MICROWAVE POWER DEVICES, INC.
49 WIRELESS BOULEVARD
HAUPPAUGE, NEW YORK 11788-3935
M (516) 231-1400 Fax: (516) 231-0712
[LOGO] P ----------------------------------------------------------------------
D
Dear Stockholder:
It is my pleasure to invite you to the Annual Meeting of Stockholders of
Microwave Power Devices, Inc. to be held on Thursday, May 8, 1997, at 11:00
A.M., local time, at the offices of Proskauer Rose Goetz & Mendelsohn LLP, 1585
Broadway, 26th Floor, New York, New York 10036.
Whether or not you plan to attend and regardless of the number of shares you
own, it is important that your shares be represented at the meeting.
Accordingly, you are urged to sign, date and return your proxy promptly in the
enclosed envelope, which requires no postage if mailed in the United States.
I sincerely hope you will be able to join us at the meeting. The officers and
directors of the Company look forward to seeing you at that time.
Sincerely,
/s/ Edward J. Shubel
-----------------------------
Edward J. Shubel
President and Chief Executive Officer
April 10, 1997
<PAGE>
MICROWAVE POWER DEVICES, INC.
49 Wireless Boulevard
Hauppauge, New York 11788-3935
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of MICROWAVE POWER DEVICES, INC. (the
"Company") will be held at the offices of Proskauer Rose Goetz & Mendelsohn LLP,
1585 Broadway, 26th floor, New York, New York 10036, on Thursday, May 8, 1997,
at 11:00 a.m., local time, for the following purposes:
1. To elect directors of the Company for the ensuing year;
2. To ratify the appointment of Arthur Andersen LLP as the independent
public accountants of the Company; and
3. To transact any such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on Wednesday, April
9, 1997 as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and at any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen W. Rubin
Secretary
April 10, 1997
<PAGE>
MICROWAVE POWER DEVICES, INC.
49 Wireless Boulevard
Hauppauge, New York 11788-3935
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1997
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Microwave Power Devices, Inc., a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders to be held at the
offices of Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, 26th Floor, New
York, New York 10036, on Thursday, May 8, 1997 at 11:00 A.M., local time, and at
any adjournments thereof.
When the accompanying proxy is properly executed and returned, the shares
of common stock of the Company, par value $.01 per share (the "Common Stock"),
it represents will be voted at the meeting in accordance with any directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of nominees for directors of the Company listed
herein; (ii) FOR the ratification of the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the current fiscal year; and
(iii) in the discretion of the holders of the proxy with respect to any other
business that may properly come before the meeting and at any adjournments
thereof. Any stockholder signing and delivering a proxy may revoke it at any
time before it is voted by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a date later than the date of the
proxy being revoked. Any stockholder attending the meeting in person may
withdraw his proxy and vote his shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made primarily by mail; however, officers and regular
employees of the Company may solicit proxies personally or by telephone or by
telegram. Those persons will not be compensated specially for such services. The
Company may reimburse brokers, banks, custodians, nominees, and fiduciaries
holding shares of Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
material to the beneficial owners of such shares.
A copy of the Notice of Annual Meeting of Stockholders accompanies this
Proxy Statement. The approximate date on which this Proxy Statement first will
be mailed to stockholders of the Company is April 11, 1997.
<PAGE>
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of business
on April 9, 1997 will be entitled to notice of and to vote at the Annual Meeting
of Stockholders. On that date, the Company had outstanding 10,375,000 shares of
Common Stock, the holders of which are entitled to one vote per share on each
matter to come before the Annual Meeting. Voting rights are non-cumulative.
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Directors will be elected at the Annual Meeting by a plurality of the
votes cast (i.e., the eight nominees receiving the greatest number of votes will
be elected as directors). Abstentions and broker non-votes (which occur when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) are counted for purposes of determining the presence or absence of a
quorum at the meeting. Abstentions are counted in tabulations of the votes cast
on proposals presented to stockholders, but broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
PRINCIPAL STOCKHOLDERS
As of April 9, 1997, the person listed in the following table was the only
person known to the Company (based on information set forth in Schedules 13D and
13G filed with the Securities and Exchange Commission or otherwise provided to
the Company by this person) to be the beneficial owner of more than five percent
of the Company's outstanding shares of Common Stock. The listed person has sole
voting and dispositive power with respect to the shares listed opposite its name
in the table.
