<PAGE> 1
LOGO Safeguard Scientifics, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 11, 1995
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 11, 1995 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,
1995 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,
/s/ JAMES A. OUNSWORTH
---------------------------------
JAMES A. OUNSWORTH
Secretary
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
April 3, 1995
<PAGE> 2
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 11, 1995 (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 3, 1995.
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, 1995 (the "Shares") are entitled to receive notice of, and to vote at,
the Annual Meeting. On that date, there were 9,582,338 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 1996 ANNUAL MEETING
Shareholders intending to present proposals at the next Annual Meeting of
Shareholders to be held in 1996 must notify the Company of the proposal no
later than December 5, 1995.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 23, 1995, 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 Percent
Shares of
Owned(1) Class
----------- ---------
<S> <C> <C>
Warren V. Musser
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087(2) ...................................... 1,214,493 12.7%
Vincent G. Bell, Jr.(3) .................................. 152,256 1.6%
Robert A. Fox(3) ......................................... 58,000 *
Delbert W. Johnson ....................................... 60,801 *
Peter Likins, Ph.D.(3) ................................... 29,000 *
Jack L. Messman(3) ....................................... 7,000 *
Russell E. Palmer(3) ..................................... 5,000 *
John W. Poduska, Sr., Ph.D.(3) ........................... 48,000 *
Heinz Schimmelbusch, Ph.D.(3) ............................ 28,000 *
Hubert J.P. Schoemaker, Ph.D.(3) ......................... 10,000 *
Jean C. Tempel(4) ........................................ 99,514 1.0%
Gary J. Anderson, M.D.(5) ................................ 38,581 *
Donald R. Caldwell(6) .................................... 35,769 *
Charles A. Root(3) ....................................... 105,177 1.1%
Edward R. Anderson ....................................... 0
James W. Dixon ........................................... 0
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401(7) ............................... 676,100 7.1%
Executive officers and directors as a group (17
persons)(8) ............................................. 1,984,740 20.2%
</TABLE>
- ------
(*) 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 spouse).
(2) Includes 50,000 shares held by a charitable foundation of which Mr.
Musser is a director and an executive officer, and 20,892 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, Likins, Messman, Palmer, Poduska,
Schimmelbusch, Schoemaker and Root, 28,000 shares, 8,000 shares, 28,000
shares, 5,000 shares, 2,000 shares, 2,000 shares, 28,000 shares, 10,000
shares and 20,500 shares which may be acquired pursuant to stock options
which are currently exercisable or which will become exercisable by May
22, 1995.
(4) Includes 2,000 shares held by Ms. Tempel's spouse and 27,694 shares which
may be acquired pursuant to stock options which are currently exercisable
or which will become exercisable by May 22, 1995. Ms. Tempel disclaims
beneficial ownership of the shares owned by her spouse.
(5) Includes 50 shares held by Dr. Anderson's son and 27,500 shares which may
be acquired pursuant to stock options which are currently exercisable or
which will become exercisable by May 22, 1995.
(6) Includes 100 shares held in a custodial account for a minor child, 1,800
shares held in trust for the benefit of his spouse, and 26,000 shares
which may be acquired pursuant to stock options which are currently
exercisable or which will become exercisable by May 22, 1995.
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(7) As reflected in Amendment No. 7 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 676,100 shares of Common Stock as of December 31, 1994, all of which
shares are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participating Group Trust, investment vehicles for
qualified employee benefit plans, for all of which Dimensional Fund
Advisors, Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(8) Includes 226,894 shares which may be acquired pursuant to stock options
which are currently exercisable or which will become exercisable by May
22, 1995.
As of March 23, 1995, CompuCom Systems, Inc. ("CompuCom") and Tangram
Enterprise Solutions, Inc. ("Tangram") are majority owned subsidiaries of the
Company. As of March 23, 1995, officers and directors of the Company
beneficially owned the following percentage of shares of common stock
outstanding in each such company: (i) CompuCom: Mr. Musser, 1.2%; Mr. Dixon,
1.1%; Mr. Anderson, 1.5%; all officers and directors of the Company as a
group, other than Messrs. Musser, Dixon and Anderson, less than 1%; and (ii)
Tangram: all officers and directors as a group, less than 1%.
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 1996 and until their successors are elected and have
qualified. All of the nominees 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 68
Vincent G. Bell, Jr. President, Verus Corporation, a management
investment firm(1)(2)(5)............................. 1956 69
Robert A. Fox President, R.A.F. Industries, Inc. and affiliates,
diversified manufacturing, distribution and service
companies(2)......................................... 1981 65
Delbert W. Johnson Chairman and Chief Executive Officer, Pioneer Metal
Finishing, a specialty metal finishing
company(6)........................................... 1992 56
Peter Likins, Ph.D. President, Lehigh University(3)(7)................... 1988 58
Jack L. Messman President and Chief Executive Officer, Union
Pacific Resources, an energy company and a
subsidiary of Union Pacific Corporation(3)(8)........ 1994 55
Russell E. Palmer Chairman and Chief Executive Officer, The Palmer
Group, a corporate investment firm(2)(3)(9).......... 1989 60
John W. Poduska, Sr., Ph.D. Chairman, Advanced Visual Systems, Inc., a provider
of visualization software(3)(10)..................... 1987 57
Heinz Schimmelbusch, Ph.D. President and Chief Executive Officer,
Safeguard International Group, Inc., a subsidiary
of the Company(1)(11)................................ 1989 50
Hubert J.P. Schoemaker, Ph.D. Chairman of the Board and co-founder of Centocor,
Inc., a biotechnology company(1)(12)................. 1993 45
Jean C. Tempel General Partner, Technology Leaders II
Management L.P. and Managing Director,
Technology Leaders Management, L.P., venture
capital partnerships(13)............................. 1991 52
</TABLE>
- ------
(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 a director of Coherent Communications Systems
Corporation, CompuCom Systems, Inc., and Tangram Enterprise Solutions,
Inc. Mr. Musser also serves on a variety of civic, educational and
charitable Boards of Directors including The Franklin Institute, the
Board of Overseers of The Wharton School, and the Wistar Institute of
Anatomy and Biology, acts as Vice Chairman of the Eastern Technology
Council, and was Chairman of the 1994 United Way Campaign for the
Philadelphia metropolitan area.
