<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Comptronix Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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> 2
COMPTRONIX (LOGO)
CORPORATION
Three Maryland Farms, Suite 140
Brentwood, Tennessee 37027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Comptronix Corporation (the "Company"), will be held at 10:00 a.m.
on Thursday, June 8, 1995, at The Maryland Farms Athletic Club, 5101 Maryland
Way, Brentwood, Tennessee, for the following purposes:
1. To elect six (6) directors to hold office until the next Annual
Meeting and until their successors are elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors has fixed the close of business on April 12, 1995 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding matters to be acted upon at the Annual
Meeting.
By Order of the Board of Directors
/s/ Joseph G. Andersen
----------------------------------
Joseph G. Andersen,
Secretary
Brentwood, Tennessee
May 5, 1995
YOUR REPRESENTATION AT THE ANNUAL MEETING IS IMPORTANT. TO ENSURE YOUR
REPRESENTATION, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. SHOULD YOU DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AS PROVIDED IN THE ACCOMPANYING PROXY STATEMENT AT ANY
TIME BEFORE IT IS VOTED.
<PAGE> 3
COMPTRONIX (LOGO)
CORPORATION
THREE MARYLAND FARMS, SUITE 140
BRENTWOOD, TENNESSEE 37027
------------------------
PROXY STATEMENT
------------------------
The accompanying proxy is solicited by the Board of Directors of Comptronix
Corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on June 8, 1995 at The Maryland Farms Athletic
Club, 5101 Maryland Way, Brentwood, Tennessee, and any adjournments thereof,
notice of which is attached hereto.
The purposes of the Annual Meeting are: to elect 6 directors; and to
transact such other business as may properly be brought before the Annual
Meeting or any adjournment thereof.
A stockholder who signs and returns a proxy may revoke the same at any time
before the authority granted thereby is exercised by attending the Annual
Meeting and electing to vote in person, by filing with the Secretary of the
Company a written revocation or by duly executing a proxy bearing a later date.
Unless so revoked, the shares represented by the proxy will be voted at the
Annual Meeting. Where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such specifications. If no
specification is made, such shares will be voted FOR the election of the 6
director nominees.
The Board of Directors knows of no other matters which are to be brought to
a vote at the Annual Meeting. However, if any other matter properly does come
before the Annual Meeting, the persons appointed in the proxy or their
substitutes will vote in accordance with their best judgment on such matters.
The Board of Directors has fixed the close of business on April 12, 1995 as
the record date for the Annual Meeting (the "Record Date"). Only record holders
of the Company's common stock, $.01 par value per share (the "Common Stock"), at
the close of business on that date will be entitled to vote at the Annual
Meeting. On the Record Date, the Company had outstanding 13,263,303 shares of
Common Stock. Holders of the Common Stock will be entitled to one vote for each
share of Common Stock so held, which may be given in person or by proxy duly
authorized in writing.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
Annual Meeting. The directors shall be elected by a plurality of the votes cast
in the election by the holders of the Common Stock represented and entitled to
vote at the Annual Meeting. Any other matters submitted to the stockholders
shall be approved by the affirmative vote of a majority of the votes cast by the
holders of Common Stock represented and entitled to vote at the Annual Meeting.
Abstentions and "non-votes" will be counted as present for purposes of
determining a quorum for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, whereas
"non-votes" are not counted for purposes of determining whether a proposal has
been approved. A "non-vote" occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owners.
The cost of solicitation of proxies will be borne by the Company, including
expenses in connection with preparing, assembling and mailing this Proxy
Statement. Such solicitation will be made by mail, and also may be made by the
Company's executive officers or employees personally or by telephone or
telegram. The Company does not anticipate paying any compensation to any party
other than its regular employees for the solicitation of proxies, but may
reimburse brokerage firms and others for their reasonable expenses in forwarding
solicitation material to beneficial owners.
This Proxy Statement and the Company's Annual Report to Stockholders (the
"Annual Report") will be mailed on or about May 5, 1995, to all stockholders of
record at the close of business on April 12, 1995.
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership as of the Record
Date of (i) each director, (ii) each of the executive officers named in the
Summary Compensation Table (collectively, the "Named Executive Officers") and
(iii) the executive officers and directors as a group. Unless otherwise noted,
the Company believes that the beneficial owner set forth in the table has sole
voting and investment power with respect to the indicated shares.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED ON
NAME APRIL 12, 1995(1) PERCENT OF CLASS
- - ----------------------- ---------------------- ----------------
<S> <C> <C>
E. Townes Duncan(2)(3).................................... 245,575(4) 1.8%
Charles D. Tillett(2)(3).................................. 21,250(5) *
Lonnie J. Stout II(2)..................................... 18,000(6) *
Richard W. Oliver(2)...................................... 19,000(6)(7) *
J C. Bowling(2)........................................... 21,500(6) *
Howard H. Graham (2)...................................... 22,000(6) *
Paul D. Johns(3).......................................... 18,750(8) *
Michael C. Thompson(3).................................... 12,500(9) *
Dennis J. Rockow(3)(10)................................... 29,150(11) *
Mark A. Zorko(3)(12)...................................... 0 *
All directors and executive officers as a group (11
persons)................................................ 388,338(13) 2.9
</TABLE>
- - ---------------
* less than one percent.
