UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X]
[_] Definitive Additional Materials
ESPEY MFG. & ELECTRONICS CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 8, 2000
-------------------------
November 10, 2000
To the Shareholders of
ESPEY MFG. & ELECTRONICS CORP.:
You are cordially invited to attend the Annual Meeting of Shareholders of
Espey Mfg. & Electronics Corp., which will be held at the Hilton Garden Inn, 125
South Broadway, Saratoga Springs, New York, on December 8, 2000, at 9:30 a.m.,
Eastern Standard Time, for the following purposes:
1. To elect three Class A directors to serve for a three year
term or until their respective successors are duly elected and
qualify;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year
ending June 30, 2001; and
3. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on November 1, 2000,
as the record date for the purpose of determining shareholders entitled to
notice of, and to vote at, said meeting or any adjournment thereof. The books
for transfer of the Company's capital stock will not be closed.
Even if you expect to attend the meeting in person, it is urged by the
Company that you mark, sign, date and return the enclosed proxy. The proxy may
be revoked at any time before it is voted and shareholders who execute proxies
may nevertheless attend the meeting and vote their shares in person. Every
properly signed proxy will be voted as specified unless previously revoked.
By Order of the Board of Directors,
/s/ Peggy A. Murphy
-------------------
PEGGY A. MURPHY
Secretary
Please make your specifications and sign and date the enclosed proxy and
mail it promptly in the accompanying pre-addressed, postage-free envelope.
<PAGE>
ESPEY MFG. & ELECTRONICS CORP.
233 Ballston Avenue
Saratoga Springs, New York 12866
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Espey Mfg. &
Electronics Corp. (the "Company") for use in voting at the Annual Meeting of the
Shareholders of the Company to be held at the Hilton Garden Inn, 125 South
Broadway, Saratoga Springs, New York, on December 8, 2000, at 9:30 a.m., Eastern
Standard Time, and at any postponement or adjournment thereof, for the purposes
set forth in the attached Notice of Meeting. It is anticipated that the Notice
of Annual Meeting of Shareholders, this Proxy Statement and the form of proxy
will be mailed on or about November 10, 2000.
Voting and Revocability of Proxies
Every properly dated, executed and returned proxy will be voted at the
Annual Meeting in accordance with the instructions of the shareholder. If no
specific instructions are given, the shares represented by such proxy will be
voted: (i)for the election of Class A directors nominated by the Board of
Directors and (ii) for ratification of the appointment of PricewaterhouseCoopers
LLP as independent public accountants of the Company for the fiscal year ending
June 30, 2001. Any shareholder giving a proxy has the power to revoke it at any
time prior to the voting thereof by voting in person at the Annual Meeting, by
giving written notice to the Secretary prior to the Annual Meeting, or by
signing and delivering a new proxy card bearing a later date.
The Company's only class of voting securities is its Common Stock, par
value $.33-1/3 per share (the "Common Stock"). Each share of Common Stock
outstanding on the record date will be entitled to one vote on all matters. In
accordance with the Company's By-Laws and applicable state law, the election of
directors will be determined by a plurality of the votes cast by the holders of
shares of Common Stock present and entitled to vote thereon, in person or by
proxy, at the Annual Meeting. Shares present which are properly withheld as to
voting with respect to any one or more nominees, and shares present with respect
to which a broker indicates that it does not have authority to vote ("broker
non-vote") will not be counted. Cumulative voting in connection with the
election of directors is not permitted. In accordance with the Company's By-Laws
and applicable state law, the affirmative vote of shares representing a majority
of the votes cast by the holders of shares present and entitled to vote is
required to approve the other matters to be voted on at the Annual Meeting.
Shares which are voted to abstain and broker non-votes are not counted as votes
cast on any matter to which they relate.
The By-Laws of the Company provide that the majority of the shares of the
Common Stock of the Company issued and outstanding and entitled to vote, present
in person or by proxy, shall constitute a quorum at the Annual Meeting. Shares
which are voted to abstain are considered as present at the Annual Meeting for
the purposes of determining a quorum. Broker non-votes are considered as not
present at the Annual Meeting for the purposes of determining a quorum.
Record Date and Share Ownership
Only holders of Common Stock of record on the books of the Company at the
close of business on November 1, 2000 will be entitled to vote at the meeting.
There were outstanding and entitled to vote on November 1, 2000, 1,033,631
shares of Common Stock.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that the
Board of Directors shall consist of three classes of directors (Class A, Class B
and Class C) with overlapping three-year terms. One class of directors is to be
elected each year for a term extending to the third succeeding Annual Meeting
after such election or until their respective successors are duly elected and
qualify. The term of the three Class A directors expire at the current Annual
Meeting. The Board of Directors has nominated three persons to stand for
election as Class A directors.
