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[SAFEGUARD SCIENTIFICS, INC. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 12, 1994
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Safeguard Scientifics, Inc. (the
'Company') will be held at 800 The Safeguard Building, 435 Devon Park Drive,
Wayne, Pennsylvania 19087 on Thursday, May 12, 1994 at 3:00 p.m., local time,
for the following purposes:
1. To elect eleven directors; and
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has established the close of business on March 23,
1994 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting or any adjournments thereof. In order that the
meeting can be held and a maximum number of shares can be voted, whether or not
you plan to be present at the meeting in person, please complete, date and sign,
and promptly return the enclosed Proxy in the return envelope provided for your
use. No postage is required if mailed in the United States.
By order of the Board of Directors,
JAMES A. OUNSWORTH
Secretary
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
April 8, 1994
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SAFEGUARD SCIENTIFICS, INC.
800 THE SAFEGUARD BUILDING
435 DEVON PARK DRIVE
WAYNE, PENNSYLVANIA 19087
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of the Board of Directors (the
'Board') of Safeguard Scientifics, Inc. (the 'Company') for use at the Annual
Meeting of Shareholders to be held on May 12, 1994 (such meeting and any
adjournment or adjournments thereof referred to as the 'Annual Meeting') for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders
and in this Proxy Statement. This Proxy Statement and the enclosed Proxy are
being mailed to shareholders on or about April 8, 1994.
VOTING SECURITIES
Only the holders of shares of common stock, par value $.10 per share (the
'Common Stock'), of the Company of record at the close of business on March 23,
1994 (the 'Shares') are entitled to receive notice of, and to vote at, the
Annual Meeting. On that date, there were 4,682,114 Shares outstanding and
entitled to be voted at the Annual Meeting. It is the intention of the persons
named in the Proxy to vote as instructed by the shareholders or, if no
instructions are given, to vote as recommended by the Board. Each holder of
Shares entitled to vote will have the right to one vote for each Share standing
in his name on the books of the Company, except that in the election of
directors, each shareholder will have the right of cumulative voting. In such
election, each holder of Shares entitled to vote will have a number of votes
equal to the number of Shares he owns multiplied by the total number of
directors to be elected, and he may cast the whole of such votes for one
candidate, or distribute them among any two or more candidates. To vote
cumulatively, a shareholder must write the name of the nominee or nominees
selected and the number of votes to be cast for each nominee, followed by the
words 'cumulate for,' on the line provided under Item 1 of the Proxy.
Discretionary authority to cumulate votes is hereby solicited by the Board.
The eleven nominees receiving the highest number of affirmative votes of
the Shares present or represented and entitled to be voted shall be elected as
directors. Votes withheld from any director, broker non-votes and abstentions
are counted for purposes of determining the presence of a quorum for the
transaction of business at the Annual Meeting. Only those votes which are cast
as affirmative or negative will be treated as voting on any matter presented at
the Annual Meeting.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person. A shareholder, in exercising his
right to vote in person at the Annual Meeting, effectively revokes all
previously executed Proxies. In addition, the Proxy is revocable at any time
prior to the effective exercise thereof by filing notice of revocation with the
Secretary of the Company or by filing a duly executed Proxy bearing a later
date.
PERSONS MAKING THE SOLICITATION
The cost of soliciting Proxies, including the actual expenses incurred by
brokerage houses, nominees and fiduciaries in forwarding Proxy materials to
beneficial owners, will be borne by the Company. In addition to solicitation by
mail, certain officers and other employees of the Company may solicit Proxies in
person, by mail, or by telephone.
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SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Shareholders intending to present proposals at the next Annual Meeting of
Shareholders to be held in 1995 must notify the Company of the proposal no later
than December 9, 1994.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 15, 1994, the Company's Common
Stock beneficially owned by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Shares, the Company's only
class of equity securities outstanding. The table also shows the number of
Shares owned beneficially by each director or nominee, by each named executive
officer, and by all directors and officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT OF
OWNED(1) CLASS
----------- -----------
<S> <C> <C>
Warren V. Musser
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087(2)....................................................................... 592,112 12.7%
Vincent G. Bell, Jr.(3).................................................................... 75,128 1.6%
Robert A. Fox(3)........................................................................... 28,000 *
Delbert W. Johnson(3)...................................................................... 28,564 *
Peter Likins, Ph.D.(3)..................................................................... 13,500 *
Jack L. Messman............................................................................ 1,000 *
Russell E. Palmer(3)....................................................................... 12,500 *
John W. Poduska, Sr., Ph.D.(3)............................................................. 23,000 *
Heinz Schimmelbusch, Ph.D.(3).............................................................. 13,000 *
Hubert J. P. Schoemaker, Ph.D.(3).......................................................... 2,500 *
Jean C. Tempel(4).......................................................................... 41,010 *
Gary J. Anderson(5)........................................................................ 17,452 *
Avery More................................................................................. 500 *
James W. Dixon............................................................................. 0
The Baupost Group, Inc.
P. O. Box 1288
Cambridge, MA 02238(6)................................................................... 342,900 7.3%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401(7)................................................................ 348,400 7.4%
Executive officers and directors as a group (19 persons)(8)................................ 951,527 19.7%
</TABLE>
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<TABLE>
<S> <C>
(*) Less than 1%.
(1) Except as otherwise disclosed, the nature of beneficial ownership is the sole power to vote and to dispose of
the shares (except for shares held jointly with spouses).
(2) Includes 25,000 shares held by a charitable foundation of which Mr. Musser is a director and an executive
officer, and 10,466 shares held by Mr. Musser's spouse. Mr. Musser disclaims beneficial ownership of the
shares owned by the charitable foundation and his spouse.
(3) Includes for Messrs. Bell, Fox, Johnson, Likins, Palmer, Poduska, Schimmelbusch, and Schoemaker 13,000 shares,
13,000 shares, 11,250 shares, 13,000 shares, 11,000 shares, 2,000 shares, 13,000 shares, and 2,500 shares
which may be acquired pursuant to stock options which are currently exercisable or which will become
exercisable by May 13, 1994.
(4) Includes 1,000 shares held by Ms. Tempel's spouse and 32,500 shares which may be acquired pursuant to stock
options which are currently exercisable or which will become exercisable by May 13, 1994. Ms. Tempel disclaims
beneficial ownership of the shares owned by her spouse.
</TABLE>
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<TABLE>
<S> <C>
(5) Includes 25 shares held by Dr. Anderson's son and 12,500 shares which may be acquired pursuant to stock
options which are currently exercisable or which will become exercisable by May 13, 1994.
