<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
Exide Electronics Group, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
(Exide Electronics logo)
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
TELEPHONE 919 872-3020 FAX 919 870-3100
WEB SITE http://www.exide.com
Dear Shareholder:
The 1997 Annual Meeting of Shareholders of Exide Electronics Group, Inc.
will be held at 9:00 a.m. on Tuesday, February 25, 1997, at the Corporate
Headquarters located at 8609 Six Forks Road, Raleigh, North Carolina. The
matters on the meeting agenda are described in the attached Notice of Annual
Meeting and Proxy Statement.
If you are a shareholder of record, we urge that you send in your proxy
promptly, whether or not you plan to attend. Giving your proxy will not affect
your right to vote in person if you attend. If you wish to give a proxy to
someone other than the persons named on the enclosed proxy form, you may cross
out their names and insert the name of some other person who will be at the
meeting. The signed proxy form then should be given to that person for his or
her use at the meeting. If your shares are held in the name of a broker and you
wish to vote those shares at the meeting, you must obtain from your broker and
present at the meeting a letter of identification and a proxy properly given to
you.
A copy of the Exide Electronics Group, Inc. 1996 Annual Report to
Shareholders, as well as a copy of the January 9, 1997 press release announcing
that the Company had been notified by the Air Force that the GAO had advised the
Air Force that all claims in the protest related to the Company's follow-on
contract with the Air Force Air Logistics Center had been denied, is enclosed.
The Company's 1996 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on January 13, 1997 contains this updated information. We
would like to welcome as shareholders those persons who purchased stock in Exide
Electronics Group, Inc. during the past year.
Sincerely,
(Signature of James A. Risher)
JAMES A. RISHER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Raleigh, North Carolina
January 22, 1997
YOUR PROXY IS IMPORTANT. PLEASE VOTE PROMPTLY.
<PAGE>
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Exide Electronics Group, Inc.:
The Annual Meeting of Shareholders of Exide Electronics Group, Inc. (the
"Company") will be held at its Corporate Headquarters, 8609 Six Forks Road,
Raleigh, North Carolina, on Tuesday, February 25, 1997, at 9:00 a.m., Eastern
Standard Time, for the following purposes:
1. To elect three directors for three-year terms ending in 2000 and, in
each case, until their successors are duly elected and qualified
(Proposal 1);
2. To ratify Mr. Stendahl's prior appointment as a director to the class of
directors having a term ending in 1999, and until his successor is duly
elected and qualified (Proposal 2);
3. To appoint independent public accountants (Proposal 3); and
4. To transact such other business as may properly come before the meeting
or any reconvened session thereof.
The Board of Directors has fixed the close of business on January 8, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting, and at any reconvened session thereof.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU HOLD
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE
REQUESTED TO DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE
THAT IS PROVIDED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND THE GIVING OF
YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
This notice is given pursuant to the direction of the Board of Directors.
(Signature of Nicholas J. Costanza)
NICHOLAS J. COSTANZA
VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND SECRETARY
Raleigh, North Carolina
January 22, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Proxy Statement........................................................................................................ 1
Voting Securities and Principal Holders................................................................................ 2
Security Ownership of Management....................................................................................... 4
Election of Directors (Proposal 1)..................................................................................... 5
Ratification of a Director (Proposal 2)................................................................................ 6
Biographical Information -- Directors............................................................................. 6
Board Committees -- Composition and Functions..................................................................... 7
Compensation of Directors......................................................................................... 8
Management............................................................................................................. 9
Executive Officers................................................................................................ 9
Biographical Information -- Executive Officers.................................................................... 9
Human Resources Committee Report on Executive Compensation............................................................. 10
Nature of Company Business........................................................................................ 10
Compensation Program for Executive Officers....................................................................... 10
CEO Compensation.................................................................................................. 13
Human Resource Committee Interlocks and Insider Participation..................................................... 14
Executive Compensation and Related Information......................................................................... 14
Summary of Cash and Certain Other Compensation.................................................................... 14
Stock Options and SARs............................................................................................ 15
Comparative Company Performance................................................................................... 17
Certain Agreements..................................................................................................... 17
Employment and Severance Agreements with Certain Executive Officers............................................... 17
Stock Purchase Agreement.......................................................................................... 18
Appointment of Independent Public Accountants (Proposal 3)............................................................. 18
Shareholder Proposals and Other Matters................................................................................ 19
</TABLE>
<PAGE>
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 25, 1997
The accompanying proxy is solicited by the Board of Directors of Exide
Electronics Group, Inc. ("Exide Electronics" or the "Company"), for use at the
Annual Meeting of Shareholders to be held on February 25, 1997 ("Annual
Meeting"), and at any reconvened session thereof. When such proxy is properly
executed and returned, the shares it represents will be voted at the meeting. If
a choice has been specified by the shareholder as to any matter referred to on
the proxy, the shares will be voted accordingly. A shareholder giving a proxy
has the power to revoke it at any time before it is voted. Presence at the
meeting by a shareholder who has signed a proxy does not alone revoke that
proxy. The proxy may be revoked by a later dated proxy or by notice of
revocation to the Secretary at the meeting. Votes on business properly coming
before the meeting will be held by written ballot.
At the Annual Meeting shareholders will be asked to:
1. Elect three directors for three-year terms ending in 2000 and, in each
case, until their successors are elected and qualified;
2. Ratify Mr. Stendahl's prior appointment as a director to the class of
directors having a term expiring in 1999;
3. Appoint independent public accountants; and
4. Transact such other business as may properly come before the meeting or
any reconvened session thereof.
The election of directors, and ratification of Mr. Stendahl as a director,
will require the affirmative vote of a plurality of the shares present in person
or represented by proxy at the meeting and entitled to vote on the election of
directors. Approval of Proposal Three requires approval by the holders of a
majority of the shares present in person, or represented by proxy, and entitled
to vote. The transaction of all other business as may properly come before the
meeting, or any reconvened session thereof, will require the affirmative vote of
a majority of the shares present in person or represented by proxy at the
meeting and entitled to vote thereon. Abstentions will be considered present at
the meeting for all particular proposals and will have the effect of negative
votes since they are not affirmative votes for proposals. With respect to
abstentions by brokers, shares will not be considered present at the meeting for
any proposal for which the broker abstained.
The solicitation of this proxy is made by the Board of Directors of this
Company. The solicitation will be by mail and the expense thereof will be paid
by the Company. The Company has retained Georgeson & Company, Inc. to assist in
the solicitation of proxies at an estimated cost of $2,500 plus expenses. In
addition, solicitation of proxies may be made by telephone or facsimile by
directors, officers or regular employees of the Company. The Company will
reimburse brokers and other persons holding shares in their names, in the names
of nominees, for their customary expenses in sending proxy materials to
beneficial owners of such shares.
Only shareholders of record as of the close of business on January 8, 1997,
will be entitled to vote at the Annual Meeting. The approximate date on which
this proxy statement and form of proxy were first sent or given to shareholders
is January 22, 1997.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, par value $0.01 per share, and 2,000,000 shares of Preferred
Stock, par value $0.01 per share. As of the record date, 10,048,784 shares of
Common Stock were outstanding with every share being entitled to one vote.
SERIES G PREFERRED STOCK. As of the record date, 1,000,000 shares of
preferred stock, designated as the "Series G Preferred Stock", were outstanding.
All of the shares of Series G Preferred Stock were issued to Fiskars Oy Ab and
Fiskars Holdings, Inc. (collectively "Fiskars") in connection with the Company's
acquisition on March 13, 1996 of Deltec Power Systems, Inc. and its subsidiaries
(the "Deltec Acquisition"). The Series G Preferred Stock is entitled to
quarterly dividends at a per annum rate of $0.80 per share through March 31,
2001 and $1.20 per share thereafter. Holders of the Series G Preferred Stock
have preference over the holders of Common Stock and holders of any other
preferred stock of the Company in the event of liquidation, dissolution or
winding up of the Company. That liquidation preference is equal to $20.00 per
share of Series G Preferred Stock plus accrued but unpaid dividends.
The Series G Preferred Stock is convertible at any time by the holders
thereof into shares of Common Stock on a share-for-share basis, subject to
adjustment for stock splits, dividends and combinations, and non-cash dividends,
stock purchase rights, capital reorganizations and dissolutions. In the event
that the market price of the Company's Common Stock exceeds $28.00 per share for
30 consecutive trading days, the Company may redeem any or all of its Series G
Preferred Stock at $20.00 per share through March 30, 1997, $26.00 per share
from March 31, 1997 through March 30, 1998 and $24.00 per share after March 30,
1998, plus accrued but unpaid dividends in each case. The Company's redemption
right is subject to the conversion rights of the holders of the Series G
Preferred Stock. At any time after September 30, 2006, the holders of the Series
G Preferred Stock may require the Company to repurchase the stock at $24.00 per
share plus accrued but unpaid dividends.