(5) Mr. Bell is a director of BHC Financial Corp. and Hunt Manufacturing
Co., Inc.
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(6) Mr. Johnson served as the President and Chief Executive Officer of
Pioneer Metal Finishing, which includes a division and a subsidiary of
the Company, from 1978 until October 1994, when he assumed the position
of Chairman of the Board and Chief Executive Officer of Pioneer Metal
Finishing. Mr. Johnson is a director of Coherent Communications Systems
Corporation, Ault, Inc., Firstbank Systems, Inc. and Tennant Company.
Mr. Johnson was the Chairman of the Ninth District Federal Reserve Bank
from 1991 to 1993 and was the 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.,
Tandy, Inc. and Union Pacific Corporation.
(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, 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. 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 a general partner of Technology Leaders II
Management L.P. since March 1994 and a managing director of Technology
Leaders Management, L.P. since November 1993. Prior to November 1993,
Ms. Tempel held the office of President and Chief Operating Officer of
the Company from February 1992. 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 and a director of Cambridge Technology Partners
(Massachusetts), Inc., a director of CompuCom Systems, Inc. and
Centocor, Inc., and a Trustee of the Scudder Family of Funds.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board held five meetings in 1994. The Company's Board of Directors has
appointed standing Audit, Compensation and Executive Committees. The
Compensation Committee, which met twice in 1994, 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 four times during 1994. The Audit Committee
recommends the firm to be appointed as independent certified public
accountants to audit the Company's financial statements, discusses the scope
and results of the audit with the independent certified public accountants,
reviews with management and the independent certified public accountants the
Company's interim and year-end operating results, considers the adequacy of
the internal accounting controls and audit procedures of the Company, and
reviews the non-audit services to be performed by the independent certified
public accountants. The Executive Committee, which met six times during 1994,
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 $2.5 million
per transaction in respect of any particular company, entity or person, and
up to $5 million in the aggregate between Board meetings. All of the members
of the Company's Board attended at least 75% of all meetings of the full
Board; however, due to extended illness, Dr. Schoemaker attended only 55% of
the total of the Board and Committee meetings of which he was a member.
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DIRECTORS' COMPENSATION
In 1994, 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 cash retainer of $1,000. Effective January 1,
1995, the annual cash retainer has been increased to $17,500, the per meeting
attendance fee has been increased from $500 to $1,000, and the attendance fee
for Compensation Committee meetings held on a date other than a Board meeting
date has been increased from $300 to $500.
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 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 The Palmer Group, of which
Mr. Palmer serves as Chairman and Chief Executive Officer. Under this
arrangement, the Company receives guidance and assistance in organizing and
moderating strategic planning seminars for the Company's management team and
has access to the resources of The Palmer Group, including research as to
certain industries, companies and other aspects of business. The Palmer Group
is paid a quarterly fee of $6,000. During 1994, The Palmer Group 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 20,000 shares of the Company's Common Stock upon his election.
Thereafter, each Eligible Director will receive (i) a Service Grant to
purchase 4,000 shares of Common Stock on December 31, 1994; (ii) a Service
Grant to purchase 4,000 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 1,000 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
40,000 shares. In May 1994, Mr. Messman received an option to purchase 20,000
shares upon his election as a director. On December 31, 1994, Messrs. Bell,
Fox, Likins, Messman, Palmer, Poduska and Schoemaker each received a Service
Grant to purchase 4,000 shares of Common Stock. Dr. Schimmelbusch received an
option on December 31, 1994 to purchase 4,000 shares of Common Stock under
the Company's 1990 Stock Option Plan.
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.
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<PAGE> 8
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, James W.
Dixon and Edward R. Anderson, are employed and compensated by CompuCom, a
publicly traded company which is a majority owned subsidiary of the Company
and its largest partnership company. Messrs. Dixon and Anderson 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.
Dixon and Anderson.
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, operating guidance and innovative
financing to its partnership companies and transferring that value to
shareholders via rights offerings. The Company's objectives are to attract
and retain 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.
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
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<PAGE> 9
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. As originally adopted, all grants under the long term
incentive plan were made in share units which entitle a grantee to participate
in the appreciation of the book value or the fair market value, at the
Committee's discretion, of the stock of a partnership company above set
threshold levels. During 1994, the Committee amended the long term incentive
plan to permit the grant of restricted stock of partnership companies to certain
executives. These amendments will provide the executives with immediate direct
ownership in the partnership company and will make the awards more tax efficient
for the executives, in exchange for which the executives will incur an economic
risk to the extent of income taxes incurred in connection with the initial
grant. All restricted stock and share unit grants under the plan are subject to
vesting over a period of years and the attainment of certain threshold levels.
