SCHEDULE 14A
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
Parlex Corporation
- -----------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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[ ] 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:
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(4) Date Filed:
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PARLEX CORPORATION One Parlex Place, Methuen, Massachusetts 01844
October 29, 1999
Dear Stockholder,
I am pleased to invite you to attend Parlex Corporation's annual
meeting. The meeting will be held on Tuesday, November 30, 1999, at 9:30
a.m. at Parlex Corporation, One Parlex Place, Methuen, Massachusetts.
As the accompanying notice and proxy statement describe, the only
action scheduled for this year's meeting is the election of two directors
each for a term of three years.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
ACCORDINGLY, PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY AT YOUR
EARLIEST CONVENIENCE.
I look forward to meeting as many of our stockholders as possible and
hope you can be present on November 30th.
Sincerely,
HERBERT W. POLLACK
Chairman of the Board
Parlex Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Parlex Corporation:
The Annual Meeting of Stockholders of Parlex Corporation will be at
Parlex Corporation, One Parlex Place, Methuen, Massachusetts, on Tuesday,
November 30, 1999, at 9:30 a.m. for the following purposes:
1. to elect two Class II members of the Board of Directors to
serve for a period of three years and until their successors
are elected and qualified; and
2. to consider and act upon any other matter that properly comes
before the meeting or any adjournment thereof.
By Order of the Board of Directors
JILL POLLACK KUTCHIN
Clerk
Methuen, Massachusetts
October 29, 1999
PARLEX CORPORATION
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER 30, 1999
This statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Parlex Corporation (the
"Company") for use at the Company's Annual Meeting of Stockholders to be
held on Tuesday, November 30, 1999, at the time and place set forth in the
notice of the meeting, and at any adjournment(s) thereof. The approximate
date on which this Proxy Statement and form of proxy are first being sent
to stockholders is October 29, 1999.
If the enclosed proxy is properly executed and returned, it will be
voted in the manner directed by the stockholder. If no instructions are
specified with respect to any particular matter to be acted upon, proxies
will be voted in favor of electing as Class II Directors the two persons
listed as nominees under the section entitled "Election of Directors"
below. Any person giving the enclosed form of proxy has the power to
revoke it by voting in person at the meeting, or by giving written notice
of revocation to the Clerk of the Company at any time before the proxy is
exercised.
The holders of a majority of the number of shares of common stock
issued, outstanding, and entitled to vote are required to be present in
person or be represented by proxy at the meeting in order to constitute a
quorum for the transaction of business. If a quorum is present, the
election of directors will be determined by a plurality of the votes cast.
The Company will bear the costs of this solicitation. It is expected
that the solicitation will be made primarily by mail, but regular employees
of the Company (none of whom will receive any extra compensation for their
activities) may also solicit proxies by telephone, facsimile and in person
and arrange for brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to their principals at the
expense of the Company.
As of the current date, the management of the Company is not aware of
any other matters to be presented for action at the meeting. If any matter
other than that described does properly come before the meeting, the
individuals named in the enclosed proxy will vote the shares represented
thereby in accordance with their best judgment.
The Company's principal executive offices are located at One Parlex
Place (formerly known as 145 Milk Street), Methuen, Massachusetts 01844,
telephone number (978) 685-4341.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on October 15,
1999, are entitled to notice of and to vote at the meeting. At the close
of business on that date, the Company had outstanding and entitled to vote
4,807,459 shares of Common Stock, par value $.10 per share ("Common
Stock"). Each outstanding share of the Company's Common Stock entitles the
record holder to one vote.
ELECTION OF DIRECTORS
The Company's Restated Articles of Organization provide for a Board
of Directors consisting of seven members divided into three classes and
elected by stockholders for staggered terms of three years each. Of the
current total of seven directors, two Class II Directors have terms
expiring at the 1999 Annual Meeting, two Class III Directors have terms
expiring at the 2000 Annual Meeting and three Class I Directors have terms
expiring at the 2001 Annual Meeting. The two directors whose terms expire
at the 1999 Annual Meeting have been nominated by the Board of Directors
for election at such meeting. All of the nominees for director are now
Class II members of the Board of Directors. Each Class II Director elected
at the 1999 Annual Meeting will serve until the 2002 Annual Meeting of
Stockholders or Special Meeting in lieu thereof, and until that director's
successor is elected and qualified.
