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:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MICROWAVE POWER DEVICES, 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):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
<PAGE>
(5) Total fee paid:
|_| 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>
[Letterhead of Microwave Power Devices, Inc.]
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 6, 1999, at 11:00
A.M., local time, at the offices of Proskauer Rose 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 6, 1999
<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 LLP, 1585 Broadway,
26th floor, New York, New York 10036, on Thursday, May 6, 1999, 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 Thursday, April
1, 1999 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 6, 1999
<PAGE>
MICROWAVE POWER DEVICES, INC.
49 Wireless Boulevard
Hauppauge, New York 11788-3935
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
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 LLP, 1585 Broadway, 26th Floor, New York, New York
10036, on Thursday, May 6, 1999 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 8, 1999.
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of business
on April 1, 1999 will be entitled to notice of and to vote at the Annual Meeting
of Stockholders. On that date, the Company had outstanding 10,469,719 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.
<PAGE>
PRINCIPAL STOCKHOLDERS
As of April 1, 1999, the persons listed in the following table were the
only persons known to the Company (based on information set forth in Schedules
13G filed with the Securities and Exchange Commission or otherwise provided to
the Company) to be the beneficial owners of more than five percent of the
Company's outstanding shares of Common Stock.
Shares of
Name and Address of Common Stock Percent
Beneficial Owners Beneficially Owned of Class
- --------------------------------- ------------------ --------
Charter Technologies Limited Liability
Company (1)
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, NY 10022 5,139,994 49.09%
Dimensional Fund Advisors, Inc.(2)
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 595,500 5.69%
- ----------
(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) All such shares are owned by advisory clients of Dimensional Fund
Advisors, Inc. As such, Dimensional Fund Advisors, Inc. disclaims
beneficial ownership of all such securities.
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.
-2-
<PAGE>
Management
Directors and Executive Officers
The following table 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.
Shares of
Common Stock
beneficially
Positions and Offices owned as of Percent of
Nominees for Directors Age with the Company April 1, 1999 Class(1)
- ---------------------- --- ---------------- ------------- --------
George J. Sbordone(2)(3) 78 Chairman of the Board 344,325 3.3%
of Directors
Edward J. Shubel(2)(4) 68 President and Chief 417,334 3.9%
Executive Officer;
Director
Merril M. Halpern(2)(5) 64 Director 0 0
A. Lawrence Fagan
(5)(6)(7) 69 Director 0 0
Alfred Weber(6) 66 Director 5,100 *
David J. Aldrich(7) 42 Director 0 0
Warren A. Law(6)(7) 74 Director 1,000 *
James Silver(2)(8) 41 Director 206,250 2.0%
Executive Officers Who Are Not Directors
Paul E. Donofrio(9) 40 Executive Vice 71,167 *
President, Chief
Operating and
Financial Officer
Fuat Agi(10) 58 Vice President and 67,833 *
General Manager -
Wireless Products
and Chief Technical
Officer
Larry Konopelko(11) 45 Vice President and 34,500 *
General Manager -
Satellite, Medical and
Military Products
Nicholas Mazzella(12) 49 Vice President 23,000 *
Operations
All directors and
executive officers as a
group (12 persons)(13) 1,170,509 10.7%
- ----------
* Less than 1%.
-3-
<PAGE>
(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 1,
1999 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.
(3) Includes an aggregate of 37,500 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(4) Includes an aggregate of 254,834 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(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) Includes an aggregate of 18,750 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(9) Includes an aggregate of 71,167 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(10) Includes an aggregate of 67,833 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(11) Includes an aggregate of 34,500 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(12) Includes an aggregate of 22,000 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
(13) Includes an aggregate of 506,584 shares of Common Stock issuable upon the
exercise of stock options exercisable within 60 days after April 1, 1999.
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.
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, a firm specializing in
private equity investments, since October 1984. Mr. Halpern is also a director
of United Road Services, Inc., a provider of motor vehicle and equipment towing,
recovery and transport services.
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.
Alfred Weber has been a director of the Company since June 1995. Prior to
his retirement in March 1999, Mr. Weber had been Chief Executive Officer of C&D
Technologies, Inc., a manufacturer of commercial and industrial battery power
systems, since January 1993 and its Chairman of the Board since November 1995.
-4-
<PAGE>
David J. Aldrich has been a director of the Company since June 1995. Mr.
Aldrich has served as Vice President and General Manager of the Alpha Microwave
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.
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.
James Silver has been a director of the Company since August 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.
Paul E. Donofrio has served as Executive Vice President, Chief Operating
and Financial Officer of the Company since January 1999. From January 1993 to
January 1999, Mr. Donofrio served as Vice President and Chief Financial Officer
of the Company. From November 1991 to January 1993, Mr. Donofrio served as Chief
Financial Officer of the Company. 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.
Fuat Agi has served as Vice President and General Manager - Wireless
Products and Chief Technical Officer of the Company since November 1998. From
June 1995 to November 1998, Mr. Agi served as Vice President and Chief Technical
Officer of the Company. From June 1972 through June 1995, Mr. Agi served in
various engineering 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.
