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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[ ] Definitive Additional Materials
[ ] 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 offices of the Company at 80 Cabot Court, Hauppauge, New
York 11788, at 10:00 a.m., Eastern Daylight Savings Time, on July 9, 1999,
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, 1999.
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 17, 1999, 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 31, 1999
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 July 9, 1999, at the offices of the Company at 80
Cabot Court, Hauppauge, New York 11788, 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 23, 1999, 6,077,593 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 17, 1999 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 31, 1999.
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
re-election to the Board of Directors and has decided not to fill the vacancy
at this time. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
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 52 President, Chief Executive Officer and Director
Bruce Reissman 49 Executive Vice President, Chief Operating Officer and
Director
Mitchell Binder 43 Vice President - Finance, Chief Financial Officer and
Director
John Molloy 69 Director
Stanley Morris 56 Director
Marc Pfefferle 42 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 has served as an interim manager of
The Wiz, Fabric Bonanza and Aerospace Supply. He has been a director of the
Company 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
three meetings during the fiscal year ended December 31, 1998. All directors
attended at least 75% of the meetings.
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, 1998. 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 Marc Pfefferle. The Compensation Committee
held one meeting during the fiscal year ended December 31, 1998. 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 two meetings during the fiscal year ended
December 31, 1998. 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,
1999 and their positions with the Company are as follows:
Name Age Position
Dennis Sunshine 52 President, Chief Executive Officer and
Director
Bruce Reissman 49 Executive Vice President, Chief Operating
Officer and Director
Mitchell Binder 43 Vice President - Finance, Chief Financial
Officer and Director
Harlan Sylvan 48 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, 1998,
1997 and 1996, compensation paid by the Company to the Chief Executive
Officer and to each other executive officer of the Company that received
more than $100,000 in salary and bonus during the fiscal year ended December
31, 1998 including salary, bonuses, stock options and certain other
compensation (each, a "Named Executive"):
ANNUAL COMPENSATION(1)
NAME AND
PRINCIPAL POSITION
YEAR
SALARY ($)
BONUS ($)
ALL OTHER
COMPENSATION($)
Dennis Sunshine,
1998
355,000
55,509
7,761(2)
President and Chief
1997
346,000
113,080
7,355(3)
Executive Officer
1996
344,000
162,875
239,710(4) (5)
Bruce Reissman,
1998
355,000
39,200
7,122(2)
Executive Vice President and
1997
346,000
64,070
6,753(3)
Chief Operating Officer
1996
344,000
85,516
6,663(5)
Mitchell Binder,
1998
262,000
30,372
5,180(2)
Vice President - Finance and
1997
255,000
50,976
4,878(3)
Chief Financial Officer
1996
253,000
68,733
4,709(5)
Harlan Sylvan
1998
115,000
8,569
2,775(2)
Treasurer, Secretary and
1997
109,000
8,240
2,677(3)
Controller
1996
106,000
8,000
2,599(5)
(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) Includes $5,000, $5,000, $4,066 and $2,172 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 $2,761, $2,122, $1,114 and $603, respectively.
(3) 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.
(4) 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 Agreements".
(5) 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 $544, respectively.
The following table sets forth certain information concerning options granted
to the Named Executives during the fiscal year ended December 31, 1998.
Option Grants in Last Fiscal Year
Individual Grants
Name
Number of
Securities
Underlying
Options Granted(1)
Percent of
Total Options
Granted to
Employees in Fiscal
Year
Exercise or
Base Price
($/Share)
Expiration
Date
Potential Realizable Value at
Assumed
Annual Rates of
Stock
Price Appreciation
for
Option Term
5% ($) 10% ($)
Dennis Sunshine(2)
0
0
- -
-
--
--
Bruce Reissman(2)
0
0
- -
-
--
--
Mitchell Binder(2)
0
0
- -
-
--
--
Harlan Sylvan (2)
0
0
- -
-
--
--
(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant.
(2) In July 1998, the Messrs. Sunshine, Reissman, Binder and Sylvan
surrendered 35,000, 35,000, 20,000 and 10,000 options, respectively, granted
to them in December 1997.
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 1998
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, 1998 by the Named Executives.
No options were exercised by any of the Named Executives during the fiscal
year ended December 31, 1998.
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
0
$77,000
$0
Bruce Reissman
260,000
0
$73,000
$0
Mitchell Binder
200,000
0
$67,000
$0
Harlan Sylvan
50,000
0
$25,000
$0
EMPLOYMENT AGREEMENTS
Dennis Sunshine has entered into an amended and restated employment agreement
with the Company which commenced in February 1999 (the "Current Sunshine
Employment Agreement"). Under the terms of Mr. Sunshine's previous
employment agreement (the "Previous Sunshine Employment Agreement"), Mr.