(1) Pursuant to the rules of the Securities and Exchange Commission (the
"Commission"), certain shares of the Common Stock set forth in this table
which an individual owner has a right to acquire within 60 days after the
Record Date pursuant to the exercise of stock options or the conversion of
the Company's 6 3/4% Convertible Subordinated Debentures Due 2002 (the
"Debentures") are deemed outstanding for the purpose of computing the
beneficial ownership of that owner and for all directors and executive
officers as a group, but are not deemed outstanding for the purpose of
computing the ownership of any other individual owner shown in the table.
(2) Director
(3) Named Executive Officer
(4) Includes 85,834 shares subject to restrictions on transfer which lapse at a
rate of 833.33 shares per month. Mr. Duncan, however, is entitled to vote
and receive dividends paid on such restricted shares. See "Executive
Compensation." Also includes 8,100 shares held by an investment partnership
of which Mr. Duncan is a partner, 4,500 shares held in trust for Mr.
Duncan's children and 1,500 shares held by Mr. Duncan's wife. Includes
84,375 shares which may be acquired by Mr. Duncan upon the exercise of
outstanding options.
(5) Includes 16,250 shares which may be acquired upon the exercise of
outstanding options.
(6) Includes 17,000 shares which may be acquired upon the exercise of
outstanding options.
(7) Includes 2,000 shares held in the name of Mr. Oliver's wife. Mr. Oliver
disclaims beneficial ownership of these shares.
(8) Includes 13,750 shares which may be acquired upon the exercise of
outstanding options.
(9) Includes 12,500 shares which may be acquired upon the exercise of
outstanding options.
(10) Mr. Rockow resigned from the Company in April 1995. Pursuant to the rules
of the Commission, because Mr. Rockow was one of the four most highly
compensated executive officers of the Company (other than the Chief
Executive Officer) at December 31, 1994, he is included in this table and
the Summary Compensation Table. See "Executive Compensation."
(11) Includes 25,000 shares which may be acquired upon the exercise of
outstanding options.
(12) Mr. Zorko's employment with the Company was terminated in November 1994.
Pursuant to the rules of the Commission, because Mr. Zorko would have been
one of the four most highly compensated executive officers (other than the
Chief Executive Officer) at December 31, 1994 had he remained with the
Company, he is included in this table and the Summary Compensation Table.
See "Executive Compensation."
(13) Includes 198,625 shares which may be acquired upon the exercise of
outstanding options. In addition to the foregoing shares of Common Stock,
an executive officer of the Company owns one share of the Company's Series
A Convertible Preferred Stock.
2
<PAGE> 5
PROPOSAL I:
ELECTION OF DIRECTORS
Directors are elected each year to hold office until the next annual
meeting of stockholders and until their successors are duly elected and
qualified. The Company's Bylaws provide for a minimum of seven (7) and a maximum
of fifteen (15) directors, the exact number to be set by the Board of Directors.
The current Board of Directors consists of six members, all of whom are nominees
to be elected as directors at the Annual Meeting. One vacancy presently exists
on the Board of Directors. Proxies may not be voted for a greater number of
directors than six.
Unless contrary instructions are received, the enclosed proxy will be voted
in favor of the election as directors of the nominees listed below. Each nominee
has consented to be a candidate and to serve, if elected. While the Board of
Directors has no reason to believe that any nominee will be unable to accept
nomination or election as a director, if such an event should occur, the proxy
will be voted with discretionary authority for a substitute or substitutes as
shall be designated by the current Board of Directors.
The following table contains certain information concerning the nominees
which has been furnished to the Company by the individuals named.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE POSITION
---------------------- --- -------- -------------------------------------------------
<S> <C> <C> <C>
E. Townes Duncan...... 41 1988 Chairman of the Board, Chief Executive Officer
and Director
Charles D. Tillett.... 45 1993 President, Chief Operating Officer and Director
Lonnie J. Stout II.... 48 1993 Director
Richard W. Oliver..... 48 1993 Director
J C. Bowling.......... 56 1994 Director
Howard H. Graham...... 48 1994 Director
</TABLE>
The following is a brief summary of the business experience of each of the
nominees.
E. TOWNES DUNCAN was appointed Chairman of the Board and Chief Executive
Officer in April 1993 by the Board of Directors. Prior to such time, Mr. Duncan
had served the Company as Interim Chairman of the Board and Interim Chief
Executive Officer since November 1992. Mr. Duncan has been a director of the
Company since 1988. From 1985 until November 1993, when Mr. Duncan resigned to
devote his full-time attention to the Company, he served as a vice president and
a principal of Massey Burch Investment Group, Inc., a venture capital
organization headquartered in Nashville, Tennessee. Previously, Mr. Duncan was
an associate and partner with the law firm of Bass, Berry & Sims in Nashville
from 1978 until 1983. Mr. Duncan is a director of Volunteer Capital Corporation,
an owner and operator of restaurants, PMT Services, Inc., a payment services
company, and Sirrom Capital Corporation, a small business investment company.
CHARLES D. TILLETT was appointed President and Chief Operating Officer in
April 1993 by the Board of Directors, and was elected a director at the
Company's 1993 Annual Meeting of Stockholders. Prior to such time, Mr. Tillett
had served the Company as Interim President and Chief Operating Officer since
November 1992. Mr. Tillett served the Company as Vice President of Marketing and
Program Management from September 1991 until May 1992, and as Vice President and
General Manager of the Guntersville division from June 1992 until appointed
Interim President and Chief Operating Officer in November 1992. Mr. Tillett
previously was employed by SCI Systems, Inc. as Vice President and Plant Manager
from 1986 until joining the Company in September 1991. In this capacity, Mr.