Shares of the Series G Preferred Stock have the same voting rights as
shares of the Company's Common Stock, with each holder of Series G Preferred
Stock entitled to the number of votes that the holder would have if the stock
were converted into Common Stock. The Series G Preferred Stock must be voted in
accordance with a stockholder agreement between the Company and Fiskars (the
"Fiskars Shareholder Agreement"), the terms of which include agreements
regarding board membership, voting, transfer restrictions and registration
rights. The Fiskars Shareholder Agreement entitles Fiskars to designate: (i) two
representatives for election to the Company's Board of Directors so long as its
beneficial ownership of Common Stock (including Common Stock that Fiskars would
own upon conversion of the Series G Preferred Stock) exceeds 10% of the
outstanding Common Stock; and (ii) one representative so long as Fiskars
beneficially owns 5% to 10% of the outstanding Common Stock. Fiskars' rights to
designate representatives for election to the Company's Board of Directors
terminate when Fiskars' beneficial ownership of Common Stock is less than 5%.
The Fiskars Shareholder Agreement requires Fiskars to vote all securities of the
Company owned or controlled by it in accordance with the recommendations of the
Company's Board of Directors. The Fiskars Shareholder Agreement contains certain
restrictions on Fiskars' ability to transfer any securities of the Company owned
or controlled by Fiskars.
SERIES D AND E PREFERRED STOCK. In July 1992, the Company issued to Japan
Storage Battery Co., Ltd. ("JSB") 5,100 shares of the Company's Series D
Preferred Stock (the "Series D Preferred") at a purchase price of $1,000 per
share. JSB had the right to convert some or all of the Series D Preferred into
the Company's Common Stock at a conversion price per share of $13.08. In
December 1992, JSB exercised an option to purchase 4,900 shares of Series E
Preferred Stock (the "Series E Preferred") at a purchase price of $1,000 per
share. The Series E Preferred were convertible at the option of JSB into the
Company's Common Stock at a conversion price per share of $23.86 (collectively,
the "Series D and E Preferred"). On July 1, 1995, JSB exercised these options
and converted all of the Series D and E Preferred into 595,273 shares of the
Company's Common Stock.
WARRANTS. In connection with financing the Deltec Acquisition, the Company
issued 11 1/2% Senior Subordinated Notes due March 15, 2006 (the "Notes") in an
aggregate principal amount of $125 million. In conjunction with the issuance of
the Notes, the Company also issued 125,000 detachable warrants ("Warrants") to
purchase in the aggregate 643,750 shares of Common Stock, subject to adjustment
under certain circumstances. Each Warrant, when exercised, entitles the holder
thereof to receive 5.15 shares of Common Stock at an exercise price of $13.475
per share, subject to adjustment under certain circumstances. The Warrants are
exercisable at any time prior to March 15, 2006. The holders of Warrants have no
right to vote on matters submitted to the stockholders of the Company for action
and have no right to receive dividends.
2
<PAGE>
The following table sets forth, as of the record date, all persons known by
the Company to be the beneficial owners of more than 5% of any class of the
voting securities of the Company. The information set forth below is based on
beneficial ownership information contained in the most recent Schedule 13D, 13F
or 13G filed on behalf of such holder or on information furnished by the holder
to the Company.
COMMON STOCK
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP (1) (2)(3)
<S> <C> <C>
Fiskars Oy Ab............................................................. 1,825,000 (4) 16.5%
Mannerheimintie 14 A
FIN-00100
Helsinki, Finland
Massachusetts Mutual Life Insurance....................................... 1,146,789 (5) 10.4%
1295 State Street
Springfield, MA 01111
Duquesne Enterprises, Inc................................................. 1,043,750 9.4%
Grant Building, Suite 240
Pittsburgh, PA 15219
Japan Storage Battery Co., Ltd............................................ 645,273 5.8%
1 Inobaba-cho
Nishinosho Kisshoin
Minami-ku
Kyoto, Japan
Dimensional Fund Advisors................................................. 626,426 5.7%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock of the Company shown as beneficially owned by them.
(2) Assumes conversion of 1,000,000 shares of the Series G Preferred Stock
issued to Fiskars, which have the same voting rights as shares of the
Company's Common Stock.
(3) The denominator in this calculation includes 10,048,784 shares of Common
Stock outstanding as of the record date, plus 1,000,000 shares of Series G
Preferred Stock on an as-converted basis.
(4) Includes 825,000 shares of Common Stock and 1,000,000 shares of Series G
Preferred Stock which have the same voting rights as shares of the Company's
Common Stock.
(5) Massachusetts Mutual Life Insurance Company, MassMutual Corporate investors,
and MassMutual Participation investors own 802,752, 229,358 and 114,679
shares of Common Stock of the Company, respectively.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the record date, all directors,
director nominees and named executive officers who are the beneficial owners of
the Common Stock of the Company and such beneficial ownership by all executive
officers and directors as a group:
COMMON STOCK
<TABLE>
<CAPTION>
SHARES OF OPTIONS AND WARRANTS
NAME AND ADDRESS OF COMMON STOCK EXERCISABLE WITHIN PERCENT OF
BENEFICIAL OWNER (1)(2) 60 DAYS (1) COMMON STOCK (3)
<S> <C> <C> <C>
Conrad A. Plimpton........................................ 278,885 (4) 17,000(8) 2.7%
James A. Risher........................................... 273,090 70,103(9) 3.1%
Lance L. Knox............................................. 154,890 17,000(8) 1.6%
Ralf R. Boer.............................................. 2,500 (5) --(10) *
Wayne L. Clevenger........................................ 10,000 17,000(8) *
Ron E. Doggett............................................ 8,000 12,000(8) *
James E. Fowler........................................... 1,250 5,750(8) *
David J. McLaughlin....................................... 4,300 14,500(8) *
Stig G. Stendahl.......................................... -- (5) --(10) *
Chiaki Tanaka............................................. -- (6) 12,000(6)(8) *
Marty R. Kittrell......................................... 38,314 30,853(11) *
Warren J. Johnson......................................... 24,927 9,552(12) *
William J. Raddi.......................................... 115,000 29,500(13) 1.3%
Mark A. Ascolese.......................................... 38,143 23,500(14) *
All Executive Officers and Directors as a Group
(17 persons).......................................... 1,009,031 (4)(7) 289,258 11.5%
</TABLE>
* Less than 1%.
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to the shares
of Common Stock of the Company shown as beneficially owned by them.
(2) Does not include options and warrants to purchase shares of Common Stock
which are listed separately under the next column "Options and Warrants
Exercisable Within 60 Days".
(3) Represents the percent of shares of Common Stock held and options and
warrants exercisable within 60 days after the record date. The numerator in
this calculation includes the shares of Common Stock plus options and
warrants exercisable within 60 days held by the beneficial owner. The
denominator includes 10,048,784 shares of Common Stock outstanding as of
the record date plus 1,000,000 shares of Series G Preferred Stock on an
as-converted basis.
(4) Includes 2,300 shares held by custodian for the Conrad A. Plimpton SERP
Trust.
(5) Does not include the 825,000 shares of Common Stock or the 1,000,000 shares
of Series G Preferred Stock held by Fiskars. Messrs. Boer and Stendahl have
shared voting and investment power over any such shares and disclaim
beneficial ownership of such shares.
(6) Does not include 595,273 shares of Common Stock which were acquired July 1,
1995, upon conversion of the Series D and E Preferred held by JSB. Mr.
Tanaka, as an officer of JSB, has shared voting and investment power over
such shares and disclaims beneficial ownership of such shares. Mr. Tanaka
will not seek re-election as director when his current term expires in
February 1997.
(7) Does not include 50,000 shares of Common Stock currently owned by JSB or
595,273 shares of Common Stock which were acquired upon conversion of the
Series D and E Preferred held by JSB. Mr. Tanaka, as an officer of JSB, has
shared voting and investment power over such shares and disclaims
beneficial ownership of such shares. Does not include 825,000 shares of
Common Stock or the 1,000,000 shares of Series G Preferred Stock held by
Fiskars. Messrs. Boer and Stendahl have shared voting and investment power
over any such shares and disclaim beneficial ownership of such shares.
(8) Does not include an option to purchase 1,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
4
<PAGE>
(9) Does not include an option to purchase 20,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(10) Does not include an option to purchase 3,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(11) Does not include an option to purchase 29,250 shares of Common Stock which
is not exercisable within 60 days after the record date.
(12) Does not include an option to purchase 15,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(13) Does not include an option to purchase 20,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(14) Does not include an option to purchase 24,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Following the election and ratification of Directors at this Annual
Meeting, the Board of Directors will consist of nine directors. The Certificate
of Incorporation of the Company provides that the Board of Directors be divided
into three classes of approximately equal size. Three directors are to be
elected at this Annual Meeting for three-year terms ending in 2000, and, in each
case, until their successors are duly elected and qualified. One previously
appointed director is to be ratified at this Annual Meeting to the class having
a term ending in 1999, and until his successor is duly elected and qualified.