The votes will be cast pursuant to the enclosed proxyfor the election of
each of the Class A nominees named below unless specification is made
withholding such authority. Each of the nominees is presently a director of the
Company. Should any of said nominees for Class A directors become unavailable,
which is not anticipated, the proxies named in the enclosed proxy will vote for
the election of such other persons as the Board of Directors may recommend.
Proxies may not be voted for a greater number of persons than the nominees
named.
<PAGE>
The names and business experience for the past five years of the three
persons who have been nominated by the Board of Directors to stand for election
as Class A directors at the Annual Meeting and the remaining directors whose
terms are continuing until the 2001 or 2002 Annual Meeting appear below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING
NOMINEES FOR CLASS A DIRECTOR.
NOMINEES FOR CLASS A DIRECTORS-- TO SERVE AS DIRECTORS FOR
A THREE YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
<TABLE>
<CAPTION>
Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
---- --- -------------- ---------------------------------- ---------
<S> <C> <C> <C> <C>
Howard Pinsley (1) . . . . 60 President and Chief Howard Pinsley for more than the past five 1992
Executive Officer years has been employed by the Company
on a full-time basis as Program Director
prior to being elected Vice President-
Special Power Supplies on April 3, 1992.
On December 6, 1996, Mr. Pinsley was
elected to the position of Executive Vice
President. On June 9,1998 he was elected
to the positions of President and Chief
Operating Officer. Subsequently he became
Chief Executive Officer.
Alvin O. Sabo . . . . . . 57 -- Attorney engaged in private practice of law 1999
and Senior Partner of the law firm of
Donohue, Sabo, Varley & Armstrong,
P.C. in Albany, NY since 1980. Prior
to that position, he was Assistant
Attorney General, State of New York,
Department of Law for eleven years.
Carl Helmetag . . . . . . 52 -- President and CEO of UVEX Inc. in 1999
Providence, RI. From 1996 to 1999, he was
President and CEO of HEAD USA Inc.
Prior to that position, Mr. Helmetag was
Executive Vice President and then President
at Dynastar Inc. from 1978 to 1996. He is
an MBA graduate from The Wharton School
of Business, University of Pennsylvania.
</TABLE>
<PAGE>
CLASS B DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
---- --- -------------- ---------------------------------- ---------
<S> <C> <C> <C> <C>
William P. Greene . . . . . . 70 Vice President Prior to his election as Vice President of 1992
of Operations Operations on March 1, 1999, he was Vice
President of Finance for ComCierge, LLC,
San Diego, CA, since August 1997. Prior to
that position, he was Vice President of
Operations for Bulk Materials International
Co., Newton, CT, from 1993 to July 1997.
From 1991 to 1993, Dr. Greene was
Associate Professor of Finance and
International Business, Pennsylvania State
University in Kutztown, PA. From 1985 to
1990, he was Associate Dean of the School
of Business, United States International
University, San Diego, CA. From 1992 to
1995, he was Chairman of the Department
of Business, Skidmore College, Saratoga
Springs, NY. Prior to that he had been
employed as an officer for several
financial institutions.
Seymour Saslow . . . . . . . 79 -- Senior Vice President since December 6, 1992
1996. Prior to being elected to Senior Vice
President, Mr. Saslow served as Vice
President-Engineering since April 3, 1992.
Mr. Saslow resigned as an executive officer
effective December 31, 1999.
Gerald B.H. Solomon. . . . . 70 -- President and Chief Executive Officer of 1999
The Solomon Group, an international
consulting firm providing strategic advice
and counsel to corporations worldwide.
Prior to becoming President of the
Solomon Group, he retired from the
United States Congress where he served
as a congressman from New York State
for twenty years.
</TABLE>
CLASS C DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
---- --- -------------- ---------------------------------- ---------
<S> <C> <C> <C> <C>
Paul J. Corr . . . . . . . . 56 -- Certified Public Accountant and a Professor 1992
of Business, Skidmore College, in Saratoga
Springs, NY, since 1981, currently
holding the position of Associate
Professor; Mr. Corr is also a
shareholder in the Latham, New
York accounting firm of Rutnik,
Matt & Corr, P.C.
</TABLE>
<PAGE>
CLASS C DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
Period to
Offices and Date
Positions Held Served as
Name Age with Company Principal Occupation or Employment Director
---- --- -------------- ---------------------------------- ---------
<S> <C> <C> <C> <C>
Barry Pinsley (1) . . . . . 58 Non-Executive Officer Certified Public Accountant who for five 1994
years acted as a consultant to the Company
prior to his election as a Vice President-
Special Projects on March 25, 1994. On
December 6, 1997, Mr. Pinsley was elected
to the position of Vice President-Investor
Relations and Human Resources, from which
he resigned on June 9, 1998. Mr. Pinsley
has been a practicing Certified Public
Accountant in Saratoga Springs,
New York since 1975.