Tillett was responsible for the management of all aspects of a contract
manufacturing services plant.
3
<PAGE> 6
LONNIE J. STOUT II was elected a director at the Company's 1993 Annual
Meeting of Stockholders. He has been the President and Chief Executive Officer
of Volunteer Capital Corporation since May 1986. Since July 1990, Mr. Stout also
has served as Chairman of Volunteer Capital Corporation. From 1984 to 1986, Mr.
Stout served as President and a director of DineLite Corporation, a food service
company. Mr. Stout formerly served Volunteer Capital Corporation from 1982 to
May 1984 as a director and served as Executive Vice President and Chief
Financial Officer from 1981 to 1984.
RICHARD W. OLIVER became a director of the Company in December 1993 and has
been a professor at the Owen School of Management at Vanderbilt University since
September 1992. Prior to such time, Mr. Oliver served as a vice president of
marketing and in other positions in marketing and communications at Northern
Telecom from 1976 until joining the faculty at Vanderbilt University. Mr. Oliver
is a director of Communications Central, Inc., a provider of public pay
telephone services, and Applied Innovation, Inc., a manufacturer of data
communication equipment in the telephone industry.
J C. BOWLING became a director of the Company in February 1994. Mr. Bowling
has served as Executive Vice President of Circuit Concepts, Inc., a manufacturer
of printed circuit boards since June 1994. From 1979 to 1994, Mr. Bowling served
as Vice President of Operations of Critikon, Inc., a division of Johnson &
Johnson, Inc. In addition to his position with Critikon, Inc., Mr. Bowling
served Johnson & Johnson, Inc. in a variety of increasingly responsible
management positions since 1966.
HOWARD H. GRAHAM became a director of the Company in April 1994. He has
served as Senior Vice President-Finance and Chief Financial Officer of Informix
Corp., a database software company, since March 1990. From 1988 to February
1990, he was Senior Vice President-Finance and Administration and Chief
Financial Officer of Wyse Technology, Inc., a computer and peripheral
manufacturer. Prior to such time, Mr. Graham held a series of increasingly
responsible financial management positions during a fifteen year career at
Zenith Electronics Corporation, including Vice President-Finance and Chief
Financial Officer from 1987 until leaving Zenith in 1988.
The Board of Directors has an Audit Committee which is comprised of Messrs.
Stout, Oliver, Bowling and Graham. The purposes of the Audit Committee include
recommending the Company's auditors, reviewing the scope of their engagement,
consulting with such auditors, reviewing the results of the audit examination,
acting as a liaison between the Board of Directors and the Company's internal
auditors, reviewing various Company policies, including those related to
accounting and internal controls matters, and monitoring compliance with the
undertakings made by the Company in its securities class action litigation
settlement related to the improper accounting scheme engaged in by former
members of the Company's management. The Audit Committee met four times during
the fiscal year ended December 31, 1994.
The Board of Directors has a Compensation Committee for the purpose of
setting officers' salaries, formulating bonuses for the Company's management and
administering the Company's stock incentive plans. Messrs. Stout, Oliver,
Bowling and Graham also comprise the Compensation Committee. The Compensation
Committee met two times during the fiscal year ended December 31, 1994. See
"Compensation Committee Report on Executive Compensation."
The Board of Directors held six meetings during the fiscal year ended
December 31, 1994. All incumbent directors attended more than 75% of meetings of
the Board of Directors and the respective committees of which they are members.
The Board of Directors does not have a nominating committee.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ended December 31, 1994, 1993 and 1992 for
(i) the Chief Executive Officer of the Company, (ii) the Company's four most
highly compensated executive officers (other than the Chief Executive Officer)
who were serving as executive officers at the end of the Company's last fiscal
year and (iii) Mark A. Zorko, the Company's former Vice President, Secretary
and Chief Financial Officer (collectively, the "Named Executive Officers").
Pursuant to the rules of the Commission, because Mr. Zorko would have been
among the four most highly paid executive officers (other than the Chief
Executive Officer) at the end of the Company's last fiscal year had he
remained employed by the Company, he is included in this table.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------- -----------------------------
AWARDS
OTHER -----------------------------
ANNUAL SECURITIES
COMPEN- RESTRICTED UNDERLYING ALL OTHER
SALARY BONUS SATION STOCK AWARDS OPTION(S)/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- - ------------------------------ ---- -------- ------- ------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
E. Townes Duncan.............. 1994 $229,558(2) $ 0 $9,755(3) $ 0 1,000 $6,316(4)
Chairman of the Board and 1993 205,000 0 0 475,000(5) 150,000 4,260
Chief Executive Officer(1) 1992 28,750(6) 0 0 0 0 0
Charles D. Tillett............ 1994 164,366(2) 0 0 0 66,000 1,521(4)
President and Chief 1993 153,664 0 0 0 28,750 422
Operating Officer 1992 104,808 14,000 0 0 0 0
Paul D. Johns................. 1994 119,529(2) 0 0 0 56,000 2,934(4)
Executive Vice President, 1993 n/a n/a n/a n/a n/a n/a
Marketing and Sales 1992 n/a n/a n/a n/a n/a n/a
Michael C. Thompson........... 1994 112,126(2) 0 0 0 1,000 1,017(4)
Vice President 1993 50,866 0 0 0 50,000 92
1992 n/a n/a n/a n/a n/a n/a
Dennis J. Rockow.............. 1994 124,125(2) 0 0 0 2,900(8) 861(4)
Former Vice President(7) 1993 122,193 0 0 0 15,000(8) 1,176
1992 99,808 16,000 0 0 0 231
Mark A. Zorko................. 1994 130,472(2) 0 0 0 21,000(8) 1,345(4)
Former Vice President, Chief 1993 109,020 0 21,369(9) 0 50,000(8) 143
Financial Officer and 1992 n/a n/a n/a n/a n/a n/a
Secretary
</TABLE>
- - ---------------
(1) Mr. Duncan was appointed Chairman of the Board and Chief Executive Officer
in April 1993 by the Board of Directors. Prior to such time, Mr. Duncan had
served the Company as Interim Chairman of the Board and Interim Chief
Executive Officer since November 1992. The Board of Directors authorized
the payment of $5,000 per week plus reimbursement of any out-of-pocket
expenses incurred by Mr. Duncan commencing November 1992. Mr. Duncan
continued to receive this salary until November 1, 1993 when he entered
into an employment contract with the Company. See "-- Employment Contract"
and "-- Compensation Committee Report on Executive Compensation".
