<PAGE> 1
JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on December 13, 1996
--------------------------
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 13, 1996, 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; and
2. 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 12, 1996, 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 14, 1996
<PAGE> 2
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 13, 1996, 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 THE ELECTION OF DIRECTORS NAMED
IN THIS PROXY STATEMENT AND THE FORM OF PROXY. 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 1996
Annual Report to Shareholders, are first being sent to shareholders on or about
November 19, 1996.
VOTING SECURITIES AND RECORD DATE
The Board of Directors has designated November 12, 1996, 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 3,888,221 (excluding 87,500 shares of
treasury stock). 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. Abstentions and broker non-votes on any item will not be
counted as voting in respect
<PAGE> 3
of such item; they will be counted only for purposes of determining whether a
quorum is present at the Annual Meeting.
PRINCIPAL SHAREHOLDERS; SHARES HELD BY MANAGEMENT
The following table sets forth the number and percentage of
shares of Common Stock owned as of October 17, 1996 (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 522,540(3) 13.2%
* Charles B. Girsky
Executive Vice President and
Director of the Company 263,274(4) 6.7%
* Stephen A. Cohen
Director 25,322(5) **
</TABLE>
* Nominee for election to the 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) 3,888,221 shares of Common Stock issued and outstanding
(excluding 87,500 shares of treasury stock), 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 15,000 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non-Qualified Stock Option
Plan.
(5) Includes 20,533 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Stock Option Plan For Outside
Directors.
2
<PAGE> 4
<TABLE>
<CAPTION>
Percentage of
Number of Shares Common Stock
Name of Beneficial Owner Beneficially Owned Outstanding
- ------------------------ ------------------ -----------
<S> <C> <C>
* Edward M. Frankel
Director 20,533(5) **
Jeffrey D. Gash
Vice President, Finance 9,565(6) **
Denis Haggerty
Vice President of Marketing 5,000(7) **
Morton J. Denson
Vice President of Marketing 4,500(8) **
Herbert Entenberg
Vice President of Management
and Information Systems,
and Secretary 6,167(9) **
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202 309,000(10) 7.9%
All Directors, executive officers
and other key employees
as a group (8 persons) 856,901(11) 21.2%
</TABLE>
(6) Includes of 9,033 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan.
(7) Consists of 5,000 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan.
(8) Includes 2,500 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non-Qualified Stock Option
Plan.
(9) Consists of 6,167 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan.
(10) These securities are owned by T. Rowe Price New Horizons Fund, Inc. for
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment advisor. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(11) Includes 160,166 shares of Common Stock acquirable pursuant to the
exercise of options.
3
<PAGE> 5
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 six meetings during the year ended
June 30, 1996 ("Fiscal 1996"). 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 1996, the Audit Committee was comprised of Stephen A. Cohen and
Edward M. Frankel. The current members of the Audit Committee are Messrs. Cohen
and Frankel. The Audit Committee met once during Fiscal 1996. The Option
Committee, composed of Messrs. Cohen and Frankel, administers the Company's 1993
Non-Qualified Stock Option Plan. The Option Committee met once during Fiscal
1996. The Compensation Committee makes recommendations to the Board of Directors
concerning compensation arrangements for directors, executive officers, and
senior management of the
4
<PAGE> 6
Company. The Compensation Committee did not meet during Fiscal 1996. During
Fiscal 1996, 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 57 Chairman of the Board, President, Treasurer, and
Director
* Charles B. Girsky 62 Executive Vice President and Director of the
Company
Jeffrey D. Gash 43 Vice President, Finance of the Company
* Stephen A. Cohen 59 Director
* Edward M. Frankel 58 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 1988.
Since April, 1984, he has been President of Distel, Inc., a wholly-owned
subsidiary of the Company since August, 1985. 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.
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.
5
<PAGE> 7
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 Vitaquest International, Inc., a
distributor of vitamins and health and beauty products, and its predecessor
entities.
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 63 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 62 years old, oversees marketing of active components and has been
employed by the Company for over 9 years.