The individuals named in the enclosed form of proxy will, if so
authorized, vote to elect as Class II Directors the persons named below
under the caption Class II Director Nominees. The management of the Company
is not aware of any reason why the nominees for director would not be able
to serve. If any of the nominees are unable to serve, the individuals named
in the enclosed form of proxy will vote in favor of such other person as
the Board of Directors may at the time recommend. Information regarding
these nominees is set forth below.
Class II Directors Nominees
M. Joel Kosheff (age 61).
Mr. Kosheff has been Principal of M.J. Kosheff Associates, a
financial consulting firm, since January 1989. He has been a Director of
the Company since 1989.
Peter J. Murphy (age 50).
Mr. Murphy has been President of the Company since July 1, 1995, and
on July 1, 1997, was elected to the office of Chief Executive Officer. He
was Chief Operating Officer and Executive Vice President from May 1994 to
July 1995 and Vice President and General Manager of Flexible Circuit
Products from February 1993 to May 1994. Mr. Murphy initially served as
Assistant to the President from December 1992 to February 1993. From 1989
to December 1992, he was President of Teledyne Electo-Mechanisms, a
manufacturer of flexible circuits. Mr. Murphy is a Director of Nashua
Corporation. He has been a Director of the Company since 1994.
The following persons will continue to be Directors of the Company:
Class III Directors
(term of office to expire with the annual meeting of stockholders to be
held in December 2000)
Herbert W. Pollack (age 72).
Mr. Pollack has served as Chairman of the Board and Treasurer of the
Company since it was founded in 1970. He was President of the Company from
1970 to July 1, 1995, and Chief Executive Officer from 1970 to June 1997.
Mr. Pollack is the brother of Lester Pollack and the father of Jill Pollack
Kutchin.
Sheldon Buckler (age 68).
Dr. Buckler has been Chairman of the Board of Commonwealth Energy
System, a supplier of energy products, since May 1995. He was employed by
Polaroid Corporation from 1964 until his retirement as Vice Chairman of the
Board of Directors in May 1994. Dr. Buckler is a Director of Aseco
Corporation and Nashua Corporation. He has been a Director of the Company
since February 1995.
Class I Directors
(term of office to expire with the annual meeting of stockholders to be
held in December 2001)
Lester Pollack (age 66).
Mr. Pollack has been Managing Director of Centre Partners Management
LLC, a private investment firm, since 1986 and was a Managing Director of
Lazard Freres & Co. LLC from 1986 to 1998. Mr. Pollack is Chairman of the
Board of Directors of Firearms Training Systems, Inc., and is a director of
LaSalle Re Limited, Nationwide Credit Inc. and Tidewater, Inc. Mr. Pollack
is the brother of Herbert W. Pollack. He has been a Director of the Company
since 1970.
Benjamin M. Rabinovici (age 77).
Dr. Rabinovici has been Chairman of the Board of ASD Company, a
manufacturer of electronic products, since July 1999. He was President of
Tympanium Corporation from 1980 to March 1996. He has been a Director of
the Company since 1970.
Richard W. Hale (age 61).
Mr. Hale has been President and Chief Executive Officer of VXI
Corporation, a manufacturer of electronic products for the telephone and
computer industry, since April 1998. He was President and Chief Executive
Officer of Watson Technologies, Inc., a manufacturer of electronic
products, from 1996 to March 1998. In addition, he has been Chairman and
Chief Executive Officer of Hale Industries, Inc., a private investment
firm, since August 1993. From 1988 to July 1993, he was Executive Vice
President and Chief Operating Officer and a member of the Board of
Directors of M/A-Com, Inc. He has been a Director of the Company since
February 1995.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held four meetings during fiscal year 1999.
Each outside director received a $10,000 annual retainer for his services,
plus $1,500 for each directors' meeting he attended.
The Board has an Audit Committee and a Compensation Committee but
does not have a nominating committee. All Directors attended all meetings
of the Board and meetings of the committees of the Board on which they
served.
During fiscal year 1999, the Audit Committee, of which Messrs.
