<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Sensormatic Electronics Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SENSORMATIC ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of SENSORMATIC ELECTRONICS CORPORATION, a Delaware corporation, will be held at
the Deerfield Beach/Boca Raton Hilton, 100 Fairway Drive, Deerfield Beach,
Florida 33441, on December 14, 1995, at 10 A.M., local time, for the following
purposes:
1. To elect three directors to serve for a term of three
years and until their successors are elected and
qualified; and
2. To transact such other business as may be properly brought
before the meeting.
Only stockholders of record at the close of business on
October 23, 1995, will be entitled to notice of, and to vote at, the meeting
and any adjournment thereof.
THE BOARD OF DIRECTORS OF SENSORMATIC ELECTRONICS CORPORATION
HOPES THAT YOU WILL FIND IT CONVENIENT TO ATTEND THE MEETING IN PERSON. IN ANY
EVENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY TO MAKE SURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY
VOTE YOUR STOCK PERSONALLY EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
By Order of the Board of Directors,
WALTER A. ENGDAHL
Secretary
Deerfield Beach, Florida
October 30, 1995
<PAGE> 3
SENSORMATIC ELECTRONICS CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Sensormatic Electronics Corporation,
a Delaware corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders of the Company to be held at the Deerfield Beach/Boca
Raton Hilton, 100 Fairway Drive, Deerfield Beach, Florida 33441, on December
14, 1995, at 10 A.M., local time, or at any adjournment or adjournments
thereof. Only stockholders of record at the close of business on October 23,
1995, shall be entitled to notice of, and to vote at, the meeting. Shares
represented by duly executed proxies received by the Company will be voted in
accordance with the instructions contained therein and, in the absence of
specific instructions, will be voted for the election as directors of the
persons who have been nominated by the Board of Directors and in accordance
with the judgment of the person or persons voting the proxies on any other
matter that may properly be brought before the meeting. The execution of a
proxy will in no way affect a stockholder's right to attend the Annual Meeting
and to vote in person. Any proxy executed and returned by a stockholder may be
revoked at any time thereafter except as to any matter or matters upon which,
prior to such revocation, a vote shall have been cast pursuant to the authority
conferred by such proxy.
The election of directors requires a plurality of the votes
cast. Shares represented by proxies marked to withhold authority to vote, and
shares represented by proxies that indicate that the broker or nominee
stockholder thereof does not have discretionary authority to vote them will be
counted to determine the existence of a quorum at the Annual Meeting, but will
not affect the plurality vote required.
This Proxy Statement and the accompanying proxy are being sent
on or about November 9, 1995, to stockholders entitled to vote at the Annual
Meeting of Stockholders. The cost of solicitation of the Company proxies will
be borne by the Company. In addition to the use of the mails, proxy
solicitations may be made by telephone, telecopier and personal interview by
officers, directors and employees of the Company. The Company has also
retained the services of Georgeson & Company Inc. to assist in the solicitation
of proxies for a fee estimated at $6,000, plus reimbursement for out-of-pocket
expenses. The Company will, upon request, reimburse brokerage houses and
persons holding shares in their names or in the names of their nominees for
their reasonable expenses in sending soliciting material to their principals.
The Company's executive offices are presently located at 500 Northwest 12th
Avenue, Deerfield Beach, Florida 33442-1795. The Company anticipates moving
its executive offices to 951 Yamato Road, Boca Raton, Florida, 33431-4425, in
early December.
<PAGE> 4
VOTING SECURITIES AND SECURITY OWNERSHIP
Only stockholders of record at the close of business on
October 23, 1995, will be entitled to vote at the Annual Meeting of
Stockholders and any adjournment thereof. At the close of business on October
23, 1995, there were outstanding 75,067,521 shares of Common Stock, $.01 par
value, of the Company. Each of such shares is entitled to one vote. There was
no other class of voting securities outstanding at that date.
