<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ).
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
JACO ELECTRONICS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2). Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (Set forth amount
on which filing fee is calculated and state how it was
determined.
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on December 11, 1995
To the Shareholders of
JACO ELECTRONICS, INC.
Please Be Advised that the annual meeting of shareholders (the
"Annual Meeting") of Jaco Electronics, Inc. (the "Company") will be held on
December 11, 1995, at 9:30 a.m., at the Melville Marriott, 1350 Old Walt
Whitman Road, Melville, New York 11747.
The Annual Meeting will be held for the following purposes:
1. To elect four Directors of the Company to hold office
until the next annual meeting of shareholders or
until their successors are duly elected and
qualified;
2. To approve and adopt an amendment to the Company's
Certificate of Incorporation to increase the
aggregate number of shares of common stock which the
Company shall have the authority to issue from
5,000,000 shares to 10,000,000 shares; and
3. To transact such other business as may properly come
before the Annual Meeting or any adjournments
thereof.
The Board of Directors has fixed the close of business on
November 10, 1995, as the record date for the determination of the shareholders
entitled to notice of and to vote at the Annual Meeting or any adjournment or
adjournments thereof. Only shareholders of record at the close of business on
the record date are entitled to notice of and to vote at the Annual Meeting.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE
MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME
BEFORE THE PROXY IS VOTED.
By Order of the Board of Directors,
Joel H. Girsky,
Chairman
Date: November 10, 1995
<PAGE> 3
JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11788
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Jaco Electronics, Inc. (the
"Company") of proxies to be voted at the annual meeting of shareholders (the
"Annual Meeting") to be held on December 11, 1995, at 9:30 a.m., at the
Melville Marriott, 1350 Old Walt Whitman Road, Melville, New York, 11747, and
any and all adjournments thereof.
The solicitation will be by mail, and the cost of such
solicitation, including the reimbursement of brokerage firms and others for
their expenses in forwarding proxies and proxy statements to the beneficial
owners of the Company's common stock, will be borne by the Company.
The shares of common stock represented by each duly executed
proxy received by the Board of Directors before the Annual Meeting will be
voted at the Annual Meeting as specified in the proxy. A shareholder may
withhold authority to vote for all of the nominees by marking the appropriate
box on the accompanying proxy card, or may withhold authority to vote for an
individual nominee by striking a line through such nominee's name in the
appropriate space on the accompanying proxy card. UNLESS INSTRUCTIONS TO THE
CONTRARY ARE GIVEN, EACH PROPERLY EXECUTED PROXY WILL BE VOTED FOR (i) THE
ELECTION OF DIRECTORS NAMED IN THIS PROXY STATEMENT AND THE FORM OF PROXY, AND
(ii) THE APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE AGGREGATE AUTHORIZED SHARES OF
COMMON STOCK. Shareholders who execute proxies nevertheless retain the right
to revoke them at any time before they are voted by submitting new proxies
bearing a later date, by submitting written revocations to the named proxies,
or by attending the Annual Meeting and voting thereat.
This Proxy Statement, the accompanying form of proxy, and the
1995 Annual Report to Shareholders, are first being sent to shareholders on or
about November 10, 1995.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has designated November 10, 1995, as
the record date (the "Record Date") for determining the shareholders entitled
to vote at the Annual Meeting. On the Record Date, the total number of shares
of common stock of the Company, $0.10 par value per share (the "Common Stock"),
outstanding and entitled to vote was 3,791,806. The holders of all outstanding
shares of Common Stock are entitled to one vote for each share of Common Stock
registered in their names on the books of the Company at the close of business
on the Record Date. The presence in person or by proxy of a majority of the
outstanding shares of the Common Stock entitled to vote at the Annual Meeting
will be necessary to constitute a quorum.
<PAGE> 4
Abstentions and broker non-votes on any item will not be counted as voting in
respect of such item; they will be counted only for purposes of determining
whether a quorum is present at the Annual Meeting.