Buckler, Kosheff and Lester Pollack were members, held two meetings. The
Audit Committee reviews the internal controls of the Company. It meets with
appropriate Company financial personnel as well as the Company's
independent auditors. The Committee reviews the scope and results of the
professional services provided by the Company's independent auditors and
the fees charged for such services and makes such recommendations to the
Board as it deems appropriate, including recommendations as to the
appointment of independent auditors. The Committee is composed entirely of
independent outside directors.
During fiscal year 1999, the Compensation Committee, of which Messrs.
Hale, Kosheff and Rabinovici were members, held one meeting. This is the
committee of the Board responsible for establishing the compensation of the
Chief Executive Officer and setting policy for compensation at the senior
levels of the Company, as well as administering various employee stock
option plans. The Committee is composed entirely of independent outside
directors.
In order to continue to attract and retain outside directors of
exceptional ability, the Company maintains the 1989 Outside Directors'
Stock Option Plan (the "1989 Director Plan") covering 112,500 shares of
Common Stock and the 1996 Outside Directors' Stock Option Plan (the "1996
Director Plan") covering 150,000 shares of Common Stock. Options are
granted pursuant to the 1989 Director Plan only to non-employee members of
the Board of Directors of the Company. Each member of the Company's Board
of Directors who is neither an employee nor an officer of the Company who
becomes a member of the Board of Directors for the first time on or after
August 22, 1989, will be automatically granted on the date such membership
on the Board of Directors commences, without further action by the Board,
an option to purchase 7,500 shares of the Company's Common Stock. In
addition, each incumbent member of the Company's Board of Directors who is
neither an employee nor an officer of the Company and who has been a member
of the Board of Directors for at least five years shall receive an
automatic grant on the first business day following his fifth year in
office, without further action by the Board, of an option to purchase 7,500
shares of the Company's Common Stock. Options granted under the 1989
Director Plan become exercisable in equal installments on each of the first
five anniversaries of the date of the option grant. The exercise price per
share of options granted under the 1989 Director Plan shall be the closing
sale price of a share of the Company's Common Stock on the date the option
is granted as listed on the Nasdaq National Market(R).
Options are granted pursuant to the 1996 Director Plan only to non-
employee members of the Board of Directors of the Company. Commencing on
August 20, 1996, and on the date of each annual meeting of stockholders
thereafter beginning with the 1997 annual meeting of stockholders, each
member of the Company's Board of Directors who is not an employee of the
Company will be automatically granted an option to purchase 1,500 shares of
the Company's Common Stock. Options granted under the 1996 Director Plan
become fully exercisable one year from the date of the option grant. In
addition to the formula option referred to above, the Board of Directors
may award options on an annual basis to purchase up to 2,250 shares of the
Company's Common Stock to non-employee members of the Board of Directors in
recognition of extraordinary efforts and contributions to the Board.
Except for the specific options referred to above, no other options shall
be granted under the 1996 Director Plan. The exercise price per share of
options granted under the 1996 Director Plan shall be the closing sale
price of a share of the Company's Common Stock on the date the option is
granted as listed on the Nasdaq National Market.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 15, 1999,
by: (i) each person who is known by the Company to own beneficially more
than 5% of the outstanding Common Stock; (ii) each of the Company's
directors and nominees for director; (iii) each of the executive officers
named in the Summary Compensation Table on page 8; and (iv) all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Shares of
Common Stock % of Outstanding
Owned Common Stock
Stockholder Beneficially(1) Owned Beneficially
----------- --------------- ------------------
<S> <C> <C>
Herbert W. Pollack(2)(3)(4) 769,914 16.0
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Sandra Pollack 230,400 4.8
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Walter A. Winshall(5) 382,098 8.0
3 Ferndale Road
Weston, MA 02193
Dimensional Fund Advisors Inc.(6) 276,050 5.7
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Standish, Ayer & Wood, Inc.(7) 265,400 5.5
One Financial Center
Boston, MA 02111
Benjamin M. Rabinovici(2)(8) 130,800 2.7
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Peter J. Murphy(2)(3)(9) 68,500 1.4
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Lester Pollack(2)(10) 52,620 1.0
c/o Centre Partners L.P.