Shares subject to restricted stock awards are subject to certain restrictions
and are held in escrow by the Company until the attainment of certain threshold
levels. Book value and market value share units 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 if 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 cumulative total return
on the Company's common stock, assuming investment in rights offerings, as
shown in the third stock performance graph which appears on page 16.
COMPANY POLICY ON QUALIFYING COMPENSATION
Internal Revenue Code Section 162(m), adopted in 1993, provides that
publicly held companies may not deduct in any taxable year compensation in
excess of one million dollars paid to any of the individuals named in the
Summary Compensation Table which is not "performance-based" as defined in
Section 162(m). The annual levels of executive compensation are not likely to
exceed one million dollars for the foreseeable future. In order for incentive
compensation to qualify as "performance-based" compensation under Section
162(m), the Committee's discretion to grant awards must be strictly limited.
The Company's 1990 Stock Option Plan qualifies as a "performance-based"
compensation plan under currently effective rules. The Committee believes
that the benefit to the Company of retaining the ability to exercise
discretion under the Company's remaining incentive compensation plans
outweighs the limited risk of loss of tax deductions under Section 162(m).
Therefore, the Committee does not currently intend to seek to qualify any of
its other incentive compensation plans under Section 162(m).
CEO COMPENSATION
Mr. Musser's base salary for 1994 was fixed by the Committee in December
1993 and represented approximately a 6% increase from his prior base salary,
which was last increased in January 1992. The increase was based in part on a
review of CEO compensation among the largest companies in the Delaware Valley
in order to place Mr. Musser in the middle one-third of that group. Mr.
Musser was awarded a bonus for 1994 equal to his target bonus. This decision
was based on the Company and its partnership companies achieving their
strategic objectives, the most significant of which were: substantial
achievement of management's operating goals and objectives for 1994; the
increase in the market value of Safeguard stock; the increase in the
Company's earnings per share; the continued strong sales and profitability
growth of CompuCom in a constantly changing marketplace; the successful
rights offering of stock in Coherent Communications Systems Corporation and
its continued strong growth; continued strong sales and profitability growth
by Cambridge Technology Partners; the successful stock market performance of
Coherent Communications and Cambridge Technology Partners; the consummation
of several strategic acquisitions; the successful launching of Technology
Leaders II; and the positioning of several partnership companies for
significant future growth.
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<PAGE> 10
OTHER EXECUTIVE COMPENSATION
The Committee approved executive cash bonuses for 1994 equal to 100% 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 new executives and employees. The relative number of options
granted to each such executive and employee was based on each individual's
current responsibilities.
In May 1994, the Committee authorized the acceleration of payments under
the long term incentive plan of the share units held by certain executives in
Micro Decisionware, Inc. in connection with the completion of the sale of
Micro Decisionware, Inc. to Sybase, Inc. In recognition of the support of
each member of the Company's corporate staff which contributed to the
successful completion of the transaction, the Committee also authorized
bonuses in addition to the payouts under the long term incentive plan to
certain of the Company's executives and to all members of the Company's
corporate staff. Each direct participant in the Company's long term incentive
plan and senior member of the professional staff received his or her payment
under the long term incentive plan and bonus in connection with this
transaction in the form of shares of common stock of Sybase, Inc.
The Committee also approved restricted stock awards and share unit grants
during 1994 to key executives and key employees under the Company's long term
incentive plan in XL Vision Inc., Diamond Technology Partners, Inc. and New
Paradigm Ventures, Inc. These restricted stock awards and share unit grants
will provide the participants under the long term incentive plan with the
opportunity to acquire a maximum aggregate amount equal to 10% of the shares
of stock held by the Company in each of these partnership companies.
Restricted stock awarded under the long term incentive plan is held in escrow
by the Company and will be released to the grantee upon the attainment of
certain thresholds and an initial public offering or sale of the subject
company, or in any event after 10 years if the grantee remains an employee of
the Company. The share unit awards will be payable in four to five years
(subject to adjustment by the Committee if the shares of a particular company
become liquid earlier through a public offering or a sale of the business).
Share unit awards may be paid in either cash or in shares of stock of each of
these companies, at the Committee's discretion, and will be paid only if the
market value of the shares of the subject company exceeds certain threshold
levels established by the Committee, based on the amount of the excess value
above the threshold level at the time of payout. The awards under the long
term incentive plan were allocated among the executives and key employees
based on their relative positions in the Company. Mr. Musser does not
participate in the long term incentive plan.
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.