Three directors were elected in 1995 for three-year terms ending in 1998, and
three directors were elected or appointed in 1996 for three-year terms ending in
1999. Messrs. Boer and Stendahl were appointed to the Board of Directors as
representatives of Fiskars for initial terms ending in 1997 and 1999,
respectively.
The following table provides information relating to the nominees to the
Board of Directors of the Company for terms ending in 2000, and to directors
whose terms in office will continue:
<TABLE>
<CAPTION>
NOMINEES AGE TERM TO EXPIRE
<S> <C> <C>
James A. Risher............................................................................ 54 2000
Ron E. Doggett............................................................................. 62 2000
Ralf R. Boer............................................................................... 48 2000
DIRECTORS CONTINUING IN OFFICE
Lance L. Knox.............................................................................. 52 1999
Wayne L. Clevenger......................................................................... 53 1999
Stig G. Stendahl........................................................................... 57 1999
Conrad A. Plimpton......................................................................... 53 1998
James E. Fowler............................................................................ 64 1998
David J. McLaughlin........................................................................ 60 1998
</TABLE>
In accordance with the Fiskars Stockholders Agreement, Fiskars has the
right to designate two representatives for election to the Company's Board of
Directors . See "Voting Securities and Principal Holders". Pursuant to this
right, Fiskars designated Stig Stendahl and Ralf Boer to serve as members of the
Board of Directors. Their appointment by the Board of Directors became effective
in May 1996. In accordance with the Company's by-laws, the size of the Board of
Directors was increased from eight to ten persons to accommodate the Fiskars'
designees. Mr. Stendahl was appointed to serve for a term ending in 1999, and
such appointment is to be ratified by the shareholders of the Company at this
Annual Meeting. Mr. Boer was appointed to the class with a term expiring in 1997
and is nominated for election at this Annual Meeting to the class of the Board
of Directors for a term ending in the year 2000. The number of members of that
class will remain the same since Mr. Tanaka, another member of that class, will
not be standing for further election. Mr. Tanaka was the Board designee of Japan
Storage Battery Co. Ltd. ("JSB"). In connection with its purchase of the
Company's Series D and E Preferred Stock, JSB was given the right to designate
one representative to the Board of Directors of the Company. That right expired
upon JSB's conversion of its Series D and E Preferred Stock into 595,273 shares
of the Company's Common Stock on July 1, 1995. As a result of Mr. Tanaka not
standing for re-election, the size of the Board will be reduced from ten persons
to nine.
5
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
RISHER, DOGGETT AND BOER.
RATIFICATION OF A DIRECTOR
(PROPOSAL 2)
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF MR.
STENDAHL.
BIOGRAPHICAL INFORMATION -- DIRECTORS
Mr. Boer became a director in May 1996. Mr. Boer has been an attorney with
Foley & Lardner, an international law firm, since 1974 and a managing partner of
the firm since 1992. He is a member of the board of directors of several
European corporations and their subsidiaries.
Mr. Clevenger has been a director since 1982. Mr. Clevenger has been
Managing Director of MidMark Management, Inc., a private investment firm, since
January 1990. He was President of Lexington Investment Company from 1985 to
1989. Mr. Clevenger is a director of Clearview Cinema Group, Inc., Lionheart
Industries, Inc. and United Wholesale, Inc.
Mr. Doggett has been a director of the Company since 1991. Mr. Doggett has
been Chief Executive Officer since 1985 and Chairman of the Board since 1987 of
GoodMark Foods, Inc., a producer of snack foods.
Mr. Fowler has been a director since 1985. Mr. Fowler has been a financial
consultant since July 1994. He previously served as Assistant Comptroller of
Inco Limited and as President of Inco Battery Holdings Corporation from 1983
until his retirement in 1994.
Mr. Knox has been Vice Chairman of the Board and a director of the Company
since 1982. Mr. Knox is a principal of The Lethbridge Group, Inc., a private
investment firm, which he founded in 1988.
Mr. McLaughlin has been a director since 1990. Mr. McLaughlin has been
Chief Executive Officer of Troy Biosciences Inc., a biotechnology company in
Phoenix, Arizona since July 1996. From 1984 to July 1996, he was President of
McLaughlin and Company Inc., a management consulting firm. He has also been
Executive Director of the Senior Personnel Executive Forum, a non-profit
association, since 1979. Mr. McLaughlin is a director of Scientific Atlanta,
Inc., Smart & Final, Inc., Troy Biosciences Inc., and Evolve Software, Inc.
Mr. Plimpton has been Chairman of the Board and a director of the Company
since 1982 and was Secretary from 1982 until 1991. Mr. Plimpton has been a
Managing Director of the private investment firm of Plimpton & Company since
1979.
Mr. Risher has been President, Chief Executive Officer, and a director
since joining the Company in 1986. From 1984 through 1986, Mr. Risher was Senior
Vice President of Distribution Operations of the Computer System Division of
Motorola, Inc. From 1979 to 1984, Mr. Risher was employed by Wang Laboratories
with his last position being Vice President of Marketing for Domestic
Operations. Previously, Mr. Risher spent 12 years with IBM in various sales and
marketing positions.
Mr. Stendahl became a director in May 1996. Mr. Stendahl has been the
President and CEO of Fiskars Oy Ab, a Helsinki, Finland based multinational
company with industrial operations in Europe, North America and Asia, since 1992
and is a member of the board of directors of several other European companies.
Mr. Tanaka was elected as a director by the Board of Directors in 1992. Mr.
Tanaka has been Managing Director, Power Supply Systems Division of JSB since
1990. He has been a director of GS-EE Co., Ltd., the Company's joint venture
with JSB, since 1989. Mr. Tanaka's term expires in February 1997, and he is not
seeking re-election.
Mr. Knox was an officer of FGH Corp., which was an inoperative shell
company, when that company filed for protection under Chapter 7 of the
Bankruptcy Code in 1992.
During fiscal 1996, the Board of Directors of the Company held fifteen
meetings. During that period, all of the directors attended more than 75% of the
meetings of the Board of Directors and meetings of the committees of the Board
of Directors on which they served, except Mr. Tanaka. Mr. Tanaka is a resident
of Japan, and because of the time and logistics to travel from Japan, Mr. Tanaka
did not attend more than 75% of all the meetings of the
6
<PAGE>
Board of Directors. Mr. Tanaka is not standing for re-election. Messrs. Boer and
Stendahl attended more than 75% of the meetings of the Board of Directors
subsequent to their appointment to the Board in May 1996.
BOARD COMMITTEES -- COMPOSITION AND FUNCTIONS
The Company's Board of Directors has established an Audit Committee, an
Executive Committee, and a Human Resources Committee. The Executive Committee
also functions as the nominating committee. The Company has established a
framework and governance procedures for the operation of the Board of Directors
and its committees, which have been approved by the Board of Directors.
The corporate governance framework and operating procedures approved by the
Board of Directors define the responsibilities of the Chairman, the full Board,
and the Committees. The corporate governance procedures prescribe that there
shall be a sufficient number of committees to conform to regulatory
requirements, common corporate practice and Company needs. Governance procedures
also define the expectations for performance by each Committee and matters
reserved for review by the entire Board of Directors.
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Fowler (the
Chairman), Clevenger, and Doggett. During fiscal 1996, the Committee held three
meetings. The Audit Committee of the Board of Directors is the independent
overseer of the Company's financial reporting process and provides an
independent assessment of the Company's internal accounting controls. The Audit
Committee is appointed annually by the Board of Directors and is composed of not
less than two directors. Members must be independent and cannot be an employee
of the Company. The Audit Committee is primarily concerned with the
appropriateness of the Company's accounting policies, and the reliability and
timeliness of information reported to all of the Company's constituencies. When
assessing the Company's internal accounting controls, the Audit Committee is
primarily concerned with the adequacy of the controls and procedures in
preventing errors and irregularities, and in detecting errors and irregularities
on a timely basis if they do occur. The Audit Committee is also responsible for
monitoring compliance with the Company's Policy Statement on Securities Trading
By Officers and Directors.
In the performance of its functions, the Audit Committee meets at least two
times a year with members of the Company's management who have responsibility
for the financial reporting process and the development, implementation, and
maintenance of adequate internal controls. In addition, the Committee meets with
the Company's internal audit department, which has the responsibility to
evaluate and test internal control systems, and with the independent external
auditors of the Company who have the responsibility to independently assess the
effectiveness of the Company's financial reporting process for purposes of
determining the nature, timing, and extent of their audit procedures.
The Audit Committee reviews the annual financial statements of the Company
prior to their submission to the Board of Directors. The Committee also has
authority to consider such other matters in relation to the Company's accounting
principles and internal accounting controls as the Committee may determine to be
advisable, and has authority to review transactions between the Company and its
affiliates to determine if conflicts of interest exist. The Committee reviewed
and approved the nature, effectiveness and extent of the services provided by
Arthur Andersen LLP, the Company's independent external auditors, including
services rendered in fiscal 1996, the costs and fees for such services and the
effect of such fee arrangements on the independence of the auditors.
EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Knox (the
Chairman), Plimpton, Doggett and Risher. During fiscal 1996, the Committee held
five meetings. The Executive Committee of the Board of Directors reviews overall
strategic plans and ensures the existence of appropriate operating plans and
budgets. The Committee also deals with overall strategic and tactical issues
relating to corporate development activities and makes recommendations of such
matters to the Board of Directors. In addition, the Committee functions as a
nominating committee for the purposes of recruiting and selecting candidates for
election to the Board of Directors. The Executive Committee maintains a file for
director candidates and will consider candidates for director recommended by
shareholders, when the recommendations are submitted in writing to the Secretary
of the Company.
HUMAN RESOURCES COMMITTEE. The Human Resources Committee consists of
Messrs. McLaughlin (the Chairman), Knox, and Doggett. During fiscal 1996, the
Committee held three meetings. The Human Resources Committee of the Board
provides counsel to the Board of Directors on matters within its area of
responsibility, including independent review of executive compensation,
management development plans, and the overall organization and executive
resources of the Company. The Committee is charged with the broad responsibility
of assuring the
7
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Board that: (i) the Company has attracted and retained outstanding executive
talent, provided for their development, and planned for succession to senior
management positions; (ii) the compensation programs of the Company reinforce
the Company's general strategy and properly recognizes performance; and (iii)
compensation levels are internally equitable and externally competitive. The
Committee's primary focus is on corporate executives and other key general
management positions.
COMPENSATION OF DIRECTORS
Mr. Risher is not compensated separately for his services as a director. In
fiscal 1996, Mr. Plimpton was paid $55,000 per year and Mr. Knox was paid
$50,000 per year for their service in the roles of Chairman and Vice Chairman,
respectively. Each was paid an expense allowance of $25,000 per year. Each of
the directors was paid an annual retainer of $20,000 and each Committee Chairman
received an additional annual retainer of $5,000. Each of the directors was also
paid a fee of $1,000 for each Board meeting and Board committee meeting attended
and $500 for each telephone Board and Board Committee meeting attended, plus
expenses. Messrs. Plimpton and Knox also received the retainers and Board
meeting fees that the other Board members received. Mr. Tanaka assigns his
compensation to JSB. The Company paid group insurance premiums on behalf of Mr.
Plimpton in the amount of $4,056. Receipt of director compensation is subject to
minimum attendance standards.
During fiscal 1996, certain changes to director compensation were approved
by the Board of Directors and will be effective in fiscal 1997. The changes are
as follows: The Chairman and Vice Chairman fees of $55,000 and $50,000,
respectively, have been eliminated. The Chairman of the Board of Directors will
receive a flat retainer fee of $25,000 for serving in that capacity. Mr. Knox
will receive an annual consulting fee of $25,000 for additional consulting
services, which include providing management and the Board of Directors counsel
and leadership on a variety of issues requiring dedicated time and effort on the
part of Mr. Knox. The lump sum expense allowance of $25,000 for Messrs. Plimpton
and Knox will be eliminated, and direct expenses will be reimbursed up to a
maximum of $15,000 each. Mr. Plimpton will reimburse the Company for group
insurance premiums paid on his behalf. Finally, all non-management members of
the Executive Committee will receive a flat retainer of $10,000 a year in lieu
of meeting fees, and the Chairman of the Executive Committee will receive an
additional $10,000 retainer.
OPTION PLANS FOR DIRECTORS. The Company believes that stock options enhance
its ability to attract the services of experienced, able and knowledgeable
persons to serve as directors. It also believes that stock options are important
to promote and encourage the continued service of directors by facilitating
their purchase of a stock interest in the Company. Accordingly, the Company
adopted non-employee director stock option plans in 1989 and 1995.
1989 DIRECTORS PLAN AND 1995 DIRECTORS PLAN. In October 1989, the Board of
Directors authorized the grant of up to 87,500 shares of the Company's Common
Stock for the Non-Employee Directors Stock Option Plan ("1989 Directors Plan").
At December 31, 1994, there were no further options available for grant to
directors under the 1989 Directors Plan. Accordingly, in 1995, the 1995
Directors Stock Option Plan (1995 Directors Plan) was adopted by the Company.
The 1989 Directors Plan had provided for the annual grant of an option to
purchase 2,500 shares. Other terms are substantially the same as in the 1995
Directors Plan as described below.
Under the terms of the 1995 Directors Plan, 150,000 shares of the Company's
Common Stock are reserved for issuance. The 1995 Directors Plan provides that
each non-employee director of the Company is granted an option to purchase 3,000
shares of stock as of the date of the director's commencement of service as a
director. Thereafter, a non-employee director is granted an additional option to
purchase 3,000 shares of stock immediately following the annual election of
directors if he or she continues to be a non-employee director on the board. The
per-share option exercise price of each of these options is the fair market
value of a share of Common Stock on the grant date as determined in accordance
with the 1995 Directors Plan.
Each option granted to a non-employee director of the Company is
exercisable for 1,500 shares of Common Stock one year following the date of
grant and exercisable for the remaining 1,500 shares two years following the
date of grant. Unexercised options granted to non-employee directors of the
Company terminate upon the expiration of one year following the date on which
the non-employee director dies or on the date on which the non-employee director
ceases to be a member of the Board for any other reason, unless such termination
of service is due to: (i) retirement from the Board; (ii) failure to stand for
election with the Board's consent; or (iii) resignation from the Board with the
Board's consent. Unexercised options expire ten years after the date of grant.
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CUMULATIVE STATUS OF OPTION PLANS AND FISCAL 1996 OPTION GRANTS.
Cumulatively, options to purchase 97,000 shares are available for grant. Of the
116,750 options outstanding, 79,250 options are currently exercisable.
During fiscal 1996, options to purchase 21,000 shares of Common Stock at a
price of $13.375 per share were granted under the 1995 Directors Plan to
continuing directors, and options to purchase 6,000 shares of Common Stock at a
price of $16.00 per share were granted under the same plan to the
representatives designated by Fiskars and appointed to the Board of Directors in
May 1996.
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company, and their respective ages, as of the
record date are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
James A. Risher............... 54 President and Chief Executive Officer
Conrad A. Plimpton............ 53 Chairman of the Board
Lance L. Knox................. 52 Vice Chairman of the Board
Mark A. Ascolese.............. 46 Senior Vice President and General Manager, Americas Group
Nicholas J. Costanza.......... 41 Vice President, Chief Administrative Officer, General Counsel and Secretary
Warren J. Johnson............. 48 Vice President and General Manager, Emerging Technologies Group
Marty R. Kittrell............. 40 Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary
Hermann G. P. Metzler......... 55 Vice President, International Group
William J. Raddi.............. 57 Senior Vice President, Chief Technology Officer and General Manager, Small Systems
Group
Alden R. Schnaidt............. 48 Vice President and General Manager, Large Systems Group
</TABLE>
BIOGRAPHICAL INFORMATION -- EXECUTIVE OFFICERS
Certain information concerning the Company's executive officers is set
forth below, except that information concerning Messrs. Risher, Plimpton and
Knox is set forth above under the caption "Biographical Information --
Directors".
Mr. Ascolese joined the Company in 1985 and assumed his current position as
Senior Vice President and General Manager, Americas Group in October 1995. Mr.
Ascolese has served in various customer service, sales management and General
Manager capacities since becoming a Vice President in 1987. He was Vice
President and General Manager, Worldwide Services Group from 1992 to January
1995, and Senior Vice President and General Manager, North American Field
Operations from January to October 1995.
Mr. Costanza joined the Company in 1980 and assumed his current position as
Vice President, Chief Administrative Officer, General Counsel and Secretary in
November 1995. As Chief Administrative Officer, Mr. Costanza has assumed
worldwide responsibility for Human Resources and certain corporate services, in
addition to such responsibility for the legal affairs of the Company. Mr.
Costanza held various legal positions with the Company prior to being promoted
to Vice President and General Counsel in 1986.
Mr. Johnson joined the Company's predecessor in 1978 serving in various
financial and managerial capacities until he assumed his current position as
Vice President and General Manager, Emerging Technologies Group in September
1995. From 1989 to 1992, Mr. Johnson was Vice President and General Manager,
Office Systems Group. From 1992 to 1995, he was Vice President, Corporate
Development, and from February to September 1995, he was Vice President and
General Manager, International Power Machines.
Mr. Kittrell joined the Company in 1989 as Vice President and Chief
Financial Officer and Treasurer. He was elected Assistant Secretary in 1991.
Mr. Metzler joined the Company in 1984 as Manager of International Sales
and Service. From 1985 until 1989, he served as Director of International
Marketing and Sales, at which time he assumed his current position of Vice
President, International Group.