<TABLE>
<CAPTION>
Shares of
Name and Address of Common Stock Percent
Beneficial Owner Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
Charter Technologies Limited Liability Company (1) 5,139,994 49.54%
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, NY 10022
</TABLE>
- ----------
(1) The members of Charter Technologies Limited Liability Company ("Charter
Technologies") are Charterhouse Equity Partners, L.P. ("CEP"), which owns
99% of the ownership interests in Charter Technologies, and George J.
Sbordone, who owns 1% of the ownership interests in Charter Technologies.
The general partner of CEP is CHUSA Equity Investors, L.P., whose general
partner is Charterhouse Equity, Inc., a wholly-owned subsidiary of
Charterhouse Group International, Inc. ("Charterhouse"). As a result of the
foregoing, all of the shares of Common Stock held by Charter Technologies
would, for purposes of Section 13(d) of the Securities Exchange Act of
1934, be considered to be beneficially owned by Charterhouse.
-2-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors is to
be elected. In the absence of instructions to the contrary, the shares of Common
Stock represented by a proxy delivered to the Board of Directors will be voted
FOR the eight nominees named under "Management" below. Each nominee has
consented to being named as a nominee in this Proxy Statement and to serve if
elected. However, if any such nominee should become unable to serve as a
director for any reason, votes will be cast instead for a substitute nominee
designated by the Board of Directors or, if none is so designated, will be cast
according to the judgment of the person or persons voting the proxy.
Management
Directors and Executive Officers
The table on the following page and the paragraphs that follow it present
certain information concerning the nominees for directors, who are the sole
current directors, and the executive officers of the Company. Directors are
elected annually to serve until the next annual meeting of stockholders and
until their successors have been elected. Officers are elected by and serve at
the discretion of the Board of Directors. There are no family relationships
between any of the directors and executive officers of the Company.
-3-
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Stock beneficially
Positions and Offices owned as of Percent
Nominees for Directors Age with the Company April 9, 1997 of Class(1)
---------------------- --- --------------------- ------------------ -----------
<S> <C> <C> <C> <C>
George J. Sbordone (2)(3) 76 Chairman of the Board of 325,575 3.1%
Directors
Edward J. Shubel (2)(4) 66 President and Chief Executive 294,583 2.8%
Officer; Director
Merril M. Halpern (2)(5) 62 Director 0 0
A. Lawrence Fagan (5)(6)(7) 67 Director 0 0
Alfred Weber (6)(8) 64 Director 5,100 *
David J. Aldrich (7)(8) 40 Director 0 0
Warren A. Law (6)(7)(8) 72 Director 1,000 *
James Silver (2)(9) 39 Director 196,875 1.9%
<CAPTION>
Executive Officers Who
Are Not Directors
- ----------------------
<S> <C> <C> <C> <C>
Fuat Agi (10) 56 Vice President and Chief 25,417 *
Technical Officer
Paul E. Donofrio (11) 38 Vice President and Chief 25,417 *
Financial Officer
Nicholas Mazzella (12) 47 Vice President and General 10,750 *
Manager - Wireless Products
Larry Konopelko (13) 43 Vice President and General 9,750 *
Manager - Satellite, Medical
and Military Products
All directors and executive officers
as a group (12 persons) (14) 894,467 8.5%
</TABLE>
- ----------
* Less than 1%.
(1) For purposes of calculating the Percent of Class beneficially owned by any
person or group of persons named above, any security which such person or
group of persons has the right to acquire within 60 days after April 9,
1997 is deemed to be beneficially owned for the purpose of computing the
percentage ownership of such person or group of persons, but is not deemed
to be outstanding for the purpose of computing the percentage ownership of
any other person or group of persons.
(2) Member of Executive Committee.
-4-
<PAGE>
(3) Includes an aggregate of 18,750 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(4) Includes an aggregate of 107,083 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(5) Merril M. Halpern and A. Lawrence Fagan are executive officers, directors
and stockholders of Charterhouse. Messrs. Halpern and Fagan each disclaim
beneficial ownership of the shares of Common Stock beneficially owned by
Charterhouse.
(6) Member of Compensation Committee.
(7) Member of Audit Committee.