To the knowledge of the Company, as of October 23, 1995, each
of the persons listed in the table below beneficially owned the number of
shares of Common Stock of the Company listed opposite its name, and, except as
noted below, each such person had sole or shared voting power and sole or
shared investment power over such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENTAGE
OF BENEFICIAL OWNER SHARES OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
Provident Investment Counsel 5,724,447 (1) 7.6%
300 North Lake Avenue
Pasadena, California 91101-4027
FMR Corp. 4,683,140 (2) 6.2%
82 Devonshire Street
Boston, Massachusetts 02109
AXA Assurances I.A.R.D. Mutuelle and
AXA Assurances Vie Mutuelle
La Grande Arche
Pardi Nord
92044 Paris La Defense France
Alpha Assurances I.A.R.D. Mutuelle and
Alpha Assurances Vie Mutuelle
101-100 Terrasse Boieldieu
92042 Paris La Defense France
Uni Europe Assurance Mutuelle
24 Rue Drouot
75009 Paris France
AXA 2,100
23, Avenue Matignon
75008 Paris France
The Equitable Companies Incorporated 4,578,110
787 Seventh Avenue
New York, NY 10019
----------
Total 4,580,210 (3) 6.1%
Quantum Industrial Partners LDC
QIH Management Investor, L.P.
QIH Management, Inc.
George Soros
Purnendu Chatterjee
----------
Sub-total 2,841,600 (4)
George Soros 1,094,400
Purnendu Chatterjee 454,958 (5)
888 Seventh Avenue, 30th Floor
New York, NY 10106
----------
Total 4,390,958 5.8%
</TABLE>
-2-
<PAGE> 5
(1) As set forth in the Schedule 13G, dated February 7, 1995,
filed by Provident Investment Counsel ("Provident"), Robert
Marvin Kommerstad also owns 5,724,447 shares of Common Stock
reported therein as a result of his stock ownership in
Provident. Provident and Mr. Kommerstad have shared
dispositive power over all of such shares and shared voting
power with respect to 4,454,422 of such shares. Neither
Provident nor Mr. Kommerstad have voting power with respect to
1,270,025 shares over which they have shared dispositive
power.
(2) As set forth in the Schedule 13G, dated February 13, 1995,
filed by FMR Corp. ("FMR"), FMR has sole voting power over
287,340 shares and no voting power over 4,395,800 shares.
Edward C. Johnson, 3d, who owns 24.9% of the outstanding
voting common stock of FMR, also has sole dispositive power
over the 4,683,140 shares beneficially owned by subsidiaries
of FMR, and sole power to vote or to direct the voting of
287,340 shares beneficially owned by a subsidiary of FMR.
(3) AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle,
Alpha Assurance I.A.R.D. Mutuelle, Alpha Assurances Vie
Mutuelle and Uni Europe Assurance Mutuelle are identified in
their Schedule 13G, dated February 10, 1995, as beneficial
owners of these shares, but their relationship to the named
record owners is not detailed.
(4) As set forth in the Schedule 13D, dated September 15, 1995,
filed by Quantum Industrial Partners LDC, QIH Management
Investors, L.P., QIH Management, Inc., George Soros and
Purnendu Chatterjee with respect to the Company's Common
Stock, Quantum Industrial Partners LDC does not have voting or
dispositive power over the 2,841,600 shares reported therein.
(5) Dr. Chatterjee is the beneficial owner of 454,958 shares,
which include 47,454 shares held directly by Dr. Chatterjee,
238,404 shares held by Chatterjee Fund Management, L.P.
("CFM"), of which he is the sole general partner, and 169,100
shares held by Winston Partners, L.P., of which CFM is the
sole general partner.
- ------------------------------
To the knowledge of the Company, no other person owned
beneficially more than five percent of the Common Stock of the Company as of
October 23, 1995.