Michael W. Wool . . . . . 54 -- Attorney engaged in private practice 1990
of law and partner of the law firm
of Langrock, Sperry & Wool, in
Burlington, VT for more than the
past five years
</TABLE>
--------
(1) Barry Pinsley and Howard Pinsley are cousins.
None of the directors holds a directorship in any other company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or subject to the requirements of Section 15(d) of the Securities
Act of 1933 or any company registered as an Investment Company under the
Investment Company Act of 1940.
The only individuals currently considered executive officers of the Company
not identified above are:
Garry M. Jones, 60, Assistant Treasurer and Principal Accounting Officer of
the Company since August 4, 1988. He was also the Principal Financial Officer
from August 4, 1988 to September 10, 1993. Prior to being elected an officer of
the Company, Mr. Jones was employed by the Company on a full-time basis as a
Senior Accountant.
John J. Pompay, Jr., 65, Vice President of Marketing and Sales since
December 6, 1996. During the past five years and before being elected to his
present position, Mr. Pompay was employed by the Company on a full-time basis as
Director of Marketing and Sales.
Peggy Murphy, 42, Secretary of the Company since December 11, 1998. She has
been employed by the Company as Director of Human Resources since October 1998.
David A. O'Neil, 35, Treasurer and Principal Financial Officer since
January 4, 2000. Mr. O'Neil is a Certified Public Accountant who, prior to
joining the Company, was a Senior Manager at the accounting firm of KPMG LLP.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the Company's fiscal year ended June 30, 2000, the Board of
Directors held a total of 8 meetings, and each director then in office attended
at least 75% of such meetings.
The Board has a standing Audit Committee whose members are Paul J. Corr,
Chairman, Alvin O. Sabo and Michael W. Wool. The functions of this Committee
include reviewing the engagement of the independent accountants, the scope and
timing of the audit and any non-audit services to be rendered by the independent
accountants, reviewing with the independent accountants and management the
Company's policies and procedures with respect to internal auditing, accounting
and financial controls, and reviewing the report of the independent accountants
upon completion of its audit. During the fiscal year ended June 30, 2000, the
Committee held 8 meetings, and each Committee member attended at least 75% of
such meetings.
<PAGE>
The Board has a standing Stock Option Committee whose members are Howard
Pinsley, Paul Corr and Barry Pinsley. The functions of this Committee include
determining to whom, and the time or times at which, options will be granted,
the number of shares of common stock that comprise each option and the exercise
price and vesting schedule for options granted pursuant to the Company's 2000
Stock Option Plan. During the fiscal year ended June 30, 2000, the Stock Option
Committee held 1 meeting, and each member was in attendance.
There is no standing nominating or compensation committee of the Board of
Directors, or committees performing similar functions with the exception of the
Stock Option Committee.
COMPENSATION OF DIRECTORS
The Company's standard arrangement compensated each director of the Company
an annual fee in the amount of $10,000 for being a member of the Board of
Directors. Each Director that also served as a member of the Audit Committee was
compensated an additional annual fee of $5,000. These fees are paid monthly to
the Directors. Barry Pinsley was paid $15,975 for additional services in
connection with his duties as a director for the fiscal year ended June 30,
2000. Effective April 1, 1999 employees of the Company that also serve on the
Company's Board of Directors or any committee thereof do not receive director's
fees.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the annual compensation for each of the
fiscal years ended June 30, 2000, June 30, 1999 and June 30, 1998 received by
(i) all persons serving as the Company's Chief Executive Officer (or acting in a
similar capacity) and (ii) the other three highest paid executive officers of
the Company who were such as of June 30, 2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Securities
Name and Annual Compensation Underlying All Other
Principal Position Fiscal Year Salary Bonus Options Compensation(1)
------------------ ----------- ------ ----- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Howard Pinsley 2000 $160,520 $25,000 1,500 $ 8,623
President and Chief 1999 $127,700 $ 0 0 $11,492
Executive Officer 1998 $120,125 $25,000 0 $15,961
Seymour Saslow (2) 2000 $111,150 $25,000 700 $ 1,237
Senior Vice President 1999 $124,625 $ 0 0 $10,568
1998 $119,625 $25,000 0 $15,024
William P. Green 2000 $116,270 $ 0 600 $ 6,414
Vice President of 1999 $ 37,650 $ 0 0 $ 0
Operations (3)
John J. Pompay, Jr. 2000 $237,816 $20,000 600 $ 8,822
Vice President of 1999 $189,399 $ 0 0 $ 8,679
Marketing and Sales 1998 $176,297 $ 0 0 $12,314
</TABLE>
----------
(1) Represents (a) the cash and market value of the shares allocated for the
respective fiscal years under the Company's Employee Retirement Plan and
Trust (the "ESOP") to the extent to which each named executive officer is
vested, and (b) directors' fees through April 30, 1999 except for Mr.
