
Michael D. Katz 257,700 (7) 7.9
Kenneth M. Darby 231,837 7.1
Arthur D. Roche 136,967 (3) 4.2
Donald N. Horn 101,003 (2) 3.1
Arthur V. Wallace 18,695 (2) .6
Kazuyoshi Sudo 14,000 (2) .4
Milton F. Gidge 10,000 (4) .3
Peter F. Neumann 8,000 (2) .2
Peter F. Barry 5,600 (2) .2
W. Gregory Robertson 5,000 (2) .2
Total all officers and
directors as a group (13 persons) 872,252 (5) 26.8%
(1) The nature of beneficial ownership of all shares is sole voting and
investment power.
(2) Includes currently exercisable options to purchase 5,000 shares.
(3) Includes currently exercisable options to purchase 7,500 shares and 124,467
shares which are owned jointly by Mr.Roche and his wife.
(4) Includes currently exercisable options to purchase 8,000 shares.
(5) Includes currently exercisable options to purchase 133,200 shares.
(6) Mr. Chun has shared voting and dispositive power over 204,507 shares but
disclaims beneficial ownership as to all but 48,400 shares. 100,707 shares
are owned by International Industries Inc. Profit Sharing Plan and 55,400 by
immediate family members. Mr. Chun is a nominee for election to the Board of
Directors for the Class of 2001.
(7) Includes currently exercisable options to purchase 5,000 shares and 252,700
shares which are owned jointly by Mr. Katz and his wife.
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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 nine 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. except for Mr. Chu S. Chun, who has executed an agreement
not to sell any of his shares of common stock for a certain period of time. If
Mr. Chun is not elected as a director, such agreement is void.
The three nominees proposed for election to a term expiring in 2001 at the
Annual Meeting are Messrs. Chu S. Chun, Milton F. Gidge and W. Gregory
Robertson. 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
- - -------------------------------------------------------------------------------
Chu S. Chun
Chairman and CEO
International Industries, Inc.
and Chun Shin Industries, Inc -- 63
Milton F. Gidge
Retired Director & Executive Officer
Lincoln Savings Bank 1987 68
W. Gregory Robertson
President
TM Capital Corp. 1991 54
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 69
Peter F. Barry
Retired Senior Vice President
Grumman Corporation 1984 68
Arthur D. Roche
Executive Vice President
Vicon Industries, Inc. 1992 59
Continuing Directors whose Term of Office Expires in 2000
- - -------------------------------------------------------------------------------
Kenneth M. Darby
CEO and President
Vicon Industries, Inc. 1987 52
Peter F. Neumann
Retired President
Flynn-Neumann Agency, Inc. 1987 63
Kazuyoshi Sudo
Chief Executive Officer
Chugai Boyeki (America) Corp. 1987 55
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Mr. Chu S. Chun, since 1988, has been Chairman and CEO of International
Industries, Inc. and Chun Shin Industries, Inc., international trading and
manufacturing companies.
Mr. Gidge is a retired director and 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 Bancshares
Corporation of New York, a mortgage banking holding company, and another
affiliated company of Intervest since 1988.
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. 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
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 LLP, an international accounting firm
which he joined in 1960.
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 LLP, a major public accounting firm.
Mr. Neumann is the retired President of Flynn-Neumann Agency, Inc., an
insurance brokerage firm. He has also served as a director of Reliance Federal
Savings Bank since 1978.
Mr. Sudo is Chief Executive Officer of Chugai Boyeki (America) Corp., a
distributor of electronic, chemical and optical products. From 1985 to 1997 he
was Treasurer of such company. He is also a director of Chugai Boyeki Company,
Ltd. since 1997.
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 27, 1998 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(currently a director, not standing for reelection when his
term expires on April 23, 1998), held one meeting during the last fiscal year.
The function of the co mpensation committee is to establish and approve
theappropriate compensation for Mr. Darby, recommend the award of stock options,
and to review the recomendations of the President with respect to the
compensation of all other officers.