(8) "Outside Director" appointed in accordance with a proposed Special Security
Agreement between the Company and the United States Department of Defense
("DOD").
(9) Includes an aggregate of 9,375 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(10) Includes an aggregate of 25,417 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(11) Includes an aggregate of 25,417 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(12) Includes an aggregate of 9,750 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(13) Includes an aggregate of 9,750 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
(14) Includes an aggregate of 205,542 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 9, 1997.
George J. Sbordone has been Chairman of the Company since August 1991.
Since September 1991, Mr. Sbordone has also been the Chief Executive Officer of
Defense Technologies, Inc. ("DTI") and of a number of holding companies (in
which an affiliate of Charterhouse is a significant investor) which own
subsidiaries engaged in the manufacture of electronic components used in
avionics, radar and communications (the "Charter Technologies Group"). DTI
provides management and consulting services to companies with electronics and
manufacturing operations, including the Charter Technologies Group. From January
1990 to September 1991, Mr. Sbordone was a non-stockholding principal of
Charterhouse, a private investment firm specializing in leveraged buy-out
acquisitions. From 1971 until January 1990, Mr. Sbordone was the Chairman of
Tempo Instruments Incorporated, a manufacturer of electronic devices and power
supplies.
Edward J. Shubel has been President and Chief Executive Officer and a
director of the Company since September 1991. Between 1986 and September 1991,
Mr. Shubel was President of EJS Products Inc., a manufacturer of antennas. From
1974 to 1986, Mr. Shubel was President of Numax Electronics, a manufacturer of
electronic components.
Merril M. Halpern has been a director of the Company since June 1995. Mr.
Halpern has been Chairman of the Board of Charterhouse since October 1984. From
1973 to October 1984, Mr. Halpern served as President and Chief Executive
Officer of Charterhouse. Mr. Halpern is also a director of Designer Holdings
Ltd., a developer and marketer of designer sportswear lines ("Designer
Holdings"); American Disposal Services, Inc., a solid waste management firm
("ADS"); and Insignia Financial Group, Inc., a real estate management firm.
A. Lawrence Fagan has been a director of the Company since June 1995. Mr.
Fagan has been President of Charterhouse since January 1997. From 1984 to
December 1996 Mr. Fagan served as Executive Vice President of Charterhouse. Mr.
Fagan is also a director of Designer Holdings and ADS.
-5-
<PAGE>
Alfred Weber has been a director of the Company since June 1995. Mr. Weber
has been President of Charter Power Systems, Inc., a manufacturer of commercial
and industrial battery power systems ("Charter Power"), since April 1989, its
Chief Executive Officer since January 1993, and its Chairman of the Board since
November 1995. Mr. Weber was an independent consultant from June 1987 to March
1989. From November 1986 to May 1987, Mr. Weber was President and Chief
Executive Officer of Uniroyal Plastics Company, Inc.
David J. Aldrich has been a director of the Company since June 1995. Mr.
Aldrich has served as Vice President and General Manager of Alpha Microwave a
Division of Alpha Industries, Inc., a commercial wireless semiconductor and
ceramics components manufacturer, since May 1996. From January 1995 through
April 1996 Mr. Aldrich was Vice President and Chief Financial Officer of Alpha
Industries, Inc. From September 1991 through December 1994, Mr. Aldrich was a
senior manager, supporting the commercial wireless businesses at M/A-Com, Inc.,
a manufacturer of high technology products. Between 1989 and 1991, Mr. Aldrich
was the Vice President Finance and Controller of the Company.
Warren A. Law has been a director of the Company since June 1995. Mr. Law
has been a professor at the Harvard Business School since 1958 (through June
1991 in an active capacity) and is currently the Edmund Cogswell Converse
Professor of Finance and Banking Emeritus. Mr. Law is also a director of Charter
Power.
James Silver has been a director of the Company since July 1991. From June
1995 to December 1995, Mr. Silver was Vice President-Corporate Finance of the
Company. From August 1991 until June 1995, Mr. Silver was a Vice President of
the Company. Mr. Silver has been an executive officer of DTI and of the holding
companies included in the Charter Technologies Group since September 1991. From
January 1991 through June 1991, Mr. Silver was a consultant to Regal Resources,
a company engaged in real estate investments.