(6) As reflected in Amendment No. 10 to Schedule 13D filed with the Securities and Exchange Commission, The
Baupost Group, Baupost Partners and Seth A. Klarman may be deemed to own beneficially 314,300 shares of Common
Stock owned by several Massachusetts limited partnerships. In addition, The Baupost Group and Seth A. Klarman
may be deemed to own beneficially an additional 28,600 shares of Common Stock owned by The Baupost Fund.
(7) As reflected in Amendment No. 6 to Schedule 13G filed with the Securities and Exchange Commission, Dimensional
Fund Advisors Inc. ('Dimensional'), a registered investment advisor, is deemed to have beneficial ownership of
348,400 shares of Common Stock as of December 31, 1993, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company, the DFA Investment Trust Company,
a registered open-end investment company, or the DFA Group Trust and the DFA Participating Group Trust,
investment vehicles for qualified employee benefit plans. Dimensional serves as investment manager of all of
the above portfolios and disclaims beneficial ownership of such shares.
(8) Includes 155,981 shares which may be acquired pursuant to stock options which are currently exercisable or
which will become exercisable by May 13, 1994.
</TABLE>
As of March 15, 1994, CenterCore, Inc. ('CenterCore'), CompuCom Systems, Inc.
('CompuCom') and Tangram Enterprise Solutions, Inc. ('Tangram') are majority
owned subsidiaries of the Company, and the Company may be deemed the beneficial
owner of 51.8% of the outstanding common stock of Cambridge Technology Partners
(Massachusetts), Inc. ('CTP'). As of March 15, 1994, officers and directors of
the Company beneficially owned the following percentage of shares of common
stock outstanding in each such company: (i) CenterCore: Mr. Musser, 5.8%; all
officers and directors of the Company as a group, other than Mr. Musser, less
than 1%; (ii) CompuCom: Mr. Musser, 1.2%; Mr. Dixon, 3.3%; Mr. More, 1.2%; all
officers and directors of the Company as a group, other than Messrs. Musser,
More and Dixon, approximately 1.6%; (iii) Tangram: all officers and directors as
a group, less than 1%; and (iv) CTP: Mr. Musser, 4.2%; Ms. Tempel, 1.6%; all
officers and directors of the Company as a group, other than Mr. Musser and Ms.
Tempel, approximately 3.2%.
I. ELECTION OF DIRECTORS
It is intended that the persons named as Proxies for the Annual Meeting
will vote in favor of the election of the following eleven nominees as directors
of the Company to hold office until the Annual Meeting of Shareholders in 1995
and until their successors are elected and have qualified. All of the nominees,
with the exception of Jack L. Messman, are presently serving as directors of the
Company. Each of the nominees has consented to serve if elected. However, if any
of the nominees should become unavailable prior to the election, the holders of
the Proxies may vote the Proxies for the election of such other persons as the
Board may recommend, unless the Board reduces the number of directors to be
elected.
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THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
THE SLATE OF NOMINEES SET FORTH IN THIS PROPOSAL. PROXIES WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS. THE ELEVEN NOMINEES
RECEIVING THE HIGHEST NUMBER OF AFFIRMATIVE VOTES OF THE SHARES PRESENT OR
REPRESENTED AND ENTITLED TO BE VOTED SHALL BE ELECTED AS DIRECTORS.
<TABLE>
<CAPTION>
HAS BEEN A
PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR
NAME EXPERIENCE DURING LAST FIVE YEARS SINCE AGE
- ------------------------------------- ---------------------------------------------------------- ----------- -----------
<S> <C> <C> <C>
Warren V. Musser Chairman of the Board, Chief Executive Officer and
President of the Company(1)(2)(4)......................... 1953 67
Vincent G. Bell, Jr. President, Verus Corporation, a management investment firm
(2)(3)(5)................................................. 1956 68
Robert A. Fox President, R.A.F. Industries, Inc. and affiliates,
diversified manufacturing, distribution and service
companies(2).............................................. 1981 64
Delbert W. Johnson President and Chief Executive Officer, Pioneer Metal
Finishing, a specialty metal finishing company(6)......... 1992 55
Peter Likins, Ph.D. President, Lehigh University(3)(7)........................ 1988 57
Jack L. Messman President and Chief Executive Officer, Union Pacific
Resources, an energy company and a subsidiary of Union
Pacific Corporation(8).................................... -- 54
Russell E. Palmer Chairman and Chief Executive Officer, The Palmer Group, a
corporate investment firm(2)(3)(9)........................ 1989 59
John W. Poduska, Sr., Ph.D. Chairman, Advanced Visual Systems, Inc., a provider of
visualization software(3)(10)............................. 1987 56
Heinz Schimmelbusch, Ph.D. Chief Executive Officer, Safeguard International Group, a
division of the Company(11)............................... 1989 49
Hubert J. P. Schoemaker, Ph.D. Chairman of the Board and co-founder of Centocor, Inc., a
biotechnology company(1)(12).............................. 1993 44
Jean C. Tempel Executive Vice President of the Company(1)(13)............ 1991 51
</TABLE>
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<TABLE>
<S> <C>
(1) Member of the Executive Committee, of which Dr. Schoemaker is Chairman.
(2) Member of the Compensation Committee, of which Mr. Fox is Chairman.
(3) Member of the Audit Committee, of which Mr. Palmer is Chairman.
(4) Mr. Musser is Chairman of the Board of Cambridge Technology Partners (Massachusetts), Inc. and CenterCore,
Inc. and a director of Coherent Communications Systems Corporation, CompuCom Systems, Inc., Tangram Enterprise
Solutions, Inc. and Castle Energy Corporation.
(5) Mr. Bell is a director of BHC Financial Corp. and Hunt Manufacturing Co., Inc.
(6) Pioneer Metal Finishing includes a division and a subsidiary of the Company. Mr. Johnson is a director of
Ault, Inc., First Bank System and Tennant Co., Inc., and serves as Chairman of the Ninth District Federal
Reserve Bank and 1993 Chairman of the Federal Reserve Board Conference of Chairmen.
(7) Dr. Likins also has served as a technical consultant for a number of companies, including Boeing Aerospace
Co., the Jet Propulsion Laboratory and Dynacs Engineering Co. and was a member of the President's Council of
Advisors for Science and Technology from 1989 to 1993. Dr. Likins is a director of Consolidated Edison Company
of New York, Communications Satellite Corporation, and Parker-Hannifin Corp.