2
<PAGE> 5
PRINCIPAL SHAREHOLDERS; SHARES HELD BY MANAGEMENT
The following table sets forth the number and percentage of
shares of Common Stock owned as of October 27, 1995 (i) by each director of the
Company and each nominee for director, (ii) all persons who, to the knowledge
of the Company, are the beneficial owners of more than 5% of the outstanding
shares of Common Stock, (iii) each of the executive officers and other key
employees named in the Summary Compensation Table, and (iv) all of the
Company's directors, executive officers and such other key employees, as a
group. Each person named in the table has sole investment power and sole
voting power with respect to the shares of Common Stock set forth opposite such
person's name, except as otherwise indicated.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Common Stock
Name of Beneficial Owner Beneficially Owned(1) Outstanding(2)
- ------------------------ --------------------- --------------
<S> <C> <C>
*Joel H. Girsky
President, Treasurer
and Director 529,040(3) 13.7%
*Charles B. Girsky
Executive Vice President
and Director 252,274 6.7%
*Stephen A. Cohen
Director 22,389(4) **
*Edward M. Frankel
Director 17,600(4) **
Jeffrey D. Gash
Vice President of Finance 4,565(5) **
Denis Haggerty
Vice President of Marketing 3,667(6) **
Morton J. Denson
Vice President of Marketing 4,400 **
Herbert Entenberg
Vice President of Management
and Information Systems,
and Secretary 3,667(6) **
All Directors, executive officers
and other key employees
as a group (8 persons) 837,602(7) 21.4%
</TABLE>
3
<PAGE> 6
- ---------------------------
* Nominee for election to Board of Directors.
** Less than 1%.
(1) Includes shares of Common Stock issuable pursuant to options exercisable
within sixty (60) days from the date hereof.
(2) Based upon (i) 3,789,384 shares of Common Stock issued and outstanding,
plus, if appropriate, (ii) the number of shares of Common Stock which may
be acquired by the named person or by all persons included in the group
pursuant to the exercise of options exercisable within sixty (60) days
from the date hereof.
(3) Includes 81,400 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
(4) Includes 17,600 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Stock Option Plan for Outside
Directors.
(5) Includes 4,033 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
(6) Includes 3,667 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
(7) Includes 127,967 shares of Common Stock acquirable pursuant to the
exercise of options.
4
<PAGE> 7
ELECTION OF DIRECTORS
Four directors are to be elected to serve until the next
annual meeting of shareholders and until their successors are elected and shall
have qualified. Directors shall be elected by shareholders holding a plurality
of the shares of Common Stock present at the Annual Meeting. It is the
intention of the persons named in the form of proxy, unless authority is
withheld, to vote the proxies given them for the election of all nominees
hereinafter named, all of whom are presently directors of the Company. In the
event, however, that any one of them is unable or declines to serve as a
director, the appointees named in the form of proxy reserve the right to
substitute another person of their choice as nominee, in his place and stead,
or to vote for such lesser number of directors as may be presented by the Board
of Directors in accordance with the Company's By-Laws.
The nominees for the Board or Directors of the Company are as
follows:
Stephen A. Cohen
Edward M. Frankel
Charles B. Girsky
Joel H. Girsky
Information about the foregoing nominees is set forth under
"Management."
UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK
REPRESENTED BY THE ENCLOSED PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES NAMED ABOVE AS DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
The Board of Directors held seven meetings during the year
ended June 30, 1995 ("Fiscal 1995"). Each director (during the period in which
each such director served) attended at least seventy-five (75%) percent of the
aggregate of (i) the total number of meetings of the Board of Directors, plus
(ii) the total number of meetings held by all committees of the Board of
Directors on which the director served.
The Board of Directors has a standing Audit Committee, a
standing Option Committee, and a standing Compensation Committee. The Audit
Committee reviews the work and reports of the Company's independent
accountants. During Fiscal 1995, the Audit Committee was comprised of Stephen
A. Cohen and Edward M. Frankel. The current members of the Audit Committee are
Mr. Frankel and Mr. Cohen. The Audit Committee met once during Fiscal 1995.
The Option Committee, composed of Mr. Cohen and Mr. Frankel, administers the
Company's 1993 Non-Qualified Stock Option Plan. The Option Committee did
5
<PAGE> 8
not meet during Fiscal 1995. The Compensation Committee makes recommendations
to the Board of Directors concerning compensation arrangements for directors,
executive officers, and senior management of the Company. The Compensation
Committee met once during Fiscal 1995. During Fiscal 1995, the Compensation
Committee was comprised of Messrs. Cohen and Frankel.