(2) Each of the Named Executive Officers voluntarily took a pay cut based on
their base salary for the fiscal year ended December 31, 1994. Messrs.
Duncan and Tillett each took a pay cut of ten percent of their annual base
salary, and Messrs. Johns, Thompson, Rockow and Zorko each took a pay cut
of five percent of their annual base salary.
(3) Represents income taxes paid on behalf of Mr. Duncan relating to his
restricted stock award in 1993. See " -- Employment Contract and Change of
Control Arrangements."
(4) Includes payments made by the Company on behalf of the Named Executive
Officers with respect to term life insurance for the benefit of each such
individual under a plan whereby the Company pays one annual premium
covering life insurance benefits to all Company employees. Such payments in
fiscal year 1994 were approximately $738, $922, $393, $2,632, $344 and $421
for each of Messrs. Duncan, Tillett, Rockow, Johns, Thompson and Zorko,
respectively. In addition, the Company also paid premiums totalling $5,578
on a separate term life insurance policy for the benefit of Mr. Duncan.
Also includes of contributions made by the Company on behalf of Messrs.
Tillett, Rockow, Johns, Thompson and Zorko to the Company's 401(k) plan for
the fiscal year ended December 31, 1994 in the amounts of $599, $469, $302,
$673 and $924, respectively.
5
<PAGE> 8
(5) Mr. Duncan's equity compensation package under his employment contract
includes a restricted stock award of 100,000 shares granted in 1993. Mr.
Duncan is entitled to vote and receive dividends paid on the restricted
shares. As of the Record Date, the restrictions on 14,166 of the shares had
lapsed and the restrictions on the remaining shares will lapse at a rate of
833.33 shares per month. If Mr. Duncan leaves the employment of the Company
during this period (a total of ten years from the date of grant) the shares
with respect to which the restrictions have not lapsed shall be returned to
the Company and canceled. In accordance with the rules promulgated by the
Commission, the dollar value reflected above ($475,000) was calculated by
multiplying the closing market price of the Common Stock on the Nasdaq
National Market on the date of grant (November 1, 1993) by the number of
restricted shares awarded. At December 31, 1994, the number of restricted
shares held by Mr. Duncan was 88,334 with a value of $115,939, based on the
closing price of the Common Stock on the OTC Bulletin Board on December 31,
1994, the last day of the Company's last fiscal year. These shares
represent the total outstanding restricted stock awards of the Company.
(6) Includes director's fees of $7,500 in 1992.
(7) Mr. Rockow resigned from the Company in April 1995. Pursuant to the rules
of the Commission, because Mr. Rockow was one of the four most highly
compensated executive officers of the Company (other than the Chief
Executive Officer) at December 31, 1994, he is included in this table.
(8) These options were cancelled upon termination of the Named Executive
Officer's employment with the Company.
(9) Includes $21,157 in relocation expenses paid to Mr. Zorko in 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Shown below is information concerning stock option grants to the Named
Executive Officers who were granted stock options during the fiscal year ended
December 31, 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE VALUE(1)
- - ------------------------------------- ------------ ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
E. Townes Duncan..................... 1,000(2) .16% $1.41 9/15/99 $ 860
Charles D. Tillett................... 35,000(3) 5.7% 5.50 1/17/99 94,150
30,000(3) 4.9% 4.50 1/17/99 86,100
1,000(2) .16% 1.41 9/15/99 860
Paul D. Johns........................ 55,000(4) 9.0% 4.50 4/17/99 148,500
1,000(2) .16% 1.41 9/15/99 860
Michael C. Thompson.................. 1,000(2) .16% 1.41 9/15/99 860
Dennis J. Rockow(5).................. 1,000(2) .16% 1.41 9/15/99 860
1,000(6) .16% 1.50 12/1/99 960
900(6) .14% 1.62 12/1/99 846
Mark A. Zorko(5)..................... 20,000(3) 3.3% 4.63 1/17/99 57,000
1,000(2) .16% 1.41 9/15/99 860
</TABLE>
- - ---------------
(1) Based on the Black-Scholes option pricing model adopted for use in valuing
executive stock options. The actual value, if any, a Named Executive
Officer may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised. The estimated values
under the Black-Scholes model are based on arbitrary assumptions as to
variables such as interest rates, stock price volatility and future
dividend yield. Accordingly, the value estimated by the Black-Scholes model
may not be a realistic measure of the true value of such options.