(8) Prior to joining Union Pacific Resources Company in April 1991, Mr. Messman was Chairman and Chief Executive
Officer of USPCI, Inc., a provider of hazardous waste services and a subsidiary of Union Pacific Corporation,
from May 1988 until April 1991. Mr. Messman is a director of Cambridge Technology Partners (Massachusetts),
Inc., Novell, Inc. and Tandy, Inc.
</TABLE>
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<TABLE>
<S> <C>
(9) Prior to organizing The Palmer Group in June 1990, Mr. Palmer was Dean of The Wharton School of the University
of Pennsylvania from 1982 to June 1990. He was managing partner and Chief Executive Officer of Touche Ross &
Co. (now Deloitte & Touche) from 1972 to 1982. Mr. Palmer is a director of Allied-Signal, Inc., Bankers Trust
New York Corporation, Contel Cellular, Inc., Federal Home Loan Mortgage Corporation, The Goodyear Tire &
Rubber Company, GTE Corporation, Imasco Limited, and The May Department Stores Company.
(10) Prior to joining Advanced Visual Systems, Inc. in January 1992, Dr. Poduska was President and Chief Executive
Officer of Stardent Computer, Inc., a computer manufacturer, from December 1989 to December 1991. From
December 1985 to December 1989, Dr. Poduska was founder, Chairman and Chief Executive Officer of Stellar
Computer, Inc., a computer manufacturer and the predecessor of Stardent Computer, Inc. Dr. Poduska is a
director of Cambridge Technology Partners (Massachusetts), Inc. and Xylogics, Inc.
(11) From 1973 to 1993 Dr. Schimmelbusch was associated with Metallgesellschaft AG, a raw materials company of
which he served as Chairman of the Executive Board from March 1989 to December 1993 and as Deputy Chairman of
the Board of Management from July 1988 to March 1989.
(12) Dr. Schoemaker is also a co-founder and a director of Tocor II, Inc.
(13) Ms. Tempel has been Executive Vice President of the Company since November 1993, prior to which she held the
office of President and Chief Operating Officer of the Company from February 1992 to November 1993. Prior to
joining the Company, Ms. Tempel was an independent management consultant from October 1990 until December
1991, and Executive Vice President and Chief Operations Officer of The Boston Company and The Boston Safe
Deposit and Trust Company, a holding company and bank, respectively, from 1983 to October 1990. Ms. Tempel is
Vice Chairman of Cambridge Technology Partners (Massachusetts), Inc. and a director of CompuCom Systems, Inc.
and Centocor, Inc.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board held four meetings in 1993. The Company's Board of Directors has
appointed standing Audit, Compensation and Executive Committees. The
Compensation Committee, which met once in 1993, fixes compensation levels
including incentive compensation for all officers and other principal employees,
and administers the stock option plans and the long term incentive plan. The
Audit Committee met three times during 1993. The Audit Committee is authorized
to conduct such reviews and examinations as it deems necessary or desirable with
respect to the practices and procedures of the independent accountants, the
scope of the audit, accounting controls, practices and policies, the
recommendation to the Board of the independent accountants to be selected, and
the relationship between the Company and the independent accountants, including
the availability of Company records, information and personnel. The Executive
Committee, which had one meeting during 1993, is authorized to act upon all
matters with respect to the management of the business and affairs of the
Company, except that its authority to authorize and approve investments by the
Company, other than investments made in the normal course of business, is
limited to investments of up to $2 million in the aggregate between meetings.
Nine of ten members of the Company's Board attended at least 75% of all meetings
of the full Board; however, Dr. Likins attended 71% and Dr. Schimmelbusch
attended 50% of the total of the Board and Committee meetings of which they are
members.
DIRECTORS' COMPENSATION
In 1993, directors who were not employees received an annual cash retainer
of $15,000, plus $500 for each Board meeting attended and $300 for each
Committee meeting attended on a date other than a Board meeting date. In
addition, Mr. Fox and Mr. Palmer, as Chairman of the Compensation Committee and
Audit Committee, respectively, received an annual retainer of $1,000.
The Company has deferred compensation plans ('Deferred Compensation Plan')
covering certain of its directors and a limited number of officers and key
employees. All contributions to the Deferred Compensation Plan were completed by
the end of 1988. Upon retirement (or an earlier date in certain cases) or upon
termination of service as a director, the participant is entitled to receive (as
a level payment over 15 years or as a lump sum) an amount equal to the aggregate
credits to the participant's account plus an investment growth factor. Under the
Deferred Compensation Plan, Mr. Bell began receiving quarterly payments of
$3,100 in February 1992, which was reduced to $3,000 in February 1994. These
payments will continue, subject to adjustment in accordance with the terms of
the Deferred
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Compensation Plan, for a period of 15 years. The Company has purchased life
insurance contracts to provide it with funds estimated to be sufficient to cover
its obligations under the Deferred Compensation Plan, and the Company is the
owner and beneficiary of such contracts. If assumptions as to mortality
experience, future policy dividends and other factors are realized, the Company
will recover an amount equal to all benefit payments under the Deferred
Compensation Plan, the premium payments on the insurance contracts, and a
portion of the interest earned on the use of the premium payments.
The Company has a consulting arrangement with Mr. Palmer under which Mr.
Palmer provides guidance and assistance to the Company in organizing and
moderating strategic planning seminars for Safeguard's management team and makes
available to the Company the resources of The Palmer Group, including research
as to certain industries, companies and other aspects of business. Pursuant to
this arrangement, Mr. Palmer is paid a quarterly fee of $6,000. During 1993, Mr.
Palmer received a total of $24,000 under this consulting arrangement. The
arrangement is terminable upon notice by either party at any time.
DIRECTORS' STOCK OPTIONS
Non-Employee Directors of the Company also participate in the Stock Option
Plan for Non-Employee Directors ('Directors' Plan'). Pursuant to the Directors'
Plan, as amended, each Eligible Director receives an option to purchase 10,000
shares of the Company's Common Stock upon his election. Thereafter, each
Eligible Director will receive (i) a Service Grant to purchase 2,000 shares of
Common Stock on December 31, 1994; (ii) a Service Grant to purchase 2,000 shares
of Common Stock on the December 31st next occurring after the end of every two
years' service thereafter provided that an Eligible Director has completed two
years of additional service since the immediately preceding grant; and (iii) an
option to purchase 500 shares of Common Stock for each $500 increase in
directors' compensation in excess of 10% over the fee in effect immediately
before the date of such grant ('Incentive Grant'); provided, however, that each
Service Grant to which an Eligible Director would be entitled would be reduced
by the number of shares subject to any Incentive Grant made as of the same date.