The following table sets forth information as to the Common
Stock of the Company beneficially owned as of October 23, 1995, by each
director, nominee for director, each person named in the Summary Compensation
Table under Executive Compensation, and by all directors and executive officers
as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
- ------------------------ ----------- ------------
<S> <C> <C>
Ronald G. Assaf . . . . . . . . . . . . . . . . . . . . 1,543,287 (1) 2.0%
C. Dawson Buck . . . . . . . . . . . . . . . . . . . . 33,301 (2) *
Thomas V. Buffett . . . . . . . . . . . . . . . . . . . 37,500 (3) *
Dennis C. Gillette . . . . . . . . . . . . . . . . . . 96,793 (4) *
Timothy P. Hartman . . . . . . . . . . . . . . . . . . 25,000 *
Jerome M. LeWine . . . . . . . . . . . . . . . . . . . 139,100 (5) *
James E. Lineberger . . . . . . . . . . . . . . . . . . 743,531 (6) *
Dr. Arthur G. Milnes . . . . . . . . . . . . . . . . . 22,500 (7)(13) *
Michael E. Pardue . . . . . . . . . . . . . . . . . . . 4,595 (8) *
Terry W. Price . . . . . . . . . . . . . . . . . . . . 33,618 (9) *
John T. Ray, Jr. . . . . . . . . . . . . . . . . . . . 22,500 (10)(13) *
Robert A. Vanourek . . . . . . . . . . . . . . . . . . 0 --
Gerd Witter . . . . . . . . . . . . . . . . . . . . . . 24,800 (11) *
All directors and executive officers as a group . . . . 2,878,713 (12)(13) 3.7%
</TABLE>
- ------------------------------
* Less than 1%.
-3-
<PAGE> 6
(1) Includes 1,134,500 shares issuable upon exercise of options. Also
includes 62,849 shares allocated to Mr. Assaf's account under the
Employee Stock Ownership Plan ("ESOP") as of September 30, 1995, over
which Mr. Assaf has sole voting power. Does not include 22,104 shares
held by Mrs. Assaf, and 3,000 shares held by trusts for the benefit of
Mr. Assaf's children, as to all of which Mr. Assaf disclaims
beneficial ownership.
(2) Includes 25,001 shares issuable upon exercise of options.
(3) All 37,500 shares are issuable upon exercise of options.
(4) Includes 55,000 shares issuable upon exercise of options and 29,362
shares allocated to Mr. Gillette's account under the ESOP as of
September 30, 1995, over which Mr. Gillette has sole voting power.
(5) Includes 136,000 shares issuable upon exercise of options.
(6) Includes 222,500 shares issuable upon exercise of options. Also
includes 15,990 shares allocated to Mr. Lineberger's account under the
ESOP as of September 30, 1995, over which Mr. Lineberger has sole
voting power.
(7) All 22,500 shares are issuable upon exercise of options.
(8) All 4,595 shares are allocated to Mr. Pardue's account under the ESOP
as of September 30, 1995, over which Mr. Pardue has sole voting
power. Mr. Pardue resigned as a director and officer of the Company,
effective June 30, 1995.
(9) Includes 25,000 shares issuable upon exercise of options and 475
shares allocated to Mr. Price's account under the ESOP as of September
30, 1995, over which Mr. Price has sole voting power.
(10) All 22,500 shares are issuable upon exercise of options.
(11) Includes 15,000 shares issuable upon exercise of options.
(12) Includes 1,781,317 shares issuable upon exercise of options and
118,957 shares allocated to executive officers under the ESOP as of
September 30, 1995, over which executive officers exercise sole voting
power.
-4-
<PAGE> 7
(13) Does not include a total of 123,586 shares (less than 1% of
the shares of the Company's outstanding Common Stock) held under the
ESOP as of September 30, 1995, and unallocated, which are voted by the
trustee of the ESOP trust fund in accordance with the instructions of
the ESOP Plan Committee, consisting of two directors, Dr. Milnes and
Mr. Ray.
For the purpose of the foregoing table, each of the directors
and executive officers is deemed to be the beneficial owner of the shares which
may be acquired by him within 60 days through the exercise of options, if any,
and such shares are deemed to be outstanding for the purpose of computing the
percentage of the Company's Common Stock beneficially owned by him and by the
directors and executive officers as a group. Such shares, however, are not
deemed to be outstanding for the purpose of computing the percentage of the
Company's Common Stock beneficially owned by any other person.
Each of the persons named in the above table as beneficially
owning the shares set forth opposite his name has sole voting power (as to
outstanding shares) and sole investment power over such shares, except as
otherwise indicated.
