SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Orbit International Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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ORBIT INTERNATIONAL CORP.
80 Cabot Court
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Orbit International Corp.:
The Annual Meeting of Stockholders of Orbit International Corp. (the
"Company") will be held at The Penn Club, 30 West 44th Street, New York, New
York 10036, at 10:00 a.m., Eastern Daylight Savings Time, on June 26, 1998,
for the following purposes:
1. To elect the Board of Directors for the ensuing year.
2. To ratify the appointment of Ernst & Young LLP as
independent auditors and accountants for the Company for
the fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before
the meeting.
All stockholders are invited to attend the meeting. Stockholders of
record at the close of business on May 18, 1998, the record date fixed by the
Board of Directors, are entitled to notice of, and to vote at, the meeting. A
complete list of stockholders entitled to notice of, and to vote at, the
meeting will be open to examination by the stockholders beginning ten days
prior to the meeting for any purpose germane to the meeting during normal
business hours at the office of the Secretary of the Company at 80 Cabot
Court, Hauppauge, New York 11788.
Whether or not you intend to be present at the meeting, please sign and
date the enclosed proxy and return it in the enclosed envelope. Returning a
proxy will not deprive you of your right to attend the annual meeting and vote
your shares in person.
By Order of the Board of Directors
HARLAN SYLVAN
Secretary
Hauppauge, New York
May 29, 1998
ORBIT INTERNATIONAL CORP.
80 Cabot Court
Hauppauge, New York 11788
(516) 435-8300
______________________
PROXY STATEMENT
______________________
The accompanying proxy is solicited by the Board of Directors of Orbit
International Corporation (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., Eastern Daylight
Savings Time, on June 26, 1998, at The Penn Club, 30 West 44th Street, New
York, New York 10036, and any adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition
to the solicitation of proxies by mail, certain officers and employees of the
Company, without additional remuneration, may also solicit proxies personally
by telefax and by telephone. In addition to mailing copies of this material
to stockholders, the Company may request persons, and reimburse them for their
expenses in connection therewith, who hold stock in their names or custody or
in the names of nominees for others to forward such material to those persons
for whom they hold stock of the Company and to request their authority for
execution of the proxies.
One third of the outstanding shares of Common Stock, par value $.10 per
share (the "Common Stock"), present in person or represented by proxy shall
constitute a quorum at the Annual Meeting. The approval of a plurality of the
outstanding shares of Common Stock present in person or represented by proxy
at the Annual Meeting is required for election of the nominees as directors.
In all matters other than the election of directors, the affirmative vote of
the majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting is required for adoption of such
matters.
The form of proxy solicited by the Board of Directors affords
stockholders the ability to specify a choice among approval of, disapproval
of, or abstention with respect to each matter to be acted upon at the Annual
Meeting. Shares of Common Stock represented by the proxy will be voted,
except as to matters with respect to which authority to vote is specifically
withheld. Where the solicited stockholder indicates a choice on the form of
proxy with respect to any matter to be acted upon, the shares will be voted as
specified. Abstentions and broker non-votes will not effect the outcome of
the election of directors or the ratification of the appointment of the
independent auditors. With respect to all other matters to be voted on by
stockholders at the Annual Meeting, abstentions will have the same effect as
"no" votes, and broker non-votes will have no effect on the outcome of the
vote.`
All shares of Common Stock represented by properly executed proxies
which are returned and not revoked will be voted in accordance with the
instructions, if any, given therein. If no instructions are provided in a
proxy, the shares of Common Stock represented by such proxy will be voted FOR
the Board's nominees for director, and FOR the ratification of the appointment
of Ernst & Young LLP and in accordance with the proxy-holder's best judgment
as to any other matters raised at the Annual Meeting.
A stockholder who has given a proxy may revoke it at any time prior to
its exercise by giving written notice of such revocation to the Secretary of
the Company, executing and delivering to the Company a later dated proxy
reflecting contrary instructions or appearing at the Annual Meeting and taking
appropriate steps to vote in person.
At the close of business on April 24, 1998, 6,222,593 shares of Common
Stock were outstanding and eligible for voting at the meeting. Each
stockholder of record is entitled to one vote for each share of Common Stock
held on all matters that come before the meeting. Only stockholders of record
at the close of business on May 18, 1998 are entitled to notice of, and to
vote at, the meeting.