Herbert Entenberg, Vice President of Management and Information Systems
and Secretary. Mr. Entenberg has been employed by the Company for over
16 years. Mr. Entenberg, who is 62 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 $100,000:
6
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------------
Annual Compensation Awards Payouts
---------------------------------------- --------------------- -------
Name and Other Restricted All Other
Principal Annual Stock Options/ LTIP Compensation
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs (#) Payouts($) ($)(2)
- -------- ---- --------- -------- --------------- --------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel H. Girsky, 1994 250,000 76,000 -- -- 81,400 -- 62,519
Chairman of the Board, 1995 300,000 193,000 -- -- -- -- 72,100
President, and Treasurer(1) 1996 325,000 387,000 -- -- -- -- 84,301
Charles B. Girsky, 1994 181,000 17,997 -- -- -- -- 3,783
Executive Vice President 1995 206,720 42,073 -- -- -- -- 3,947
1996 225,000 96,535 -- -- 15,000 -- 5,608
Jeffrey D. Gash, 1994 96,000 10,000 -- -- 4,033 -- 1,663
Vice President, Finance 1995 96,347 10,000 -- -- -- -- 1,806
1996 96,000 42,595 -- -- 5,000 -- 1,841
Denis Haggerty 1994 90,000 31,377 -- -- 3,667 -- 11,165
Vice President, Marketing 1995 90,348 36,964 -- -- -- -- 11,029
1996 90,000 58,389 27,651(3) -- 5,000 -- 11,302
Morton J. Denson 1994 114,998 19,887 -- -- -- -- 8,891
Vice President of 1995 115,440 37,955 -- -- -- -- 8,957
Marketing 1996 114,998 50,000 -- -- 2,500 -- 9,330
Herbert Entenberg 1994 102,560 4,363 -- -- 3,667 -- 3,436
Vice President of 1995 102,816 16,155 -- -- -- -- 3,538
Management and 1996 102,560 20,188 -- 2,500 -- 3,197
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 June 30, 1994,
$300,000 for the fiscal year ended June 30, 1995, and $325,000 for 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.
The 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 of Mr.
Girsky's employment, Mr. Girsky will receive between $450,000 and
$600,000, depending on the date of termination.
7
<PAGE> 9
(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 1996 for the
Named Executives were as follows: Mr. Joel Girsky -- $23,686, Mr. Charles
Girsky -- $2,110, Mr. Gash -- $724, Mr. Entenberg -- $2,001, Mr. Haggerty
-- $9,600 and Mr. Denson -- $7,200. 401(k) matching contributions for
fiscal 1996 for the Named Executives were as follows: Mr. Joel Girsky --
$988, Mr. Charles Girsky -- $1,041, Mr. Gash -- $1,035, Mr. Entenberg --
$957, Mr. Haggerty -- $1,140 and Mr. Denson -- $1,217. Premiums paid on
group term life insurance for fiscal 1996 for the Named Executives were as
follows: Mr. Joel Girsky -- $1,575, Mr. Charles Girsky $2,457, Mr. Gash --
$82, Mr. Entenberg -- $239, Mr. Haggerty -- $562 and Mr. Denson -- $913.
The taxable portion of split dollar life insurance policies for Mr. Joel
Girsky was $8,052 for fiscal 1996. $50,000 deferred compensation was
accrued in fiscal 1996 in connection with Mr. Joel Girsky's employment
agreement with the Company.
(3) Includes information regarding value realized (market value on date of
exercise less exercise price) on stock options previously granted under
the Company's option plans and exercised during fiscal 1996 by Mr.
Haggerty.
STOCK OPTIONS
The following tables set forth information concerning the
grant of stock options made during Fiscal 1996 to each of the persons described
in the Summary Compensation Table on page 7 and the number and value of
unexercised options held by them at the fiscal year-end.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants(1)
--------------------
Potential Realizable Value
Percent of at Assumed Annual Rates
Total of Stock Price Appreciation
Options/ For Option Term(2)
SARs ------------------
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10%($)
---- -------- ----------- ------------ ----------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky 0 0% -- -- $ -- $ --
Charles B. Girsky 15,000 24% $12.75 November 8, 2000 $52,839 $116,760
Jeffrey D. Gash 5,000 8% $12.75 November 8, 2000 $17,613 $ 38,920
Dennis Haggerty 5,000 8% $12.75 November 8, 2000 $17,613 $ 38,920
Morton J. Denson 2,500 4% $12.75 November 8, 2000 $ 8,807 $ 19,460
Herbert Entenberg 2,500 4% $12.75 November 8, 2000 $ 8,807 $ 19,460
</TABLE>
(1) The options in the table were granted on November 8, 1995 under the
Company's 1993 Non-Qualified Plan and have exercise prices equal to the fair
market value of the Common Stock on the date of grant. The options become
exercisable one year from the date of grant.