Mr. Raddi has been with the Company and its predecessors since 1962 and has
served in various engineering, development, and manufacturing capacities. In
1990, he assumed the title of Senior Vice President and Chief Technology
Officer. In 1992, he assumed the additional position of Senior Vice President
and General Manager, Small Systems Group.
Mr. Schnaidt joined the Company in 1986 as Director of Manufacturing, was
promoted to Vice President, Manufacturing Operations in 1988, and assumed his
current position in 1992.
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HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors (the "HR
Committee") independently reviews executive compensation and provides counsel to
the Board of Directors on matters relating to such compensation as part of its
charter. In exercising its responsibilities, the HR Committee relies on the
advice and counsel of independent accountants, benefits consultants, and outside
legal counsel in connection with issues relating to the design of executive
compensation plans, and attendant accounting and legal considerations.
The HR Committee considers and approves matters relating to: (i) total cash
compensation of executive officers of the Company, including salaries and
incentives; (ii) grants of options under the Company's option plans; (iii)
awards under the Company's Management Incentive Compensation Plan; and (iv) the
Company's benefit plans.
The HR Committee has prepared the following report on executive
compensation, the Company's compensation philosophy, policies and their
implementation in fiscal 1996.
NATURE OF COMPANY BUSINESS
The Company provides Strategic Power Management solutions to a broad range
of businesses and institutions worldwide. The Company's products are used for
networking, financial, medical, industrial, telecommunications, military, cable
television, and aerospace applications -- wherever continuous power is essential
to daily operations. The Company has designed and sold large customized
uninterruptible power systems ("UPS") for data centers since the early 1960s.
During the 1980s, the Company broadened its product offerings by introducing
Powerware(Register mark) Systems, standardized UPS to support mainframe and
large minicomputer installations. Personal computers proliferated in the late
1980s, and the Company responded with product families that support personal
computers, workstations and local area networks ("LANs"), including the
Powerware Prestige product line that was introduced in 1993. The Company has
expanded its product offering through acquisitions and internal development to
include the full spectrum of off-line, line-interactive and on-line UPS
products, as well as a worldwide service organization.
Although there are many competitors in the UPS industry, the Company is one
of three companies competing on a worldwide basis with a full line of UPS
products and services and believes that it is one of the largest worldwide
independent suppliers of UPS products.
In this highly competitive industry, the Company must compete against
subsidiaries of large industrial companies, rapidly growing independent
companies, and non-U.S. companies for qualified personnel. Accordingly, its
compensation program needs to be competitive against a broad universe of
different sizes and types of companies.
COMPENSATION PROGRAM FOR EXECUTIVE OFFICERS
COMPENSATION PHILOSOPHY. The executive compensation program is based on the
strong belief that a performance-based program which also encourages equity
ownership in the Company will align both annual and long-term interests of the
Company and its shareholders with those of management. The Company is dedicated
to achieving global leadership in a highly competitive industry and to
delivering superior shareholder value. The mission of the Company is to provide
power protection solutions for customers worldwide in order to create enterprise
value and achieve the common goals of: (i) superior financial performance; (ii)
customer satisfaction; (iii) associate satisfaction; and (iv) quality. The
purpose of the Company is to provide solutions that exceed customers'
expectations and create value. The vision of the Company is to become "The
Worldwide Leader in Strategic Power Management". With these principles in mind,
the executive compensation program objectives are as follows:
(Bullet) To provide a competitive compensation program in order to attract,
retain and motivate qualified personnel for positions of
substantial responsibility in order to promote the success of the
Company's business.
(Bullet) To serve as a management tool in focusing and directing the
energies and efforts of key executives toward achieving the
Company's goals through individual and collective goals.
(Bullet) To provide a long-term incentive for the executive to continue
providing service to the Company by linking the success and
prosperity of the individual to the success and prosperity of the
Company.
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TOTAL CASH COMPENSATION. Total cash compensation consists of base salary
and annual cash incentive opportunities. A total cash compensation target is
established for each position using benchmark survey comparisons. The actual
payment of the annual cash incentive portion of the total cash compensation is
based principally on the financial performance of the Company.
To determine the competitive level of total compensation (including
short-term and long-term incentives), the HR Committee sets the total pay target
in a competitive compensation range as benchmarked against published survey data
and data derived through special studies of comparable industries. Most factors
of the compensation program are positioned around the 50th percentile of the
competitive range, with the ability to earn proportionately higher or lower
total cash compensation based upon achievement against established business
performance objectives.
The competitive range is compiled from data obtained from the American
Electronics Association, Radford Associates and Executive Compensation Service,
Inc. The American Electronics Association compiled survey data from 438 member
firms. Radford Associates, a subsidiary of the Alexander and Alexander
Consulting Group, compiled survey data from 433 comparable high technology
companies. Executive Compensation Service, Inc., a subsidiary of the management
consulting firm of Watson Wyatt Data Services, Inc., compiled survey data from
272 durable goods manufacturing firms. Given the Company's particular industry,
there is limited publicly available data of direct competitors for comparison
purposes. The surveys referenced use data from manufacturing companies with
international scope that are market driven, technology based, cost-oriented, and
experiencing growth and sales volume similar to the Company.
BASE SALARY. The HR Committee reviews executive base salaries on a regular
basis and provides for base salaries in the middle range of competitive salary
levels, with adjustments made to reflect individual performance, experience and
contributions. A discussion of Chief Executive Officer base salary compensation
is set forth below under the caption "CEO Compensation".
MANAGEMENT INCENTIVE COMPENSATION PLAN("MIP"). The objective of MIP is to
attract, retain and motivate key executives and managers by providing annual
cash incentives for goal achievement. The Company maintains a formalized annual
incentive opportunity for key executives responsible and accountable for
achieving the annual operating plan. The MIP generates 50th percentile awards in
comparison to the survey groups described above based upon the achievement of
targeted Company results. Proportionately higher or lower awards are achieved if
results are above or below target. No awards are made if a threshold level of
corporate financial performance is not achieved, unless the Board of Directors
determines it is in the best interests of the Company to do so pursuant to its
discretion under the MIP. Each eligible grade level is assigned a fixed
percentage of annual salary as the target annual incentive opportunity. For
executive officers, this ranged from 30 percent to 60 percent of annual salary
in fiscal 1996. A discussion of Chief Executive Officer incentive compensation
is set forth below under the caption "CEO Compensation".
Under the MIP, payments are made based on the Company achieving
predetermined goals established annually by the Board of Directors. These goals
typically include: (i) targets for corporate growth, such as improvements year
over year to earnings per share and cash flow; (ii) targets for strategic
business unit growth, such as improvements year over year in specific areas of
financial performance of each individual strategic business unit; and (iii)
attainment of certain individually tailored non-financial objectives for each
executive. The relative weighting for each objective is determined each year by
the HR Committee, and may vary depending upon the Company's financial and
strategic objectives for that year.
In fiscal 1996, the Company completed a major repositioning of its business
through its strategic acquisition of the worldwide UPS business of Fiskars
("Deltec Acquisition") and its successful integration of the previously acquired
operations of International Power Machines Corporation ("IPM") and Lectro
Products, Inc. ("Lectro"), enabling the Company to provide one of the broadest
product offerings in the global UPS industry. The Deltec Acquisition also
enabled the Company to significantly improve its competitive position in the
small systems UPS market, the fastest growing segment of the industry, and has
positioned the Company as a leader in the global UPS market. As a result of
these acquisitions, the Company achieved record revenues of approximately $460
million in fiscal 1996, an increase of 17.7% over the prior year. Cost savings
and operating efficiencies resulting from the continued integration and
consolidation of the operations of IPM, Lectro and the Deltec Acquisition are
expected to significantly improve the Company's future financial results.
11
<PAGE>
In applying the MIP for fiscal year 1996, the HR Committee evaluated and
balanced a number of factors, including the: (i) nature and breadth of strategic
achievement, as generally described above; (ii) actual financial performance of
the Company and individual strategic business units as compared to the
applicable financial targets pre-established at the outset of the fiscal year,
which did not contemplate the Deltec Acquisition; (iii) success of accelerated
acquisition integration activities; (iv) individual executive's performance as
compared to individual financial and non-financial goals during a year of
corporate transition; and (v) discretion under the MIP to make cash awards
deemed by the Board of Directors to be in the overall best interests of the
Company based on an evaluation of all factors, as recommended by the HR
Committee. Accordingly, eight executive officers (including the CEO) and
seventeen key managers were awarded cash payments totaling $554,500.