No Dissenter's Rights
Under Delaware law, stockholders are not entitled to dissenter's
rights of appraisal with respect to Proposal 2.
This proxy material is being mailed to stockholders commencing on or
about May 29, 1998.
PROPOSAL 1
ELECTION OF DIRECTORS
The bylaws of the Company provide that each director serves from the
date of election until the next annual meeting of stockholders and until his
successor is elected and qualified. The specific number of directors is set
by a resolution adopted by a majority of the entire Board of Directors. The
number of directors is currently fixed at seven, and the number of current
directors is six. Effective January 1, 1998, Nathan Greenberg resigned from
the Board of Directors for personal reasons. Marc Pfefferle was appointed by
the remaining members of the Board of Directors to fill this vacancy. The
Company has nominated Dennis Sunshine, Bruce Reissman, Mitchell Binder, John
Molloy, Stanley Morris, and Marc Pfefferle, each a current Director, for
reelection to the Board of Directors and has decided not to fill the vacancy
at this time.
The persons named in the accompanying proxy intend to vote for the
election of the nominees listed herein as directors. Each nominee has
consented to serve if elected. The Board of Directors has no reason to
believe that any nominee will not serve if elected, but if any of them should
become unavailable to serve as a director, and if the Board of Directors
designates a substitute nominee or nominees, the persons named as proxies will
vote for the substitute nominee or nominees designated by the Board of
Directors.
The following table sets forth certain information with respect to the
individuals nominated and recommended to be elected by the Board of Directors
of the Company and is based on the records of the Company and information
furnished to it by such persons. Reference is made to "Security Ownership of
Certain Beneficial Owners and Management" for information pertaining to stock
ownership by the nominees.
Name of Nominee Age Position
Dennis Sunshine 51 President, Chief Executive Officer
and Director
Bruce Reissman 48 Executive Vice President, Chief
Operating Officer and Director
Mitchell Binder 42 Vice President - Finance, Chief
Financial Officer and Director
John Molloy 68 Director
Stanley Morris 55 Director
Marc Pfefferle 41 Director
Biographical Information
Dennis Sunshine has been President and Chief Executive Officer of the
Company since March 1995. He has held various positions with the Company
since 1976, including Secretary and Vice President of Operations from April
1988 to March 1995 and Director of Operations from June 1983 to April 1988.
He has been a director of the Company since 1988.
Bruce Reissman has been Executive Vice President and Chief Operating
Officer of the Company since March 1995. He has held various positions with
the Company since 1975, including Vice President-Marketing from April 1988 to
February 1995 and Director of Sales and Marketing from 1976 to April 1988. He
has been a director of the Company since 1992.
Mitchell Binder has been Vice President-Finance of the Company since
1986 and Chief Financial Officer since 1983. He has held various positions
with the Company since 1983, including Treasurer and Assistant Secretary from
1983 to March 1995. He has been a director of the Company since 1985.
John Molloy has been a part-time consultant for Montgomery Associates, a
consulting company for the defense industry since November 1991. Prior
thereto he served as Vice President, Business Development of Ocean
Technologies Inc., a defense electronics company, from September 1986 to
October 1991. He has been a director of the Company since 1992.
Stanley Morris has been President of Rampart Brokerage Corporation
("Rampart"), an insurance agency since 1989. He has been a director of the
Company since 1995.
Marc Pfefferle has been a Managing Director of the Carl Marks Consulting
Group, Co. which specializes in enhancing growth and shareholder value in
middle market companies. Mr. Pfefferle has been with the Carl Marks
Consulting Group, Co. since 1992. Mr. Pfefferle also serves as a Board
Advisor to Precision Combustion, Inc. and is currently serving as interim
President of Nobody Beats the Wiz. He has been a director since 1998.
Stockholder Vote Required
Election of each director requires a plurality of the votes of the
shares of Common Stock present in person or requested by Proxy at the meeting
and entitled to vote on the election of directors.
The Board of Directors recommends a vote "FOR" the election of each of
the nominees for election to the Board of Directors named above.