9
<PAGE> 11
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, each of
the other four most highly compensated executive officers of the Company
whose salary and bonus exceeded $100,000 in 1994 and two individuals who were
no longer executive officers of the Company on December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------- --------------------------------------------
Securities
Other Underlying Long Term
Annual Restricted Options/ Incentive All Other
Name and Principal Salary Bonus Compensa- Stock SARS Payouts Compensa-
Position Year ($)(1) ($)(2) tion($)(3) Award(s)($)(4) (#)(5) ($)(6) tion ($)(7)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Warren V. Musser, 1994 $250,000 $125,000 -- -- -- -- $ 12,375
Chairman of the Board,
Chief Executive Officer 1993 235,000 135,000 -- -- -- -- 11,098
and President(8)
1992 235,000 105,800 -- -- -- -- 10,298
- ----------------------------------------------------------------------------------------------------------------------------------
Donald R. Caldwell, 1994 $225,000 $108,800 -- $ 77,841(10) 150,000 -- $ 6,750
Executive Vice
President(9)
- ----------------------------------------------------------------------------------------------------------------------------------
Charles A. Root, Executive 1994 $225,000 $ 78,800 -- $ 77,841(10) 100,000(11) $106,877 $ 15,907
Vice President
1993 210,000 85,000 -- 6,000 -- 17,908
1992 190,000 66,500 -- 117,600 70,000 -- 16,173
150,000(12)
- ----------------------------------------------------------------------------------------------------------------------------------
James W. Dixon, 1994 $310,000 $310,000 -- -- -- -- $ 3,143
Chairman of the Board
of CompuCom 1993 310,000 471,200 -- -- -- -- 4,497
Systems, Inc.
1992 275,000 257,141 -- -- -- -- 4,364
- ----------------------------------------------------------------------------------------------------------------------------------
Edward R. Anderson, 1994 $310,000 $310,000 $608,874 -- 350,000(14) -- $ 1,938
President and Chief
Executive Officer of 1993 121,022 235,600 -- -- 775,000(14) -- 0
CompuCom Systems,
Inc.(13)
- ----------------------------------------------------------------------------------------------------------------------------------
Gary J. Anderson, M.D., 1994 $225,000 $440,673 -- -- 10,500(15) $106,877 $ 13,500
Former Executive Vice
President, Fund 1993 211,000 85,000 -- -- -- -- 15,825
Management
1992 200,000 70,000 -- 117,600 -- -- 15,373
- ----------------------------------------------------------------------------------------------------------------------------------
Jean C. Tempel, 1994 $200,000 $135,000 -- $ 39,386(10) -- -- $ 12,750
Former Executive Vice
President 1993 235,000 135,000 -- -- -- -- 16,556
1992 198,077 90,000 $ 36,501 160,000 150,000 -- 8,913
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes annual compensation which has been deferred by Messrs. Musser,
Caldwell and Root, Dr. Gary Anderson and Ms. Tempel pursuant to the
Company's stock savings plan and by Messrs. Dixon and Edward Anderson
pursuant to the CompuCom Systems, Inc. 401(k) matched savings plan.
(2) With respect to Messrs. Dixon and Edward Anderson, a portion of the cash
bonus paid and included above for services rendered in each year was not
paid until the following year. With respect to Mr. Caldwell, Dr. Gary
Anderson and Ms. Tempel, the bonus paid in 1994 includes the value of
650 shares, 7,844 shares and 1,626 shares, respectively, of Sybase, Inc.
common stock awarded as a bonus in connection with the sale of Micro
Decisionware, Inc. to Sybase, Inc.
10
<PAGE> 12
(3) The amount reported for Mr. Edward Anderson includes, among other
things, relocation expenses totaling $592,133. While other named
executives enjoy certain similar perquisites, for fiscal year 1994,
perquisites and other personal benefits for such executive officers 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) Any dividends which become payable will be paid on restricted stock
awards at the same rate as paid to all shareholders. At December 31,
1994, restricted stock and share unit holdings were: (i) Mr.
Caldwell--restricted stock: 39,375 shares of XL Vision, Inc., 17,000
shares of Diamond Technology Partners, Inc., and 9,000 shares of New
Paradigm Ventures, Inc.; (ii) Mr. Root--restricted stock: 39,375 shares
of XL Vision, Inc., 17,000 shares of Diamond Technology Partners, Inc.,
and 9,000 shares of New Paradigm Ventures, Inc.; share units: Premier
Solutions, Ltd., 139,913 share units; Sanchez Computer Associates,
15,600 share units; Sky Alland Marketing, 13,780 share units; Tangram
Enterprise Solutions, Inc. 187,099 share units; Micro Dynamics Ltd.,
22,540 share units; (iii) Dr. Gary Anderson--share units: Premier
Solutions, Ltd., 139,913 share units; Sanchez Computer Associates,
15,600 share units; Sky Alland Marketing, 13,780 share units; Tangram
Enterprise Solutions, Inc. 187,099 share units; Micro Dynamics Ltd.,
22,540 share units; and (iv) Ms. Tempel--restricted stock: 38,500 shares
of XL Vision, Inc. At December 31, 1994, the aggregate value of the
restricted stock held by Messrs. Caldwell and Root and Ms. Tempel was
$77,841, $77,841 and $39,386, respectively. The aggregate value of the
share unit holdings is indeterminate until the payment date for each
award.
(5) Except as otherwise indicated in individual footnotes, options in this
table are to acquire Common Stock of the Company.
(6) This amount represents the value of 2,316 shares of Sybase, Inc. common
stock distributed to each of Mr. Root and Dr. Gary Anderson as payment
of share units previously awarded under the Company's long term
incentive plan upon the acceleration of the payment date of such share
unit awards.
(7) The stated amounts for fiscal 1994 include the following amounts for
each named executive officer: Company contributions under the Company's
Money Purchase Pension Plan -- Mr. Musser, $6,750; Mr. Caldwell, $6,750;
Mr. Root, $6,750; Dr. Gary Anderson, $6,750; Ms. Tempel, $6,750; Company
matching contributions under the Company's Stock Savings Plan -- Mr.