MANAGEMENT
Executive Officers and Directors
- --------------------------------
The directors and executive officers of the Company, their
ages, and their positions and terms of office with the Company are set forth
below.
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
* Joel H. Girsky 56 Chairman of the Board, President, Treasurer, and Director
* Charles B. Girsky 61 Executive Vice President and Director of the Company
Jeffrey D. Gash 42 Vice President, Finance of the Company
* Stephen A. Cohen 58 Director
* Edward M. Frankel 57 Director
- ---------------
</TABLE>
* Nominee for election to the Board of Directors.
Joel H. Girsky has been a Director and executive officer of
the Company since it was founded in 1961. He also is a Director of Nastech
Pharmaceutical Company, Inc. of Hauppauge, New York, and Frequency Electronics,
Inc. of Uniondale, New York. Messrs. Joel H. Girsky and Charles B. Girsky are
brothers.
Charles B. Girsky became an executive officer of the Company
on August 2, 1985 and has been its Executive Vice President since January 1983.
Since April, 1984, he has been President of Distel, Inc., a wholly-owned
subsidiary of the Company ("Distel"). He was a founder, Director, and the
President of the Company from 1961 through January, 1983, and was elected a
Director of the Company again in 1986. Messrs. Charles B. Girsky and Joel H.
Girsky are brothers.
6
<PAGE> 9
Jeffrey D. Gash became Vice President of Finance of the
Company in January, 1989, and was Controller of the Company for more than five
years prior thereto. He has also served in similar capacities with the
Company's subsidiaries.
Stephen A. Cohen has been a Director of the Company since
1970. Since August, 1989, he has practiced law as a member of Morrison Cohen
Singer & Weinstein, LLP general counsel to the Company. For more than five
years prior thereto, he was engaged in the practice of law as a member of the
firm of Friedlander, Gaines, Cohen & Rosenberg, former general counsel to the
Company.
Edward M. Frankel became a Director of the Company in May,
1984. For more than five years, he has been President of both Garden State
Nutritionals, Inc. and Windmill Marketing Services, Inc., each a regional
distributor of vitamins and health and beauty products.
Other Key Employees
- -------------------
The Company also considers the following individuals to be key
to its operations:
Denis Haggerty, Vice President of Marketing -- Passives. Mr.
Haggerty, who is 62 years old, oversees marketing of passive components and has
been employed by the Company for approximately 30 years.
Morton J. Denson, Vice President of Marketing -- Actives. Mr.
Denson, who is 61 years old, oversees marketing of active components and has
been employed by the Company for over 8 years.
Herbert Entenberg, Vice President of Management and
Information Systems and Secretary. Mr. Entenberg has been employed by the
Company for over 15 years. Mr. Entenberg, who is 61 years old, oversees
management information systems and operations and is responsible for developing
and implementing the Company's inventory control system.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the Company's three most
recently ended fiscal years, the compensation paid or accrued to the President
of the Company and to the executive officers and other key employees of the
Company, other than the President, whose aggregate annual salary and bonus for
the Company's last fiscal year exceeded $100,000:
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- -------------------- -------
Name and Other Restricted All Other
Principal Annual Stock Options/ LTIP Compensation
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs (#) Payouts($) ($)(2)
- -------- ---- --------- -------- --------------- --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel H. Girsky, 1993 225,000 87,000 -- -- -- -- 55,087
Chairman of the Board 1994 250,000 76,000 -- -- 81,400 -- 62,519
President, and Treasurer(1) 1995 300,000 193,000 -- -- -- -- 72,100
Charles B. Girsky, 1993 168,269 40,037 -- -- -- -- 3,762