The exercise price of each option is equal to the fair market value of the
shares on the date of grant. The maximum number of shares of Common Stock
subject to options granted to an Eligible Director under the Directors' Plan
cannot exceed 20,000 shares. In May 1993, Dr. Schoemaker received an option to
purchase 10,000 shares upon his election as a director.
REPORT OF THE BOARD COMPENSATION COMMITTEE
The Compensation Committee of the Board (the 'Committee') reviews and
approves management recommendations for compensation levels, including incentive
compensation, for the executives of the Company, and administers the Company's
stock option plans and long term incentive plan.
The members of the Committee are all outside directors of the Company
except for Mr. Musser, who is Chairman of the Board, Chief Executive Officer and
President of the Company. Mr. Musser, who is also the largest single shareholder
of the Company, does not participate in the Company's stock option plans or long
term incentive plan. Mr. Musser does not participate in decisions regarding his
compensation.
Two of the executive officers named in the compensation tables, Avery More
and James W. Dixon, are or were employed and compensated by CompuCom, a publicly
traded company which is a majority owned subsidiary of the Company and its
largest partnership company. Messrs. More and Dixon have not and do not
participate in any of the Company's compensation plans and their compensation
arrangements are not reviewed by the Committee. Consequently, the report of this
Committee does not relate to the compensation of Messrs. More and Dixon.
EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation program is designed to support the
Company's mission to achieve maximum returns for its shareholders by providing
active strategic management and direct creative financing to its partnership
companies. The Company's objectives are to attract and retain
6
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outstanding executives, to promote among them the economic benefits of stock
ownership in Safeguard and its partnership companies, and to motivate and reward
executives who, by their industry, loyalty and exceptional service, make
contributions of special importance to the success of the business of the
Company.
Base compensation levels are initially established for new executives on
the basis of subjective factors, with reference to the experience and
achievements of the individual and the level of responsibility to be assumed in
the Company. Salary increases are awarded each year based on increased levels of
individual responsibility, to maintain an appropriate scale among company
executives based on relative positions and responsibilities, and on general
levels of inflation. Annual cash bonuses are intended to motivate executives to
achieve and exceed annual corporate performance targets and strategic
objectives. Target levels of executive bonuses are determined in advance for
each year as a percentage of base salary, which percentages are based on the
executive's ability to impact Company performance. Bonuses are awarded at
year-end based on a review of the level of achievement of financial and
strategic objectives as defined in the Company's plan and the plans of the
partnership companies (including the publicly held partnership companies) as
approved by the Company, and individual performance. Company performance, rather
than individual performance, is given the greatest weight in bonus
determinations. The Company's primary objective is to create and increase the
value of the Company's partnership companies. Specific financial and strategic
objectives may include achievement of pre-tax operating earnings targets,
strengthening a partnership company's management/marketing team, building
strategic alliances, identifying and exploiting markets, increasing existing
market share and penetration, and obtaining additional financing. A significant
mark of the Company's success in creating value in partnership companies is the
successful completion of a rights offering of the partnership company's stock to
the Company's shareholders. Based on the foregoing review, bonuses are paid as a
percentage of target amounts. Bonuses may exceed target amounts when, in the
judgment of the Committee, performance levels are deemed to be superior. The
Company is studying the effects of the new $1 million compensation deduction cap
under the Internal Revenue Code and will present its analysis to the Committee
during 1994.
Grants of Company stock options are intended to align the interests of
executives and key employees with the long-term interests of the Company's
shareholders and to encourage executives and key employees to remain in the
Company's employ. Generally, grants are not made in every year, but are awarded
subjectively, based on a number of factors, including the Company's achievement
of financial and strategic objectives, the individual's contributions in
providing strategic leadership and oversight for the Company and its partnership
companies, and the amount and term of options already held by the individual.
The Company's long term incentive plan is intended to support the Company's
strategy of rewarding shareholders through rights offerings or other
dispositions to shareholders of selected Safeguard partnership companies. The
plan is designed to channel the energies of executives and key employees into
efforts that create shareholder value over the long term by enabling
participants to share in the results of their contributions through direct
participation in the growth of Safeguard's partnership companies. Growth of the
partnership companies benefits the Company's shareholders indirectly, by
increasing the value of the Company's ownership interest in the partnership
companies, and directly, by increasing the value of the stock in the publicly
held partnership companies previously distributed to the Company's shareholders
through rights offerings. Grants under the plan generally are made in units
based on increases in the book value or the fair market value of the stock of
the partnership company above set threshold levels. Awards are payable after a
fixed period of years (subject to adjustment by the Committee in certain
circumstances) in cash or in stock of the partnership company once the threshold
levels are achieved.
The Committee believes that its policy of aligning the interests of
executives and key employees with the long-term interests of the Company's
shareholders has been successful, as evidenced by the ten-year cumulative total
return on the Company's common stock, assuming net investment in rights
offerings, as shown in the second stock performance graph which appears on page
13.
7
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CEO COMPENSATION
At his request, Mr. Musser's base salary for 1993 was maintained at the
same level as for 1992. Mr. Musser was awarded a bonus for 1993 equal to 115% of
his target bonus. This decision was based on the Company and its partnership
companies achieving their strategic objectives, the most significant of which
were: the significant increase in 1993 operating earnings (before the goodwill
write-off) compared to 1992; consolidated sales exceeding a billion dollars; the
continued strong sales and earnings growth of CompuCom in a constantly changing
marketplace; the successful rights offering of stock in Cambridge Technology
Partners and its continued strong growth; the successful positioning of Micro
Decisionware, which resulted in the Company signing an agreement in January 1994
to sell Micro Decisionware for a favorable price; the merger of Rabbit Software
Corporation with Tangram Systems Corporation to create a stronger, more viable
business renamed Tangram Enterprise Solutions, Inc.; and the acquisition of an
interest in XL Vision, Inc.
OTHER EXECUTIVE COMPENSATION
The Committee approved executive cash bonuses for 1993 equal to 115% of the
target bonus amounts. As noted above under discussion of the CEO's compensation,
these decisions were based on the Company and its partnership companies
achieving or exceeding their financial and strategic objectives as outlined
above, and reflect the Committee's policy of providing superior compensation for
superior performance. Also considered to a lesser extent in awarding bonuses was
each executive's individual performance for the year. The Committee granted
options under the Company's 1990 Stock Option Plan to certain of its executives
and employees. Executives who assumed significant new responsibilities and new
executives were granted more options than other executives in order to establish
appropriate relative numbers of options held by each executive and employee
based on their current responsibilities.