Musser, $5,625; Mr. Caldwell, $0; Mr. Root, $6,750; Dr. Gary Anderson,
$6,750; Ms. Tempel, $6,000; and, as to Mr. Root, $2,407 of above market
earnings on deferred compensation. With respect to Messrs. Dixon and
Edward Anderson, the stated amounts are for matching contributions made
by CompuCom under its 401(k) matched savings plan.
(8) Mr. Musser does not participate in the Company's stock option plans or
long term incentive plan.
(9) Mr. Caldwell has been an executive officer of the Company since November
1993, but was not on the Company's payroll until January 1994.
(10) This amount represents the fair market value on December 22, 1994 of
shares of restricted stock in XL Vision, Inc., Diamond Technology
Partners, Inc. and New Paradigm Ventures, Inc. awarded to Messrs.
Caldwell and Root and shares of restricted stock of XL Vision, Inc.
awarded to Ms. Tempel under the Company's long term incentive plan.
(11) Options granted by Coherent Communications Systems Corporation to
acquire shares of common stock of Coherent Communications Systems
Corporation, an affiliate of the Company.
(12) Options granted by Tangram Enterprise Solutions, Inc. to acquire shares
of common stock of Tangram Enterprise Solutions, Inc., a subsidiary of
the Company.
(13) Mr. Edward Anderson joined CompuCom in August 1993.
(14) Options granted by CompuCom Systems, Inc. to acquire shares of common
stock of CompuCom, a subsidiary of the Company.
(15) Dr. Gary Anderson received an award of 10,500 share units in XL Vision,
Inc. under the Company's long term incentive plan which entitle him to
participate in the appreciation of the market value of the common stock
of XL Vision, Inc. above a predetermined level.
<PAGE> 13
STOCK OPTIONS
The following tables set forth information with respect to options granted
and exercised during fiscal year 1994 and the number of unexercised options
and the value of unexercised in-the-money options at December 31, 1994. The
information set forth in these tables relates to options granted to the named
individuals by the Company to purchase shares of Company Common Stock, stock
appreciation rights granted in affiliated companies under the Company's long
term incentive plan, and options granted to certain of the named executives
by subsidiaries and affiliates of the Company to purchase shares of each such
subsidiary or affiliate.
11
<PAGE> 14
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
At Assumed Annual Rates
Of Stock Price Appreciation
Individual Grants For Option Term(1)
- --------------------------------------------------------------------------------------------------------------------
% of Total
Options/SARS
Options/ Granted To Exercise Or
SARs Employees In Base Price Expiration 5% 10%
Name Granted(#) Fiscal Year(2) ($/Sh)(3) Date ($) ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Warren V. Musser 0 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Donald R. Caldwell
Company Options(4) 150,000 76.9% $11.750 01/03/2002 $841,515 $2,015,575
- -------------------------------------------------------------------------------------------------------------------
Charles A. Root
Coherent Options(5) 100,000 64.3% $5.000 02/02/2001 $203,550 $ 474,359
- -------------------------------------------------------------------------------------------------------------------
James W. Dixon 0 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Edward R. Anderson
CompuCom Options(6) 350,000 57.2% $3.375 08/30/2004 $742,882 $1,882,608
- -------------------------------------------------------------------------------------------------------------------
Gary J. Anderson
XL Vision SARs(7) 10,500 3.0% $2.050 03/15/1998 0 0
- -------------------------------------------------------------------------------------------------------------------
Jean C. Tempel 0 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The potential realizable values are based on an assumption that the
stock price of the shares of Common Stock of the Company, or shares of
common stock of the subsidiary or affiliate for which the options were
granted, appreciates at the annual rate shown (compounded annually) from
the date of grant until the end of the option term. These values do not
take into account amounts required to be paid as income taxes under the
Internal Revenue Code of 1986, as amended, and any applicable state laws
or option provisions providing for termination of an option following
termination of employment, nontransferability, or vesting over periods
of up to five years. These amounts are calculated based on the
requirements promulgated by the Securities and Exchange Commission and
do not reflect the Company's estimate of future stock price growth of
the shares of common stock of the Company or any of its subsidiaries or
affiliates.
(2) Based upon options granted by the Company to its employees in 1994 to
purchase a total of 195,000 Company shares of Common Stock, options
granted by Coherent to its employees in 1994 to purchase a total of
155,500 shares of Coherent common stock, options granted by CompuCom to
its employees in 1994 to purchase a total of 612,000 shares of CompuCom
common stock, and restricted stock and share units awarded by the
Company to its employees in 1994 under the long term incentive plan with
respect to 350,000 shares of common stock of XL Vision, Inc.
(3) All options have an exercise price at least equal to the fair market
value of the shares subject to each option on the date of grant.
(4) The option vests 20% on December 14 in each of 1994 through 1997 and 20%
on January 3, 1998, and has an eight-year term. The option continues
vesting and remains exercisable so long as employment with the Company
or one of its subsidiaries continues. The option exercise price may be
paid in cash, or, in the discretion of the Compensation Committee, by
(i) delivery of previously acquired shares, subject to certain
conditions, or (ii) same day sales, i.e. cashless broker's exercises.
The Compensation Committee of the Board has the authority to modify the
terms of outstanding options, including acceleration of the exercise
date of outstanding options.