(2) Options granted September 15, 1994. These options vest in four equal annual
instalments of 25% beginning on the first anniversary date of the grant.
(3) Options granted January 17, 1994. These options vest in four equal annual
instalments of 25% beginning on the first anniversary date of the grant.
(4) Options granted April 17, 1994. These options vest in four equal annual
instalments of 25% beginning on the first anniversary date of the grant.
(5) Upon termination of the Named Executive Officer's employment with the
Company, these options were cancelled.
(6) Options granted December 1, 1994. These options vest in four equal annual
instalments of 25% beginning on the first anniversary of the date of grant.
6
<PAGE> 9
FISCAL YEAR END OPTION/SAR VALUES
The following table provides information as to the number of shares covered
by both exercisable and unexercisable stock options for the Named Executive
Officers as of December 31, 1994. Also reported are the values for the
"in-the-money" options, which represent the positive spread between the exercise
price of any such existing stock options and the year-end price of the Common
Stock. No options were exercised by the Named Executive Officers during the
fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ----------------------------------------------- ----------- -------------- ---------- -------------
<S> <C> <C> <C> <C>
E. Townes Duncan............................... 65,625 110,375 0 0
Charles D. Tillett............................. 0 94,750 0 0
Paul D. Johns.................................. 0 56,000 0 0
Michael C. Thompson............................ 0 51,000 0 0
Dennis J. Rockow............................... 25,000 17,900 0 0
Mark A. Zorko(2)............................... 0 0 0 0
</TABLE>
- - ---------------
(1) Based on the closing price of the Common Stock on the OTC Bulletin Board on
December 31, 1994 ($1.3125), the indicated options are not "in-the-money,"
i.e., the fair market value of the underlying securities at year-end did
not exceed the exercise price of the option.
(2) Upon termination of Mr. Zorko's employment with the Company in November
1994, all of the options granted to Mr. Zorko were canceled.
DIRECTOR COMPENSATION
The Company's directors receive an annual retainer of $6,000 plus a fee of
$250 for each Board of Directors or committee meeting attended and reimbursement
of expenses. Pursuant to the Company's 1993 Outside Directors' Stock Plan (the
"Outside Directors' Plan"), each non-employee director of the Company serving as
a director on December 21, 1993 received an option to purchase 15,000 shares of
Common Stock at $4.50 per share. Each person elected as an outside director
after such date shall receive an initial one-time option grant for the purchase
of 15,000 shares of Common Stock with an exercise price equal to the fair market
value of the Common Stock at the time of such director's election to the Board
of Directors. In addition, each non-employee director shall receive annually on
the date of the annual meeting of stockholders, an additional option for the
purchase of 2,000 shares of Common Stock with an exercise price equal to the
fair market value of the Common Stock on the date of grant. All options granted
under the Outside Directors' Plan shall vest on the first anniversary of the
date of grant and shall remain exercisable for a period of ten years as long as
the director serves on the Board of Directors. In addition, each non-employee
director may elect to receive all or a portion of his or her director fees in
shares of Common Stock under the Outside Directors' Plan. The Board of Directors
may, in the future, adjust the compensation of directors as it deems advisable
and consistent with the best interests of the Company's stockholders and the
financial abilities of the Company.
EMPLOYMENT CONTRACT AND CHANGE OF CONTROL ARRANGEMENTS
Effective November 1, 1993, the Company entered into an employment contract
with E. Townes Duncan to serve as Chief Executive Officer of the Company for a
period of one (1) year, with automatic renewal terms unless terminated upon not
less than thirty (30) days prior written notice from either party. Mr. Duncan's
cash compensation pursuant to his employment contract includes a base salary of
$240,000 and a cash bonus not to exceed 50% of his base salary as determined by
the Compensation Committee. The base salary of Mr. Duncan will be reviewed
annually by the Compensation Committee. See "-- Compensation Committee Report on
Executive Compensation." Mr. Duncan's employment contract also includes equity
components consisting of a restricted stock award of 100,000 shares of Common
Stock (the "Restricted Stock") and a
7
<PAGE> 10
stock option to purchase 150,000 shares of Common Stock at $5.50 per share (the
"Stock Option"). With respect to the Restricted Stock award, 14,166 shares of
Common Stock are freely transferable and the remaining 85,834 shares contain
restrictions on transfer which lapse at a rate of 833.33 shares per month. The
Company also agreed to pay all tax liabilities owed by Mr. Duncan relating to
such shares. With respect to the Stock Option, 56,250 shares of Common Stock are
currently exercisable, and the remaining 93,750 shares vest at a rate of 3,125
shares per month. If Mr. Duncan is terminated by the Company for any reason
other than Cause (as defined in the employment contract) during the term of the
employment contract, Mr. Duncan shall receive severance compensation equal to
one year's base salary as in effect at the time of termination. Such severance
compensation also shall be due if Mr. Duncan resigns within 90 days following a
Change of Control Event (as defined in the employment agreement). Furthermore,
upon the occurrence of a Change of Control Event, the restrictions on the
Restricted Stock shall be removed and the Stock Option shall become immediately
exercisable in full. Mr. Duncan also is eligible to receive annual stock option
grants as determined by the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, Lonnie J. Stout II, J C. Bowling, Howard H.