By the Compensation Committee:
Robert A. Fox Vincent G. Bell, Jr. Russell E. Palmer Warren V. Musser
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Fox, Bell, Palmer and Musser comprise the Compensation Committee.
Mr. Musser is Chairman of the Board, Chief Executive Officer and President of
the Company. Mr. Musser does not participate in discussions regarding his
compensation and does not participate in the Company's stock option plans or
long term incentive plan.
Cambridge Technology Partners leases its Massachusetts headquarters from a
trust of which Mr. Musser is the sole beneficiary. Approximate minimum lease
payments for 1993 and 1994 are $665,000 and $720,000, respectively. These
payments include base rent charges, a management fee equal to one percent of
base rent and a monthly charge for the utilization of parking facilities. The
leased premises include approximately 62,000 square feet of rentable floor
space. The lease term runs until June 2007 with two options to extend for
periods of five years each. Commencing in June 1995, annual increases in base
rent under the lease will be based on increases in the consumer price index.
Cambridge Technology Partners has advised that it believes the lease terms are
no less favorable than could be obtained from an unrelated third party.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid
during the last three fiscal years to the Chief Executive Officer and each of
the other four most highly compensated executive officers of the Company whose
salary and bonus exceeded $100,000 in 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) COMPENSATION($)(3) AWARD(S)($) SARS(#)(4) COMPENSATION($)(5)
<S> <C> <C> <C> <C> <C> <C> <C>
Warren V. Musser, 1993 $ 235,000 $ 135,000 -- $ 0 0 $ 11,098
Chairman of the Board, 1992 235,000 105,800 0 0 10,298
Chief Executive 1991 223,000 73,500 -- 0 0
Officer and
President(6)
Gary J. Anderson, M.D., 1993 $ 211,000 $ 85,000 -- $ 0 0 $ 15,825
Executive Vice 1992 200,000 70,000 -- 117,600(8) 0 15,000
President, Fund 1991 160,000 56,000 0 5,000
Management(7)
Jean C. Tempel, 1993 $ 235,000 $ 135,000 -- -- 0 $ 16,556
Executive Vice 1992 198,077 90,000 $ 36,501 160,000(9) 75,000 8,913
President 1991 -- -- -- --
James W. Dixon, 1993 $ 310,000 $ 471,200 -- -- 0 $ 4,497
Chairman of the Board 1992 275,000 257,141 -- -- 0 4,364
of CompuCom Systems, 1991 250,000 177,000 0
Inc.
Avery More, 1993 $ 310,000 $ 471,200 -- -- 0 $ 74,497
President and Chief 1992 275,000 257,141 -- -- 125,000(10) 4,364
Executive Officer of 1991 250,000 177,000
CompuCom Systems, Inc. 0
</TABLE>
<TABLE>
<S> <C>
(1) Includes annual compensation which has been deferred by Messrs. Musser and Anderson and Ms. Tempel pursuant to
the Company's stock savings plan and by Messrs. Dixon and More pursuant to the CompuCom Systems, Inc. 401(k)
matched savings plan.
(2) Cash bonuses for services rendered by all executive officers in 1991 have been listed for the year earned, but
were actually paid in the following fiscal year. With respect to Messrs. Dixon and More, a portion of the cash
bonus paid and included above for services rendered in 1992 and 1993 was not paid until February of the
following year.
(3) For fiscal year 1993, perquisites and other personal benefits did not exceed the lesser of $50,000 or 10% of
any executive officer's salary and bonus and accordingly have been omitted from the table as permitted by the
rules of the Securities and Exchange Commission.
(4) Except as otherwise indicated in individual footnotes, options in this table are to acquire Common Stock of
the Company.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
(5) The stated amounts for fiscal 1993 include the following amounts for each named executive officer: Company
contributions under the Company's Money Purchase Pension Plan -- Mr. Musser, $10,575; Dr. Anderson, $9,495;
Ms. Tempel, $10,575; Company matching contributions under the Company's Stock Savings Plan -- Mr. Musser,
$523; Dr. Anderson, $6,330; Ms. Tempel, $5,981. With respect to Messrs. Dixon and More, the stated amounts are
for matching contributions made by CompuCom under its 401(k) matched savings plan of $4,497 for each of Mr.
Dixon and Mr. More and forgiveness of the principal amount of $70,000 under a note from Mr. More to CompuCom.
(6) Mr. Musser does not participate in the Company's stock option plans or long term incentive plan.
(7) Dr. Anderson was elected as an executive officer of the Company in November 1993. Dr. Anderson also had served
as an executive officer of the Company in 1991 and during part of 1992.
(8) This amount represents the fair market value on November 30, 1992 of an aggregate of 58,800 shares of common
stock of Cambridge Technology Partners granted by the Company to Dr. Anderson on that date under the Company's
long term incentive plan. Of those shares, 11,025 shares represent the payment of share units previously
awarded to Dr. Anderson under the Company's long term incentive plan upon the acceleration of the vesting
schedule and payment date of such share units to November 30, 1992, and 47,775 shares represent an increase in
the amount of shares granted under the plan. All of the shares are subject to repurchase by the Company upon
termination of employment, which restrictions lapse as to 33% of the shares on December 31, 1992, 67% of the
shares on December 31, 1993 and 100% of the shares on December 31, 1994. If any dividends are paid with
respect to the shares of common stock of Cambridge Technology Partners, such dividends will be paid to Dr.
Anderson. At December 31, 1993, Dr. Anderson held 19,600 shares of stock in Cambridge Technology Partners
subject to continuing restrictions with a value of $308,700.
(9) This amount represents the fair market value on November 30, 1992 of 80,000 shares of common stock of
Cambridge Technology Partners granted by the Company to Ms. Tempel on that date under the Company's long term
incentive plan. The shares are subject to repurchase by the Company upon termination of employment, which
restrictions lapse as to 33% of the shares on December 31, 1992, 67% of the shares on December 31, 1993 and
100% of the shares on December 31, 1994. If any dividends are paid with respect to the shares of common stock
of Cambridge Technology Partners, such dividends will be paid to Ms. Tempel. At December 31, 1993, Ms. Tempel
held 26,666 shares of stock in Cambridge Technology Partners subject to continuing restrictions with a value
of $420,000.
(10) Options granted by CompuCom Systems, Inc. to acquire shares of common stock of CompuCom, a majority owned
subsidiary of the Company.