One Rockefeller Plaza
New York, NY 10020
M. Joel Kosheff(2)(11) 27,000 *
31 Pier 7
Charlestown, MA 02129
Sheldon Buckler(2)(12) 10,500 *
200 Dudley Road
Newton Centre, MA 02159
Alfred R. Calvetti(3)(13) 10,250 *
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Steven M. Millstein(3)(14) 9,700 *
c/o Parlex Corporation
One Parlex Place
Methuen, MA 01844
Richard W. Hale(2)(15) 9,000 *
c/o VXI Corporation
One Front Street
P.O. Box 490
Rollinsford, NH 03869
All directors and officers
as a group (10 persons)(16) 1,249,533 26.0
- -----------------------------
* Less than one percent.
<FN>
<F1> For purposes of this table, any person who directly or indirectly has
or shares voting or investment power with respect to shares of Common
Stock is deemed a beneficial owner of those shares. Thus, more than
one person may be the beneficial owner of particular shares. Each
person listed above is deemed to have sole voting and investment
power with respect to the shares shown, unless otherwise indicated.
<F2> Denotes a director or a director nominee of the Company.
<F3> Denotes an executive officer of the Company.
<F4> The shares shown as owned by Herbert W. Pollack include 230,400
shares, of which he disclaims beneficial ownership, owned directly by
his wife, Sandra Pollack.
<F5> The shares shown as owned by Walter A. Winshall are as reported in a
Statement on Form 4 filed by him with respect to his holdings of
Common Stock as of February 1999.
<F6> The shares shown as owned by Dimensional Fund Advisors Inc. are as
reported by Dimensional Fund Advisors Inc. in a statement on Schedule
13G with respect to its holdings of Common Stock as of February 11,
1999.
<F7> The shares shown as owned by Standish, Ayer & Wood, Inc. are as
reported by Standish, Ayer & Wood, Inc. in a Statement on Schedule
13G with respect to its holdings of Common Stock as of February 5,
1998.
<F8> The shares shown as owned by Dr. Rabinovici include 34,800 shares, of
which he disclaims beneficial ownership, owned directly by his wife.
The shares shown as owned by Dr. Rabinovici also include 12,000
shares which he has the right to acquire within 60 days of October
15, 1999, by the exercise of stock options granted under the
Company's 1989 Director Plan and the Company's 1996 Director Plan.
<F9> The shares shown as owned by Mr. Murphy include 23,750 shares which
he has the right to acquire within 60 days of October 15, 1999, by
the exercise of stock options granted under the Company's 1989
Employees' Stock Option Plan (the "1989 Option Plan").
<F10> The shares shown as owned by Lester Pollack include 12,000 shares
which he has the right to acquire within 60 days of October 15, 1999,
by the exercise of stock options granted under the Company's 1989
Director Plan and the Company's 1996 Director Plan.
<F11> The shares shown as owned by Mr. Kosheff include 12,000 shares which
he has the right to acquire within 60 days of October 15, 1999, by
the exercise of stock options granted under the Company's 1989
Director Plan and the Company's 1996 Director Plan.
<F12> The shares shown as owned by Dr. Buckler include 9,000 shares which
he has the right to acquire within 60 days of October 15, 1999, by
the exercise of stock options granted under the Company's 1989
Director Plan and the Company's 1996 Director Plan.
<F13> The shares shown as owned by Mr. Calvetti include 2,250 shares which
he has the right to acquire within 60 days of October 15, 1999, by
the exercise of stock options granted under the Company's 1989 Option
Plan.
<F14> The shares shown as owned by Mr. Millstein include 1,000 shares which
he has the right to acquire within 60 days of October 15, 1999, by
the exercise of stock options granted under the Company's 1989 Option
Plan.
<F15> The shares shown as owned by Mr. Hale are shares which he has the
right to acquire within 60 days of October 15, 1999, by the exercise
of stock options granted under the Company's 1989 Director Plan and
the Company's 1996 Director Plan.
<F16> The number of shares shown as beneficially owned by officers and
directors include 82,250 shares which they have the right to acquire
within 60 days of October 15, 1999, by the exercise of stock options.