Fuat Agi has served as Vice President and Chief Technical Officer of the
Company since June 1995. From June 1972 through June 1995, Mr. Agi served in
various engineering roles for the Company.
Paul E. Donofrio has served as Vice President and Chief Financial Officer
of the Company since January 1993 and has been Chief Financial Officer of the
Company since November 1991. From April 1984 to November 1991, Mr. Donofrio was
an employee of AIL Systems, Inc. - Eaton Corporation, a manufacturer of
electronic systems for military and commercial applications, and held the
position of Finance and Accounting Manager from April 1989 to November 1991.
Nicholas Mazzella has served as Vice President and General Manager -
Wireless Products of the Company since August 1995. From July 1990 to August
1995, Mr. Mazzella served as Vice President - Standard Products and Quality
Assurance of the Company. From March 1988 to July 1990, Mr. Mazzella served as
Director - Standard Products and Quality Assurance of the Company. From February
1984 to March 1988, Mr. Mazzella served in various roles for the Company.
Larry Konopelko has served as Vice President and General Manager -
Satellite, Medical and Military Products of the Company since August 1995. From
April 1994 to August 1995, Mr. Konopelko served as Vice President - Contracts
and Program Management of the Company. From June 1990 to April 1994, Mr.
Konopelko served as Director - Contracts of the Company. From December 1988 to
June 1990, Mr. Konopelko served as Contracts Manager of the Company.
-6-
<PAGE>
Director Compensation
The only directors who are compensated for services as a director are
Messrs. Weber, Aldrich and Law, each of whom receives $2,000 for each meeting of
the Board of Directors which he attends and $2,000 for each meeting of a
committee of the Board of Directors which he attends.
Board Committees and Membership
The Company has established an Executive Committee, a Compensation
Committee and an Audit Committee. The Executive Committee assists the Board in
its responsibilities. Messrs. Sbordone, Shubel, Halpern and Silver are the
members of the Executive Committee. The Compensation Committee approves the
salaries and other benefits of the executive officers of the Company and
administers any bonus, incentive compensation or stock option plans of the
Company (including the Microwave Power Devices, Inc. 1995 Stock Option Plan and
1996 Stock Option Plan). In addition, the Compensation Committee consults with
the Company's management regarding pension and other benefit plans, and
compensation policies and practices of the Company. As required by the proposed
Special Security Agreement with the DOD, at least one member of the Compensation
Committee must be an Outside Director, as defined by the Special Security
Agreement. Messrs. Fagan, Weber and Law are the members of the Compensation
Committee. The Compensation Committee held one meeting in 1996.
The Audit Committee reviews the professional services provided by the
Company's independent auditors, the independence of such auditors from
management of the Company, the annual financial statements of the Company and
the Company's system of internal accounting controls. The Audit Committee also
reviews such other matters with respect to the accounting, auditing and
financial reporting practices and procedures of the Company as it may find
appropriate or as may be brought to its attention, and meets from time to time
with members of the Company's internal audit staff. Messrs. Fagan, Aldrich and
Law are the members of the Audit Committee. The Audit Committee held one meeting
in 1996.
The Company does not have a nominating committee. The Board of Directors
held four meetings in 1996. Each of the directors attended at least 75% of (i)
the total number of meetings of the Board of Directors and (ii) the total number
of meetings of all committees of the Board on which such director served.
Charter Technologies, the Company and MPD Technologies, Inc. (the Company's
operating subsidiary) plan to enter into a Special Security Agreement with the
DOD in order to preserve the facilities security clearance of MPD Technologies,
Inc. As required by the proposed Special Security Agreement, the Company has
established a Defense Security Committee consisting of all the members of the
Board of Directors other than Messrs. Halpern and Fagan. The purpose of the
Defense Security Committee is to ensure that the Company maintains policies and
procedures to safeguard classified information in its possession and to ensure
that the Company complies with all applicable agreements and contract provisions
regarding security, federal export control laws and the DOD Industrial Security
Program.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than 10 percent of the Common
Stock are required to report their ownership of Common Stock and any changes in
that ownership, on a timely basis, to the Securities and Exchange Commission.
Based on material provided to the Company, all such required reports were filed
on a timely basis in 1996 except for: (i) one report on Form 4, for Richard
Gloekler, which report was filed approximately three days past the deadline,
(ii) one report on Form 3, for Ed McDonald, which report was filed approximately
seven months past the deadline and (iii) two reports on Form 4, for Ed McDonald,
which reports were filed approximately five months and two months, respectively,
past the deadline.