Executive Vice President 1994 181,000 17,997 -- -- -- -- 3,783
1995 206,720 42,073 -- -- -- -- 3,947
Jeffrey D. Gash, 1993 86,160 9,000 -- -- -- -- 1,513
Vice President of Finance 1994 96,000 10,000 -- -- 4,033 -- 1,663
1995 96,347 10,000 -- -- -- -- 1,806
Denis Haggerty 1993 76,096 33,368 -- -- -- -- 10,814
Vice President of 1994 90,000 31,377 -- -- 3,667 -- 11,165
Marketing 1995 90,348 36,964 -- -- -- -- 11,029
Morton J. Denson 1993 114,306 16,173 -- -- -- -- 8,762
Vice President of 1994 114,998 19,887 -- -- -- -- 8,891
Marketing 1995 115,440 37,955 -- -- -- -- 8,957
Herbert Entenberg 1993 102,560 -- -- -- -- -- 3,369
Vice President of 1994 102,560 4,363 -- -- 3,667 -- 3,436
Management and 1995 102,816 16,155 -- -- -- -- 3,538
Information Systems,
and Secretary
- -----------------------
</TABLE>
(1) Mr. Joel Girsky entered into a four-year employment agreement with the
Company, effective as of July 1, 1993, to serve as the Company's
Chairman, President and Treasurer. Pursuant to the agreement, Mr. Girsky
shall receive a base salary of $250,000 for the fiscal year ended 1994,
$300,000 for the fiscal year ended June 30, 1995, and $325,000 for each
of the fiscal years ended June 30, 1996 and June 30, 1997. In addition,
he is entitled to receive a cash bonus equal to four percent (4%) of the
Company's earnings before income taxes for each year in which such
earnings are in excess of $1,000,000, and six percent (6%) of the
Company's earnings before income taxes for each year in which such
earnings are in excess of $2,500,000. Mr. Girsky or his estate, as the
case may be, is entitled to receive a payment of $500,000 if he dies or
becomes permanently disabled during the term of the employment agreement.
This death and disability benefit is funded by a "key-man" life insurance
policy maintained by the Company. In the event of Mr. Girsky's cessation
of employment with the Company, upon his request, the Company is
obligated to transfer such policy to Mr. Girsky. Thereafter, the Company
would have no further liability for the payment of such benefit or the
premiums on such policy. In addition, pursuant to the terms of the
employment agreement, Mr. Girsky is to receive deferred compensation
which accrues at the rate of $50,000 per year and becomes payable in a
lump sum at the later of (i) Mr. Girsky's attainment of age 60, or (ii)
his cessation of employment, with or without cause, by the Company at any
time after July 1, 1993. In the event of a change in control resulting
in termination fo Mr. Girsky's employment, Mr. Girsky will receive
between $450,000 and $600,000 depending on the date of termination.
(2) Includes auto expenses, 401(k) matching contributions by the Company,
premiums paid on group term life insurance, taxable portion of split
dollar life insurance policies and deferred compensation accrued in
connection with Mr. Joel Girsky's employment agreement with the Company,
as described in footnote (1) above. Auto expenses for fiscal 1995 for
the Named Executive were as follows: Mr. Joel Girsky -- $12,031, Mr.
Charles Girsky -- $2,110, Mr. Gash -- $724, Mr. Entenberg -- $2,354, Mr.
Haggerty - $9,600 and Mr. Denson - $7,200. 401(k) matching contributions
for fiscal 1995 for the Named Executives were as follows: Mr. Joel
Girsky -- $1,009, Mr. Charles Girsky -- $1,162, Mr. Gash -- $1,000, Mr.
Haggerty -- $1,078, Mr. Denson -- $1,055 and Mr. Entenberg -- $1,031.
Premiums paid on group term life insurance for fiscal 1995 for the Named
Executives were as follows: Mr. Joel Girsky -- $1,008, Mr. Charles
Girsky -- $675, Mr. Gash -- $82, Mr. Haggerty -- $351, Mr. Denson --
$702 and Mr. Entenberg -- $153. The taxable portion of split dollar life
insurance policies for Mr. Joel Girsky was $8,052 for fiscal 1995.
$50,000 of deferred compensation was accrued in fiscal 1995 in connection
with Mr. Joel Girsky's employment agreement with the Company.
8
<PAGE> 11
STOCK OPTION
There were no grants of stock options made to any of the persons
described in the Summary Compensation Table on page 8 during fiscal 1995.