Graham and Richard W. Oliver served as members of the Compensation Committee. E.
Townes Duncan, the Company's Chairman of the Board and Chief Executive Officer,
serves as a member of the Compensation Committee of Volunteer Capital
Corporation, of which Mr. Stout is Chairman of the Board and Chief Executive
Officer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is reviewed annually
by the Board of Directors and the Compensation Committee, which is composed
entirely of non-employee directors. In addition to reviewing and approving
executive officers' salary and bonus arrangements, the Compensation Committee
administers the Company's stock option and other plans and establishes
guidelines for other employee benefits.
Compensation Consultant.
The Compensation Committee recognizes that its efforts to fairly evaluate
and compensate the Company's executive officers in the past were severely
compromised by the improper accounting scheme engaged in by former members of
the Company's senior management. Accordingly, the Company retained a
compensation consulting firm (the "Consultant") in 1993 to evaluate and
formalize its executive compensation policies and procedures and to recommend
appropriate types and levels of compensation. Pursuant to the recommendations of
the Consultant, the Compensation Committee negotiated an agreement to secure the
employment of E. Townes Duncan as the Company's Chairman of the Board and Chief
Executive Officer and took certain corrective actions to compensate and reward
executive officers and employees for their past efforts and properly incentivize
such employees in the future. The report set forth below is based on, among
other things, the recommendations of the Consultant.
General Compensation Policies Applicable to Executive Officers.
The Compensation Committee believes that the primary objective of the
Company's compensation of executive officers should be:
- To attract and retain talented executives by providing compensation that
is, overall, competitive with the compensation provided to executives at
companies of comparable size and position in the contract manufacturing
industry, while maintaining compensation levels that are consistent with
the Company's overall financial objectives and operating performances;
- To provide the appropriate incentives for executive officers to work
towards the achievement of the Company's annual sales and operating
targets; and
- To more closely align the interests of its executive officers with those
of its stockholders and the long-term interests of the Company by
providing long-term incentive compensation in the form of stock options
and other equity-based awards.
8
<PAGE> 11
Executive compensation is designed with both current (salaries and bonuses)
and long-term (equity ownership) components in mind. The Compensation Committee
believes that the Company's executive compensation policies should be reviewed
each year following the time when the financial results of the prior year become
final. The policies are reviewed in light of their consistency with the
Company's financial performance, the success achieved in meeting its sales and
operating performance targets, achieving its overall strategic business plan
objectives and its position within the electronic manufacturing services
industry, as well as the compensation policies of similar companies.
Base Salary Compensation. The Compensation Committee, in conjunction with
management, sets the base compensation of its executive officers, including the
Chief Executive Officer, annually at a level it believes appropriate considering
(i) the overall strategic direction of the Company, (ii) the Company's position
within the relative segments of its industry, (iii) the overall responsibilities
of each executive officer, and (iv) the overall compensation package, including
long-term equity and annual incentive compensation, of each executive officer.
In addition to corporate performance and specific unit performance, the
Compensation Committee considers subjective qualitative factors to discern a
particular executive's relative value and personal contributions to the success
of the corporate enterprise. The Compensation Committee also considers
compensation packages for similarly situated executives of companies of similar
size or comparable lines of business, with whom the Company expects to compete
for executive talent. The Company's Chief Executive Officer initially proposes a
compensation package for each of the Company's executive officers, including the
Chief Executive Officer. The Compensation Committee reviews the Chief Executive
Officer's recommendations and determines the appropriate compensation package
for the forthcoming year. Although not recommended or requested by the
Compensation Committee, Mr. Duncan proposed, and the executive officers of the
Company voluntarily took, a pay cut based on each executive officer's annual
base salary during the fiscal year ended December 31, 1994. Messrs. Duncan and
Tillett each took a pay cut of ten percent of their annual base salary, and the
remaining executive officers took a pay cut of five percent of their annual base
salary.
In 1994, as a result of the improper accounting scheme and the unsettled
financial condition of the Company, qualitative factors such as leadership
skills, planning initiative, development skills, morale building skills and
crisis management skills were particularly important factors considered by the
Compensation Committee. The Compensation Committee believes that the management
team in 1994 exceeded its expectations with respect to these qualitative factors
by continuing the process begun in 1993 of restoring confidence among the
Company's employees, maintaining its banking and customer relationships and
implementing control and information systems to facilitate more accurate and
timely management decisions in the operation of the Company's business.
Annual Incentive Compensation. The Company instituted a three year annual
compensation plan for cash bonuses in February 1994 for all employees of the
Company, salaried and non-salaried, including the executive officers, based on
the recommendations of the Consultant. The bonus plan is designed to encourage
and reward employees for decisions and actions that result in performance
achievement for the benefit of the Company's stockholders and customers.
Compensation under the bonus plan is subject to the attainment of a threshold
level of pre-tax earnings as determined by the Compensation Committee.
If the targeted level of earnings is attained, awards to executive officers
under the bonus plan will be based on corporate and division performance.
Performance awards to executive officers under the bonus plan will be based on a
performance index that combines return on working assets (75%) and customer
satisfaction (25%). Return on working assets is calculated by dividing the
Company's net earnings before taxes by working assets. The customer satisfaction
component will be measured according to weekly/monthly survey responses from
customers. Performance bonuses to executive officers not tied to a division will
be based entirely on financial results of the Company as a whole. Executive
officers assigned to a particular division will have 60% of their performance
bonus tied to the corporate performance index and the remaining 40% tied to his
or her division performance index. Executive officers also are eligible to
participate in a discretionary incentive pool
9
<PAGE> 12
established by the Compensation Committee based on recommendations of the Chief
Executive Officer and Chief Operating Officer.