-7-
<PAGE>
Executive Compensation
The following table sets forth information about the compensation paid, or
payable, by the Company for services rendered in all capacities to the Chief
Executive Officer of the Company and each of the four other most highly paid key
policy-making executive officers of the Company for each of the last three
fiscal years in which such officers were executives officers for all or part of
the year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation (1) Compensation
------------------------------------- ------------------------
Other Restricted Securities
Name and Annual Stock Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($) Award(s)($) Options # Compensation
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward J. Shubel......... 1996 241,600 50,000(2) 27,691(5) 0 40,000 45,000(6)
President and 1995 204,289 75,000(3) 37,036(5) 0 187,500 45,000(6)
Chief 1994 180,044 25,000(4) 30,626(5) 0 0 45,000(6)
Executive
Officer
- ----------------------------------------------------------------------------------------------------------------------------
Fuat Agi................. 1996 139,384 0 0 0 20,000 0
Vice President 1995 134,371 20,000(3) 0 0 37,500 0
and Chief 1994 119,889 10,000(4) 0 0 0 0
Technical
Officer
- ----------------------------------------------------------------------------------------------------------------------------
Paul E. Donofrio......... 1996 126,543 0 0 0 20,000 0
Vice President 1995 99,781 70,000(7) 0 0 37,500 0
and Chief 1994 91,400 10,000(4) 0 0 0 0
Financial
Officer
- ----------------------------------------------------------------------------------------------------------------------------
Nicholas Mazzella........ 1996 117,499 0 0 0 15,000 0
Vice President 1995 102,732 12,000(3) 0 0 9,500 0
and
General Manager
- ----------------------------------------------------------------------------------------------------------------------------
Larry Konopelko.......... 1996 117,318 0 0 0 15,000 0
Vice President 1995 101,704 12,000(3) 0 0 9,500 0
and
General Manager
</TABLE>
- ----------
(1) Other than the salary, bonus and other compensation described above, the
Company did not pay the persons named in the Summary Compensation Table any
compensation, including incidental personal benefits, in excess of 10% of
such executive officer's salary.
(2) Represents bonuses relating to performance of services for the Company in
fiscal 1996 which will be paid in fiscal 1997.
(3) Represents bonuses relating to performance of services for the Company in
fiscal 1995 which were paid in fiscal 1996.
(4) Represents bonuses relating to performance of services for the Company in
fiscal 1994 which were paid in fiscal 1995.
(5) Represents, in 1996, 1995 and 1994 respectively, the Company's payment for
an automobile lease ($9,576, $9,474 and $7,657), gasoline ($1,560, $1,476
and $1,103) and spousal travel expenses ($16,555, $26,086 and $21,866).
(6) Represents the Company's payment of premiums on a life insurance policy.
See "Employment Agreements."
(7) Represents bonuses relating to performance of services for the Company in
fiscal 1995 which were paid both in fiscal 1995 and in fiscal 1996.
Stock Options
The following table contains information concerning the grant of options
under the Company's 1995 Stock Option Plan (the "1995 Plan") and/or the
Company's 1996 Stock Option Plan (the "1996 Plan") to each of the named
executive officers of the Company during the year ended December 31, 1996. No
stock appreciation rights ("SARS") were granted in 1996.
-8-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------
Percent of Potential Realizable
Number of Total Value at Assumed Annual
Securities Options Rates of
Underlying Granted to Exercise Stock Appreciation
Options Employees in Price Expiration for Option Term (4)
Name Granted(#)(1) Fiscal Year(2) ($/Share) Date(3) 5% 10%
- ------------------- ------------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Edward J. Shubel... 40,000 33.7% $11.125 3/5/06 $279,858 $709,215
Fuat Agi........... 20,000 16.8% 11.125 3/5/06 139,929 354,608
Paul E. Donofrio... 20,000 16.8% 11.125 3/5/06 139,929 354,608
Nicholas Mazzella.. 15,000 12.6% 11.125 3/5/06 104,947 265,956
Larry Konopelko.... 15,000 12.6% 11.125 3/5/06 104,947 265,956
</TABLE>
- ----------
(1) All options granted in 1996 were granted pursuant to the Company's 1995 and
1996 Stock Option Plans and generally become exercisable annually, in
increments of 33 1/3% of the total grant, beginning on the first
anniversary of the date of grant. Options were granted at the fair market
value of Common Stock on the effective date of grant.