Committees of the Board - Board Meetings
The Board has established an audit, a compensation and a stock option
committee to assist it in the discharge of its responsibilities. The
principal responsibilities of each committee and the members of each committee
are described in the succeeding paragraphs. Actions taken by any committee of
the Board are reported to the Board of Directors, usually at its next meeting
or by written report. The Company's Board of Directors held four meetings
during the fiscal year ended December 31, 1997. All directors attended at
least 75% of the meetings with the exception of Nathan Greenberg who could not
attend due to personal reasons.
The Audit Committee of the Board of Directors currently consists of John
Molloy, Stanley Morris and Marc Pfefferle. The Audit Committee held two
meetings during the fiscal year ended December 31, 1997. Each year it
recommends the appointment of a firm of independent public accountants to
examine the financial statements of the Company and its subsidiaries for the
coming year. In making this recommendation, it reviews the nature of audit
services rendered, or to be rendered, to the Company and its subsidiaries. It
reviews with representatives of the independent public accountants the
auditing arrangements and scope of the independent public accountants'
examination of the financial statements, results of those audits, their fees
and any problems identified by the independent public accountants regarding
internal accounting controls, together with their recommendations. It also
meets with the Company's Controller to review reports on the functioning of
the Company's programs for compliance with its policies and procedures
regarding ethics and those regarding financial controls and internal auditing.
This includes an assessment of internal controls within the Company and its
subsidiaries based upon the activities of the Company's internal auditing
staffs as well as an evaluation of the performance of those staffs. The Audit
Committee is also prepared to meet at any time upon request of the independent
public accountants or the Controller to review any special situation arising
in relation to any of the foregoing subjects.
The Compensation Committee of the Board of Directors currently consists
of John Molloy, Stanley Morris and Dennis Sunshine. The Compensation
Committee did not meet during the fiscal year ended December 31, 1997. This
Committee makes recommendations to the Board of Directors as to the salaries
of the President, sets the salaries of the other elected officers and reviews
salaries of certain other senior executives. It grants incentive compensation
to elected officers and other senior executives and reviews guidelines for the
administration of the Company's incentive programs. It also reviews and
approves or makes recommendations to the Board of Directors on any proposed
plan or program which would benefit primarily the senior executive group.
The Stock Option Committee of the Board of Directors currently consists
of Stanley Morris and John Molloy. The Stock Option Committee was formed on
September 1, 1995 and held one meeting during the fiscal year ended December
31, 1997. This Committee is responsible for administering the Company's stock
option plans. Specifically, the Committee determines the persons to be
granted options as well as the exercise price and term of such. The members
of the Stock Option Committee are not eligible to participate in the stock
option plans they administer.
The Board of Directors does not have a nominating committee. This
function is performed by the Board of Directors as a whole.
There are no family relationships among any of the directors or
executive officers of the Company except that Bruce Reissman and Dennis
Sunshine are brothers-in-law. The Company's executive officers serve in such
capacity at the pleasure of the Board of Directors.
Executive Officers of the Company
The names and ages of the executive officers of the Company as of April
30, 1998 and their positions with the Company are as follows:
Name Age Position
Dennis Sunshine 51 President, Chief Executive
Officer and Director
Bruce Reissman 48 Executive Vice President,
Chief Operating Officer and
Director
Mitchell Binder 42 Vice President - Finance,
Chief Financial Officer and
Director
Harlan Sylvan 47 Treasurer, Secretary and
Controller
Set forth below is a brief biographical description of each executive
officer:
Dennis Sunshine. See "Election of Directors."
Bruce Reissman. See "Election of Directors."
Mitchell Binder. See "Election of Directors."