(2) The potential realizable value assumes that the stock price
increases from the date of grant until the end of the option term (5 years) at
the annual rate of 5% and 10%. The assumed annual rates of appreciation are
computed in accordance with the rules and regulations of the Securities and
Exchange Commission. No assurance can be given that the annual rates of
appreciation assumed for the purposes of the table will be achieved, and actual
results may be lower or higher.
8
<PAGE> 10
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Shares Option/SARs at Option/SARs at
Acquired FY-End (#) FY-End ($)(1)
on Value ---------- -------------
Exercise(#) Realized($) Exercisable Unexercisable Exercisable
----------- ----------- ----------- ------------- -----------
Unexercisable
- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky -- -- 81,400 -- 428,754 --
Charles B. Girsky -- -- -- 15,000 -- --
Jeffrey D. Gash -- -- 4,033 5,000 21,242 --
Dennis Haggerty 3,667 27,651 -- 5,000 -- --
Morton J. Denson -- -- -- 2,500 -- --
Herbert Entenberg -- -- 3,667 2,500 19,629 --
</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, 1996 on
the NASDAQ National Market System was $10.125.
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.
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 7 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 20,533
shares of Common Stock. Mr. Cohen
9
<PAGE> 11
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 seeks to encourage the
achievement of business objectives and superior corporate performance by the
Company's executives. The program enables the Company to reward and retain
highly qualified executives and to foster a performance-oriented environment
wherein management's long-term focus is on maximizing shareholder value through
equity-based incentives. The Program calls for consideration of the nature of
each executive's work and responsibilities, unusual accomplishments or
achievements on the Company's behalf, years of service, the executive's total
compensation and the Company's financial condition generally.
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 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 1993
Non-Qualified Stock Option Plan (the "Non-Qualified 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
10
<PAGE> 12
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. National Union Insurance Company issued the policy, which provides coverage
of $5,000,000 for an annual premium of $70,000. The original policy, which
expired on February 5, 1996, was renewed on such day and is currently in effect
with improved terms and conditions.
11
<PAGE> 13
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
Dow Jones Industrial & Commercial Services -- General
Services Index for the Company's last five (5) fiscal years:
[Chart and Graph]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Jaco Electronics, Inc. 100 252 539 487 650 1032
Dow Jones Equity Market Index 100 114 131 132 167 212
Dow Jones Industrial Service & Commercial
Services - General Services 100 111 121 120 141 170
</TABLE>
12
<PAGE> 14
INDEPENDENT AUDITORS
The Board of Directors selected Grant Thornton LLP as independent
auditors for its fiscal year ended June 30, 1996. Grant Thornton LLP were also
auditors for the fiscal year ended June 30, 1995. The Company has not chosen an
independent auditor for the fiscal year ending June 30, 1997, as the Company,
historically, does not choose its auditors until near the end of the fiscal
year. 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 1996, the Company incurred approximately $571,000
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 was renewed on January 1, 1996 and expires on
December 31, 2003. The current rental rate is lower than the rate paid under the
prior lease.
During Fiscal 1996, 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 $313,808 during such fiscal year. 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 -- Compensation Committee Interlocks
and Insider Participation."
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
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
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<PAGE> 15
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 1996, the Company's executive officers, directors,
and Ten Percent Shareholders complied with all applicable Section 16(a) filing
requirements.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholders wishing to present proposals at the 1997 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 1997
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,
1997.
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 14, 1996
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<PAGE> 16
JACO ELECTRONICS, INC.
Proxy for Annual Meeting of Shareholders - December 13, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints Joel H. Girsky and Charles B.
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 13, 1996, 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 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 ITEM 1.
Receipt of the Notice of Annual Meeting, the Proxy Statement, and the Annual
Report to Shareholders is hereby acknowledged.
Date:__________________________ , 1996
_______________________________
_______________________________
_______________________________
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.