SUPPLEMENTARY MANAGEMENT INCENTIVE PLAN ("SUPPLEMENTARY MIP"). In November
1994, the Company adopted a supplementary plan to motivate executives with
matching cash awards designed to reduce individual notes associated with 1988
and 1989 stock purchase agreements (described below under the caption "Stock
Purchase Agreements"), which incent continued equity positions in the Company of
eight key executive officers, including the Chief Executive Officer. Under this
plan, executives in good standing who have paid for the purchase of Common Stock
by promissory notes prior to the Company's 1989 initial public offering are
eligible to receive matching contributions up to individually set annual limits
during calendar years 1995 through 1999 of 50% of the executives' voluntary
prepayments of the balances outstanding under their notes. The match amounts are
grossed up and tax assisted. The maximum annual contribution by the Company is
limited to $200,000 per calendar year, allocated among eligible executives based
on performance and their outstanding note balance. Any portion of the maximum
annual contribution by the Company remaining unused at the end of the calendar
year will be retired and will not increase the maximum for future calendar
years. In calendar 1996, seven eligible executive officers participated.
Voluntary prepayments totaled $203,800. Company contributions, including match
and gross-up, totaled $169,800.
OPTION PLANS FOR EMPLOYEES. The Company provides long-term incentive
compensation through its employee stock option plans. The plans are intended to
foster management team cohesion and positively align and reinforce management
and shareholder interests. The plans are structured to allow the HR Committee
discretion in creating employee equity incentives which assist the Company in
attracting, motivating and retaining the appropriate talent needed to conduct
its business successfully. Key managers as well as executive officers are
eligible for grants under the plans, which seek to implement the Company's
long-term incentive approach primarily through the utilization of nonstatutory
options. Awards are at the 50th percentile of the compensation range of the
survey groups previously described reflecting a total compensation philosophy
that factors in long-term corporate performance as captured by stock price and
increased shareholder value. The Company believes that the plans encourage
superior performance that can result in significantly enhanced shareholder
value, which would result in compensation at a higher percentile of the
competitive range. Accordingly, the Company adopted employee stock option plans
in 1989 and 1995.
1989 STOCK OPTION PLAN AND 1995 EMPLOYEE STOCK OPTION AND RESTRICTED STOCK
PLAN. In October 1989, the Board of Directors authorized the grant of up to
550,000 shares for the 1989 Stock Option Plan ("1989 Option Plan"). At December
31, 1994, all options had been granted. In order to ensure that there was a
sufficient number of stock options and restricted stock available to meet the
intent and purpose of stock incentive programs determined in the long term
interests of the Company, the 1995 Employee Stock Option and Restricted Stock
Plan (the "1995 Option Plan") was adopted in 1995.
Under the terms of the 1995 Option Plan, 750,000 shares of the Company's
Common Stock were reserved for issuance. The 1995 Option Plan provides for the
grant of options that are intended to qualify as ISOs as defined under Section
422 of the Code, nonqualified options, and restricted stock. Unlike the 1989
Option Plan, it does not provide for SARs. It is administered by the HR
Committee, which selects the officers and employees of the Company and its
subsidiaries to whom options may be granted.
With respect to the grant of options, the HR Committee is charged with
determining the option grant date, the vesting schedule and expiration of
options, all in accordance with the 1995 Option Plan. The maximum number of
shares subject to options that can be granted under the 1995 Option Plan to any
individual executive officer or other employee of the Company or any subsidiary
is 300,000 shares during the first ten years of the 1995 Option Plan and 50,000
shares per year thereafter.
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With respect specifically to ISOs, no person may receive any ISO if, at the
time of grant, such person owns directly or indirectly more than 10% of the
total combined voting power of the Company. There is also a $100,000 limit on
the value of stock (determined at the time of grant) covered by incentive stock
options that first become exercisable by an optionee in any calendar year. No
incentive stock option may be granted more than 10 years after the effective
date of the 1995 Option Plan.
The HR Committee determines the service requirements and performance goals
necessary for awards of restricted stock to be made. The maximum number of
shares of restricted stock that can be granted under the 1995 Option Plan to any
individual executive officer or other employee of the Company or any subsidiary
is 300,000 shares during the first ten years of the 1995 Option Plan, and 50,000
shares per year thereafter. At its discretion, the HR Committee may grant
restricted stock subject to objective performance goals established prior to
April 15 of the year in which the grant is made and while the outcome is
substantially uncertain. Performance goals must be in accordance with the terms
of the 1995 Option Plan.
CUMULATIVE STATUS OF OPTION PLANS AND FISCAL 1996 OPTION GRANTS.
Cumulatively, options to purchase 432,334 shares are currently available for
grant. Of the 754,767 options outstanding, 296,203 options are exercisable.
Currently, there are eight executive officers and one hundred four key employees
who have been granted options under the 1989 Option Plan and 1995 Option Plan
since inception. For fiscal 1996, Messrs. Kittrell, Johnson, Raddi and Ascolese
were awarded options to purchase 18,000, 19,000, 12,500 and 12,000 shares,
respectively, to incent and reward their ongoing contributions enhancing the
market and financial position of the Company. The awards were based in part on
the value and number of options they held relative to other executive officers
and to their peers at other comparable companies with which the Company competes
for human resources.
401(K) RETIREMENT BENEFIT PLAN. The Company maintains a savings plan
qualified under Section 401(k) of the Internal Revenue Code of 1986 for the
benefit of all active U.S. employees. Employees may elect to defer from Federal
income tax up to 15% of their total compensation up to the annual statutory
maximum, which was $9,500 for calendar year 1996. The Company contributes to the
employee's account an amount equal to 2% of an employee's total annual
compensation up to annual compensation of $150,000 for calendar year 1996 and
matches up to 4% of an employee's contributions at a rate of 50 cents on the
dollar. In addition, the HR Committee may recommend that the Board of Directors
make additional discretionary contributions each year based on the Company
meeting certain profit objectives. In fiscal 1996, the Company made a
discretionary contribution of $150,000, which is allocated in accordance with
the terms of the plan to the accounts of all eligible participants.
CEO COMPENSATION
As indicated previously, the Company's executive compensation program is
reviewed regularly and is based upon business performance and the achievement of
individual objectives. The Chief Executive Officer's base salary and total cash
compensation are positioned at approximately the 50th percentile of the
competitive compensation range as described above. Proportionately higher or
lower awards are achieved if results are above or below target. Mr. Risher's
goals for fiscal 1996 focused his efforts principally on: (i) financial
performance of the Company (especially earnings per share and cash flow); (ii)
strategic corporate development and repositioning; (iii) integration of
previously acquired companies; and (iv) restructuring the Company on a global
basis, including all key personnel, organizations and succession matters.
Strategic corporate development and repositioning goals generally consisted of
achieving specific revenue and growth targets for each strategic business unit,
new acquisitions, the continued focus on cost effective manufacturing, the
increase in productivity and total quality management, and the enhancement of
market position. The organizational goals included a multi-year focus on
improving managerial capabilities and increasing the number of experienced
executives to meet the human resource needs of the Company. A primary focus is
to improve the overall effectiveness of the organization through establishing an
appropriate structure to meet business objectives. Another key focus is on
succession planning and management training and development.
Mr. Risher is a participant in the Company's MIP. A discussion of the MIP
as it applies to all executives (including Mr. Risher), achievements by the
Company in fiscal year 1996 and balancing of factors in the HR Committee's
annual review of Mr. Risher's performance is set forth above under the caption
"Management Incentive Compensation Plan ("MIP")". At the targeted 50th
percentile, Mr. Risher's potential incentive compensation under the MIP would
approximate 60% of Mr. Risher's base salary. Mr. Risher's achievement of
individual objectives described above and the financial performance of the
Company resulted in an incentive compensation payment under the
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MIP of $100,000 in fiscal 1996. That incentive compensation payment represented
approximately 24% of Mr. Risher's base salary, which was $425,000 in fiscal
1996. Mr. Risher's total cash compensation in fiscal 1996 was below the targeted
50th percentile.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
David J. McLaughlin Lance L. Knox Ron E. Doggett
CHAIRMAN
</TABLE>
HUMAN RESOURCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee performs the functions of a compensation
committee for the Board of Directors. The current members of the Human Resources
Committee are Messrs. McLaughlin, Knox, and Doggett. Mr. Knox currently serves
as Vice Chairman of the Board of Directors and has served in that position since
1982. Mr. Knox was paid $50,000, plus an expense allowance of $25,000, for his
service in that role in 1996 for the Company as described above under the
caption "Compensation of Directors."
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Summary Compensation Table indicates the cash compensation paid by the
Company and its subsidiaries as well as certain other compensation paid or
accrued to the Chief Executive Officer and the four other highest paid executive
officers ("Named Executive Officers"), for services rendered in all capacities
during the fiscal years ended September 30, 1996, 1995, and 1994, respectively.