For 1994, the Compensation Committee determined that no awards would be
made under the bonus plan unless the Company attained pre-tax earnings of at
least $2,250,000; therefore, no cash bonuses were paid to executive officers of
the Company during the fiscal year ended December 31, 1994.
Long Term Incentive Compensation. The Compensation Committee believes that
significant stock ownership by management creates a powerful incentive for
executives to build long-term stockholder value. Accordingly, the Compensation
Committee considers equity-based compensation, which is intended to more closely
align an executive's long-term interest with the Company's stockholders, to be
an integral component of executive compensation. In consultation with the
Consultant, the Compensation Committee determined that it was appropriate to
take certain corrective actions during 1993 to adequately compensate and reward
the Company's employees, including certain executive officers, for their past
service to the Company and their extraordinary efforts to maintain the viability
of the Company's business following disclosure of the improper accounting
scheme. In the past, the Company awarded stock options to salaried employees
upon hire based upon their job level, with subsequent grants made for promotions
or changes in the number of options designated per job level. These options were
granted with a five (5) year term and an exercise price equal to the market
value of the Common Stock at the time of grant. Following disclosure of the
improper accounting scheme, the options granted to employees from March 1991 to
November 1992 had exercise prices in excess of the market value of the Common
Stock (the "Underwater Options") and, therefore, did not properly incentivize
such employees. Additionally, for certain long-time employees, even though their
options still had an exercise price lower than the current market value, what
appeared to be significant value in their options disappeared once the
accounting disclosures were made. In light of the inflated prices at which such
options were granted and based on the Consultant's recommendations, the Company
(i) replaced all Underwater Options (the "Replacement Options") on a one-for-one
basis at an exercise price of $5.50 (the average stock price of the Common Stock
for the 45 trading days prior to issuance) and (ii) made a one-time additional
grant to certain long-time employees who did not receive Replacement Options
because their outstanding options were not Underwater Options (the "Retention
Options") equal to 20% of such employee's prior option grants. The Retention
Options also were granted with an exercise price equal to $5.50. One-half of the
shares subject to the Replacement Options and Retention Options will become
exercisable as of the first date after the Common Stock has traded at a price
greater than $8.00 per share for 45 consecutive trading days. The remaining
shares may be exercised as of the first date after the Common Stock has traded
at a price greater than $12.00 per share for 45 consecutive trading days.
Notwithstanding the foregoing, the options shall be exercisable in full 54
months after the date of grant.
The Company intends to continue the program of stock option grants in the
future with equity-based awards which are comparable in amount to long-term
incentive award packages for similarly situated executives of companies of
similar size or in comparable lines of business. In 1994, the Company granted
options to certain newly hired executive officers in amounts deemed necessary to
attract such persons and provide the proper incentives for such executive
officers to promote the long-term interests of the Company. In addition, the
Company granted options to existing executive officers in amounts deemed
appropriate to properly incentivize such executive officers. In determining the
size of option awards for a particular executive officer, the Compensation
Committee considers the amount of options already held by such officers. See
"Executive Compensation -- Option/SAR Grants in Last Fiscal Year."
Chief Executive Officer Compensation.
E. Townes Duncan was appointed Interim Chairman of the Board and Interim
Chief Executive Officer in November 1992 following the announcement of the
improper accounting scheme and continued in such capacity until April 1993 when
Mr. Duncan was appointed Chairman of the Board and Chief Executive Officer.
Effective November 1, 1993, the Company entered into an employment contract with
Mr. Duncan to serve as Chief Executive Officer of the Company for a period of
one (1) year, with automatic one-year renewal terms unless terminated upon not
less than thirty (30) days prior written notice from either party. Mr. Duncan's
cash compensation pursuant to his employment contract provides for a base salary
of $240,000.
10
<PAGE> 13
Mr. Duncan also is eligible to receive a cash bonus not to exceed 50% of his
base salary as determined by the Compensation Committee. In accordance with his
employment contract, Mr. Duncan's base salary is reviewed annually by the
Compensation Committee.
A significant portion of Mr. Duncan's compensation package under his
employment contract consists of equity-based incentive compensation. Since Mr.
Duncan did not have significant ownership in the Common Stock, the Compensation
Committee felt that a substantial portion of Mr. Duncan's compensation should be
in the form of equity incentive compensation to more closely align his interests
with the stockholders and the long-term interests of the Company. Mr. Duncan's
equity compensation package includes a Restricted Stock award of 100,000 shares
and a stock option to purchase 150,000 shares of Common Stock at $5.50 per
share. With respect to the Restricted Stock award, 14,166 shares of Common Stock
presently are freely transferrable and the remaining 85,834 shares contain
restrictions on transfer which lapse at a rate of 833.33 shares per month. The
Company also agreed to pay all income tax liabilities owed by Mr. Duncan
relating to such shares. 56,250 shares of Common Stock which are subject to the
Stock Option presently are exercisable and the remaining 93,750 shares vest at a
rate of 3,125 shares per month. Mr. Duncan also is eligible to receive annual
stock option grants as determined by the Compensation Committee. During 1994,
Mr. Duncan received an option to purchase 1,000 shares of Common Stock at an
exercise price of $1.41, the fair market value of the Common Stock on the date
of grant. The shares exercisable pursuant to this option vest in four equal
annual installments of 25% beginning on the first anniversary date of the grant.