</FN>
</TABLE>
---------------------
EXECUTIVE OFFICERS
The executive officers of the Company, together with a description of
the business experience backgrounds of all of them except Herbert W.
Pollack and Peter J. Murphy (whose backgrounds are described under the
caption Election of Directors) are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <S>
Herbert W. Pollack 72 Chairman of the Board of Directors
and Treasurer
Peter J. Murphy 50 President, Chief Executive Officer
and Director
Alfred R. Calvetti 56 Vice President and General Manager-
Laminated Cable Products
Jill Pollack Kutchin 47 Vice President-Corporate Affairs and
Clerk
Steven M. Millstein 55 Vice President-Finance
</TABLE>
Mr. Calvetti joined the Company in July 1971 and has served in a
variety of technical and managerial roles. From December 1988 to February
1993, he was Vice President and General Manager of Laminated Cable
Products. In February 1993, he became a Corporate Vice President and
General Manager of Laminated Cable Products.
Ms. Kutchin joined the Company in January 1977 and served as Manager-
Marketing Administration until December 1983, when she became Vice
President-Corporate Affairs. Since November 1980, she has also been Clerk
of the Company. Ms. Kutchin is the daughter of Herbert W. Pollack.
Mr. Millstein joined the Company in March 1977, serving initially as
Controller and from February 1979 to February 1988 as Vice President-
Controller. In February 1988, he became Vice President-Finance.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the fiscal years ending June 30, 1999,
1998, and 1997, all compensation earned or paid to the Company's Chief
Executive Officer and each of the Company's most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000 in
each year for all services rendered in all capacities to the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------- ------------
Awards
Securities Underlying
Name and Stock Options All Other
Principal Position Year Salary($) Bonus($)(1) (Number of Shares) Compensation($)
------------------ ---- --------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <S>
Herbert W. Pollack(2) 1999 $218,640 - - -
Chairman and Treasurer 1998 218,640 - - -
1997 218,640 - - -
Peter J. Murphy(3) 1999 $225,000 $50,000 15,000 -
President and Chief 1998 210,000 25,000 40,000 -
Executive Officer 1997 192,504 50,000 - -
Alfred R. Calvetti 1999 $121,200 $65,250 5,000 -
Vice President and General 1998 115,560 64,000 2,000 -
Manager-Laminated Cable 1997 110,016 54,000 - -
Products
Steven M. Millstein 1999 $106,750 $ - - -
Vice President-Finance 1998 100,008 5,000 2,000 -
1997 96,224 5,000 - -
- ---------------------
<FN>
<F1> Amounts shown were earned in the years indicated. Bonuses are
generally paid in the first quarter of the following fiscal year.
<F2> For a description of the employment agreement between the Company and
Mr. Pollack, see EMPLOYMENT AGREEMENTS below.
<F3> For a description of the employment agreement between the Company and
Mr. Murphy, see EMPLOYMENT AGREEMENTS below.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Pollack in
July 1997, for a period of three years ending June 30, 2000, which provides
for current compensation of $8,210 twice a month. The agreement provides
for a death benefit payment equal to 75% of his current compensation for a
period of 24 months after his death. The agreement also provides that the
employee will not own, operate, or manage any business in competition with
that of the Company so long as he is employed by the Company and, in
certain instances, for a one-year period thereafter.