Harlan Sylvan has been Treasurer and Secretary of the Company since
March 1995 and Controller of the Company since 1987.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the fiscal years ended December 31,
1997, 1996 and 1995, compensation paid by the Company to the Chief Executive
Officer and to each other executive officer of the Company that received more
than $100,000 in salary and bonus during the fiscal year ended December 31,
1997 including salary, bonuses, stock options and certain other compensation
(each, a "Named Executive"):
Annual Compensation(1)
Name and All Other
Principal Position Year Salary($) Bonus($) Compensation($)
Max Reissman (2) 1997 0(2) 0 0
1996 0(2) 0 0
1995 49,000 0 86,250(3)
Dennis Sunshine,(2) 1997 346,000 113,080 7,355(4)
President and Chief 1996 344,000 162,875 239,710(5)
Executive Officer 1995 319,000 0 7,009(7)
Bruce Reissman, 1997 346,000 64,070 6,753(4)
Executive Vice 1996 344,000 85,516 6,663(6)
President and 1995 319,000 0 6,975(7)
Chief Operating
Officer
Mitchell Binder, 1997 255,000 50,976 4,878(4)
Vice President- 1996 253,000 68,733 4,709(6)
Finance and 1995 243,000 0 26,753(7)(8)
Chief Financial
Officer
Harlan Sylvan 1997 109,000 8,240 2,677(4)
Treasurer, 1996 106,000 8,000 2,599(6)
Secretary and 1995 99,000 0 2,352(7)
Controller
(1) The Company has no long-term incentive compensation plan other than its
several stock option plans described herein and various individually
granted options. The Company does not award stock appreciation rights,
restricted stock awards or long-term incentive plan pay-outs.
(2) Max Reissman served as Chief Executive Officer of the Company until his
death on February 24, 1995, after which Dennis Sunshine was elected to
serve as Chief Executive Officer and President. Pursuant to Mr.
Reissman's employment agreement with the Company, Mr. Reissman's estate
is entitled to receive approximately $265,000 per year for three years
following his death, which amounts are funded by the $1.5 million of key
man life insurance received by the Company upon Mr. Reissman's death.
During 1998, Mr. Reissman's estate was paid approximately $67,000. See
"Employment Agreements."
(3) Consists of the value of the right of the Company to repurchase, for $.10
per share, 460,000 shares of Common Stock which the Company issued to Mr.
Reissman in 1985 for $.10 per share. Such right terminated upon Mr.
Reissman's death at which point the remaining 46,000 of such shares
vested. See "Employment Agreements."
(4) Includes $4,750, $4,750, $3,807 and $2,108 of matching contributions made
by the Company pursuant to the Company's 401(k) Plan for each of Messrs.
Sunshine, Reissman, Binder and Sylvan, respectively. Also includes the
portion of the insurance premium attributable to the employee and paid by
the Company under split dollar insurance policies maintained by the
Company for the benefit of Messrs. Sunshine, Reissman, Binder and Sylvan
in the amounts of $2,605, $2,003, $1,071 and $569, respectively.
(5) Includes the fair market value of 300,000 shares of Common Stock which
the Company issued to Mr. Sunshine in 1996, less the $.10 per share paid
for such shares. See "Employment Agreement".
(6) Includes $4,750, $4,750, $3,800 and $2,055 of matching contributions made
by the Company pursuant to the Company's 401(k) Plan for each of Messrs.
Sunshine, Reissman, Binder and Sylvan, respectively. Also includes the
portion of the insurance premium attributable to the employee and paid by
the Company under split dollar insurance policies maintained by the
Company for the benefit of Messrs. Sunshine, Reissman, Binder and Sylvan
in the amounts of $2,468, $1,913, $909 and $544, respectively.
(7) Includes $4,666, $5,149, $3,760 and $1,832 of matching contributions made
by the Company pursuant to the Company's 401(k) Plan for each of Messrs.
Sunshine, Reissman, Binder and Sylvan. Also includes the portion of the
insurance premium attributable to the employee and paid by the Company
under split dollar insurance policies maintained by the Company for the
benefit of Messrs. Sunshine, Reissman, Binder and Sylvan in the amounts
of $2,343, $1,826, $993 and $520, respectively.
(8) Consists of forgiveness of indebtedness to the Company.
The following table sets forth certain information concerning options
granted to the Named Executives during the fiscal year ended December 31,
1997.