Nicholas Mazzella has served as Vice President - Operations of the Company
since November 1998. From August 1995 to November 1998, Mr. Mazzella served as
Vice President and General Manager - Wireless Products of the Company. 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.
-5-
<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. 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. Messrs. Fagan, Weber and Law are the members of
the Compensation Committee. The Compensation Committee held one meeting in 1998.
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 1998.
The Company does not have a nominating committee. The Board of Directors
held four meetings in 1998. 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.
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 1998.
-6-
<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............... 1998 279,885 60,000(2) 24,126(5) 0 42,000 45,000(6)
President and 1997 259,146 43,750(3) 32,691(5) 0 40,000 45,000(6)
Chief Executive 1996 241,600 50,000(4) 27,691(5) 0 40,000 45,000(6)
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Paul E. Donofrio............... 1998 148,593 20,000(7) 0 0 21,000 0
Executive Vice 1997 135,155 17,500(3) 0 0 20,000 0
President, Chief 1996 126,543 0 0 0 20,000 0
Operating and
Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Fuat Agi....................... 1998 154,245 20,000(7) 0 0 21,000 0
Vice President and 1997 145,820 17,500(3) 0 0 20,000 0
General Manager and 1996 139,384 0 0 0 20,000 0
Chief Technical
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Konopelko................ 1998 133,433 12,000(7) 0 0 15,000 0
Vice President and 1997 124,039 10,500(3) 0 0 15,000 0
General Manager 1996 117,318 0 0 0 15,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
Nicholas Mazzella.............. 1998 133,607 12,000(7) 0 0 15,000 0
Vice President 1997 124,269 10,500(3) 0 0 15,000 0
1996 117,499 0 0 0 15,000 0
</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 1998, $10,000 of which was paid in fiscal 1998 and $50,000 of which
was paid in fiscal 1999.
(3) Represents bonuses relating to performance of services for the Company in
fiscal 1997 which were paid in fiscal 1998.
(4) Represents bonuses relating to performance of services for the Company in
fiscal 1996 which were paid in fiscal 1997.
(5) Represents, in 1998, 1997 and 1996 respectively, the Company's payment for
an automobile lease ($10,513, $11,468 and $9,576), gasoline ($1,210,
$1,900 and $1,560) and spousal travel expenses ($12,403, $19,323 and
$16,555).
(6) Represents the Company's payment of premiums on a life insurance policy.
See "Employment Agreements."
(7) Represents bonuses relating to performance of services for the Company in
fiscal 1998 which were paid in fiscal 1999.
-7-
<PAGE>
Stock Options
The following table contains information concerning the grant of options
under the Company's 1995 Stock Option Plan (the "1995 Plan") and/or the
Company's 1996 Stock Option Plan (the "1996 Plan") to each of the named
executive officers of the Company during the year ended December 31, 1998. No
stock appreciation rights ("SARS") were granted in 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Percent of
Number of Total Potential Realizable Value
Securities Options at Assumed Annual Rates of
Underlying Granted to Exercise Stock Appreciation
Options Employees in Price Expiration for Option Term (4)
Name Granted(#)(1) Fiscal Year(2) ($/Share) Date(3) 5% 10%
---- ------------- -------------- --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Edward J. Shubel...... 42,000 20.1% $6.375 3/2/08 $168,387 $426,725
Paul E. Donofrio...... 21,000 10.1% 6.375 3/2/08 84,193 213,362
Fuat Agi.............. 21,000 10.1% 6.375 3/2/08 84,193 213,362
Larry Konopelko....... 15,000 7.2% 6.375 3/2/08 60,138 152,402
Nicholas Mazzella..... 15,000 7.2% 6.375 3/2/08 60,138 152,402
</TABLE>
- ----------
(1) All options granted in 1998 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 1998 was 208,520.
(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.
-8-
<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, 1998. There were 10,000 options exercised during 1998. There
were no SARs exercised during 1998 and none were outstanding as of December 31,
1998.
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, 1998 At December 31, 1998 (2)
on Exercise Realized -------------------- ------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward J. Shubel....... 0 $0 227,500 82,000 $545,310 $368,003
Paul E. Donofrio....... 0 0 57,500 41,000 139,065 183,998
Fuat Agi............... 10,000 76,446 47,500 41,000 81,147 183,998
Larry Konopelko........ 0 0 24,500 30,000 55,313 135,000
Nicholas Mazzella...... 0 0 24,500 30,000 55,313 135,000
</TABLE>
- ----------
(1) Represents the difference between the market price of the Common Stock on
the date of the exercise and the exercise price per share of the options,
multiplied by the number of shares underlying the options.
(2) Represents the difference between the closing market price of the Common
Stock at December 31, 1998 of $10.375 per share and the exercise price per
share of the in-the-money options, multiplied by the number of shares
underlying the in-the-money options.
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 $279,000 and
terminates on August 30, 1999. 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 or, alternatively, will be paid as a lump sum. 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.