The following table sets forth information concerning the exercise of
stock options during fiscal 1995 by each of the persons described in the
Summary Compensation Table on page 8 and the number and value of unexercised
options held by them at the fiscal year-end.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End (#) FY-End ($)(1)
----------------------------- ---------------------------
Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky . . . . . 0 0 81,400 0 123,728 0
Charles B. Girsky . . . . 36,667 92,188 0 0 0 0
Jeffrey D. Gash . . . . . 0 0 4,033 0 6,130 0
Denis Haggerty . . . . . 0 0 3,667 0 5,877 0
Morton J. Denson . . . . 4,400 10,875 0 0 0 0
Herbert Entenberg . . . . 0 0 3,667 0 5,877 0
</TABLE>
__________________________
(1) Based on the fair market value per share of the Common Stock
at year end, minus the exercise or base price on "in-
the-money" options. The closing sale price for the Company's
Common Stock as of June 30, 1995 on The NASDAQ National Market
was $6.38.
COMPENSATION OF DIRECTORS
Pursuant to the Company's 1993 Stock Option Plan for Outside Directors
(the "Outside Directors' Plan"), the Company's outside directors (directors who
are not employees of the Company) were each granted options on December 31,
1993 to purchase 14,667 shares of Common Stock. In addition, the Outside
Directors Plan provides that each outside director shall also be granted on
each December 31 subsequent to December 31, 1993 stock options to purchase
2,933 shares of Common Stock. All options granted under the Outside Directors'
Plan are immediately exercisable, and the exercise price per share of each
option is equal to the fair market value of the shares of Common Stock on the
date of grant.
9
<PAGE> 12
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company's employment agreement with Mr. Joel Girsky is described
in the footnotes to the Summary Compensation Table on page 8 of this Proxy
Statement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Stephen A. Cohen, a Director of the Company, is a member of Morrison
Cohen Singer & Weinstein, LLP, general counsel to the Company. Mr. Cohen
currently owns 4,789 shares of Common Stock and options to purchase an
additional 17,600 shares of Common Stock. Mr. Cohen is one of the two members
of the Company's Compensation Committee, the committee responsible for
determining and administering the Company's compensation policies for the
remuneration of the Company's senior management.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee of the Board of Directors of the Company
(the "Committee") is responsible for determining and administering the
Company's compensation policies for the remuneration of the Company's senior
management. The Committee annually evaluates individual and corporate
performance from both a short-term and long-term perspective.
PHILOSOPHY
The Company's executive compensation program is designed to reward and
retain highly-qualified executives, and to encourage the achievement of
business objectives and superior corporate performance. The program seeks to
foster a performance-oriented environment, to enhance management's long-term
focus on maximizing shareholder value through equity-based incentives, and to
adjust the variable portion of an executive's compensation based upon corporate
and individual performance. In determining an executive's compensation,
consideration is given to the employee's total compensation package, overall
corporate financial performance, and the employee's role in attaining such
results.
COMPONENTS OF EXECUTIVE COMPENSATION
Historically, the Company's executive employees have received
cash-based and equity-based compensation.
CASH-BASED COMPENSATION: Base salary represents the primary cash
component of an executive employee's compensation, and is determined by
evaluating the responsibilities associated with an employee's position at the
Company and the employee's overall level of experience. In
10
<PAGE> 13
addition, the Committee, in its discretion, may award bonuses. The Committee
and the Board of Directors believes that the Company's management and employees
are best motivated through stock option awards and cash incentives.
EQUITY-BASED COMPENSATION: Equity-based compensation principally has
been in the form of stock options granted pursuant to the Company's 1981
Incentive Stock Option Plan (the "Incentive Plan"). Although the Incentive
Plan was terminated in 1991, the Company recently adopted the 1993
Non-Qualified Stock Option Plan. The Committee believes that stock options
represent an important component of a well-balanced compensation program.
Because stock option awards provide value only in the event of share price
appreciation, stock options enhance management's focus on maximizing long term
shareholder value, and thus provide a direct relationship between an
executive's compensation and the shareholders' interests. No specific formula
is used to determine option awards for an employee. Rather, individual award
levels are based upon the subjective evaluation of each employee's overall past
and expected future contributions to the success of the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The philosophy, factors, and criteria of the Committee generally
applicable to the Company's senior management is applicable to the Chief
Executive Officer.