(2) The total number of options granted to employees in 1996 was 118,750.
(3) Each option is subject to earlier termination if the officer's employment
with the Company is terminated.
(4) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Company's Common Stock over the term of the options. The potential
realizable values set forth above do not take into account applicable tax
and expense payments that may be associated with such option exercises.
Actual realizable value, if any, will be dependent on the future price of
the Common Stock on the actual date of exercise, which may be earlier than
the stated expiration date. The 5% and 10% assumed annualized rates of
stock price appreciation over the exercise period of the options used in
the table above are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future price of the Common Stock on any date. There is no representation
either express or implied that the stock price appreciation rates for the
Common Stock assumed for purposes of this table will actually be achieved.
-9-
<PAGE>
The following table sets forth information for each of the named executive
officers with respect to the value of outstanding and unexercised options held
as of December 31, 1996. There were no options exercised during 1996. There were
no SARs exercised during 1996 and none were outstanding as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at December 31, 1996 at December 31, 1996 (1)
on Exercise Realized ---------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward J. Shubel.... 0 $0 93,750 133,750 $0 $0
Fuat Agi............ 0 0 18,750 38,750 0 0
Paul E. Donofrio.... 0 0 18,750 38,750 0 0
Nicholas Mazzella... 0 0 4,750 19,750 0 0
Larry Konopelko..... 0 0 4,750 19,750 0 0
</TABLE>
- ----------
(1) The exercise price of all unexercised stock options exceeds the closing
market price of the Common Stock at December 31, 1996 of $2.75 per share.
Employment Agreements
In September 1991, Mr. Shubel entered into an employment agreement with the
Company under which he serves as the Company's President. The employment
agreement currently provides for an annual base salary of $250,000 and
terminates on August 30, 1997. The employment agreement provides that after the
expiration of the current term it will be automatically renewed for successive
one year terms unless either party gives the other party at least 60 days prior
written notice of non-renewal.
In April 1992, the Company entered into agreements with Mr. Shubel pursuant
to which the Company agreed to purchase and pay the annual premiums on an
insurance policy on Mr. Shubel's life which had an original face value of $1.1
million. Upon Mr. Shubel's retirement, the cash surrender value of this policy
will be used to pay a monthly pension to Mr. Shubel or his beneficiaries for 60
months. If Mr. Shubel dies before his retirement, then the proceeds of this
policy will be split between the Company (up to the aggregate amount of premiums
paid by the Company) and Mr. Shubel's beneficiaries.
-10-
<PAGE>
Stock Option Plans
The Company has adopted the Microwave Power Devices, Inc. 1995 Stock Option
Plan and the 1996 Stock Option Plan (collectively, the "Plans"). The Plans
provide for the grant of incentive stock options and non-qualified stock options
to key employees and consultants of the Company and its subsidiaries. The Plans
are administered by the Compensation Committee of the Board of Directors which
determines the key employees and consultants eligible to receive options and the
terms thereof (including exercise price and vesting requirements), all in a
manner consistent with the terms of the Plans. An aggregate of 1,000,000 shares
of Common Stock are subject to the grant of options under the Plans, and as of
April 9, 1997 options have been granted to purchase an aggregate of 752,590
shares of Common Stock.
401(k) Plan
The Company adopted the Microwave Power Devices, Inc. In-VEST Plan, which
is a 401(k) Plan, effective January 1, 1992. The plan is available to all
employees who have been employed by the Company for at least 30 days. An
employee may contribute, on a pre-tax basis, up to 14% of the employee's total
annual compensation from the Company (defined as Internal Revenue Code Section
3401(a) compensation). After one year of employment, the Company also makes
matching contributions ranging from 50% to 100% (based on years of service) of
such employee's contributions up to a maximum of 6% of such employee's
compensation.
Contributions are allocated to each employee's individual account and are,
at the employee's election, invested in one or more investment funds. Employee
contributions are fully vested and non-forfeitable. Employer contributions are
subject to a graduated vesting schedule beginning during a participant's second
year of employment by the Company and resulting in full vesting by the end of
the fifth year.