The Company does not have any long term incentive, defined benefit or actuarial
plans for the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) SARS(#)
<S> <C> <C> <C> <C> <C> <C>
James A. Risher 1996 425,000 100,000 141,473(2) 0 0
President and Chief Executive Officer 1995 375,000 160,000 126,159(2) 0 40,000
1994 350,000 200,000 123,597(2) 0 0
Marty R. Kittrell 1996 200,000 70,000 (3) 0 18,000
Vice President, CFO, Treasurer, and 1995 200,000 55,000 (3) 0 15,000
Assistant Secretary 1994 170,833 63,900 (3) 0 15,000
Warren J. Johnson 1996 135,000 125,000(1) (3) 0 19,000
Vice President, General Manager, Emerging 1995 135,000 -- 48,201(2) 0 0
Technologies Group 1994 126,600 40,500 (3) 0 0
William J. Raddi 1996 200,000 40,000 (3) 0 12,500
Senior Vice President, Chief Technology 1995 200,000 45,000 (3) 0 20,000
Officer, General Manager, Small Systems 1994 180,000 47,300 24,568(2) 0 0
Group
Mark A. Ascolese 1996 192,000 32,000 26,117(2) 0 12,000
Senior Vice President, General Manager, 1995 189,000 68,000 (3) 0 30,000
Americas Group 1994 184,500 65,100 (3) 0 0
<CAPTION>
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(4)($)
<S> <C>
James A. Risher 86,974
President and Chief Executive Officer 51,675
55,006
Marty R. Kittrell 13,341
Vice President, CFO, Treasurer, and 11,384
Assistant Secretary 14,750
Warren J. Johnson 26,803
Vice President, General Manager, Emerging 12,533
Technologies Group 18,390
William J. Raddi 55,341
Senior Vice President, Chief Technology 45,463
Officer, General Manager, Small Systems 48,013
Group
Mark A. Ascolese 24,729
Senior Vice President, General Manager, 13,204
Americas Group 14,348
</TABLE>
(1) Includes a $100,000 bonus for calendar year 1995.
(2) Includes the following reported amounts for particular perquisites which
exceed 25% of the total amount of perquisites for the Named Executive
Officers. Includes for fiscal 1996: (a) reimbursement for payment of taxes:
James A. Risher -- $61,368; (b) automobile allowance: Mark A.
Ascolese -- $12,000. Includes for fiscal 1995: (a) reimbursement for payment
of taxes: James A. Risher -- $41,624; (b) automobile allowance: James A.
Risher -- $35,597; (c) reimbursement for relocation: Warren J.
Johnson -- $35,000. Includes for fiscal 1994: (a) reimbursement of payment
of taxes: James A. Risher -- $32,687; (b) automobile allowance: James A.
Risher -- $38,376; William J. Raddi -- $9,000; (c) reimbursement of loan
interest: William J. Raddi -- $10,306.
14
<PAGE>
(3) Total perquisites were less than 10% of total fiscal year salary and bonus.
(4) The total in this column reflects the aggregate value of the Company
contributions under the 401(k) Retirement Benefit Plan, the portion of the
premiums paid by the Company in the covered fiscal year under a "split
dollar" insurance arrangement and the Company's contributions to the
Supplementary MIP, as described above under the caption "Compensation
Program for Executive Officers". Company contributions for each of the Named
Executive Officers for fiscal 1996 are as follows:
<TABLE>
<CAPTION>
SPLIT-DOLLAR SUPPLEMENTARY
401(K) INSURANCE MIP
<S> <C> <C> <C>
James A. Risher $5,399 $ 46,575 $35,000
Marty R. Kittrell 6,274 4,567 2,500
Warren J. Johnson 9,417 8,286 9,100
William J. Raddi 6,274 38,767 10,300
Mark A. Ascolese 6,274 5,455 13,000
</TABLE>
STOCK OPTIONS AND SARS
For fiscal 1996, options to purchase 272,250 shares were granted to 25
employees as a group. Each of the Named Executive Officers received grants as
follows: Mr. Kittrell, an option to purchase 18,000 shares which represented
6.6% of the total granted to all employees as a group for fiscal 1996; Mr.
Johnson, 19,000, 6.9%; Mr. Raddi, 12,500, 4.6%; and Mr. Ascolese, 12,000, 4.4%.
The following table sets forth all material terms with regard to grants of stock
options to each of the Named Executive Officers for the fiscal year ended
September 30, 1996. All such grants were made under the 1995 Option Plan. No
SARs have been granted under the 1989 Option Plan and SARs are not provided for
in the 1995 Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
% OF
TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS
SECURITIES GRANTED VALUE AT ASSUMED
UNDERLYING TO ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES EXERCISE PRICE APPRECIATION
GRANTED IN FISCAL PRICE EXPIRATION FOR OPTION TERM
NAME (#) YEAR (1) ($/SH) DATE 5%($)(2) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C>
Marty R. Kittrell 15,000 5.5% 14.000 12/05/05 132,068 334,686
3,000 1.1% 11.750 11/06/06 22,169 56,179
Warren J. Johnson 5,000 1.8% 18.750 10/25/05 58,959 149,413
9,000 3.3% 14.000 12/05/05 79,241 200,812
5,000 1.8% 11.750 11/06/06 36,948 93,632
William J. Raddi 10,000 3.7% 14.000 12/05/05 88,045 223,124
2,500 0.9% 11.750 11/06/06 18,474 46,816
Mark A. Ascolese 10,000 3.7% 14.000 12/05/05 88,045 223,124
2,000 0.7% 11.750 11/06/06 14,779 37,453
</TABLE>
(1) For fiscal 1996, options to purchase 272,250 shares were granted to 25
employees as a group.
(2) Represents the gain before income taxes, equal to the appreciated value of
the options less the exercise price, at an assumed 5% rate of stock price
appreciation, compounded annually, over the ten-year life of the option.
Assumes an appreciated stock price of $30.54, $22.80 and $19.14 at October
25, 2005, December 5, 2005 and November 6, 2006, respectively.
(3) Represents the gain before income taxes, equal to the appreciated value of
the options less the exercise price, at an assumed 10% rate of stock price
appreciation, compounded annually, over the ten-year life of the option.
Assumes an appreciated stock price of $48.63, $36.31 and $30.48 at October
25, 2005, December 5, 2005 and November 6, 2006, respectively.
15
<PAGE>
The following table sets forth information with regard to exercises of
stock options during the fiscal year ended September 30, 1996, by each of the
Named Executive Officers and the fiscal year-end value of all unexercised
options held by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NO. OF SHARES FY-END FY-END
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE (1)
<S> <C> <C> <C> <C>
James A. Risher.................................... -0- -0- 60,000/30,000 $0/$0
Marty R. Kittrell.................................. -0- -0- 23,250/36,750 $0/$0
Warren J. Johnson.................................. -0- -0- 7,250/17,750 $0/$0
William J. Raddi................................... -0- -0- 22,000/27,500 $0/$0
Mark A. Ascolese................................... -0- -0- 13,500/34,500 $0/$0
</TABLE>
(1) Closing price of the Common Stock of the Company at September 30, 1996, was
$10.75.
16
<PAGE>
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder return for
the Company with a performance indicator of the overall stock market, the S&P
500 Stock Index, and a nationally recognized industry group, the Dow Jones
Electrical Components and Equipment Industry Group, since October 1, 1991.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG EXIDE ELECTRONICS GROUP, INC.
DOW JONES ELECTRICAL COMPONENTS and EQUIPMENT INDUSTRY GROUP,
and S&P 500
(Performance graph appears here with the following plot points.)
<TABLE>
<CAPTION>
1992(1) 1993(1) 1994(1) 1995(1) 1996(1)
<S> <C> <C> <C> <C>
Exide Electronics (XUPS) 233 343 355 306 176
S&P 500 Index (S&P 500) 111 126 130 169 203
Dow Jones Electrical Components
and Equipment Industry Group (ELQ) 109 126 139 172 191
</TABLE>
ASSUMES $100 INVESTED ON OCTOBER 1, 1991(1)
ASSUMES DIVIDENDS REINVESTED
FISCAL YEARS ENDING SEPTEMBER 30
(1) Closing price of the Common Stock on September 30, 1992, 1993, 1994, 1995,
and 1996 was $14.25, $21.00, $21.75, $18.75 and $10.75, respectively.
CERTAIN AGREEMENTS
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
In fiscal 1986, the Company entered into an employment agreement with Mr.
Risher at the time he was hired. Upon the expiration of that employment
agreement, in fiscal 1990 the Company entered into a new employment agreement
with Mr. Risher. The agreement provides that in the event of termination of Mr.
Risher's employment by the Company, other than for cause, Mr. Risher would be
entitled to severance payments equal to three years total compensation,
including base salary and bonus. The agreement also includes provisions
prohibiting Mr. Risher from competing with the Company for a period of time
after termination of his employment under certain circumstances. The Company
also entered into employment agreements with the Named Executive Officers and
other executive officers of the Company, which provide for severance up to two
years total compensation in each case, depending on the number of years of
service with the Company and the individual's responsibilities, and otherwise
contain terms similar to those described above for Mr. Risher. In addition, the
Company has a severance plan for certain executive officers of the Company
providing for severance payments if their employment is terminated (including
constructive termination) for reasons other than cause during the five-year
period following a "change in control" of the Company. The plan defines a
"change in control" as occurring when a person acquires 30% or more of the
Company's voting securities or when there is a business combination (as defined
in the plan) which has been approved by the Company's shareholders, a change in
a majority of the members of the Board of Directors
17
<PAGE>
over a three-year period (other than due to death, disability or resignation),
or a change in control for purposes of specified federal securities laws. Under
this plan, the affected officer would receive a payment equal to six months
compensation plus an additional two months compensation for each year of
service, up to an aggregate maximum severance payment equal to 30 months
compensation.