Stephen A. Cohen
Edward M. Frankel
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company has purchased a directors' and officers' liability
insurance policy, as permitted by Article 7 of the New York Business
Corporation Law. Admiral Insurance Company issued the policy, which provides
coverage of $2,000,000 for an annual premium of $25,102. The policy is
currently in effect and expires on February 5, 1996. In addition, the Company
currently maintains two excess directors' and officers' liability insurance
policies, which in the aggregate provide an additional $3,000,000 of coverage
for an annual aggregate premium of $35,000. The foregoing excess policies are
written by National Union Fire Insurance Company of Pittsburgh, Pennsylvania
and Admiral Insurance Company; they likewise expire on February 5, 1996.
11
<PAGE> 14
COMPARATIVE STOCK PERFORMANCE GRAPH
The following is a graph comparing the annual percentage change in the
cumulative total shareholder return of the Company's common stock with the
cumulative total returns of the published Dow Jones Equity Market Index and
Industrial & Commercial Services - General Services Index for the Company's
last five (5) fiscal years:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG JACO ELECTRONICS, INC., DOW JONES EQUITY MARKET INDEX AND DOW
JONES INDUSTRIAL & COMMERCIAL SERVICES - GENERAL SERVICES INDEX
FISCAL YEAR ENDING JUNE 30
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Jaco Electronics, Inc. 100 40 100 214 193 258
Dow Jones Equity Market Index 100 108 123 141 143 179
Dow Jones Industrial & Commercial Services -General 100 105 116 127 126 148
</TABLE>
12
<PAGE> 15
INDEPENDENT AUDITORS
The Board of Directors selected Grant Thornton LLP as independent
auditors for its fiscal year ended June 30, 1995. Grant Thornton LLP were also
auditors for the fiscal year ended June 30, 1994. The Company has not chosen
an independent auditor for the fiscal year ending June 30, 1996.
Representatives of Grant Thornton LLP will be present at the Annual
Meeting, will be afforded an opportunity to make a statement, and will be
available to respond to appropriate inquiries from shareholders.
CERTAIN TRANSACTIONS
During the year ended 1995, the Company incurred approximately
$654,000 of rental expenses in connection with its main headquarters and
centralized inventory distribution facility, located in Hauppauge, New York,
which was paid to Bemar Realty Company ("Bemar"), the owner of such premises.
Bemar is a partnership consisting of Messrs. Joel Girsky and Charles Girsky,
both of whom are officers, directors and principal shareholders of the Company.
The lease on the property, which is net of all expenses, including taxes,
utilities, insurance, maintenance and repairs, expires on December 31, 1995.
The Company is in the process of negotiating a renewal of such lease at a
rental rate comparable to the rates currently being charged to rent similar
properties in the area. It is anticipated that the new rental rate will be
slightly lower than the current rate.
During fiscal 1995, Joel H. Girsky, the Chairman, President and
Treasurer of the Company, was indebted to the Company under demand loans
bearing interest at a rate of 9 3/4% per annum, the greatest amount of which
indebtedness was $641,425 during such fiscal year. At June 30, 1995, the
amount of such indebtedness was $309,808. Such indebtedness was repaid in full
on October 27, 1995.
In September 1995, the Company's Board of Directors adopted a policy
prohibiting the Company from making any loan or advance of money or property
to, or guaranteeing the obligation of, any non-employee director of the Company
and limiting the Company's ability to make such loans, advances or guarantees
to employee directors and executive officers of the Company or its subsidiaries
unless a majority of independent disinterested outside directors determine that
such loan, advance or guarantee may reasonably be expected to benefit the
Company. See also "Executive Compensation and Other Information --
Compensation Committee Interlocks and Insider Participation."
13
<PAGE> 16
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of the Common Stock (the
"Ten Percent Shareholders") to file with the Securities and Exchange Commission
initial reports of beneficial ownership on Form 3 and reports of changes in
beneficial ownership on Form 4 or Form 5. Executive officers, directors, and
Ten Percent Shareholders are required to furnish the Company with copies of
such Forms. Based solely on a review of such Forms furnished to the Company,
the Company believes that during Fiscal 1995, the Company's executive officers,
directors, and Ten Percent Shareholders complied with all applicable Section
16(a) filing requirements.
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES.
Description of the Proposed Amendment
- -------------------------------------
The Board of Directors proposes and recommends that the shareholders
approve and adopt an amendment to the Certificate of Incorporation of the
Company to increase the number of shares of Common Stock which the Company is
authorized to issue from 5,000,000 shares to 10,000,000 shares. The adoption
of the amendment is subject to and contingent on the approval of shareholders
holding a majority of the outstanding shares of Common Stock.