ELECTION OF DIRECTORS
Unless otherwise specified, shares represented by the enclosed
proxy will be voted for the election of Thomas V. Buffett, James E. Lineberger
and John T. Ray, who have been nominated by the Board of Directors as directors
to serve until the Annual Meeting of Stockholders in 1998 and until their
successors are elected and qualified. Each of the nominees is now a director
of the Company. Directors shall be elected by a plurality of the votes cast,
in person or by proxy, at the meeting.
The Board of Directors is divided into three classes. One
class will stand for election for a three-year term at the Annual Meeting of
Stockholders on December 14, 1995. The terms of office of the other two
classes do not expire until the Annual Meeting of Stockholders in 1996 and
1997, respectively. The names of, and certain information concerning, the
nominees and the other directors are set forth below:
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE DIRECTOR OFFICES
---- --- --------- -------
<S> <C> <C> <C>
NOMINEES TO SERVE UNTIL
ANNUAL MEETING OF STOCKHOLDERS IN 1998:
THOMAS V. BUFFETT (b)(c) . . . . . . . 59 1992 Vice Chairman of the Board of Directors
JAMES E. LINEBERGER (a)(c) . . . . . . 58 1968 Chairman of the Executive Committee and
Director
JOHN T. RAY, JR. (b)(d)(e) . . . . . . 57 1989 Director
CONTINUING DIRECTORS TO SERVE UNTIL
ANNUAL MEETING OF STOCKHOLDERS IN 1996:
RONALD G. ASSAF (a) . . . . . . . . . . 60 1966 Chairman of the Board of Directors and
Chief Executive Officer
DR. ARTHUR G. MILNES (b)(d)(e) . . . . 73 1968 Director
</TABLE>
-5-
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Continuing Directors to serve until
Annual Meeting of Stockholders in 1997:
JEROME M. LeWINE (a)(d) . . . . . . . . 55 1974 Director
TIMOTHY P. HARTMAN (c) . . . . . . . . 56 1995 Director
ROBERT A. VANOUREK . . . . . . . . . . 53 1995 President, Chief Operating Officer and
Director
</TABLE>
- ------------------------------
(a) Member of the Executive Committee (d) Member of the Compensation Committee
(b) Member of the Audit Committee (e) Member of the Stock Incentive Plan
(c) Member of the Finance Committee Committee
Ronald G. Assaf, a founder of the Company, has been Chairman
of the Board of Directors of the Company since October 1971 and served as
President and Chief Executive Officer of the Company from 1974 to January 1986.
In January 1988, Mr. Assaf was appointed Co-Chief Executive Officer and in July
1988 was reappointed to the positions of President and Chief Executive Officer.
In October 1995, Mr. Assaf relinquished the title of President when Robert A.
Vanourek was appointed President and Chief Operating Officer of the Company.
Mr. Assaf continues to serve as Chairman of the Board and Chief Executive
Officer. Mr. Assaf is also a director of Hilite Industries Inc. and Computer
Integration Corporation.
Thomas V. Buffett is President of Clipper Investments, a
private firm that invests in, and provides consulting services to, the alarm
industry. He served as Chairman and Chief Executive Officer of Automated
Security (Holdings) PLC, a United Kingdom-based international company
specializing in electronic security, from 1974 through October 1994.
Jerome M. LeWine has been a partner of the New York City law
firm of Christy & Viener for more than five years.
James E. Lineberger has been Chairman of the Executive
Committee of the Company since 1974. From January 1988 to July 1988, Mr.
Lineberger served as Co-Chief Executive Officer of the Company. He has been a
partner of Lineberger & Co. and its predecessors, private investment firms,
since 1974. Additionally, Mr. Lineberger serves as Chairman of the Board of
Directors of Hilite Industries Inc.
Dr. Arthur G. Milnes is professor emeritus of electrical and
computer engineering at Carnegie-Mellon University, Pittsburgh, Pennsylvania,
where he has been a member of the faculty for more than five years.