</TABLE>
The Company and Jean C. Tempel have entered into an agreement fixing her
compensation for 1994 and providing for certain compensation in the event of
termination of her employment as described below under 'CERTAIN TRANSACTIONS.'
Avery More and CompuCom Systems, Inc. have entered into an agreement in
connection with Mr. More's resignation as an executive officer of CompuCom as
described below under 'CERTAIN TRANSACTIONS.'
STOCK OPTIONS
The following table sets forth information with respect to options
exercised during fiscal year 1993 and the number of unexercised options and the
value of unexercised in-the-money options at December 31, 1993. The information
set forth in this table relates to options granted to the named individuals by
the Company to purchase shares of Company Common Stock and options granted to
certain of the named executives by subsidiaries of the Company to purchase
shares of each such subsidiary. No options were granted to any of the named
executive officers for services rendered during 1993.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Warren V. Musser 0 -- 0 0 $ 0 $ 0
Gary J. Anderson 0 -- 12,500 2,500 $ 116,875 $ 29,375
Jean C. Tempel
Company Options 5,000 $ 58,750 32,500 47,500 $ 268,750 $ 385,000
Cambridge Options 0 -- 4,791 5,209 65,876 71,624
James W. Dixon
CompuCom Options 0 -- 912,500 212,500 $ 2,338,281 $ 519,531
Avery More
CompuCom Options 400,000 $ 887,500 0 225,000 $ 0 $ 482,813
</TABLE>
<TABLE>
<S> <C>
(1) The value of unexercised in-the-money options is calculated based upon (i) the fair market value of the stock
at December 31, 1993 less the option exercise price, multiplied by (ii) the number of shares subject to an
option. On December 31, 1993, the per share fair market values utilized in calculating the values in this
table were as follows: Company Common Stock, $24.00; CompuCom common stock, $4.0625; Cambridge Technology
Partners common stock, $15.75.
</TABLE>
11
<PAGE>
STOCK PERFORMANCE GRAPHS
The following chart compares the cumulative total return on the Company's
Common Stock for the period from December 31, 1983 through December 31, 1993
with the cumulative total return on the Russell 2000 Index for the same period
and the cumulative total return for a peer group index for the period from
December 31, 1988 through December 31, 1993.
[INSERT STOCK PERFORMANCE GRAPH #1 HERE]
<PAGE>
<TABLE>
<CAPTION>
SAFEGUARD RUSSELL 2000 PEER GROUP
<S> <C> <C> <C>
1983 37 68
1984 44 64
1985 79 84
1986 83 88
1987 89 80
1988 100 100 100
1989 83 116 112
1990 59 94 111
1991 89 137 203
1992 111 162 224
1993 145 193 299
</TABLE>
1. The peer group consists of SIC Code 737--Computer Programming & Data
Processing Services and SIC Code 5045--Computer, Peripheral Equipment and
Software Wholesalers, with a 50% weighting for each SIC Code. Stock
perfomance data for the peer group index was not available from the publisher
for the full ten-year period.
2. Assumes reinvestment of dividends for each comparison index. The Company has
not distributed cash dividends during this ten-year period. Assumes a value
of zero for all rights issued in rights offerings to the Company's
shareholders.
3. Assumes that the value of each investment was $100 on December 31, 1988.
4. The chart is presented on a logarithmic scale in order to enhance the
comparability of the annual percentage changes in the cumulative total
returns.
12
<PAGE>
The following chart compares the cumulative total return on the Company's
Common Stock, assuming a net investment (as described below) in the stock
offered in each of the rights offerings to the Company's shareholders, with the
cumulative total returns on the Russell 2000 Index and the peer group index, in
each case for the same period as in the above chart. The Company's primary
method of providing investment returns to its shareholders is through rights
offerings, and not through dividends. This chart, based on the assumptions
described below, should provide a more comprehensive indication of the
cumulative total return to the Company's shareholders by including both the
value of the Company's Common Stock and the value of the various common stocks a
shareholder could have obtained in the five rights offerings of the Company. All
of the decrease in the value of the Safeguard holdings during 1993 and most of
the increase in the value of the Safeguard holdings during the ten-year period
is attributable to changes in the value of the Novell stock acquired in the 1985
rights offering.
[INSERT STOCK PERFORMANCE GRAPH #2 HERE]
<TABLE>
<CAPTION>
SAFEGUARD RUSSELL 2000 PEER GROUP
<S> <C> <C> <C>
1982 11 53
1983 17 68
1984 20 64
1985 55 84
1986 60 88
1987 85 80
1988 100 100 100
1989 92 116 112
1990 141 94 111
1991 455 137 203
1992 444 162 224
1993 364 193 299
</TABLE>
1. The peer group is the same as in the first chart above.
13
<PAGE>
2. The cumulative total return on the Company's Common Stock assumes the
exercise on the expiration date of all of the rights received in each rights
offering made to the Company's shareholders, and the sale at the market price
of a portion of the stock purchased upon each such exercise to fund the
payment of the rights exercise price, resulting in the acquisition of stock
offered in each rights offering at a net cost of zero. The subsequent
cumulative returns on such stock holdings are included in the cumulative
total return on the Company's Common Stock for the remainder of the
comparison period. The rights offerings have permitted each shareholder to
obtain one right for every two shares of the Company's Common Stock.
Therefore, for each share of Company Common Stock held, a shareholder is
assumed to have acquired: (a) 0.315 shares of Novell, Inc. on February 25,
1985; (b) 0.238 shares of CompuCom Systems, Inc. (formerly Machine Vision
International Corporation) on October 25, 1985; (c) 0.25 shares of Tangram
Enterprise Solutions, Inc. (formerly Rabbit Software Corporation) on February
6, 1987; (d) 0.079 shares of CenterCore, Inc., on May 25, 1988 for $1.00; and
(e) 0.214 shares of Cambridge Technology Partners (Massachusetts), Inc. on
May 13, 1993.
3. Assumes reinvestment of dividends for each comparison index.
4. Assumes that the value of each investment was $100 on December 31, 1988.
5. Although the company believes the assumptions made in calculating the values
of the chart are reasonable, other assumptions could be used which may cause
the graph of the Company's cumulative total return to be altered.
6. The chart is presented on a logarithmic scale in order to enhance the
comparability of the annual percentage changes in the cumulative total
returns.