Pompay. Effective April 1, 1999 employees of the Company that also serve on
the Company's Board of Directors or any committee thereof do not receive
director's fees.
(2) Represents wages as both an executive officer and non-executive officer.
Mr. Saslow resigned as Senior Vice President on December 31, 1999.
(3) Mr. Greene's employment with the Company commenced in February, 1999.
<PAGE>
OPTION GRANTS IN FISCAL 2000
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Number of Percent Rates of Stock
Securities of Total Price Appreciation
Underlying Options for Option Term (1)
Options Granted to Exercise Expiration -------------------
Name Granted Employees Price Date 5% ($) 10%($)
---- ---------- ---------- -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Howard Pinsley 1,500 13% $ 13.25 03/01/2010 12,495 31,680
William P. Greene 600 5% $ 13.25 03/01/2010 4,998 12,672
John J. Pompay Jr. 600 5% $ 13.25 03/01/2010 4,998 12,672
David A. O'Neil 600 5% $ 13.25 03/01/2010 4,998 12,672
</TABLE>
----------
(1) Amounts reflect certain assumed rates of appreciation set forth in the
Commission's executive compensation disclosure rules. Actual gains, if any,
on stock option exercises will depend on future performance of the Common
Stock. No assurance can be made that the amounts reflected in these columns
will be achieved. The values in these columns assume that the fair market
value on the date of grant of each option was equal to the exercise price
thereof.
In accordance with the 2000 Stock Option Plan the above options are
exercisable anytime after March 1, 2002. Accordingly, no options were exercised
by the above named executive officers in fiscal 2000.
Insurance
The executive officers of the Company are covered under group life and
medical and health plans which do not discriminate in favor of the officers of
the Company and which are available generally to all salaried employees. The
directors of the Company are offered the same insurance plans with the exception
of the group life plan.
The Company maintains insurance coverage, as authorized by Section 727 of
the New York Business Corporation Law, providing for (a) reimbursement of the
Company for payments it makes to indemnify officers and directors of the
Company, and (b) payment on behalf of officers and directors of the Company for
losses, costs and expenses incurred by them in any actions.
EMPLOYMENT CONTRACTS
The Company has entered into an employment contract with John J. Pompay Jr.
in connection with his duties as Vice President of Marketing and Sales. The
contract was effective as of January 4, 1999 and terminated on December 31, 1999
subject to a one year option. Effective January 1, 2000 the one year option was
exercised extending the contract through December 31, 2000. The contract
provides for a minimum base annual salary of $117,000 plus commissions at the
rate of 3% on all payments received by the Company against Mr. Pompay's open
orders booked up to and including December 31, 1996, and 1% on all payments
received against orders booked by the Company between January 1, 1997 and
December 31, 1998. The contract further provides that if Mr. Pompay's employment
is terminated by the Company prior to the expiration date, other than for cause,
he will continue to receive his full salary for six months after the termination
date and the Company will pay him commissions due on all orders when payment is
received. The contract also provides for a restrictive covenant of
non-competition by Mr. Pompay for a period of two years upon termination for
cause or termination of the contract by Mr. Pompay. At the end of the contract
term Mr. Pompay has the option to accept at the time of his voluntary
resignation as an executive officer, an employment contract as a non-executive
officer in which he would receive full compensation for 13 weeks and then for
the next 104 weeks receive $1,000 per week.
As part of a management succession plan as implemented by the Board of
Directors in June 1998, the Company entered into agreements with the following
then named executive officers: Joseph Canterino, Barry Pinsley, Seymour Saslow
and Herbert Potoker. The contracts provide for the resignation of the above
officers from their positions as executive officers and for them to be
compensated in accordance with their respective agreements. The effective date
of the resignations of Mr. Canterino and Mr. Barry Pinsley as executive officers
was June 9, 1998. The effective date of the resignation of Mr. Potoker as an
executive officer was December 31, 1998. The effective date of the resignation
of Mr. Saslow as an executive officer is December 31, 1999. The compensation to
be paid under the agreements is $1,000 per week for Messrs. Canterino, Saslow
and Potoker and $500 per week for Mr. Pinsley during such two year period. In
the event of a named executive officer's death, the Company is obligated to
continue the payments as scheduled under the terms of the agreements.
<PAGE>
All of the named executive officers' contracts contain a restrictive
covenant regarding non-competition with the Company during the term of the
agreement and for a period of five years after the termination of the agreement
and an agreement regarding the treatment of confidential information.