Option Grants in Last Fiscal Year
Individual Grants
Number of
Securities
Underlying
Options
Granted(1)
Percent of
Total Options Granted to
Employees in Fiscal Year
Exercise or
Base Price
($/Share)
Expiration
Date
Potential Realizable
Annual Rates of
Stock
Price Appreciation
for
Option Term 5%
10%
Dennis Sunshine
35,000
19.88%
$2.44
12/3/07
$96,000
$204,000
Bruce Reissman
35,000
19.88%
$2.44
12/3/07
$96,000
$204,000
Mitchell Binder
20,000
11.36%
$2.44
12/3/07
$55,000
$117,000
Harlan Sylvan
10,000
5.68%
$2.44
12/3/07
$28,000
$58,000
(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND
FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the number
and value of securities underlying exercisable and unexercisable stock options
as of the fiscal year ended December 31, 1997 by the Named Executives. No
options were exercised by any of the Named Executives during the fiscal year
ended December 31, 1997.
Number of
Securities
Underlying
Unexercised
Options at
Fiscal Year End
Value of
Unexercised
In-the-Money
Options
at Fiscal Year
End
Name
Exercisable
Unexercisable
Exercisable
Unexercisable
Dennis Sunshine
275,000
35,000
$533,000
$26,000
Bruce Reissman
260,000
35,000
$503,000
$26,000
Mitchell Binder
200,000
20,000
$399,000
$15,000
Harlan Sylvan
50,000
10,000
$108,000
$ 7,000
EMPLOYMENT AGREEMENTS
Until his death on February 24, 1995, Max Reissman was employed by the
Company pursuant to an employment agreement, dated as of July 1, 1992, which
provided for annual base compensation of $275,000 (subject to cost-of-living
increases), plus an annual cash bonus equal to 4% of the Company's pre-tax
earnings. Under the agreement, Mr. Reissman's estate has the right to require
the Company to register, under federal and state securities laws, any
securities of the Company owned by him. As a result of his death, Mr.
Reissman's estate is entitled to receive approximately $265,000 per year for
three years following his death.
Dennis Sunshine has entered into an employment agreement with the
Company which commenced in April 1996. Under the terms of Mr. Sunshine's
employment agreement (the "Sunshine Employment Agreement"), Mr. Sunshine is
entitled to receive an annual base salary and a bonus equal to 4% of the
Company's pre-tax earnings. The Sunshine Employment Agreement provides that
the employment of Mr. Sunshine may be terminated by the Company for "cause."
"Cause" is defined as (i) willful and repeated failure by Mr. Sunshine to
perform his duties under the Sunshine Employment Agreement, which failure is
not remedied within 30 days after written notice from the Company; (ii)
conviction of Mr. Sunshine for a felony; (iii) Mr. Sunshine's dishonesty or
willfully engaging in conduct that is demonstrably and materially injurious to
the Company or (iv) willful violation by Mr. Sunshine of any provision of the
Sunshine Employment Agreement which violation is not remedied within 30 days
after written notice from the Company. The agreement may also be terminated
by the Company on not less than three years' prior notice.
The Sunshine Employment Agreement contains a provision prohibiting Mr.
Sunshine from competing with the Company for a one year period following
termination of his employment. The agreement also provides for the purchase
by Mr. Sunshine of 300,000 shares of Common Stock at $.10 per share. Such
shares are subject to vesting over a period of three years commencing on April
1, 1997.
Bruce Reissman has entered into an employment agreement with the Company
which commenced in April 1996. Under the terms of Mr. Reissman's employment
agreement (the "Reissman Employment Agreement"), Mr. Reissman is entitled to
receive an annual base salary and a bonus equal to 1.77% of the first $5
million of the Company's pre-tax earnings and 2.65% of any additional pre-tax
earnings. The Reissman Employment Agreement provides that the employment of
Mr. Reissman may be terminated by the Company for "cause" (as defined above).
The agreement may also be terminated by the Company on not less than three
years' prior notice.
Mitchell Binder has entered into an employment agreement with the
Company which commenced in April 1996. Under the terms of Mr. Binder's
employment agreement (the "Binder Employment Agreement"), Mr. Binder is
entitled to receive an annual base salary and a bonus equal to 1.46% of the
first $5 million of the Company's pre-tax earnings and 2.20% of any additional
pre-tax earnings. The Binder Employment Agreement provides that the
employment of Mr. Binder may be terminated by the Company for "cause" (as
defined above). The agreement may also be terminated by the Company on not
less than three years' prior notice.