John T. Ray, Jr. has served since June 1985 as the Senior Vice
President and General Manager of the United States Adhesives, Sealants and
Coatings Division of H.B. Fuller Company, expanded in 1994 to include Mexico
and Canada and now known as North American ASC Group.
Timothy P. Hartman was appointed a Director of the Company in
July 1995 by the Board of Directors. Mr. Hartman serves as Chairman of
NationsBank of Texas and, until his retirement in 1994, also was a director and
Vice Chairman of its parent corporation. Before joining the NationsBank
organization in 1982, Mr. Hartman was the Chief Financial Officer of
Baldwin-United Corporation, a diversified financial services company, with
which he was associated from 1963 through 1981.
Robert A. Vanourek joined the Company in October 1995, as its
President and Chief Operating Officer. Since 1992, Mr. Vanourek had been
President and Chief Executive Officer of
-6-
<PAGE> 9
Recognition International, Inc. ("Recognition"), a provider of document
processing hardware, software and services worldwide, until its recent merger
with BancTek, Inc. He acted as Co-Chief Executive Officer of Recognition from
1989 to 1992. Before joining Recognition, Mr. Vanourek was a Group Vice
President of Pitney Bowes, Inc., with which he had been affiliated since 1981,
and prior to that, he had positions with Avery Dennison Corporation and Couroc
Corporation.
None of the directors has any family relationship with any
other director or with any executive officer of the Company.
The Company has no reason to believe that the nominees will be
unable or unwilling to serve as directors, if elected. If, however, the
nominees should decline or be unable to act as directors, the shares
represented by the enclosed proxy will be voted for such other person or
persons as may be nominated by the Board of Directors.
Committees and Meetings
The Board of Directors has standing Executive, Audit, Finance,
Compensation and Stock Incentive Plan Committees. The Board of Directors does
not have a standing nominating committee.
The Audit Committee reviews the proposed scope of audit and
non-audit services and the fees proposed to be charged for such services,
reviews the reports and receives comments and recommendations from the
Company's internal audit function and the Company's independent auditors
following completion of the annual audit, and reviews with such auditors and
management the Company's accounting policies and the adequacy of the Company's
internal accounting controls. As in the case of the 1995 audit, the Audit
Committee also deals with special matters relating to the Company's accounting
practices and financial statements brought to its attention by the Company's
internal auditors, management or the Company's independent auditors. The Audit
Committee met two times during the 1995 fiscal year.
The Finance Committee was established early in fiscal 1996 to
evaluate and provide counsel on proposals for short- and long-term financing
for the Company and other financial transactions.
The Compensation Committee implements the Company's cash
compensation policies and determines the salaries, bonuses and certain other
benefits of executive officers of the Company. The Compensation Committee also
administers the Stock Purchase Loan Plan and from time to time makes
recommendations to the Board of Directors regarding other compensation matters.
The Compensation Committee met three times during the 1995 fiscal year.
The Stock Incentive Plan Committee administers the Company's
1995 Stock Incentive Plan (the "1995 Plan"), as well as the Company's 1989
Stock Incentive Plan (the "1989 Plan") with respect to options outstanding
thereunder (no new options have been granted under the 1989 Plan since the
adoption of the 1995 Plan). Administration of the 1995 Plan includes the
granting of awards to officers, key employees and directors who are eligible to
participate in the 1995 Plan. The Stock Incentive Plan Committee met seven
times during the 1995 fiscal year.
The Board of Directors held seven meetings during the 1995
fiscal year. No director of the Company during the last fiscal year attended
fewer than 100% of the aggregate number of meetings of the Company's Board of
Directors and all committees of the Board of Directors on which he served,
except for Mr. Pardue, who did not attend the two meetings scheduled after the
announcement of his resignation but before its effective date.
-7-
<PAGE> 10
Compensation of Directors
During fiscal 1995, the directors of the Company (other than
Messrs. Assaf and Pardue) received annual compensation for all services as
follows: Mr. Lineberger, $152,019; Mr. Buffett, $80,000; Mr. LeWine, $50,000;
Dr. Milnes, $33,200; Mr. Ray, $20,000; and, in the cases of Dr. Milnes and Mr.