EMPLOYEE STOCK OWNERSHIP PLAN
The Board of Directors of the Company adopted on June 2, 1989 effective as
of July 1, 1988, and thereafter amended and restated on June 30, 1994, an
Employee Retirement Plan and Trust (the "ESOP") to provide retirement benefits
to eligible employees of the Company including officers and to enable such
employees to share in the ownership of the Company. The ESOP used the proceeds
of a loan from the Company to purchase on June 5, 1989 from the Company 316,224
shares of the Company's Common Stock for approximately $8.4 million and the
Company on the same date contributed $397,500 to the ESOP which was used by the
ESOP to purchase from the Company 15,000 shares of the Company's Common Stock.
The loan from the Company to the ESOP is repayable in annual installments of
$1,039,065 including interest at the rate of 9% per annum through June 30, 2004.
The assets of the ESOP are intended to be invested primarily in Common
Stock of the Company and it is intended that at all times the ESOP will
constitute a qualified plan under the Internal Revenue Code. By providing its
employees with a convenient vehicle for accumulating capital for their future
economic security, the Company believes that the ESOP will assist it in
attracting and retaining capable personnel.
All employees of the Company, other than those covered under a collective
bargaining agreement, who have completed one year of service and are 21 years or
older, are eligible to participate in the ESOP. For each plan year the Company's
contributions may be paid to the trustee of the ESOP in such amount as may be
determined by the Board of Directors, provided, however, that the Company has
agreed to make contributions sufficient to discharge the ESOP's loan obligations
with respect to its aforementioned purchase of the Company's Common Stock.
Contributions by the Company may be paid in cash or in shares of Common Stock of
the Company. No participant is required or permitted to make contributions to
the ESOP.
With each principal and interest payment made by the ESOP on the loan
obligation, a portion of the Company's Common Stock purchased with such loan
proceeds will be allocated to participating employees. The allocation of the
Company stock for any plan year will be credited to each participant's account
on the basis of the ratio of such participant's compensation (up to a maximum of
$100,000) to the aggregate compensation of all participants in the ESOP for such
plan year; provided, however, that for each plan year the annual allocation with
respect to any participant may not exceed the lesser of 25% of compensation or
$30,000. In addition, a participant's account will be credited annually with a
share of the investment earnings and losses of the ESOP, allocated in a manner
similar to the above. Forfeitures will likewise be allocated among the remaining
participants in a similar manner.
As of June 30, 2000, there were 197,137 shares of the Company's Common
Stock in the ESOP allocated to participants, of which 451 shares were allocated
to William P. Greene, 7,251 shares were allocated to John J. Pompay, Jr., 6,843
shares were allocated to Howard Pinsley, 6,170 shares were allocated to Seymour
Saslow, 433 shares were allocated to David A. O'Neil and 2,703 shares were
allocated to Barry Pinsley.
The trustee for the ESOP will vote the shares of the Company's Common Stock
in accordance with instructions received from participants with respect to
shares allocated to their respective accounts, and in accordance with
instructions received from the plan administrator appointed by the Company with
respect to shares not allocated to participants and with respect to shares
allocated to participants for which voting instructions are not received from
participants.
Generally, no benefits are vested until the completion of three continuous
years of service with the Company, as defined by the plan. At that time a
participant's interest will be 20% vested; such vested interest will increase by
20% for each additional year of continuous service and will reach 100% after
seven years. Upon death or upon attaining Normal Retirement Age, a participant
will become 100% vested.
At retirement, termination, death or permanent disability, a participant
will be entitled to his or her vested benefit. Distribution of vested benefits
will be made in accordance with the terms of the plan and in accordance with the
Internal Revenue Code. Subject to certain exceptions, distributions must begin
no later than April 1 following the calendar year in which the participant
reaches age 70-1/2, even if the participant does not retire.
<PAGE>
2000 STOCK OPTION PLAN
On October 29, 1999, the Board of Directors of the Company adopted, and on
January 4, 2000, the stockholders approved, the 2000 Stock Option Plan of the
Company (the "2000 Plan"). As of June 30, 2000, the 2000 Plan was authorized to
issue 150,000 shares of Common Stock. The Board adopted the 2000 Plan to ensure
that the Company can provide equity incentives to employees, directors and other
participants at levels determined appropriate by the Board. As of November 1,
2000, 11,500 stock options were granted under the 2000 Plan which vest over two
years. Consideration for the options to be granted under the Plan is provided by
the recipient's past, present and expected future contributions to the Company.
No monetary consideration is provided by the recipient with respect to the grant
of options.
The 2000 Plan provides for the grant of options to officers, directors, key
employees and consultants of the Company and its subsidiaries. Currently, all of
the Company's employees, directors and consultants are eligible to participate
in the 2000 Plan. The 2000 Plan is administered by the Stock Option Committee of
the Board of Directors. The Stock Option Committee has the authority to
determine to whom, and the time or times at which, options will be granted, the
number of shares of Common Stock that comprise each option, whether to amend or
reduce the exercise price of outstanding options, and the time or times at which
each option granted under the 2000 Plan may be exercised; provided, however,
that no option may be exercised later than 10 years after the date of grant. The
2000 Plan is not subject to the Employee Retirement Income Security Act of 1974.
The 2000 Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended.