The Company entered into an employment agreement with Mr. Murphy on
September 1, 1999, for a period of three years ending August 31, 2002,
which provides for current compensation of $10,000 twice a month. The
agreement provides for a death benefit payment equal to 75% of his current
compensation for a period of 24 months after his death. The agreement also
provides that the employee will not own, operate, or manage any business in
competition with that of the Company so long as he is employed by the
Company and, in certain instances, for a one-year period thereafter.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information relating to stock option
grants to the named executive officers during fiscal year 1999. Pursuant to
applicable Securities and Exchange Commission regulations, the amounts
shown under the heading "Potential Realizable Value" are based on
arbitrarily assumed annualized rates of stock price appreciation of five
percent and ten percent, compounded annually, from the date of grant to the
end of the ten year option term. Actual stock appreciation on options
exercised are dependent on the future performance of the Company's Common
Stock and overall stock market conditions. There can be no assurance that
these values will be achieved.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Ten-Year Option Term
-------------------------------------------------------- ----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) Year 1999 ($/Share) Date 5%($) 10%($)
---- ---------- ---------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Herbert W. Pollack - - - - - -
Peter J. Murphy(1) 15,000 29 $13.25 8/25/08 $124,993 $316,756
Alfred R. Calvetti(1) 5,000 10 13.25 8/25/08 41,664 105,585
Steven M. Millstein(1) - - - - - -
- ---------------------
<FN>
<F1> The shares were granted under the 1989 Option Plan, at an exercise
price equal to the fair market value of the Company's stock on the
date of grant and become exerciseable in increments of 25% over the
first five years of the ten year period, the first 25% becoming
exercisable one year after the grant date.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information relating to the aggregate
exercised and unexercised stock options held by the named executive
officers during fiscal year 1999 and the value of their unexercised stock
options as of June 30, 1999.
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-The-Money
on Value Options at 6/30/99(#) Options at 6/30/99($)(1)
--------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Herbert W. Pollack 75,000 $705,750 - - - -
Chairman and Treasurer
Peter J. Murphy 37,500 $326,500 10,000(2) 45,000(2) $0 $37,500
President and Chief
Executive Officer
Alfred R. Calvetti 15,000 $ 99,375 500(2) 6,500(2) $0 $12,500
Vice President and General
Manager-Laminated Cable
Products
Steven M. Millstein - - 500 1,500(2) $0 $ 0
Vice President-Finance
- ---------------------
<FN>
<F1> The "value of unexercised in-the-money options at June 30, 1999" was
calculated by determining the difference between the fair market
value of the underlying Common Stock at June 30, 1999, (closing price
of the Company's Common Stock on the Nasdaq National Market on June
30, 1999, was $15.75 per share) and the exercise prices of the stock
options. An option is "in-the-money" when the fair market value of
the underlying Common Stock exceeds the exercise price of the option.
<F2> These shares were granted under the 1989 Option Plan.
</FN>
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Company's filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate other
filings with the Securities and Exchange Commission, including this Proxy
Statement, in whole or in part, the following report and the Stock
Performance Graph on page 13 shall not be incorporated by reference into
any such filings.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Committee
The Compensation Committee (the "Committee") is comprised of Messrs.
Hale, Kosheff and Rabinovici. This is the committee of the Board
responsible for establishing the compensation of the Chief Executive
Officer and setting policy for compensation at the senior levels of the
Company, as well as administering various employee stock option plans. The
Committee is composed entirely of independent outside directors.
Compensation Philosophy
The Committee maintains a philosophy that executive compensation
levels should be competitive and consistent with flexible interconnect
industry standards to enable the Company to attract, motivate and retain
executive officers of outstanding ability who are capable of making
significant contributions which are critical to the Company's success. The
Committee believes that such compensation also should be meaningfully
related to both an individual's job performance, as measured by the
achievement of qualitative objectives, and the performance of the Company,
as measured by its profitability, the value created for stockholders and
the realization of the Company's short- and long-term strategic goals. The
Company's compensation policies are designed to attract and retain talented
managers and motivate such managers to enhance the Company's performance,
thereby building value into the Company's business. The Company also seeks
to align the interests of its executives with the long-term interests of
stockholders in the enhancement of stockholder value through stock option
awards that can result in the ownership of the Company's common stock.
At present, compensation of the Company's executive officers is
composed of the following elements: annual base salary, annual performance
incentives in the form of cash bonuses and long-term performance incentives
in the form of stock option awards under the 1989 Option Plan.
Base Salary
The Committee's general approach to compensating executive officers
is to pay cash salaries competitive with industry standards based upon the
individual's experience and past and potential contribution to the success
of the Company. In determining industry standards, the Committee compares
compensation levels paid by a self-selected group of flexible interconnect
industry companies that compete in the Company's line of business. Such
compensation information is obtained from various publicly available
sources.
The Committee also believes that compensation should be meaningfully
related to the value created by individual executive officers for the
stockholders. Accordingly, the Committee considers the quality of an
individual executive's contribution to the Company's overall profitability
and success in determining the executive's salary. The Committee reviews on
an annual basis the salaries of its executive officers in light of the
foregoing factors. The Company believes that the base salaries of its
executive officers have been at or below the median of the base salaries
for executive officers in the flexible interconnect industry.