Ray, an additional $3,000 for each meeting of the Board of Directors (other
than telephonic meetings), an additional $3,000 for service on the Audit
Committee, and an additional $3,000 for service on compensation committees. In
the cases of Messrs. Lineberger and Buffett, such compensation reflects their
services both as directors and as Chairman of the Executive Committee and as
Vice Chairman of the Board, respectively. Mr. Lineberger also participates in
various benefit plans and the bonus program for executive officers of the
Company. Mr. Hartman receives compensation for his services as a director in
the amount of $20,000 per year, plus an additional $3,000 for each meeting of
the Board of Directors (other than telephonic meetings).
In addition, the directors of the Company participate in
either the Directors Stock Option Plan (the "Directors Plan") or the 1995 Plan.
In fiscal 1995, Dr. Milnes and Mr. Ray each received 10-year options to
purchase 7,500 shares of Common Stock, exercisable on a cumulative basis in
three equal annual installments, under the Directors Plan, which provides for
annual, non-discretionary grants in such amount (after an initial grant to new
directors participating in the Directors Plan of an option to purchase 20,000
shares) at an exercise price per share equal to the fair market value of a
share of Common Stock on the date of grant. Mr. Hartman received an initial
grant of an option to purchase 20,000 shares of Common Stock under the
Directors Plan upon joining the Board, effective July 14, 1995. Messrs.
Lineberger and LeWine received options to purchase a total of 25,000 and 18,500
shares of Common Stock, respectively, under the 1995 Plan, including options
for 15,000 shares for Mr. Lineberger and 11,000 shares for Mr. LeWine that
were granted under the additional terms and conditions set forth in the
Company's Long-Term Incentive Program ("LTIP"). (See footnote 1 to the table
"Option/SAR Grants in Last Fiscal Year" for a summary of the terms of options
granted under the 1995 Plan, including options granted under the LTIP.)
Messrs. Lineberger and LeWine also received grants of 4,600 shares and 3,100
shares of restricted stock, respectively, under the 1995 Plan, the vesting and
additional terms of which are governed by the LTIP. (See footnote 3 to the
"Summary Compensation Table" for certain terms of the restricted stock awards
granted pursuant to the LTIP.) Messrs. Assaf and Pardue also participated in
the 1995 Plan, as described below under "Executive Compensation."
A Board of Directors Retirement Plan for non-officer
directors, adopted in 1989, provides for monthly payments over 15 years
beginning upon the later of the attainment of age 60 or retirement from the
Company, or upon the director's earlier death. The Plan provides that the
benefits are 50% vested after five years of service and are vested an
additional 10% for each year of service thereafter. Benefits are payable to
the director's designated beneficiary or estate in the event of death. If the
director dies while in office and prior to attaining the age of 60, the
director's vested interest would be deemed to be equal to that which would have
accrued had he remained in office until attaining that age. Annual benefits
are fixed by the Board of Directors or a committee thereof and are currently
fixed at $50,000 for Mr. LeWine and $20,000 for each of Dr. Milnes and Mr. Ray.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK INCENTIVE PLAN COMMITTEES
The Compensation Committee of the Board of Directors,
consisting of Messrs. Ray and LeWine and Dr. Milnes, and the Stock Incentive
Plan Committee of the Board, consisting of Mr. Ray and Dr. Milnes, implement
the Company's compensation programs. The Compensation
-8-
<PAGE> 11
Committee is responsible for periodically reviewing and determining the cash
compensation and certain other non-equity-based benefits of the Company's
executive officers. The Stock Incentive Plan Committee administers the
Company's 1995 Plan and grants awards thereunder to the Company's executive
officers, key employees and participating directors, including stock-based
long-term incentive compensation under the LTIP. The Committees receive Mr.
Assaf's recommendations with respect to compensation of the Company's other
executive officers and meet with Mr. Assaf to evaluate such executives'
performance and, at times, to discuss the bases for his recommendations. The
Committees meet without Mr. Assaf to evaluate his performance and to determine
compensation of all executive officers.
The Committees provide the following report, each being
responsible for the portions thereof which refer to them or their separate
functions.