Except as may otherwise be provided by the Stock Option Committee as to
non-qualified stock options, no option granted under the 2000 Plan is
transferable, except in the event of a recipient's death or permanent
disability. Incentive Stock Options ("ISOs") may be exercised by the holder (a)
while he is an employee of the Company or (b) at such time as designated in the
individual option agreement but in no event later than three months after
termination of his employment, other than owing to death or permanent
disability. In the event of a recipient's death or permanent disability, the
recipient's ISOs may be exercised at any time prior to expiration of the ISOs,
but in any event no later than one year after the date of his death or permanent
disability. In the event of the recipient's death, the ISOs may be exercised by
the person entitled to do so under the recipient's will or by the recipient's
legal representative. Termination of employment or other relationship with the
Company by a holder of non-qualified stock options will have the effect
specified in the individual option agreement.
The Board of Directors or the Stock Option Committee may at any time
suspend or terminate the 2000 Plan except that (i) no such action may impair the
rights of optionees under any option previously granted pursuant to the 2000
Plan and (ii) shareholder approval is required to effect any amendment to or
change in the 2000 Plan that would: (a) increase the maximum number of shares
which may be acquired pursuant to options granted under the 2000 Plan (except as
to adjustments for any reorganization, recapitalization, stock dividend, stock
split, reverse stock split or other similar transaction as provided in the 2000
Plan); (b) change the minimum exercise price of an option; or (c) increase the
maximum number of options issuable under the 2000 Plan.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding ownership of the
Company's outstanding Common Stock as of November 1, 2000 by each person or
group who is known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- ---------
<S> <C> <C>
Barry Pinsley 2,900.00-Direct 8.0%
58 Washington Avenue 80,164.00-Indirect(1)
Saratoga Springs, NY 12866
Dimensional Fund Advisors Inc. 74,500.00-Direct (2) 7.1%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc. 90,000.00-Direct (3) 8.6%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
The Adirondack Trust Company, 280,585.00-Direct (4) 27.1%
as Trustee of the Company's Employee
Retirement Plan and Trust
473 Broadway
Saratoga Springs, NY 12866
</TABLE>
----------
(1) Does not include 2,000 shares of common stock of the Company owned by the
spouse of Barry Pinsley, beneficial ownership of which is disclaimed by Mr.
Pinsley. The shares listed as indirectly owned by Barry Pinsley are 2,703
shares allocated to him as of June 30, 2000 as a participant in the
Company's ESOP and 77,461 shares owned by the trust under the will of Ruth
Pinsley of which Mr. Pinsley is trustee. Mr. Pinsley has the right to
direct the manner in which such shares are to be voted.
(2) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Dimensional Fund Advisors Inc.
("Dimensional") is from the Schedule 13G dated February 4, 2000 filed with
the Securities and Exchange Commission (the "SEC"). Dimensional, a
registered investment advisor, is deemed to have beneficial ownership of
74,500 shares of Espey Mfg. & Electronics Corp. stock as of February 4,
2000, all of which shares are held in Dimensional investment companies,
trusts and accounts. Dimensional, in its role as investment advisor and/or
manager, disclaims beneficial ownership of all such shares. Dimensional, in
its role as investment advisor and/or manager, reported sole voting power
with respect to 74,500 shares.
(3) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Franklin Resources, Inc.
("Franklin") is from the Schedule 13G, dated January 19, 2000 filed with
the SEC. The Franklin statement indicated that Franklin's "investment
advisory subsidiaries," have sole voting and dispositive power with respect
to all of the shares of common stock shown in the table above for Franklin.
The Franklin statement indicates that the common stock set forth in the
table is beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by direct and
indirect Franklin investment advisory subsidiaries. The statement also
indicated that it filed the Schedule 13G on behalf of itself, Franklin
Advisory, and Franklin's principal shareholders, Charles B. Johnson and
Rupert H. Johnson, Jr. (the "Principal Shareholders"), all of which are
deemed beneficial owners of the shares of common stock shown in the above
table for Franklin. Franklin and the Principal Shareholders disclaim any
economic interest or beneficial ownership in any of the common stock shown
in the table for Franklin.