Sunshine was entitled to receive an annual base salary of $340,000 and a
bonus equal to 4.00% of the Company's pre-tax earnings. Under the
terms of the Current Sunshine Employment Agreement, Mr. Sunshine is entitled
to receive an annual base salary of $290,000 and a bonus equal to 4.00% of
the Company's pre-tax earnings between $500,000 and $1,000,000; 5.00%
of the Company's pre-tax earnings between $1,000,001 and $2,000,000; 6.0% of
the Company's pre-tax earnings between $2,000,001 and $3,000,000; and 7.5% of
the Company's pre-tax earnings in excess of $3,000,001. The Current 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 Current
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 Current Sunshine Employment
Agreement which violation is not remedied within 30 days after written
notice from the Company. The Current Sunshine Employment Agreement may also
be terminated by the Company on not less than three years' prior notice.
The Current 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 Previous Sunshine Employment Agreement
also provided 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 which commenced on April 1,1997.
Bruce Reissman has entered into an amended and restated employment agreement
with the Company which commenced in February 1999. Under the terms of Mr.
Reissman's previous employment agreement, Mr. Reissman was entitled to
receive an annual base salary of $340,000 and a bonus equal to 1.77% of the
first $5,000,000 of the Company's pre-tax earnings and 2.65% of any
additional pre-tax earnings. Under the terms of Mr. Reissman's current
employment agreement (the "Reissman Employment Agreement"), Mr. Reissman is
entitled to receive an annual base salary of $240,000 and a bonus equal to
2.40% of the Company's pre-tax earnings between $500,000 and $1,000,000;
3.00% of the Company's pre-tax earnings between $1,000,001 and $2,000,000;
3.6% of the Company's pre-tax earnings between $2,000,001 and $3,000,000; and
4.5% of the Company's pre-tax earnings in excess of $3,000,001.
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 amended and restated employment agreement
with the Company which commenced in February 1999. Under the terms of Mr.
Binder's previous employment agreement, Mr. Binder was entitled to receive an
annual base salary of $255,000 and a bonus equal to 1.46% of the first
$5,000,000 of the Company's pre-tax earnings and 2.20% of any additional
pre-tax earnings. Under the terms of Mr. Binder's current employment
agreement (the "Binder Employment Agreement"), Mr. Binder is entitled to
receive an annual base salary of $218,000 and a bonus equal to 1.60% of the
Company's pre-tax earnings between $500,000 and $1,000,000; 2.00% of the
Company's pre-tax earnings between $1,000,001 and $2,000,000; 2.4% of the
Company's pre-tax earnings between $2,000,001 and $3,000,000; and 3.0% of the
Company's pre-tax earnings in excess of $3,000,001. 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 Current 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, John Molloy
and Marc Pfefferle, each of whom is a non-employee member of the Company's
Board of Directors.
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 Pfefferle comprise the Compensation Committee.
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 1998 will not result in
any material loss of tax deductions for the Company.
Surrender of Previously Granted Options
In December 1997, the Compensation Committee awarded to Messrs. Sunshine,
Reissman, Binder and Sylvan 35,000, 35,000, 20,000 and 10,000 stock options,
respectively in recognition of an effort leading to an anticipated award
of a long term project utilizing the Company's products in a trading floor
environment. In August 1998, when it became apparent to management that the
project was not as imminent as expected, Messrs. Sunshine, Reissman, Binder and
Sylvan requested that such options be canceled. The Compensation Committee
then canceled the options and returned them to the pool of options available
for grant under the 1995 Stock Option Plan.
Steps Taken During First Quarter 1999
Recognizing that the Company is currently operating in a difficult
environment for defense contractors, the Company, upon the recommendation of
the Compensation Committee, took a number of precautionary steps in the first
quarter of 1999 which, the Company believes, will allow it to mitigate the
reduction in profit due to an anticipated reduction in revenues.
Dennis Sunshine, the President and Chief Executive Officer, Bruce Reissman,
the Executive Vice President and Chief Operating Officer, and Mitchell
Binder, the Vice President - Finance and Chief Financial Officer, each agreed
to (a) a salary reduction, and (b) a reformulation of the bonus provisions in
their respective Employment Agreements which eliminates any bonus award if
the Company's pre-tax earnings fall below a certain level and rewards the
executive on an escalating basis as the Company's pre-tax earnings increase,
and (c) a surrender of stock options granted to them in December 1997. The
respective Employment Agreements of such executives were amended and restated
in February 1999 to reflect such changes. The executives agreed with the
Compensation Committee that the steps taken not only were prudent but also
served as an example to the Company's remaining employees.