-9-
<PAGE>
Change in Control Agreements
In March 1999, the Company entered into change in control agreements with
Messrs. Shubel, Donofrio, Agi, Konopelko and Mazzella, as key employees of the
Company. The Company believes that the establishment and maintenance of a sound
and vital management of the Company is essential to the protection and
enhancement of the interests of the Company and its stockholders. The Company
also recognizes that the possibility of a change in control of the Company, with
the attendant uncertainties and risks, might result in the departure or
distraction of key employees of the Company to the detriment of the Company. The
Company has determined that it is appropriate to take steps to induce key
employees to remain with the Company, and to reinforce and encourage their
continued attention and dedication, when faced with the possibility of a change
in control of the Company. These change in control agreements have a term of
three years. The details of the agreements are as follows:
For Messrs. Shubel and Donofrio, upon a Change in Control (as such term is
defined in the change in control agreements) they each shall receive: (i)
two times their then current annual salary and then current annual
targeted bonus, paid as a lump sum, (ii) full vesting in all outstanding
stock options, (iii) the continuation of health benefits and coverage for
the next twenty-four months and (iv) a gross-up payment in the event that
an excise tax is due pursuant to Section 4999 of the Internal Revenue Code
of 1986. In addition, Mr. Donofrio will receive a payment equal to the
difference between $1,000,000 and the Aggregate Spread for all stock
options granted to him through December 31, 1998. Aggregate Spread means
the sum of: (i) the difference between the exercise price and the market
price at the time of exercise for any options exercised prior to the
Change in Control and (ii) the difference between the exercise price and
the closing market price on the date of the Change in Control for any
unexercised options.
For Messrs. Agi, Konopelko and Mazzella, if employment is terminated
(under certain circumstances) within six months after a Change in Control,
they each shall receive: (i) fifty-two weeks of salary continuance at
their then current annual salary (including their then current annual
targeted bonus) and (ii) the continuation of health benefits and coverage
for the next twelve months.
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 1,500,000 shares of Common Stock are subject to the grant of
options under the Plans. As of April 1, 1999, options have been granted to
purchase an aggregate of 1,130,225 shares of Common Stock, leaving an aggregate
of 369,775 options available for grant. In addition, an aggregate of 1,035,506
shares of Common Stock are outstanding under the Plans, as of April 1, 1999.
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.
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<PAGE>
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 (which was performed in February
1996 and updated in February 1999) that was commissioned by the Board of
Directors. Under the bonus plan, annual bonuses will be based upon the
achievement of performance goals that are annually preset by the Committee.
These performance goals are linked to earnings per share, net sales and
operating cash flow. 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 linked to the
achievement of earnings per share goals; one-quarter of the target bonus award
is linked to the achievement of net sales goals; and one-quarter of the target
bonus award is linked to the achievement of operating cash flow goals. An
executive can earn 0% or from 50% 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. In 1998,
$120,000 in bonuses were earned (paid in 1999) under the terms of this plan.
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.
-11-
<PAGE>
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 1998 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. Pursuant to such employment agreement, the Company paid to Mr. Shubel a
base salary of $264,000 in 1998. In addition, the Compensation Committee
determined to grant Mr. Shubel a bonus of $50,000 with respect to 1998 (paid in
1999) under the terms of the executive incentive bonus plan and a $10,000
discretionary bonus which was paid in 1998. Mr. Shubel was also awarded options
in 1998 to purchase 42,000 shares of the Company's Common Stock under the
Microwave Power Devices, Inc. 1996 Stock Option Plan.
The Compensation Committee
A. Lawrence Fagan
Alfred Weber
Warren A. Law
-12-
<PAGE>
Performance Graph
The following performance graph compares the thirty-nine 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.
[GRAPHIC OMITTED]
Measurement Period MPDI S&P 500 Nasdaq Elec Comp
- ------------------ ---- ------- ----------------
September 1995 $100 $100 $100
December 1995 127 105 86
December 1996 31 127 149
December 1997 80 166 157
December 1998 119 210 242
-13-
<PAGE>
Certain Transactions
On September 3, 1991, Messrs. Sbordone and Shubel purchased from the
Company 306,825 and 187,500 shares of the Company's Common Stock, respectively.
Mr. Sbordone paid the purchase price by delivery of a promissory note in the
amount of $122,730. 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, 2001. To secure this debt, each of
Messrs. Sbordone and Shubel pledged 306,828 and 162,500 shares, respectively, 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 1998 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.
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, 1999
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.
-14-
<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 2000
must submit the same in writing so as to be received at the executive office of
the Company on or before December 31, 1999. 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, 1998 is
being mailed together with this Proxy Statement to the Company's stockholders of
record at the close of business on April 1, 1999.
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 6, 1999
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.
-15-
<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 6, 1999.
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 1, 1999 at the Annual
Meeting of Stockholders to be held on Thursday, May 6, 1999, 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: _____________________________, 1999
__________________________________________
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.