(4) This information is from the Form 4 dated September 12, 2000 filed with the
SEC by the Trustee on behalf of the Company's ESOP. The ESOP Trustee has
sole voting power with respect to unallocated common shares owned by the
Trust, 84,048 shares as of September 13, 2000, as directed by the Plan
Administrator appointed by the Company's Board of Directors. As to the
common shares allocated to participants, 196,537 shares as of September 13,
2000, the ESOP Trustee has the power to vote such shares as directed by
such Plan Administrator to the extent the participants do not direct the
manner in which such shares are to be voted.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following information is furnished as of November 1, 2000, as to each
class of equity securities of the Company beneficially owned by all the
Directors and by Directors and Officers of the Company as a Group:
<TABLE>
<CAPTION>
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- ---------
<S> <C> <C>
Paul J. Corr ............................................. 3,000.00-Direct 0.29%
William P. Greene ........................................ 100.00-Direct 0.05%
451.00-Indirect
Michael W. Wool .......................................... 100.00-Direct 0.01%
Barry Pinsley ............................................ 2,900.00-Direct 8.00%
80,164.00-Indirect(1)(2)(3)
Seymour Saslow ........................................... 351.00-Direct 0.63%
6,170.00-Indirect (1)
John J. Pompay, Jr. ...................................... 7,251.00-Indirect(1) 0.70%
Howard Pinsley ........................................... 42,134.00-Direct
6,843.00-Indirect(1) 4.74%
Gerald B.H. Solomon ...................................... 0.00- (4) 0.00%
Alvin O. Sabo ............................................ 0.00- (5) 0.00%
Carl Helmetag ............................................ 1,800.00-Direct 0.22%
500.00-Indirect(6)
David A. O'Neil .......................................... 1,000.00-Direct 0.14%
433.00-Indirect (1)
Garry M. Jones ........................................... 3,412.00-Indirect(1) 0.33%
Peggy Murphy ............................................. 2,110.00-Indirect(1) 0.20%
Officers and Directors as a Group ........................ 51,085.00-Direct 15.33%
107,334.00-Indirect(7)
</TABLE>
-----------
(1) Includes shares allocated to named director or executive officer as of June
30, 2000 as a participant in the Company's ESOP. Each such person has the
right to direct the manner in which such shares allocated to him or her are
to be voted by the ESOP Trustee.
(2) Excludes 2,000 shares owned by the spouse of Barry Pinsley. Beneficial
ownership of the shares is disclaimed by Mr. Pinsley.
(3) Includes 77,461 shares owned by a testamentary trust of Ruth Pinsley, the
deceased spouse of Sol Pinsley, former Chairman, President and Chief
Executive Officer. As trustee of the trust, Barry Pinsley may be deemed the
beneficial owner, as defined in Rule 13d-3, of the shares held by the
trust.
(4) Excludes 400 shares owned by the spouse of Gerald B.H. Solomon. Beneficial
ownership of the shares is disclaimed by Mr. Solomon.
(5) Excludes 1,000 shares owned by the spouse of Alvin O. Sabo. Beneficial
ownership of the shares is disclaimed by Mr. Sabo.
(6) Includes 500 shares owned by the Molly K. Helmetag Trust. As trustee of the
trust, Carl Helmetag may be deemed the beneficial owner, as defined in Rule
13d-3, of the shares held by the trust.
(7) Includes shares allocated to all directors and executive officers as a
group as of June 30, 2000 who participate in the Company's ESOP. Each such
person has the right to direct the manner in which such shares allocated to
him or her are to be voted by the ESOP Trustee.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As previously reported, the Company established and sold to the ESOP Trust
on June 5, 1989, 331,224 shares of the Company's treasury stock at a price of
$26.50 per share, which purchase price was funded by the Company making a cash
contribution and loan. Each year, the Company makes contributions to the ESOP
which are used to make loan interest and principal payments to the Company. With
each such payment, a portion of the common stock held by the ESOP is allocated
to participating employees. As of June 30, 2000, there were 197,137 shares
allocated to participants. The loan from the Company to the ESOP is repayable in
annual installments of $1,039,605, including interest, through June 30, 2004.
Officers of the Company, including those who are also directors, are eligible to
participate in the ESOP and to have shares and cash allocated to their accounts
and distributed to them in accordance with the terms of the ESOP.
The Company paid the law firm of Langrock, Sperry & Wool, of which Michael
W. Wool, a director of the Company, is a partner, a total of $42,000 for legal
services during the fiscal year ended June 30, 2000. The Company paid a director
of the Company a total of approximately $15,975 and $15,600 for consulting
services during the fiscal year ended June 30, 2000 and 1999, respectively.
BOARD OF DIRECTORS' PROPOSAL TO RATIFY
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending June 30, 2001. Pricewaterhouse Coopers
LLP was engaged by the Company on October 23, 1998. Also upon the recommendation
of the Audit Committee, on October 23, 1998, the Board notified KPMG Peat
Marwick LLP, the Company's independent accountants for the fiscal year ended
June 30, 1998, that the Company would not engage them as independent accountants
for the fiscal year ended June 30, 1999. During the Company's 1997 and 1998
fiscal years and the subsequent interim period preceding such dismissal, there
were no disagreements with KPMG Peat Marwick LLP regarding any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
Unless otherwise specified by the shareholders, the shares represented by
their properly executed proxies will be voted for ratification of the
appointment of PricewaterhouseCoopers LLP as independent accountants for the
fiscal year ending June 30, 2001. The Company is advised by said firm that
neither PricewaterhouseCoopers LLP nor any of its partners now has, or during
the past three years had, any direct financial interest or material indirect
financial interest or any connection with the Company.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting with the opportunity to make a statement if he or she desires
to do so and to be available to respond to appropriate questions from
shareholders.