Executive Incentive Bonus Plan
The Company adopted, in February 1996, an executive incentive bonus plan to
reward key officers who have significant impact on the operating success of the
company. The plan is based on The Jaffe Group's Executive Compensation Audit,
Analysis and Recommendations, a study that was commissioned by the Board of
Directors. Under the bonus plan, future annual bonuses will be based upon the
achievement of performance goals that are annually preset by the Committee and
that are keyed to earnings per share, net sales and contract awards/bookings.
The Committee establishes a target bonus amount for each key officer at the
beginning of the year. The target amount is then divided into three portions, as
follows: one-half of the target bonus award is keyed to the achievement of
earnings per share goals; one-quarter of the target bonus award is keyed to the
achievement of net sales goals; and one-quarter of the target bonus award is
keyed to the achievement of contract awards/bookings goals. For 1996, an
executive could earn 0% or from 70% to 150% of each portion of his bonus, based
upon a measured comparison of actual results achieved to performance goals. For
1997, an executive can earn 0% or from 25% to 200% of each portion of his bonus,
based upon a measured comparison of actual results achieved to performance
goals. An officer whose employment is terminated voluntarily or for cause prior
to December 31 will forfeit his bonus for the entire year. An officer whose
employment is terminated by the Company but not for cause will receive, at the
discretion of the Committee, an award for such year pro-rated to the date of
separation, or such lesser amount as the Committee deems appropriate. An officer
whose employment is terminated due to retirement, disability or death will
receive an award for such year pro-rated to the date of separation. New
executive hires may be included in the plan on a pro-rata basis. Any executive
may elect to defer receipt of his incentive award but must give notice of his
election to do so by March 31 of the year for which the bonus is awarded. In
1996, no bonuses were earned under the terms of this plan.
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<PAGE>
Compensation Committee Interlocks and Insider Participation
Messrs. Fagan, Weber, and Law are the members of the Compensation
Committee. Mr. Fagan is a director, executive officer and a stockholder of
Charterhouse which may be deemed to be the beneficial owner of the shares of
Common Stock of the Company owned by Charter Technologies. Messrs. Weber and Law
own 5,100 and 1,000 shares of Common Stock, respectively.
Compensation Committee Report
Compensation Policies. The principal goal of the Company's compensation
program as administered by the Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
Base Salary. Base salaries paid in 1996 to the Company's executive officers
are competitive with those payable to executives holding corresponding positions
at corporations within the Company's industry that are of comparable size.
Individual experience and performance is considered when setting salaries within
the range for each position. Annual reviews are held and adjustments are made
based on attainment of individual goals and in a manner consistent with the
Company's overall operating and financial performance.
Bonuses. Bonuses are intended to motivate individual and team performance
by creating potential to earn annual incentive awards that are generally
contingent upon the performance of the Company and that are comparable to those
payable to executives holding corresponding positions at corporations within the
Company's industry that are of comparable size.
Long Term Incentives. The Company provides its executives with long-term
incentive compensation through grants of stock options under the Company's stock
option plans. The grant of stock options aligns the executive's interests with
those of the Company's stockholders by providing the executive with an
opportunity to purchase and maintain an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock. The size
of option grants is comparable to grants by other corporations within the
Company's industry that are of comparable size.
CEO's Compensation. As discussed under "Management -- Employment
Agreements," the Company entered into an employment agreement with Mr. Shubel in
1991, which was prior to the formation of the Compensation Committee. Pursuant
to such employment agreement, the Company paid to Mr. Shubel a base salary of
$240,000 in 1996. In addition, the Compensation Committee determined to grant
Mr. Shubel a bonus of $50,000 with respect to 1996 (payable in 1997). Mr. Shubel
was also awarded options in 1996 to purchase 40,000 shares of the Company's
common stock under the Microwave Power Devices, Inc. 1995 Stock Option Plan.
The Compensation Committee
A. Lawrence Fagan
Alfred Weber
Warren A. Law
-12-
<PAGE>
Performance Graph
The following performance graph compares the fifteen-month cumulative
return of the Company's Common Stock to the total returns of the Standard &
Poor's 500 Stock Index and the Nasdaq Stock Market Electronic Component Stocks
Index, which is a total return index of electronic component companies. Each
case assumes a $100 investment on September 29, 1995 (the first day of public
trading of the Company's Common Stock) and reinvestment of any dividends.