CERTAIN TRANSACTIONS
In January 1989, Avery More joined CompuCom as President and co-Chief
Executive Officer. In such capacity, he acted as an executive officer of the
Company through December 31, 1993. As a partial condition for his accepting
employment, CompuCom provided Mr. More with a five-year, interest-free loan of
$150,000 ('Initial Note') evidenced by a promissory note and secured by a second
mortgage on his residence in Dallas, Texas. In December 1992, Mr. More delivered
to CompuCom in partial payment of the exercise price of an option to purchase
shares of the common stock of CompuCom a full recourse, five-year promissory
note in the amount of $600,000 ('Subsequent Note') which is secured by a pledge
of 200,000 shares of CompuCom common stock. The Subsequent Note provided for the
annual payment of interest at an adjustable annual rate equal to the prime rate
of CompuCom's commercial lender, and the payment of principal and interest in
two equal annual installments beginning in 1996. The Subsequent Note also was to
become payable in full upon termination of employment or payable on a pro rata
basis upon the sale of any shares pledged as collateral. In connection with Mr.
More's resignation as an executive officer of CompuCom, the outstanding
principal balance of $70,000 under the Initial Note was forgiven by CompuCom on
January 1, 1994 and the Subsequent Note was amended to provide for the payment
of accrued interest on the 8th day of December in each of 1993 and 1994 and
payment in full of the outstanding principal balance and accrued interest on
March 1, 1995. Mr. More will continue as a consultant to CompuCom through
January 4, 1995 for an annual fee equal to his 1993 salary. During this period,
CompuCom also will continue to provide Mr. More with the standard senior
management benefits to which he was entitled prior to his resignation. In
addition, Mr. More's option to purchase shares of CompuCom will continue to vest
according to the vesting schedule set forth in his option agreement, provided,
however, that the 75,000 shares which remain unvested on January 2, 1995 will be
converted from incentive stock options to non-qualified stock options and will
become fully vested on that date.
In January 1994, CompuCom sold to Rosetta Stone Corporation, a corporation
of which Mr. More is a principal owner, a majority interest in PC Parts Express,
Inc., a subsidiary of CompuCom, and substantially all of CompuCom's property and
assets related to its network training business. The purchase price for the
interest in PC Parts Express, which was initially determined by negotiations
between Warren V. Musser and Mr. More, was based upon a valuation based on a
multiple of adjusted 1993 after-tax profits of PC Parts Express. The
Robinson-Humphrey Company, Inc., an investment banking firm, rendered to
CompuCom a fairness opinion with respect to the structure and pricing of the
sale of the interest in PC Parts Express. The transaction was approved by
CompuCom's Board of
14
<PAGE>
Directors, with Mr. More abstaining from the vote. Rosetta Stone Corporation
purchased 1,700,000 shares of PC Parts Express, Inc. (representing a 56%
interest) for $2.25 per share, which was paid by delivery of $325,000 cash and a
$3,500,000 non-recourse promissory note with a five-year term ('PCPE Note')
which is secured by a pledge of the 1,700,000 shares as collateral. The PCPE
Note bears interest at the annual rate of 10%. Interest will accrue and will be
due and payable on January 5, 1996, 1997 and 1998. Principal and unpaid accrued
interest under the PCPE Note will become payable in full on January 5, 1999.
Rosetta Stone Corporation also issued to CompuCom a five-year warrant to
purchase 250,000 shares of PC Parts Express, Inc. at an exercise price of $2.25
per share. The pricing and structure of CompuCom's sale of its network training
business to Rosetta Stone Corporation was determined by negotiations between Mr.
Musser and Mr. More and was based upon a valuation based on a multiple of 1993
after-tax profits of the network training business, which was selected to
reflect the small, private company status that this group is expected to have.
The purchase price of $1,500,000 was paid by Rosetta Stone Corporation by
delivery of a $1,000,000 five-year non-recourse promissory note ('Network
Training Note') and a royalty agreement which provides for the payment to
CompuCom of 2% of revenues for a five-year period, with a minimum and maximum
annual payment of $100,000 and $300,000, respectively. The Network Training Note
bears interest at the prime rate, adjustable annually, of CompuCom's commercial
lender, with payments of principal and interest on December 31 of each year.
CompuCom acquired the networking training business in April 1992 in connection
with its acquisition of certain assets of CompuServe Systems Integration Group
Southwest, Inc., a technical network integration services business. The cost of
these assets to CompuCom was less than $500,000.
In August 1993, Edward R. Anderson joined CompuCom as Chief Operating
Officer. As of January 1, 1994, Mr. Anderson became President and Chief
Executive Officer of CompuCom and as such became an executive officer of the
Company. As a partial condition for his accepting employment, CompuCom provided
Mr. Anderson with a bridge loan of $194,816 evidenced by a promissory note which
bears interest at 1% in excess of the prime rate. The principal and accrued
interest will become payable within seven days of the sale of his California
residence. Mr. Anderson also delivered to CompuCom in payment of the purchase
price of 350,000 shares of common stock of CompuCom a full recourse, four-year
promissory note in the amount of $1,093,750 which is secured by a pledge of the
350,000 CompuCom shares. Interest on the note accrues at the rate of 6% per
annum and is payable annually beginning January 1, 1995. Principal is payable in
two equal annual installments on August 10 in each of 1996 and 1997.
In February 1992, Ms. Tempel joined the Company as President and Chief
Operating Officer. As a partial condition for her accepting employment, the
Company provided Ms. Tempel with a two-year, interest-free loan of $200,000,
evidenced by a promissory note and secured by a first mortgage on her residence
in Pennsylvania. In November 1993, the terms of that promissory note were
revised to provide for repayment on the earlier of the sale of her Pennsylvania
residence or December 31, 1994. The Company also entered into an agreement with
Ms. Tempel in November 1993 providing for the payment, upon termination of
employment on or before December 31, 1994, of her base pay through December 31,
1994, or for six additional months, whichever is greater, payable in equal
installments over the period in question.
Mr. Musser has a material interest in a real estate lease between a trust,
of which he is the sole beneficiary, and Cambridge Technology Partners
(Massachusetts), Inc., as disclosed above under the heading 'COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.'