Each of the Sunshine Employment Agreement, the Reissman Employment
Agreement and the Binder Employment Agreement (the "Employment Agreements")
supersede employment agreements previously entered into with the Company. The
Employment Agreements provide that the employee is entitled to receive
benefits offered to the Company's employees generally. The Employment
Agreements also provide for termination by the employee on not less than six
months' prior notice or upon a "change of control" (as defined in the
Employment Agreements). If the employee terminates his employment in
connection with a change in control of the Company, then the employee shall be
entitled to receive, as termination pay, the maximum amount that can be paid
without any portion thereof constituting an "excess parachute payment" as
defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as
amended.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employed by the Company receive
directors fees of $3,750 per quarter. Employee directors are not compensated
for services as a director. All directors are reimbursed for expenses
incurred on behalf of the Company. In December 1995, the stockholders
approved the Company's 1995 Stock Option Plan for Non-Employee Directors
pursuant to which non-employee Directors will be entitled to receive annual
grants of options to purchase Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Stanley Morris and John
Molloy, each of whom is a non-employee member of the Company's Board of
Directors, and Dennis Sunshine, who is the Company's Chief Executive Officer
and President.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors is responsible for
determining the compensation of executive officers of the Company, other than
compensation awarded pursuant to the Company's Plans which is administered by
the Stock Option Committee of the Board of Directors. Messrs. Morris, Molloy
and Sunshine comprise the Compensation Committee. Mr. Sunshine abstains from
any vote regarding his compensation.
The Stock Option Committee is responsible for granting and setting the
terms of stock options under the Company's 1995 Employee Stock Option Plan.
Messrs. Morris and Molloy serve on the Stock Option Committee.
General Policies Regarding Compensation of Executive Officers
The Company's executive compensation policies are intended (1) to
attract and retain high quality managerial and executive talent and to
motivate these individuals to maximize shareholder returns, (2) to afford
appropriate incentives for executives to produce sustained superior
performance, and (3) to reward executives for superior individual
contributions to the achievement of the Company's business objectives. The
Company's compensation structure consists of base salary, annual cash bonuses
and stock options. Together these components link each executive's
compensation directly to individual and Company performance.
Salary. Base salary levels reflect individual positions, responsibilities,
experience, leadership, and potential contribution to the success of the
Company. Actual salaries vary based on the Compensation Committee's subject
assessment of the individual executive's performance and the Company's
performance.
Bonuses. Executive officers are eligible to receive cash bonuses based on the
Compensation Committee's subject assessment of the respective executive's
individual performance and the performance of the Company. In its evaluation
of executive officers and the determination of incentive bonuses, the
Compensation Committee does not assign quantitative relative weights to
different factors and follow mathematical formula. Rather, the Compensation
Committee makes its determination in each case after considering the factors
it deems relevant, which may include consequences for performance that is
below expectations.
Stock Options. Stock options, which are granted at the fair market value of
the Common Stock on the date of grant, are currently the Company's sole long
term compensation vehicle. The stock options are intended to provide
employees with sufficient incentive to manage from the perspective of an owner
with an equity stake in the business.
In determining the size of individual options grants, the Stock Option
Committee considers the aggregate number of shares available for grant, the
number of individuals to be considered for an award of stock options, and the
range of potential compensation levels that the option awards may yield. The
number and timing of stock option grants to executive officers are decided by
the Stock Option Committee based on its subjective assessment of the
performance of each grantee. In determining the size and timing of option
grants, the Stock Option Committee weighs any factors it considers relevant
and gives such factors the relative weight it considers appropriate under the
circumstances then prevailing. While an ancillary goal of the Stock Option
Committee in awarding stock options is to increase the stock ownership of the
Company's management, the Stock Option Committee does not, when determining
the amount of stock options to award, consider the amount of stock already
owned by an officer. The Stock Option Committee believes that to do so could
have the effect of inappropriately or inequitably penalizing or rewarding
executives based upon their personal decisions as to stock ownership and
option exercises.
In 1993, the Internal Revenue Code was amended to limit the
deductibility of compensation paid to certain executives in excess of $1
million. Compensation not subject to the limitation includes certain
compensation payable solely because an executive attains performance goals
("performance-based compensation"). Stock options granted under the 1995
Employee Stock Option Plan did not qualify as performance-based compensation.