Annual Incentives
The Company has traditionally paid employee performance bonuses once
a year, usually during the first quarter of the following fiscal year for
which the bonus is earned. Bonuses are traditionally based on both
individual performance and Company performance. Except for a particular
incentive bonus arrangement entered into with Mr. Calvetti, the Board has
not utilized any specific formula for determination of bonus amounts. For
fiscal year 1999, Mr. Calvetti received a bonus based upon the achievement
of financial and operating performance objectives as provided in his
incentive bonus arrangement.
Stock Options
Stock options are used as the primary long-term incentive vehicle.
The Committee believes that reliance upon such incentives is advantageous
to the Company because they foster a long-term commitment by the recipient
to the Company and motivate the employees to seek to improve the long-term
market performance of the Company's stock. Thus, stock option grants
provide an incentive for the executive to manage the Company from the
perspective of an owner with an equity stake in the business. During fiscal
year 1998, the Board authorized the grant of stock options under the 1989
Option Plan to executive officers and other key employees. Stock option
grants to executive officers are discretionary and reflect the relative
value of the individual's position as well as the current performance and
continuing contribution of that individual to the Company. The Board does
not utilize any specific formula for determination of option grants.
Compensation of the Chief Executive Officer
As described in the section above entitled Employment Agreements, Mr.
Murphy entered into a new employment agreement as of September 1, 1999. In
fiscal year 1999, Mr. Murphy's annual base salary was increased to $225,000
in order to bring his salary in line with the competitive salary range for
his position. In fiscal year 1999, the Committee granted to Mr. Murphy an
option to purchase 15,000 shares under the 1989 Option Plan at an exercise
price equal to the fair market value of the Company's stock on the date of
grant. The option expires after ten years and becomes exercisable in
increments of 25% over the first five years of the ten year term of the
option. The first 25% become exercisable one year after the date of grant.
The purpose of this grant was to reward Mr. Murphy for his role and
responsibilities in the performance and growth of the Company, and to
enable him to purchase and maintain an equity interest in the Company and
to share in the appreciation of the value of the stock.
Benefits
The Company provides medical, life insurance and profit sharing
benefits to the executive officers that generally are available to all
Company employees.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986 (the "Code")
limits a company's ability to take a deduction for federal tax purposes for
certain compensation paid to its executives. The Company currently expects
that all compensation payable to executive officers during fiscal year 1999
will be deductible by the Company for federal income tax purposes. The
Committee's policy with respect to compensation to be paid to executive
officers is to structure compensation payments to executive officers so as
to be deductible under Section 162(m).
COMPENSATION COMMITTEE
Benjamin M. Rabinovici, Chairman
Richard W. Hale
M. Joel Kosheff
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal year 1999, the Compensation Committee members were Benjamin
M. Rabinovici, Richard W. Hale and M. Joel Kosheff, none of whom has ever
been employed by the Company. Further, the Board of Directors is unaware of
any relationship of any member of the Compensation Committee required to
be disclosed under Item 402(j) or 404 of Regulation S-K promulgated by the
Securities and Exchange Commission.
STOCK PERFORMANCE GRAPH
The following Stock Performance Graph compares the cumulative total
shareholder return on the Company's Common Stock for a five year period
(July 1, 1994 to June 30, 1999) with the cumulative total return of the
CRSP Total Return Index for the Nasdaq National Market and a group of peer
companies. The companies included in the peer group are Adflex Solutions,
Inc., Hadco Corporation, Merix Corporation and Sheldahl, Inc. Altron
Incorporated was removed from the list of peer companies as a result of no
longer being listed on the Nasdaq National Market. The Performance Graph
assumes the investment of $100 on July 1, 1994, in the Company's Common
Stock, in the Nasdaq National Market companies and in the peer group and
also assumes the reinvestment of all dividends. The returns for each
company in the peer group have been weighted to reflect stock market
capitalization.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
PARLEX CORPORATION, NASDAQ NATIONAL MARKET INDEX, AND PEER GROUP
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Parlex $100 $167 $212 $361 $331 $386
NASDAQ $100 $134 $171 $208 $274 $394
Peer Group $100 $263 $213 $372 $155 $194
</TABLE>
INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP to be the
independent auditors to audit the consolidated financial statements of the
Company for the fiscal year ending June 30, 2000. Deloitte & Touche LLP has
been regularly employed by the Company for audit of consolidated financial
statements and other purposes since the Company's organization in 1970.