The Company and Valley Forge Capital Group, Ltd. ('VFCG'), a business
mergers and acquisition advisory firm owned by Donald R. Caldwell, were parties
to a consulting agreement pursuant to which VFCG rendered advisory services on
general business matters and strategic planning to the Company and its
partnership companies. Mr. Caldwell has been an executive officer of the Company
since November 1993. Under this agreement, VFCG received a $10,000 monthly
retainer from January through June 1993 and a $15,000 monthly retainer from July
through December 1993 and earned transaction fees of $100,000 in connection with
an acquisition made by the Company during 1993. No further consulting or
transaction fees under this agreement will be payable by the Company or any of
its subsidiaries other than as set forth below. The Company and VFCG remain
subject to an agreement
15
<PAGE>
under which VFCG acted as an advisor in connection with structuring the proposed
transfer by the Company and its real estate affiliate of ownership of certain of
their real estate properties to an operating partnership of a Real Estate
Investment Trust ('REIT'). Pursuant to that agreement, VFCG will be entitled to
receive a transaction fee equal to .5% of the value of the assets transferred by
the Company and its real estate affiliate to the REIT and an incentive fee equal
to between 4% and 8% of the market value of the aggregate consideration received
for such assets. The Company also had extended to VFCG an interest-free $300,000
line of credit. Any transaction fees paid to VFCG generally have been applied
first to repayment of any principal amounts outstanding under the line of
credit. At December 31, 1993, the principal balance outstanding under the line
of credit was $180,000. During 1993, VFCG also received transaction fees of
$110,200 from CenterCore, Inc., a majority owned subsidiary of the Company, for
services rendered in connection with CenterCore's acquisitions of Airo Clean
Engineering, Inc. and Maris Equipment Company, Inc., and is eligible to receive
future additional payments in connection with the Maris acquisition of up to a
maximum of $58,800 based on Maris' earnings and project reserves.
INDEPENDENT PUBLIC ACCOUNTANTS
Since 1986, the Company has retained KPMG Peat Marwick as its independent
public accountants and it intends to retain Peat Marwick for the current year
ending December 31, 1994. Representatives of KPMG are expected to be present at
the Annual Meeting, will have an opportunity at the Annual Meeting to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 ('1934 Act') requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities ('10%
Shareholders'), to file reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company with the Securities and
Exchange Commission ('SEC') and the New York Stock Exchange. Officers, directors
and 10% Shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations from certain
reporting persons that no other reports were required for those persons, the
Company believes that during the period January 1, 1993 through December 31,
1993, its officers, directors and 10% Shareholders complied with all applicable
Section 16(a) filing requirements.
OTHER BUSINESS
The Company is not aware of any other business to be presented at the
Annual Meeting. If any other matter should properly come before the Annual
Meeting, however, the enclosed Proxy confers discretionary authority with
respect thereto.
The Company's Annual Report for 1993, including financial statements and
other information with respect to the Company and its subsidiaries, is being
mailed simultaneously to the shareholders but is not to be regarded as proxy
solicitation material.
Dated: April 8, 1994
16
<PAGE>
PROXY
SAFEGUARD SCIENTIFICS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby constitute and appoint Warren V. Musser, Donald R. Caldwell, and James
A. Ounsworth and each of them, my true and lawful agents and proxies with full
power of substitution in each, to vote all shares held of record by me, as
directed, and in their discretion, on all other matters which may properly come
before the 1994 Annual Meeting of Shareholders of Safeguard Scientifics, Inc. to
be held on May 12, 1994, and at any adjournments thereof. I direct said proxies
to vote as specified on the reverse side.
PLEASE MARK, SIGN AND DATE THE PROXY CARD ON THE REVERSE SIDE
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
[ INSERT GRAPHIC -- SEE APPENDIX FOR GRAPHIC AND IMAGE MATERIAL ]
17
<PAGE>
1. Election of Directors
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD TO WITHHOLD AUTHORITY TO VOTE FOR TO CUMULATE VOTES, WRITE THE NAME OF
all nominees AUTHORITY ANY INDIVIDUAL WHILE VOTING FOR THE THE NOMINEES(S) AND THE NUMBER OF VOTES TO
listed (except to vote for all REMAINDER, STRIKE A LINE THROUGH THE BE CAST FOR EACH NOMINEE IN THE SPACE
as marked to nominees NOMINEE'S NAME IN THE LIST BELOW: PROVIDED BELOW, FOLLOWED BY "CUMULATE FOR."
the contrary) Nominees: Warren V. Musser, Vincent G. Bell Jr.,
Robert A Fox, Delbert W. Johnson, Peter Likins,
Jack L. Messman, Russell E. Palmer,
John W. Poduska Sr., Heinz Schimmelbusch,
Hubert J.P. Schoemaker, and Jean C. Tempel.
</TABLE>
DATED: , 1994
Signature
Signature if held jointly
THIS PROXY MUST BE SIGNED EXACTLY AS
NAME APPEARS HEREIN. When shares are held by
joint tenants, both should sign. Attorneys, executors,
administrators, trustees, etc. should give full title as
such. If a corporation, please sign in full corporate
name by duly authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES.
FOLD AND DETACH HERE
[ SAFEGUARD LOGO ]
YOUR PROXY VOTE IS IMPORTANT, REGARDLESS OF THE
NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ABOVE
PROXY CARD AND RETURN IT WITHOUT DELAY IN THE
ENCLOSED ENVELOPE.
18
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Item 304 of Regulation S-T, the following information appears
at the bottom of the proxy card with graphical borders.
SAFEGUARD -- A Partnership of Companies
<TABLE>
<CAPTION>
TECHNOLOGY DESCRIPTION SSI OWNERSHIP
<S> <C> <C>
Cambridge Technology Partners Information technology consulting & software 25%
development services
Coherent Communications Systems Enhanced-quality telecommunications via expertise 99%
in echo cancellation technology, digital signal
processing & software development
CompuCom Systems Leading direct reseller of microcomputer-based 64%
systems and services to Fortune 1000 and other
large companies
Laser Communications Clear line-of-sight wireless data communications 50%
Micro Dynamics Document imaging systems 55%
Premier Solutions Asset management systems solutions for financial 77%
services industry
Sanchez Computer Associates Banking software and support services 44%
Tangram Enterprise Solutions Mainframe enterprise-wide information management 75%
products & services
XL Vision Designer and manufacturer of electronic imaging 16%
products
SERVICE
Sky Alland Research Provider of customer satisfaction research services 55%
CenterCore Designs, manufactures and markets office 65%
furnishings, air filtration systems and advanced
electronic security systems
Pioneer Metal Finishing A specialty metal finishing company 100%
The Nichols Co. Real estate ownership, management and development 40%
VENTURE CAPITAL AFFILIATES
Radnor Venture Partners A $33 million High Tech Venture Capital fund 14%
Technology Leaders I A $60.6 million High Tech Venture Capital fund 3%
</TABLE>