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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 once 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 six times during the year
including an organizational meeting following the conclusion of the Annual
Meeting of Shareholders. The Board held seven meetings in the Company's 1997
fiscal year. 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 an annual rate of $6,000 and $500 per committee meeting
attended in person. The Chairman of the Board is compensated at an annual rate
of $10,000 and $500 per committee meeting attended in person.
CERTAIN RELATIONSHIPS
Chugai Boyeki Company, Ltd. and affiliates (CBC) owns 18.0 % of the
outstanding Common Stock of the Company. The business relationship between the
Company and CBC has continued for 20 years, during which period CBC has served
as (i) a lender, (ii) a product supplier and sourcing agent, and (iii) a
reseller of Company products. Historically, CBC has provided a significant
amount of funding to the Company in the form of extended accounts payable
related to product purchases. In 1997, the Company incurred approximately
$383,000 in interest expense on amounts it owed to CBC with respect to extended
accounts payable. CBC also acts as the Company's sourcing agent for the purchase
of certain video components. In 1997, the Company purchased approximately $7.1
million of products from or through CBC which includes approximately $286,000 in
commissions on purchases of video products. Additionally, the Company sells
finished products to CBC for resale by CBC in certain Asian and European
markets. Sales to CBC were $2.7 million in 1997. CBC also has the exclusive
right to sell the Company's products in Japan. In April 1997, the Company repaid
$236,000 of mortgage loan indebtedness of Vicon U.K. to CBC with the proceeds of
a new 10-year bank term loan. Although management believes that the CBC
relationship has been beneficial to the Company on an overall basis, the terms
provided to the Company by CBC for the foregoing may be less favorable than
those the Company may be able to obtain from unaffiliated third parties.
Kazuyoshi Sudo, a director of the Company and of CBC, is Chief Executive Officer
of Chugai Boyeki (America) Corp., a U.S. subsidiary of CBC.
Mr. Chu S. Chun, who controls 6.7% of the outstanding Common Stock of the
Company, also owns Chun Shin Industries, Inc. (CSI), a 50% partner with the
Company in Chun Shin Electronics, Inc. (CSE). In 1997, CSE sold approximately
$7.0 million of product to the Company through International Industries, Inc.
("I.I.I."), a U.S.-based company controlled by Mr. Chun. I.I.I. arranges the
importation of and provides short-term financing on all the Company's product
purchases from CSE, which in 1997 included approximately $137,000 in connection
with such services. CSE also sold approximately $1.7 million of product to CSI,
which has the exclusive right to sell the Company's products in South Korea. In
addition, I.I.I. purchased approximately $1.1 million of products directly from
the Company during 1997 for resale to CSI. Although management believes that the
CSE relationship has been beneficial to the Company on an overall basis, the
terms provided to the Company by CSE for the foregoing may be less favorable
than those the Company may be able to obtain from unaffiliated third parties.
Peter F. Neumann, a director of the Company, is a former principal in the
insurance brokerage firm of Bradley & Parker, Inc., which is the agent for
certain of the Company's commercial insurance. The premium paid for such
insurance amounted to approximately $61,000 in 1997.
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OFFICERS OF THE COMPANY
In addition to Messrs. Darby and Roche, the Company has three other officers.
They are:
John L. Eckman, age 48 Vice President, U.S. Sales
Peter A. Horn, age 42 Vice President, Compliance and Quality Assurance
Yacov A. Pshtissky, age 46 Vice President, Technology and Development
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., an
access control security products manufacturer, 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,
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 Vice President, Technology and Develop-ment in May 1990.
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" included
elsewhere herein, for a discussion of certain other relationships.
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
himself. 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
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.
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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 1997 $225,000 58,000 $87,017 (4)
Chief Executive Officer 1996 $195,000 95,000 $34,750 (2)
1995 $195,000 -- $ 3,000 (1)
Arthur D. Roche 1997 $170,000 35,000 $45,240 (5)
Executive Vice President 1996 $150,000 25,000 $15,875 (3)
1995 $150,000 -- --
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) Represents bonus in the form of 8,467 shares of common stock issued from
treasury.