Representatives of Deloitte & Touche LLP expect to be present at the
meeting, and, while they do not plan to make a statement at the meeting,
such representatives will be available to respond to appropriate questions
from stockholders in attendance.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the Company's
Proxy Statement for the 2000 Annual Meeting of Stockholders must be
received by the Clerk of the Company at One Parlex Place, Methuen,
Massachusetts 01844, no later than June 24, 2000. Under regulations adopted
by the Securities and Exchange Commission, if a proponent of a stockholder
proposal fails to notify the Company at least 45 days prior to the month
and day of mailing of the prior year's proxy statement, then the proxies
appointed herein shall be allowed to use their discretionary voting
authority when a proposal is raised at the annual meeting, without any
discussion of the matter in the proxy statement.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to
file with the Securities and Exchange Commission (the "Commission") initial
reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater
than ten percent shareholders are required by the Commission's regulations
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required during the fiscal year ended June 30, 1999, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent beneficial owners were complied
with.
AVAILABILITY OF FORM 10-K
Copies of the Company's Annual Report on Form 10-K with respect to
the fiscal year ended June30, 1999 (without exhibits), as filed with the
Securities and Exchange Commission, are available to stockholders free of
charge by writing to: Investor Relations Department, Parlex Corporation,
One Parlex Place, Methuen, Massachusetts 01844.
By Order of the Board of Directors
JILL POLLACK KUTCHIN
Clerk
October 29, 1999
PARLEX CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock hereby constitutes and appoints
Herbert W. Pollack, Peter J. Murphy and Jill Pollack Kutchin and each of
them, proxies with full power of substitution to each, to represent and
vote all shares of Common Stock of Parlex Corporation (the "Company")
standing in the name of the undersigned at the Annual Meeting of
Stockholders to be held at Parlex Corporation, One Parlex Place, Methuen,
Massachusetts on Tuesday, November 30, 1999, at 9:30 a.m., or any
adjournment(s) thereof, hereby granting full power and authority to act on
behalf of the undersigned at said meeting or any adjournment(s) thereof.
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED AS SPECIFIED ABOVE. IF
NO DIRECTION IS GIVEN AND THE PROXY IS VALIDLY EXECUTED, THE SHARES SHALL
BE VOTED "FOR" THE NOMINEES PROPOSED FOR ELECTION AS DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES PROPOSED FOR
ELECTION AS DIRECTORS AS INDICATED IN THE PROXY STATEMENT.
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PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
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Please sign this proxy exactly as your name(s) appear(s) on this card.
Joint owners should each sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign, and where more than one
name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her title.
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HAS YOUR ADDRESS CHANGED?
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[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
PARLEX CORPORATION
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
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- --------Stockholder sign here----------------------Co-owner sign here------
1. To elect two Class II directors to hold office for a term expiring
with the annual stockholders' meeting to be held in 2002 or until their
successors are elected and qualified:
For All Nominees [ ] Withhold [ ] For All Except [ ]
M. Joel Kosheff
Peter J. Murphy
INSTRUCTIONS: To withhold authority to vote for a particular nominee, mark
the "For All Except" box and strike a line through that nominee's name.
2. In their discretion, to vote upon such other business as may properly
come before the meeting.
The undersigned hereby revokes any proxy previously given and acknowledges
receipt of written notice of, and the statement for, the 1999 Annual Meeting
of Stockholders and the 1999 Annual Report of the Company.
Mark box at right if an address change has been noted on the reverse side
of this card. [ ]
DETACH CARD DETACH CARD
PARLEX CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy
Ballot. The issue related to the management and operation of the Company
requires your immediate attention and approval. This is discussed in detail
in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on
November 30, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Parlex Corporation