Compensation of the Chief Executive Officer
Mr. Sunshine's base salary and bonus for the fiscal year ended December 31,
1998 was determined by the terms of the Previous Sunshine Employment
Agreement which was entered into in April 1996 and is described elsewhere in
this proxy statement. Mr. Sunshine was not granted any options during the
fiscal year ended December 31, 1998 and, as described above, surrendered the
options granted to him in December 1997. The Compensation Committee believes
that Mr. Sunshine's base salary level and bonus formula as set forth in both
the Previous Sunshine Employment Agreement and the Current Sunshine
Employment Agreement fairly reflect the outstanding contributions Mr.
Sunshine has made to the Company's growth and financial position as well as
Mr. Sunshine's commitment to the continued financial success of the Company.
During 1998, Mr. Sunshine was instrumental in the expansion of the
Company's products into strategic commercial markets and the implementation
of significant cost cutting measures to improve profitability. 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
Marc Pfefferle
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, 1993, 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
6/93 100 100 100
12/93 79 107 111
12/94 30 84 108
12/95 15 104 153
12/96 37 140 188
12/97 54 136 230
12/98 26 169 325
* $100 invested on 6/30/93 in stock or index -- including reinvestment of
dividends. [Fiscal year ending June 30 through June 30, 1994.] 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, 1999 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
c/o 80 Cabot Court
Hauppauge, New York 1,270,138(2) 19.99%
Bruce Reissman
c/o 80 Cabot Court
Hauppauge, New York 953,614(3) 15.05%
Parsow Partnership, Ltd.
2222 Skyline Drive
Elkhorn, Nebraska 370,000 6.09%
Mitchell Binder
c/o 80 Cabot Court
Hauppauge, New York 220,000(4) 3.51%
Harlan Sylvan
c/o 80 Cabot Court
Hauppauge, New York 53,000(5) *
John Molloy
1815 Paliament Road
Leucadia, California 10,000(6) *
Stanley Morris
2470 Cove Court
Bellmore, New York 13,000(6) *
Marc Pfefferle
135 East 57th Street
New York, New York 5,000(7) *
All officers and directors
as a group
(7 persons)(2)(3)(4)(5)(6)(7) 2,524,572 36.68%
(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 275,000 shares of Common Stock.
(3) Includes options to purchase 260,000 shares of Common Stock.
(4) Includes options to purchase 200,000 shares of Common Stock.
(5) Includes options to purchase 50,000 shares of Common Stock.
(6) Includes options to purchase 7,000 shares of Common Stock.
(7) Includes options to purchase 5,000 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. This loan, which had a balance of $114,000 at December 31, 1997,
was paid off in full by Mr. Reissman during the fiscal year ended December
31, 1998.
All of the Company's insurance policies are either underwritten by or placed
by Rampart Brokerage Corporation ("Rampart"), a Company for which Stanley
Morris, a director of the Company, serves as President. Rampart underwrites
various insurance policies for the Company (including property and liability
coverages). In addition, through a wholly-owned subsidiary, Rampart places
the Company's life insurance and health insurance. For the property
and liability coverages, Rampart pays, on the Company's behalf, the premiums
owing with respect to such policies, directly to the insurance carriers. The
Company pays the premiums on its life and health insurance policies directly to
the relevant insurance carriers. The Company does not pay to Rampart any
commissions or other fees for placing these policies. Rampart receives any
such commissions directly from the respective insurance carriers. The Company
believes it obtains insurance on terms no less favorable than it could obtain
from a third party.
PROPOSAL 2
INDEPENDENT ACCOUNTANTS
Ratification of Appointment of Auditors
The firm of Ernst & Young LLP, independent auditors, 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,
1998, 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 2000 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 21, 2000, 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 CORP.,
80 CABOT COURT, HAUPPAUGE, NEW YORK 11788.
ORBIT INTERNATIONAL CORPORATION
Annual Meeting of Stockholders -July 9, 1999
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 offices of
the Company at 80 Cabot Court, Hauppauge, New York 11788, 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.
The Directors recommend a vote FOR Proposal 2
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 any
postponement or adjournment thereof.
Dated , 1999
Signature(s)
Signatures
Please sign exactly as your name appears and return
this proxy immediately in the enclosed stamped self-
addressed envelope.
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