STOCK PURCHASE AGREEMENT
In fiscal years 1986 and 1988, Mr. Risher purchased an aggregate of 200,000
shares of Common Stock from the Company at $4.00 per share in exchange for
10-year promissory notes secured by the Common Stock. The promissory notes
delivered by Mr. Risher bear interest at the applicable Federal rate, as
determined under Section 1274(d) of the Internal Revenue Code (the "Federal
Rate"), and are payable immediately upon the sale of the shares purchased with
the promissory notes. The maturity date of the 1986 promissory note has been
extended to coincide with the maturity date of the 1988 promissory note. As of
September 30, 1996, the aggregate principal and interest amount outstanding on
these promissory notes was $580,000 and $370,330, respectively. The largest
principal amount outstanding during fiscal 1996 was $700,000 in November 1995.
The largest amount of interest accrued on these promissory notes during fiscal
1996 was $540,166 in October 1995.
During fiscal 1989, all of the Company's current executive officers who
were at that time employees of the Company, except for Messrs. Plimpton and
Knox, purchased Common Stock from the Company pursuant to stock purchase
agreements for $8.00 per share in exchange for 10-year promissory notes. The
promissory notes delivered by the executive officers are secured by the shares
of Common Stock, bear simple interest at the prime rate and are payable
immediately upon the sale of the underlying shares and, following termination of
an executive officer's employment, upon the first to occur of (i) the original
maturity date of the promissory note, (ii) three years after the date of
termination of employment or (iii) 90 days after the Company has filed its
second registration statement under the Securities Act of 1933, as amended, for
its Common Stock, following such termination of employment, pursuant to which
such person could have registered such shares. The following information sets
forth the name of each current executive officer who purchased shares during
fiscal 1989 in exchange for notes, the number of shares purchased and the
principal amount outstanding on the notes as of September 30, 1996: Mr. Risher,
136,090 shares, $1,008,720; Mr. Ascolese, 35,000 shares, $280,000; Mr. Costanza,
28,250 shares, $205,432; Mr. Johnson, 18,250 shares, $127,824; Mr. Kittrell,
50,000 shares, $275,008; Mr. Metzler, 12,250 shares, $80,280; Mr. Raddi, 68,000
shares, $544,000; Mr. Schnaidt, 30,000 shares, $221,632. These balances were the
largest principal amounts outstanding at any time during fiscal 1996 for Messrs.
Ascolese, Raddi and Risher. In the case of Messrs. Costanza, Kittrell, Johnson,
Metzler and Schnaidt, the largest principal outstanding during fiscal 1996 was
$226,000, $280,000, $146,000, $85,272 and $240,000, respectively, each in
December 1995. The interest accrued on these notes exchanged for stock for each
of the executive officers as of September 30, 1996, is as follows: Mr. Risher,
$504,051, Mr. Ascolese, $172,210, Mr. Costanza, $134,670, Mr. Johnson, $83,093,
Mr. Kittrell, $158,558, Mr. Metzler, $49,639, Mr. Raddi, $318,221, Mr. Schnaidt,
$145,512. These amounts were the largest amounts of interest accrued at any time
during fiscal 1996 for all but two of the executive officers. The largest amount
of interest accrued on these notes for Messrs. Ascolese and Johnson was $152,660
and $74,122, respectively, in November 1995. All shares were vested as of
September 30, 1996, and are registered for resale through a currently effective
registration statement on Form S-3.
The Company provides incentives for the executives in good standing to make
payments on the promissory notes through the Supplementary MIP (described above
under the caption "Compensation Program for Executive Officers").
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 3)
It is intended that shares represented by proxies in the accompanying form
will be voted at the Annual Meeting in favor of the appointment of the firm of
Arthur Andersen LLP (unless otherwise indicated on any proxy) as independent
public accountants to audit the consolidated financial statements of the Company
for the fiscal year ending September 30, 1997. The Board of Directors has
recommended the appointment of that firm. It is expected that representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will be available
to respond to appropriate questions. They will be given an opportunity to make a
statement if they desire to do so. Proxies solicited by the Board of Directors
will be voted for the appointment of Arthur Andersen LLP unless shareholders
specify a contrary choice in their proxies. The submission of this matter to
shareholders at the Annual Meeting is
18
<PAGE>
not required by law or by the By-Laws of the Company. Nevertheless, the Board of
Directors of the Company is submitting it to the shareholders to ascertain their
views. If this appointment is not ratified by the holders of at least a majority
of the shares of Common Stock of the Company at the Annual Meeting, the Board of
Directors intends to reconsider its appointment of Arthur Andersen LLP as
independent accountants of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT OF
ARTHUR ANDERSEN LLP.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
Annual Meeting. However, if other matters should come before the meeting, each
person named in the proxy intends to vote the proxy in accordance with his
judgment on such matters.
Any proposal intended to be presented at the 1998 Annual Meeting of
Shareholders of the Company (the 1998 Annual Meeting) by any shareholder of the
Company must be received by the Secretary of the Company at 8609 Six Forks Road,
Raleigh, North Carolina 27615, not later than September 30, 1997, in order for
such proposal to be included in the Company's proxy statement and proxy relating
to the 1998 Annual Meeting. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to the 1998
Annual Meeting any shareholder proposal that does not meet all of the
requirements for such inclusion in effect at that time.
The Federal Securities Laws require that the Company's directors, officers
and persons who beneficially own more than ten percent of the Company's Common
Stock file with the Securities and Exchange Commission reports indicating
initial beneficial ownership and any changes in ownership of any equity
securities of the Company. For the fiscal year ended September 30, 1996, all
required persons filed in a timely manner.
THE COMPANY WILL SEND A COPY OF ITS ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION FOR 1996 ON FORM 10-K, WITHOUT CHARGE, TO ANY SHAREHOLDER OF
RECORD OR BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK, UPON RECEIPT
OF A WRITTEN REQUEST ADDRESSED TO: MARTY R. KITTRELL, VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, EXIDE ELECTRONICS GROUP, INC., 8609 SIX FORKS ROAD, RALEIGH,
NORTH CAROLINA 27615. UPON REQUEST, THE COMPANY WILL PROVIDE A LIST OF EXHIBITS
TO THE REPORT AND THE COST OF EACH. ANY OF THE EXHIBITS TO THE REPORT WILL BE
PROVIDED UPON PAYMENT OF THE COST NOTED ON THE LIST.
This proxy statement is provided by the direction of the Board of
Directors.
(Signature of Nicholas J. Costanza)
NICHOLAS J. COSTANZA
VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND
SECRETARY
January 22, 1997
19
<PAGE>
(Exide Electronics logo)
1997
ANNUAL MEETING
OF SHAREHOLDERS
NOTICE AND PROXY STATEMENT
<PAGE>
*******************************************************************************
APPENDIX
PROXY
EXIDE ELECTRONICS GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James A. Risher, Nicholas J. Costanza and
Marty R. Kittrell and each of them, with full power of substitution, attorneys
and proxies to appear and vote, as indicated below, all of the shares of Common
Stock of Exide Electronics Group, Inc. that the undersigned would be entitled to
vote at the annual meeting of shareholders of Exide Electronics Group, Inc. to
be held on February 25, 1997 and at any and all reconvened sessions thereof. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING ITEMS:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees except as marked to the contrary [ ] WITHHOLD AUTHORITY to vote for all nominees
</TABLE>
NOMINEES: Terms ending in 2000 -- James A. Risher, Ron E.Doggett and Ralf
R. Boer
(INSTRUCTION: To withhold authority to vote for any individual nominee draw a
line through that nominee's name above.)
2. RATIFICATION OF APPOINTMENT OF STIG G. STENDAHL AS DIRECTOR WITH A TERM
ENDING IN 1999.
<TABLE>
<CAPTION>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<S> <C> <C>
</TABLE>
3. APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
<TABLE>
<CAPTION>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<S> <C> <C>
</TABLE>
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any reconvened session thereof.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE NOMINEES FOR DIRECTOR, "FOR" THE RATIFICATION OF THE APPOINTMENT OF
MR. STENDAHL AS A DIRECTOR AND "FOR" PROPOSAL 3.
Dated:
Signature
Please sign exactly as your name appears
hereon. If holder is a corporation,
partnership or other association, please
sign its name and add your name and title.
When signing as attorney, executor,
administrator, trustee or guardian, please
also give your full title. If shares are
held jointly EACH holder must sign to make
this proxy effective.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE MEETING.
THIS IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR
PROXY MAY
SUBJECT THE COMPANY TO ADDITIONAL EXPENSE.