(5) Option granted in February 1994 by Coherent Communications Systems
Corporation. The option vests 20% each year commencing on the first
anniversary of the grant date. The option has a seven-year term and
continues vesting and remains exercisable until such time as the
Compensation Committee of the Board of Directors of Coherent determines
that Mr. Root has ceased to perform services for Coherent of a nature
and to an extent required for continued vesting and exercisability of
the option. The option exercise price may be paid in cash, or, in the
discretion of Coherent's Compensation Committee, by (i) delivery of
previously acquired shares, subject to certain conditions, or (ii) same
day sales, i.e. cashless broker's exercises. Coherent's Compensation
Committee has the authority to modify the terms of outstanding options,
including acceleration of the exercise date of outstanding options.
<PAGE> 15
(6) The option was granted by CompuCom Systems, Inc. in August 1994 and was
fully vested and exercised on the date of grant. The option exercise
price was paid by delivery of a full recourse promissory note.
(7) This grant was made under the Company's long term incentive plan in
February 1994 and entitles Dr. Gary Anderson to participate in the
appreciation of the market value of the common stock of XL Vision, Inc.
The grant vests 25% on December 31 in each of 1994 through 1997 and has
a payment date of March 15, 1998. Before any payment may be made, the
market value per share of common stock of XL Vision, Inc. must exceed
$2.05. The Compensation Committee has the authority to accelerate
vesting and accelerate or delay the payment date of this award.
12
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Number Of Securities
Underlying Unexercised Value Of Unexercised
Options/SARs In-The-Money Options/SARs
Acquired On Value At Fiscal Year-End (#) At Fiscal Year-End ($)(1)
Name Shares Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- ----------- ----------- ------------- --------------------------
Warren V. Musser 0 -- 0 0 $ 0 $ 0
Donald R. Caldwell
Company Options 0 -- 30,000 120,000 $165,000 $ 660,000
Charles A. Root
Company Options 24,462 $ 191,936 20,500 37,500 $189,844 $ 330,531
Coherent Options 0 -- 0 100,000 0 1,125,000
Tangram Options 0 -- 90,000 60,000 16,875 11,250
Gandalf SARs 0 -- 0 7,980 0 0
CompuCom Options 100,000 451,563 0 0 0 0
James W. Dixon
CompuCom Options 0 -- 461,250 0 $738,871 $ 0
Edward R. Anderson
CompuCom Options 350,000 $ 0 155,000 620,000 $ 0 $ 0
Gary J. Anderson
Company Options 0 -- 27,500 2,500 $275,938 $ 27,813
XL Vision SARs 0 -- 0 10,500 0 0
Gandalf SARs 0 -- 0 7,980 0 0
Jean C. Tempel
Company Options 35,388 $ 286,410 59,612 65,000 $560,835 $ 610,000
Cambridge Options 0 -- 7,291 2,709 147,643 54,857
- ------------------ ------------- ---------- --------- --------- ----------- -----------
</TABLE>
(1) The value of unexercised in-the-money options is calculated based upon
(i) the fair market value of the stock at December 30, 1994 less the
option exercise price, multiplied by (ii) the number of shares subject
to an option. On December 30, 1994, the per share fair market values
utilized in calculating the values in this table were as follows:
Company Common Stock, $17.25; Coherent common stock, $16.25; Tangram
common stock, $1.1875; CompuCom common stock, $3.125; Cambridge
Technology Partners common stock, $22.25; Gandalf Technologies, Inc.
common stock, $1.375; and XL Vision, Inc. common stock, $1.023.
13
<PAGE> 17
STOCK PERFORMANCE GRAPHS
The following graph compares the cumulative total return on the Company's
Common Stock for the period from December 31, 1989 through December 31, 1994
with the cumulative total return on the Russell 2000 index and the peer group
index for the same period.
Comparison of Cumulative Total Returns
1989-1994
300|------------------------------------------------------------------|
| # |
| |
250|-------------------------------------------------------------*#---|
| |
| |
200|-------------------------------------#----------------------------|
| # *& & |
| |
150|------------------------------------------------------------------|
| |
| *& *& |
100|---*&#---------#--------------------------------------------------|
| *& |
| |
50|------------------------------------------------------------------|
| |
| |
0|----|----------|---------|-----------|-----------|-----------|----|
1989 1990 1991 1992 1993 1994
*=Safeguard &=Russell 2000 #=Peer Group
- -------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------
Safeguard 100 72 107 134 176 253
Russell 2000 100 81 118 139 166 163
Peer Group 100 100 182 201 269 251
- -------------------------------------------------------------------------------
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.
2. Assumes reinvestment of dividends. The Company has not distributed cash
dividends during this period. Assumes a value of zero for all rights
issued in rights offerings to the Company's shareholders.
3. Assumes an investment of $100 on December 31, 1989.
The above graph is presented on a basis different from that of the graph
in last year's proxy statement, as follows. First, the graph is for a
five-year period rather than a ten-year period, in recognition of the
accelerating pace at which the Company's strategic and operating focus is
changing, and of the greater weight given by the investment community to the
most recent five-year performance than to ten-year performance. Second, the
graph is presented on a normal scale rather than a logarithmic scale in order
to improve comparability to stock performance graphs included in proxy
statements of other companies. No change has been made to the peer group or
the broad market index used.
14
<PAGE> 18
As required by SEC rules, the following graph is presented on the same
basis as that presented in last year's proxy statement. The footnotes to the
above graph apply also to the following graph.