As of the date hereof, 5,000,000 shares of Common Stock are
authorized. The proposed additional 5,000,000 shares of Common Stock would be
a part of the existing class of Common Stock and, if and when issued, would
have the same rights and privileges as the shares of Common Stock presently
issued and outstanding. The holders of Common Stock of the Company are not
entitled to preemptive rights or cumulative voting. The proposed amendment
would not affect the number of authorized shares of preferred stock.
Purposes and Effects of the Proposed Amendment
- ----------------------------------------------
If the proposed amendment is approved by the shareholders there would
be 10,000,000 shares of Common Stock authorized. The additional 5,000,000
shares of Common Stock would be available for issuance by the Board of
Directors in connection with any future stock dividends or stock splits,
financings, acquisitions, management incentive or employee benefit plans and
for other general corporate purposes. The Company's management has no present
intention of issuing additional shares other than as a result of the exercise
of currently outstanding stock options, warrants or similar instruments.
No further action or authorization by shareholders would be necessary
prior to issuance of additional shares of Common Stock, except as may be
required by law or applicable stock exchange regulations.
14
<PAGE> 17
UNLESS MARKED TO THE CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED
BY THE ENCLOSED PROXY WILL BE VOTED FOR THE ADOPTION AND APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ADOPTION AND APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Shareholders wishing to present proposals at the 1996 annual meeting
of shareholders and wishing to have their proposals presented in the proxy
statement distributed by the Board of Directors in connection with the 1996
annual meeting of shareholders must submit their proposals, in writing, to the
attention of the Vice President, Finance of the Company, on or before June 30,
1996.
GENERAL
The Board of Directors knows of no other matters which are likely to
be brought before the Annual Meeting. If, however, any other matters are
properly brought before the Annual Meeting, the persons named in the enclosed
proxy or their substitutes shall vote thereon in accordance with their judgment
pursuant to the discretionary authority conferred by the form of proxy.
By Order of the Board of Directors,
Joel H. Girsky, Chairman
Hauppauge, New York
November 10, 1995
15
<PAGE> 18
JACO ELECTRONICS, INC.
Proxy for Annual Meeting of Shareholders - December 11, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints Charles B. Girsky and Joel H.
Girsky, and each of them, proxies of the undersigned (the "Proxies"), with the
power to appoint a substitute, to represent and to vote all shares of common
stock of Jaco Electronics, Inc. (the "Company"), $0.10 par value per share (the
"Common Stock"), which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders of the Company, to be held on
December 11, 1995, and all adjournments thereof, as follows:
*1. To vote on the election of each of the following nominees to
the Board of Directors, as indicated:
FOR all nominees listed below (except as marked to the
contrary). / /
WITHHOLD AUTHORITY to vote for all nominees listed below.
/ /
Stephen A. Cohen, Edward M. Frankel, Charles B. Girsky, and
Joel H. Girsky
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE.)
*2. To approve and adopt an amendment to the Company's Certificate
of Incorporation to increase the aggregate number of shares of
Common Stock which the Company shall have the authority to
issue from 5,000,000 shares to 10,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To vote, in the discretion of the Proxies, on such other
matters as may properly come before the meeting.
*THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY SHALL BE VOTED AS
DIRECTED ABOVE BY THE SHAREHOLDER. IN THE ABSENCE OF SUCH DIRECTION, THE
SHARES OF COMMON STOCK SHALL BE VOTED FOR THE MATTERS SET FORTH IN ITEMS 1 AND
2.
Receipt of the Notice of Annual Meeting, the Proxy Statement, and the Annual
Report to Shareholders is hereby acknowledged.
Date:_____________________________, 1995
___________________________________________
___________________________________________
___________________________________________
Signatures of Shareholders
Please sign as name appears hereon. If signing as attorney, executor,
administrator, trustee, guardian, or other fiduciary, please give your full
title as it appears. If shares of Common Stock are held jointly, each named
shareholder should sign.
PLEASE DATE, SIGN, AND RETURN THIS PROXY PROMPTLY.