The Audit Committee approved this change of the Company's independent
accountants. If the stockholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Board will consider other independent
accountants upon recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY FOR FISCAL YEAR ENDING JUNE 30, 2001.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, generally
requires the Company's directors, executive officers, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of beneficial ownership and changes in beneficial ownership with
the Securities and Exchange Commission. Based solely upon its review of copies
of such reports received by it, or upon written representations obtained from
certain reporting persons, the Company believes that its officers, directors,
and stockholders who own more than ten percent of the Company's equity
securities have complied with all Section 16(a) filing requirements.
<PAGE>
ANNUAL REPORTS
The Annual Report of the Company to the shareholders for the fiscal year
ended June 30, 2000, including financial statements, accompanies this Proxy
Statement. Such financial statements are not incorporated herein by reference.
A copy of the Company's Annual Report on Form 10-K (including financial
statements and schedules thereto) for the fiscal year ended June 30, 2000 filed
with the Securities and Exchange Commission will be provided without charge upon
the written request of shareholders to Espey Mfg. & Electronics Corp.,
attention: Investor Relations, 233 Ballston Avenue, Saratoga Springs, New York
12866. The Company's Form 10-K for the fiscal year ended June 30, 2000 can also
be viewed electronically through a link at the Company's website
(www.espey.com).
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder proposal which may be a proper subject for inclusion in the
proxy statement and for consideration at the 2001 Annual Meeting must be
received by the Company at its principal executive office no later than July 14,
2001, if it is to be included in the Company's 2001 proxy statement and proxy
form.
OTHER MATTERS
Proxy Solicitation
The solicitation of the enclosed proxy is being made on behalf of the Board
of Directors and the cost of preparing and mailing the Notice of Meeting, Proxy
Statement and form of proxy to shareholders is to be borne by the Company.
Other Matters
The Company is unaware of any other matter that will be brought before the
meeting for action. If other matters should come before the meeting which
require a shareholder vote, it is intended that the proxy holders will use their
own discretion in voting on such other matters.
By Order of the Board of Directors,
/s/ Howard Pinsley
------------------------
HOWARD PINSLEY
President and Chief Executive Officer
November 10, 2000
Saratoga Springs, New York
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ESPEY MFG. & ELECTRONICS CORP.
PROXY FOR THE
2000 ANNUAL MEETING OF SHAREHOLDERS
December 8, 2000
The undersigned hereby appoints Howard Pinsley and Barry Pinsley as Proxies,
each with the power to appoint his substitute, and hereby authorizes them or any
one of them to represent and to vote, as designated below, all the shares of
common stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be
entitled to vote if personally present at the 2000 Annual Meeting of
Shareholders to be held on December 8, 2000 or any adjournment thereof.
Please be sure to sign and date Date this Proxy in the box below.
COMMON
1. Election of Class A Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
CARL HELMETAG HOWARD PINSLEY ALVIN O. SABO
Management recommends a vote FOR these nominees.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
the "FOR" box above AND write the nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. Proposal to approve the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Management recommends a vote FOR this proposal.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please be sure to sign and date
this Proxy in the box below.
________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
--------------------------------------------------------------------------------
Detach here, sign, date and mail in postage paid envelope provided.
ESPEY MFG. & ELECTRONICS CORP.
--------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE ABOVE SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ESPEY MFG. & ELECTRONICS CORP.
PROXY FOR THE
2000 ANNUAL MEETING OF SHAREHOLDERS
December 8, 2000
The undersigned hereby appoints Howard Pinsley and Barry Pinsley as Proxies,
each with the power to appoint his substitute, and hereby authorizes them or any
one of them to represent and to vote, as designated below, all the shares of
common stock of ESPEY MFG. & ELECTRONICS CORP. which the undersigned would be
entitled to vote if personally present at the 2000 Annual Meeting of
Shareholders to be held on December 8, 2000 or any adjournment thereof.
ESOP PLAN
1 Election of Class A Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
CARL HELMETAG HOWARD PINSLEY ALVIN O. SABO
Management recommends a vote FOR these nominees.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
the "FOR" box above AND write the nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. Proposal to approve the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Management recommends a vote FOR this proposal.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Detach here, sign, date and mail in postage paid envelope provided.
ESPEY MFG. & ELECTRONICS CORP.
--------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE ABOVE SIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