Comparison of Cumulative Total Returns
1984-1994
1000|--------------------------------------------------------------------------|
| |
| |
|--------------------------------------------------------------------------|
| # *#|
| # |
|----------------------------------------------------#-------------*&------|
| *& & |
| * & |
100|-----------------*------*------------*&#-----#------*---------------------|
| * & & |
| |
|----------&------&------&--------------------*----------------------------|
| |
| *& |
|--------------------------------------------------------------------------|
| |
| |
10|---|------|------|------|------|------|------|------|------|------|-----|-|
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
*=Safeguard &=Russell 2000 #=Peer Group
- -------------------------------------------------------------------------------
1984 1985 1986 1987 1988
- -------------------------------------------------------------------------------
Safeguard 53 95 101 108 121
Russell 2000 55 72 75 69 86
Peer Group N/A N/A N/A N/A N/A
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------
Safeguard 100 72 107 134 176 253
Russell 2000 100 81 118 139 166 163
Peer Group 100 100 182 201 269 251
- -------------------------------------------------------------------------------
1. Stock performance data for the peer group index was not available from the
publisher for the full ten-year period.
15
<PAGE> 19
The following graph compares the cumulative total return on the Company's
Common Stock, assuming an 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. The Company's primary method of providing investment returns to its
shareholders is through rights offerings, and not through dividends. This
graph, 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 Company's rights offerings. This graph assumes a full exercise, for a
cash investment, of all rights rather than a net exercise of rights as
assumed in last year's second graph, in order to more accurately portray what
the Company believes to be the actual investment behavior of its
shareholders.
Comparison of Cumulative Total Returns
1989-1994
Assuming Investment in Rights Offerings
450|------------------------------------------------------------------|
| |
| * |
400|------------------------------------------------------------------|
| |
| |
350|------------------------------------------------------------------|
| |
| |
300|--------------------------------------------------#----------#----|
| |
| |
250|------------------------------------------------------------------|
| * |
| |
200|-------------------------------------#-----------------------&----|
| # & |
| |
150|------------------------------------------------------------------|
| *& |
| & |
100|---*&#---------#---------*----------------------------------------|
| *& |
| |
50|------------------------------------------------------------------|
| |
| |
0|----|----------|---------|-----------|-----------|-----------|----|
1989 1990 1991 1992 1993 1994
*=Safeguard &=Russell 2000 #=Peer Group
- -------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------
Safeguard 100 72 107 134 234 414
Russell 2000 100 81 118 139 187 209
Peer Group 100 100 182 201 292 297
- -------------------------------------------------------------------------------
1. The peer group is the same as in the prior graphs.
2. The cumulative total return on the Company's Common Stock assumes a cash
investment to exercise all of the rights received in each rights offering
made to the Company's shareholders since January 1, 1989. 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. For each share of Company Common Stock held, a
shareholder is assumed to have acquired: (a) 0.5 shares of Cambridge
Technology Partners (Massachusetts), Inc. for $2.50 on May 13, 1993; and
(b) 0.667 shares of Coherent Communications Systems Corporation for $3.33
on July 21, 1994.
16
<PAGE> 20
3. Assumes reinvestment of dividends for each comparison index and an
additional investment at the end of the calendar quarter immediately
preceding each Safeguard rights offering in an amount equal to the amount
of the assumed cash investment in the Safeguard index.
4. Assumes an initial investment of $100 on December 31, 1989.
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.
CERTAIN TRANSACTIONS
In connection with restricted stock awards made under the Company's long
term incentive plan in December 1994 and January 1995, the Company made
available to the recipients of those grants two- year, full recourse loans to
pay the related income taxes which the Company was required to withhold on
the compensation resulting from the acquisition of such shares. Each
individual who accepted this offer in connection with the December 1994
awards delivered to the Company a promissory note ("December Note"), which
bears interest at the rate of 6.55% per annum. The principal and accrued
interest is repayable in two installments on each of the first and second
anniversaries of the December Note. Each individual who accepted this offer
in connection with the January 1995 awards delivered to the Company a
promissory note ("January Note"), which bears interest at the rate of 7.07%
per annum. The principal and accrued interest is repayable on January 3,
1997. Each December Note and January Note is secured by a pledge of the
restricted shares granted to each individual. The highest outstanding balance
since January 1, 1994 under the December Note and the January Note delivered
by each of Messrs. Caldwell and Root, and by Gerald M. Wilk, an executive
officer of the Company, and the balance at January 31, 1995, was an aggregate
of $84,475.29, $84,475.29 and $61,492.04, respectively, for each of such
officers.
In August 1993, Edward R. Anderson joined CompuCom Systems, Inc. as Chief
Operating Officer. 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 on this note was payable within seven days of
the sale of his California residence. In December 1994, Mr. Anderson paid in
full the outstanding principal balance and accrued interest of $15,091.
In August 1993, Mr. Anderson also delivered to the Company in payment of
the purchase price of 350,000 shares of common stock of the Company a full
recourse, four-year promissory note in the amount of $1,093,750 which was
secured by a pledge of the 350,000 CompuCom shares. This sale was not
consummated in accordance with the objectives of CompuCom's Compensation
Committee and as a result, it was rescinded and the note delivered by Mr.
Anderson was canceled without obligation.
In August 1994, Mr. Anderson delivered to CompuCom in payment of the
purchase price of 350,000 shares of common stock of CompuCom which he
acquired upon exercise of stock options a full recourse, four-year promissory
note in the amount of $1,181,250 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, 1996. Principal is payable in two
equal annual installments on August 31 in each of 1996 and 1997.