[The following table was represented as a line graph in the printed material]
COMPARISON OR CUMULATIVE TOTAL RETURN
Measurement Period MPDI S&P 500 Nasdaq Elec Comp
- ------------------ ---- ------- ----------------
September 1995 $100 $100 $100
December 1995 127 105 86
December 1996 31 127 149
-13-
<PAGE>
Certain Transactions
On September 3, 1991, Messrs. Sbordone, Shubel and Silver purchased from
the Company 306,825, 187,500 and 187,500 shares of the Company's Common Stock,
respectively. Messrs. Sbordone and Silver paid the purchase price by delivery of
promissory notes in the amounts of $122,730 and $75,000, respectively. On
January 31, 1996, Mr. Silver repaid $37,500 of the principal balance of his
note. Mr. Shubel paid the purchase price by a cash payment of $10,000 and by
delivery of a promissory note in the amount of $65,000. The principal amounts of
all the promissory notes were payable, together with interest at the rate of
8.0% per annum, on September 3, 1996. Such payment date was subsequently
extended to September 3, 1998. To secure this debt, each of Messrs. Sbordone,
Shubel and Silver pledged these shares to the Company.
Pursuant to consulting agreements which were effective January 1, 1996,
Messrs. Sbordone and Silver served as consultants to the Company receiving
consulting fees in 1996 of $125,000 and $100,000, respectively. These consulting
services consist of: services relating to the Company's banking and other
financial relationships including assistance in connection with the financing
and refinancing of corporate indebtedness; analysis and assistance from both a
financial and operational standpoint in connection with the expansion of the
Company's business operations; assistance with strategic planning; advice
related to acquisitions; and other general management guidance or assistance.
-14-
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has reappointed Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending December 31, 1997 and
recommends the ratification by the stockholders of that reappointment. In the
absence of instructions to the contrary, the shares of Common Stock represented
by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the appointment of Arthur Andersen LLP.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting of Stockholders and will be available to respond to appropriate
questions and make such statements as he or she may desire.
-15-
<PAGE>
STOCKHOLDERS PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1998
must submit the same in writing so as to be received at the executive office of
the Company on or before December 31, 1997. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholders' proposals.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31, 1996 is
being mailed together with this Proxy Statement to the Company's stockholders of
record at the close of business on April 9, 1997.
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.
By Order of the Board of Directors,
Stephen W. Rubin
Secretary
April 10, 1997
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
-16-
<PAGE>
MICROWAVE POWER DEVICES, INC.
49 Wireless Boulevard, Hauppauge, New York 11788-3935
Solicited by the Board of Directors for the
Annual Meeting of Stockholders on May 8, 1997.
The undersigned hereby appoints George J. Sbordone, Edward J. Shubel and
Stephen W. Rubin, or any of them, with power of substitution, as Proxies and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of Microwave Power Devices, Inc. (the "Company") held of record
by the undersigned at the close of business on April 9, 1997 at the Annual
Meeting of Stockholders to be held on Thursday, May 8, 1997, and at any
adjournments thereof.
1. ELECTION OF DIRECTORS
|_| FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY
BELOW):
George J. Sbordone Merril M. Halpern Alfred Weber
Warren A. Law Edward J. Shubel A. Lawrence Fagan
David J. Aldrich James Silver
|_| WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE).
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting and at any
adjournments thereof.
(Continued and to be SIGNED on other side)
<PAGE>
(Continued from other side)
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. PLEASE SIGN EXACTLY AS
NAME APPEARS ON THIS PROXY.
Dated: ___________________________, 1997
________________________________________
Signature
________________________________________
Signature, if held jointly
Please sign exactly as your name appears
on this Proxy. If shares are registered
in more than one name, the signatures of
all such persons are required. A
corporation should sign in its full
corporate name by a duly authorized
officer, stating such officer's title.
Trustees, guardians, executors and
administrators should sign in their
official capacity giving their full
title as such. A partnership should sign
in the partnership name by an authorized
person, stating such person's title and
relationship to the partnership.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY,
USING THE ENCLOSED ENVELOPE.
No postage is required if mailed in the United States of America.