(4) Represents life insurance policy payment of $3,000 and cash bonus of
$84,017. The cash bonus equaled 4.55% of the sum of consolidated income
before taxes and provision for officers' bonuses, which bonus formula was
adopted for the years 1997 and 1998 by the Board of Directors upon
recommendation of its Compensation Committee.
(5) Represents cash bonus. The cash bonus equaled 2.45% of the sum of
consolidated income before taxes and provision for officers' bonuses,
which bonus formula was adopted for the years 1997 and 1998 by the Board
of Directors upon recommendation of its Compensation Committee.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term
- - --------------------------------------------------------------------------------
% of Total
No. of Granted to Exercise
Options Employees In Price Expiration
Name Granted Fiscal Year Per Share Date 5% 10%
- - --------------------------------------------------------------------------------
Kenneth M. Darby 38,000 16% 2.5000 10/01 $26,200 $58,000
20,000 8% 3.0625 4/02 $16,900 $37,400
Arthur D. Roche 25,000 10% 2.5000 10/01 $17,300 $38,200
10,000 4% 3.0625 4/02 $ 8,500 $18,700
Options granted in the year ended September 30, 1997 were issued under the 1996
Incentive Stock Option Plan. The options granted above are exercisable as
follows: up to 30% of the shares at the grant date, an 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.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
At September 30, 1997
---------------------
Number of Value of
Shares Unexercisable Unexercisable
Acquired Value In-the-Money In-the-Money
Name on Exercise Realized (1) Options (3) Options (2)
- - -------------------------------------------------------------------------------
Kenneth M. Darby 153,432 $698,621 78,600 $484,775
Arthur D. Roche 75,500 $343,750 34,500 $206,875
(1) Calculated based on the difference between the closing quoted market
value of $6.50 per share at the date of exercise and the exercise price.
(2) Calculated based on the closing quoted market value of $8.375 per share.
(3) No options were exercisable by the above named officers at September 30,
1997.
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EMPLOYMENT CONTRACTS, CHANGE IN CONTROL
AND DEFERRED COMPENSATION ARRANGEMENTS
Mr. Darby and Mr. Roche have each entered into employment agreements with
the Company that provide for annual salaries of $225,000 and $170,000,
respectively. Each of these agreements provides for payment in an amount up to
three times their 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). Mr. Darby's agreement also provides for a deferred compensation
benefit of 45,952 shares of common stock held by the Company in treasury. Such
benefit vests upon retirement of the executive, or earlier under certain
conditions. The quoted market value of such benefit approximated $345,000 at the
date of grant.
Messrs. D. Horn and A. 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 and Mr. Horn began receiving payments under the agreement in
January 1994.
STOCK PERFORMANCE GRAPH
This graph compares the return of $100 invested in the Company's stock on
October 1, 1992, with the return on the same investment in the AMEX Market Value
Index.
COMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN BETWEEN
VICON INDUSTRIES AND AMEX MARKET VALUE INDEX
(The following table was represented by a chart in the printed material)
Vicon AMEX Market
Date Industries, Inc. Value Index
10/01/92 100 100
10/01/93 58 122
10/01/94 60 122
10/01/95 63 145
10/01/96 83 152
10/01/97 279 191
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PROPOSAL 2. APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP
as auditors for the fiscal year ending September 30, 1998, and further directed
that management submit the Board's selection of auditors to the shareholders at
the Annual Meeting for ratification. KPMG Peat Marwick LLP, 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 LLP or any of its associates, other than the usual
relationship that exists between independent certified public accountants and
client.
KPMG Peat Marwick LLP 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 LLP 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 LLP 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 LLP as the
independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP 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.
MISCELLANEOUS
Solicitation of proxies is being made by mail and may also be made in
person or by telephone or facsimile 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
Hauppauge, New York Arthur D. Roche
March 2, 1998 Secretary
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