The compensation package of Mr. Duncan is based on recommendations of the
Consultant and a search firm engaged by the Company to attract qualified
candidates to serve as the Company's Chief Executive Officer. The Compensation
Committee believes the compensation package offered to Mr. Duncan is appropriate
in relation to compensation packages for similarly situated officers of publicly
held companies and considering the extraordinary circumstances of the Company.
Federal Income Tax Deductibility Limitations.
The Compensation Committee believes it is appropriate to take into account
the $1,000,000 limit on the deductibility of executive compensation for Federal
income tax purposes enacted as part of the 1993 Omnibus Budget Reconciliation
Act ("OBRA") and to seek to qualify the Company's long-term compensation awards
as performance-based compensation excluded from the $1,000,000 limit. Because
the regulations are still in proposed form, and because the Company is in no
immediate danger of losing any deduction, the Company has not yet taken action
to qualify its stock incentive plans as performance-based compensation.
Lonnie J. Stout II
Richard W. Oliver
J C. Bowling
Howard H. Graham
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares yearly percentage change in the unaudited
total return on the Common Stock against the cumulative total stockholder return
of the Nasdaq Stock Market Total Return Index and the Nasdaq Electronic
Component Stocks Index commencing December 31, 1989 and ending December 31,
1994. The comparison of total return on investment (change in year-end stock
price plus reinvested dividends) for each of the periods assumes that $100 was
invested on December 31, 1989 in the Common Stock or the respective indexes.
(Graph)
<TABLE>
<CAPTION>
Nasdaq
The Nasdaq Electronic
Measurement Period Comptronix Stock Market Component
(Fiscal Year Covered) Corporation (US) Stocks
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 104.76 84.92 97.04
1991 471.43 136.28 138.19
1992 200.00 158.58 215.87
1993 142.86 180.93 296.50
1994 50.00 176.92 328.14
</TABLE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
In May 1992, the Company sold a house previously owned by Dennis J. Rockow
to Charles D. Tillett for $250,000 and financed $75,000 of the purchase price.
Mr. Tillett is a director and presently serves as President and Chief Operating
Officer of the Company. The $75,000 loan to Mr. Tillett is being repaid over a
period of four years pursuant to a non-interest bearing promissory note held by
the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Commission. Officers, directors, and greater than ten percent stockholders
are required by federal securities regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms and
written representations from certain reporting persons furnished to the Company,
the Company believes that its officers, directors, and greater than ten percent
beneficial owners were in compliance with all applicable filing requirements,
except
12
<PAGE> 15
that each of Messrs. Duncan, Nesbit and Rockow were required to amend a Form 4,
although timely filed, to reflect on exempt option grant of Common Stock which
had been inadvertently omitted from the Form 4 originally filed. Similarly, Mr.
Andersen was required to amend his initial report on Form 3, which, while timely
filed, inadvertently failed to set forth his beneficial ownership of derivative
securities of the Company.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP to
serve as independent auditors for the current fiscal year. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting and will be
given the opportunity to make a statement if they desire to do so and to respond
to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Stockholders intending to submit proposals for presentation at the next
Annual Meeting of Stockholders and inclusion in the proxy statement and form of
proxy for such meeting should forward such proposals to Joseph G. Andersen,
Secretary, Comptronix Corporation, Three Maryland Farms, Suite 140, Brentwood,
Tennessee 37027. Proposals should be sent to the Company by certified mail,
return receipt requested and must be received by the Company prior to January 8,
1996.
Date: May 5, 1995
13
<PAGE> 16
APPENDIX A
PROXY
COMPTRONIX CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON THURSDAY, JUNE 8, 1995.
The undersigned hereby appoints E. Townes Duncan and Charles D. Tillett, and
each of them, as proxies, with full power of substitution, to vote all shares of
the undersigned as shown below on this proxy at the Annual Meeting of
Stockholders of Comptronix Corporation to be held at The Maryland Farms Athletic
Club, 5101 Maryland Way, Brentwood, Tennessee, on Thursday, June 8, 1995 at
10:00 a.m., local time, and any adjournment thereof.
(1) PROPOSAL I: ELECTION OF DIRECTORS
/ / FOR all of the nominees (except as indicated to the contrary below):
E. Townes Duncan, Charles D. Tillett, Lonnie J. Stout II, Richard W.
Oliver, J C. Bowling, Howard H. Graham
/ / WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees
(please print name or names)
- - --------------------------------------------------------------------------------
/ / WITHHOLD AUTHORITY (ABSTAIN) to vote for all six nominees
(2) In their discretion, any other matter which may properly come before said
meeting or any adjournment thereof.
IMPORTANT: PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the nominees in the election of
directors.
Date: , 1995
-------------------
PLEASE SIGN BELOW, PROVIDE
YOUR SOCIAL SECURITY NUMBER OR
TAX IDENTIFICATION NUMBER AND
RETURN PROMPTLY
------------------------------
------------------------------
------------------------------
SOCIAL SECURITY NUMBER/
TAX IDENTIFICATION NUMBER
Please sign exactly as your
name appears on your share
certificates. If registered in
the names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians,
attorneys, and corporate
officers should show their
full titles.
- - --------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