The Company's compensation deduction for a particular executive's total
compensation, including compensation realized from the exercise of stock
options, will be limited to $1 million. The Compensation Committee believes
that the compensation paid by the Company in fiscal 1997 will not result in
any material loss of tax deductions for the Company.
Compensation of the Chief Executive Officer
Mr. Sunshine's base salary and bonus for the fiscal year ended December
31, 1997 was determined by the terms of his employment agreement which was
entered into in April 1996 and is described elsewhere in this proxy statement.
Mr. Sunshine was granted 35,000 options during the fiscal year ended December
31, 1997. The Compensation Committee believes that Mr. Sunshine's base salary
level and bonus formula as set forth in his employment agreement fairly
reflects the outstanding contributions Mr. Sunshine has made to the Company's
growth and financial position. During 1997, Mr. Sunshine was instrumental in
the Company's return to profitability, the expansion of the Company's products
into strategic commercial markets and the continued orderly discontinuation of
the Company's apparel business. The Company believes that each of the
foregoing events helped to stabilize and improve the Company's financial
condition.
Compensation Committee Stock Option Committee
Stanley Morris Stanley Morris
John Molloy John Molloy
Dennis Sunshine
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return
on the NASDAQ Stock Market-U.S. Index and a peer group of comparable companies
(the "Peer Group") selected by the Company over the same period (assuming the
investment of $100 in the Common Stock, the NASDAQ Stock Market-U.S. and the
Peer Group on June 30, 1992, and the reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ORBIT INTERNATIONAL, THE NASDAQ
STOCK MARKET-US INDEX AND A PEER GROUP
(in dollars)
Orbit
International Peer
Corp. Group NASDAQ
6/30/92 100 100 100
6/30/93 116 118 126
12/31/93 93 125 139
12/31/94 35 97 136
12/31/95 18 120 192
12/31/96 44 163 236
12/31/97 64 158 290
* $100 invested on 6/30/92 in stock or index -- including reinvestment of
dividends. Fiscal year ending June 30 through June 30, 1993. Thereafter,
fiscal years presented are December 31.
The Peer Group is comprised of six companies in the defense electronics
industry - Aeroflex Inc., NAI Technologies Inc., Miltope Group Inc., Megadata
Corp., La Barge, Inc. and Astrosystems, Inc. Such companies were chosen for
the Peer Group because they have similar market capitalizations to the Company
and because they represent the line of business in which the Company is
engaged. Each of the six Peer Group issuers is weighted according to its
respective market capitalization.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is stock ownership information as of April 14, 1998 as
to each person who owns, or is known by the Company to own beneficially
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934),
more than 5% of the Company Common Stock, and the number of shares of Common
Stock owned by its directors, by all persons named in the Summary Compensation
Table and by all officers and directors as a group.
Name and Address of Amount and Name of
Beneficial Owner Beneficial Ownership(1) Percent of Class
Dennis Sunshine 1,305,138(2) 19.98%
c/o 80 Cabot Court
Hauppauge, New York
Bruce Reissman 988,614(3) 15.17%
c/o 80 Cabot Court
Hauppauge, New York
Mitchell Binder 240,200(4) 3.73%
c/o 80 Cabot Court
Hauppauge, New York
Harlan Sylvan 63,000(5) 1.0%
c/o 80 Cabot Court
Hauppauge, New York
John Molloy 9,000(6) *
1815 Paliament Road
Leucadia, California
Stanley Morris 12,000(6) *
2470 Cove Court
Bellmore, New York
Marc Pfefferle 0 *
135 East 57th Street
New York, New York
All officers and directors 2,617,952 36.76%
as a group
(7 persons)(2)(3)(4)(5)(6)
(1) Except as otherwise noted in the footnotes to this table, the named
person owns directly and exercises sole voting and investment power over
the shares listed as beneficially owned by such persons.
(2) Includes 690,614 shares held by Mr. Sunshine's wife and 3,000 shares held
in her IRA. Also includes options to purchase 310,000 shares of Common
Stock.
(3) Includes options to purchase 295,000 shares of Common Stock.
(4) Includes options to purchase 220,000 shares of Common Stock.
(5) Includes options to purchase 60,000 shares of Common Stock.
(6) Includes options to purchase 7,000 shares of Common Stock.