In November 1994, CompuCom provided Mr. Dixon with a loan of $210,000
evidenced by a promissory note and secured by a lien on Mr. Dixon's home in
Dallas, Texas. The promissory note bears interest at the prime rate.
One-third of the principal amount of the note, together with accrued interest
became payable on March 31, 1995, and the remaining unpaid principal together
with accrued interest is payable on the earlier of December 31, 1996 or Mr.
Dixon's termination of employment. At the date of this Proxy Statement, the
principal balance due on this note was $140,000.
In January 1995, CompuCom provided Mr. Dixon with a bridge loan of
$217,000 in connection with his relocation from Georgia to Texas. This loan
is evidenced by a promissory note which bears interest at 1% in excess of the
prime rate, and is secured by a second mortgage on his Georgia residence. The
principal and accrued interest on the note are payable within 7 days of the
sale of Mr. Dixon's residence in Georgia.
17
<PAGE> 21
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. On June 30, 1994, Ms. Tempel
paid in full the outstanding principal balance of $200,000 on this note.
The Company had extended to Valley Forge Capital Group, Ltd. ("VFCG"), a
business mergers and acquisition advisory firm owned by Donald R. Caldwell,
an interest-free $300,000 line of credit. The highest outstanding balance
since January 1, 1994 under the line of credit, and the balance at December
31, 1994, was $230,000. This line of credit will be repaid from future fees
earned by Valley Forge Capital Group.
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, 1995. 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, 1994 through
December 31, 1994, its officers, directors and 10% Shareholders complied with
all applicable Section 16(a) filing requirements, except for one transaction
which was reported late on a Form 4 by each of Messrs. Musser and Palmer.
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 1994, 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 3, 1995
18
<PAGE> 22
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 specified on the reverse
side and, in their discretion, on all other matters which may
properly come before the 1995 Annual Meeting of Shareholders of
Safeguard Scientifics, Inc. to be held on May 11, 1995, and at any
adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES TO THE BOARD OF
DIRECTORS AND AS THE PROXIES MAY DETERMINE IN THEIR DISCRETION WITH
REGARD TO ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE MARK, SIGN AND DATE THE PROXY CARD ON THE REVERSE SIDE
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
SAFEGUARD -- PUBLIC COMPANIES
<TABLE>
<CAPTION>
<S> <C> <C>
Cambridge Technology Partners Systems integration, consulting & custom system development services 24%
(Nasdaq:CATP) for a fixed price, in a fixed time
Coherent Communications Enhanced-quality telecommunications via expertise in echo cancellation 43%
(Nasdaq:CCSC) technology, digital signal processing & software development
CompuCom Systems Leading distributor of network integration services and products to 64%
(Nasdaq:CMPC) Fortune 1000 companies
National Media (NYSE:NM) Worldwide leader in the home shopping infomercial industry ***
Tangram Enterprise Solutions Mainframe enterprise-wide information management products & services 73%
(OTC:TESI)
SAFEGUARD -- PRIVATE COMPANIES
Diamond Technology Partners Provides business and information technology consulting services 23%
Interactive Marketing Group Establishes joint marketing ventures & develops proprietary products 20%
Micro Dynamics Develops & markets turnkey document imaging systems 54%
MultiGen Leading developer of real-time 3D modeling software for visual simulations 31%
New Paradigm Ventures Partners with nationally recognized companies to create new business opportunities 33%
Nichols Company Real estate ownership, management and development 40%
Pioneer Metal Finishing A specialty metal finishing company 100%
Premier Solutions Asset management systems solutions for the financial services industry 99%
PTS Learning Systems Provides software education, consulting, training & modular courseware 4%
Radnor Venture Partners High-tech venture capital fund 14%
Safeguard International Group International dimension of Safeguard 60%
Sanchez Computer Associates Develops & markets proprietary banking software 44%
Sky Alland Marketing Provides interactive, one-to-one marketing services to Fortune 500 companies 49%
Technology Leaders I High-tech venture capital fund 3%
Technology Leaders II High-tech venture capital fund 5%
USDATA Produces factory automation software & performs systems integration 30%
XL Vision Develops front-end applications for the electronic imaging industry 16%
*** National Media ownership consists of convertible preferred and warrants;
no common stock
</TABLE>
<PAGE> 23
1. Election of Directors:
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for all
as marked to nominees
the contrary)
/ / / /
TO WITHHOLD AUTHORITY TO VOTE FOR To cumulate votes, write
ANY INDIVIDUAL WHILE VOTING FOR THE the name of the nominee(s)
REMAINDER, STRIKE A LINE THROUGH and the number of votes to
THE NOMINEE'S NAME IN THE LIST BELOW: be cast for each nominee
NOMINEES: WARREN V. MUSSER, in the space provided
VINCENT G. BELL JR., ROBERT A. FOX, below, followed by
DELBERT W. JOHNSON, PETER LIKINS, "cumulate for."
JACK L. MESSMAN, RUSSELL E. PALMER,
JOHN W. PODUSKA SR., HEINZ SCHIMMELBUSCH,
HUBERT J.P. SCHOEMAKER, AND JEAN C. TEMPEL -------------------------------
DATED: , 1995
-------------------
-------------------------------
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
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.
LOGO Safeguard Scientifics, Inc.