* Less than one percent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1982, the Company loaned $200,000 to Bruce Reissman, for the
purchase of a residence in connection with his relocation to California to
manage the Company's California operations and sales and marketing activities.
The loan, which is collateralized by a mortgage on his residence, is non-
interest bearing and repayable at the rate of $6,000 annually. At December
31, 1996 the amount due on the loan was $116,000 and at December 31, 1997 the
amount due on the loan was $114,000.The Company is currently negotiating with
Mr. Reissman with regard to an accelerated repayment schedule for such loan.
All of the Company's insurance policies (including general liability and
directors' and officers' insurance) are written by Rampart, a Company for
which Mr. Morris serves as President. The aggregate annual premiums under the
policies are approximately $958,000. The Company believes it obtains
insurance on terms no less favorable than it could obtain from a third party.
INDEPENDENT ACCOUNTANTS
Ratification of Appointment of Auditors
The firm of Ernst & Young LLP, independent certified public accountants,
has audited the books and records of the Company for the previous fiscal year.
Accordingly, the Board of Directors recommends that the stockholders vote FOR
the ratification of the appointment by the Board of Directors of the firm of
Ernst & Young LLP to audit the books and accounts of the Company for the
current fiscal year.
Representatives of Ernst & Young LLP are expected to be available at the
meeting to respond to appropriate questions and will be given the opportunity
to make a statement if they desire to do so. If the stockholders do not
ratify the appointment of this firm, the appointment of another firm of
independent certified public accountants will be considered by the Board of
Directors.
The Board of Directors deem the ratification of the appointment of Ernst
& Young LLP as the auditors for the Company to be in the Company's best
interest and recommends a vote "FOR" such ratification.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and the other equity securities of the Company. Officers,
directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equities are required by the regulations of
the Securities and Exchange Commission 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 December 31, 1997, all Section 16(a) filing requirements applicable to
its officers, directors, and greater than ten percent beneficial owners were
complied with.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the
proxy statement for presentation at the Company's 1999 Annual Meeting of
Stockholders must be received at the Company's at its offices at 80 Cabot
Court, Hauppauge, New York 11788 no later than January 20, 1999, for inclusion
in the Company's proxy statement and form of proxy relating to such meeting.
All proposals must comply with applicable Commission rules and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those
set forth in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named
as proxies intend to vote the shares they represent in accordance with their
best judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE
ADDRESSED TO THE OFFICE OF THE SECRETARY, ORBIT INTERNATIONAL, 80 CABOT COURT,
HAUPPAUGE, NEW YORK 11788.
ORBIT INTERNATIONAL CORPORATION
Annual Meeting of Stockholders -June 26, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder in Orbit International Corporation ("Corporation")
hereby constitutes and appoints Dennis Sunshine, Bruce Reissman, and Mitchell
Binder, and each of them, his true and lawful attorneys and proxies, with full
power of substitution in and for each of them, to vote all shares of the
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at The Penn Club, 30 West 44th Street, New York, New
York 10036 at 10:00 a.m., Eastern Daylight Savings Time, or at any
postponement or adjournment thereof, on any and all of the proposals contained
in the Notice of the Annual Meeting of Stockholders, with all the powers the
undersigned would possess if present personally at said meeting, or at any
postponement or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED ON THE REVERSE SIDE.
(Continued and to be signed and dated on the other side)
The Directors recommend a vote FOR Proposal 1
Please mark your
votes as this example
COMMON
1. Election of Directors FOR All nominees WITHHOLD AUTHORITY
listed (except as marked to vote for all
to the contrary, see nominees listed
instruction below) at left
Dennis Sunshine, Bruce Reissman,Mitchell Binder, John Molloy,
Stanley Morris and Marc Pfefferle
INSTRUCTION: To withhold authority to vote for any individual
nominee, line through the name of the nominee above.
2. Proposal to ratify Ernst & Young LLP
as independent auditors.
For Against Abstain
The above named proxies are granted the authority, in their
discretion, to act upon such other matters as may properly come
before the meeting or my postponement or adjournment thereof.
Dated , 1998
Signature(s)
Signatures
Please sign exactly as your name appears and return this proxy
immediately in the enclosed stamped self-addressed envelope.
251440v3