The Company's executive compensation programs are designed to
attract and retain qualified leaders and motivate them to achieve the Company's
short- and long-term business objectives. The Company believes that the key to
achieving such goals is to provide compensation which is competitive with the
compensation packages provided by comparable companies and of which a high
proportion is "at risk" for performance, in the form of annual incentive
bonuses and long-term stock-based incentives.
Fiscal 1995 Performance
Fiscal 1995 was a year of both successes and disappointments
for the Company. On the positive side, the Company expanded its product and
market breadth with a number of significant acquisitions and partnerships,
including the purchase of Knogo Corporation's operations outside North America
and the acquisitions of Software House, Inc., a leading supplier of high-end
access control systems, and Case Security Limited, a well-known provider of
security systems for the U.K. financial industry. The Company also purchased
Glen Industrial Communications, Inc., a U.S. systems integrator, and several
smaller systems integrators in Europe. New products and technology were
brought to market, including Rapid Pad II, a new Ultra-Max(R) deactivator; a
new line of video managers designed to give customers the ability to integrate
closed circuit television systems with other software systems, and a new
proprietary electromagnetic label, the SensorStrip(TM). In addition,
production capacity increased with the establishment of a European
manufacturing facility in Cork, Ireland, and the enlargement of the Company's
manufacturing facilities in both Boca Raton, Florida and Puerto Rico. The
Company implemented its "Customer Care" program to provide extended technical
assistance and product information to customers and sales representatives. The
Company also restructured its commercial/industrial subsidiaries into a new
Security Products Division to improve coordination, control and expansion of
supplies of those products to the Company's dealers.
Despite its customer and product successes and substantial
revenue increases, however, the Company failed to meet its earnings targets for
fiscal 1995. That disappointment, and an extensive year-end examination by the
Company's auditors authorized by the Audit Committee, demonstrated that the
development of the Company's management organization had failed to keep pace
with the growth of its revenues. Expenses also grew significantly faster than
revenues, particularly in the second half of the fiscal year, and the
integration of Knogo's international operations into the Sensormatic European
network has been slower and more costly than expected. In addition, third
quarter results were required to be restated downwards, primarily due to the
premature recognition of revenue on certain shipments made after quarter-end
and on certain shipments not supported by adequate documentation.
To address these problems, the Company has implemented
corrective actions, which will require management's continuing efforts. All
financial activities and their reporting have now been centralized. A Company-
wide expense reduction program, designed to reduce operating
-9-
<PAGE> 12
expenses by ten percent, has begun. Throughput at the Irish manufacturing
facility will increase, to improve margins, and programs have begun to enhance
inventory turns and accelerate the collection of receivables, thereby improving
the Company's cash flow and reducing debt and related interest expense.
Notwithstanding the disappointments of fiscal 1995, it is
clear that the Company's business remains vital. Its markets are strong and
growing. Revenues for fiscal 1995 grew 36 percent to over $889 million.
Revenues from the Company's commercial/industrial business -- which amounted to
$6.5 million five years ago -- were $213 million for fiscal 1995, and now
account for 24 percent of the Company's business. Management's near-term
challenge will be to resolve the problems that surfaced in fiscal 1995, while
continuing to achieve and maintain the highest standards of performance in all
aspects of the Company's worldwide business.
These circumstances, and management's performance in response
thereto, had a substantial impact on the Committees' assessment of the overall
performance of participating executive officers and resulting compensation
decisions for fiscal 1995.
Base Salary
The Compensation Committee establishes base compensation for
executive officers reflecting both the individual's responsibilities and
experience and the competitive salary ranges for executives with similar
responsibilities in corporations with revenues comparable to those of the
Company, taking into account relative profitability. The Compensation
Committee relies on information from a variety of sources to determine
competitive cash compensation ranges, including, in fiscal 1995, executive
compensation surveys conducted by three employee benefit consulting firms. The
base salaries of the Company's executive officers are generally set at or below
the median salaries reported for comparable positions.
Base salaries are modified annually, generally near the
beginning of a calendar year, by the Compensation Committee as warranted by the
performance of the Company or the applicable department or business unit, or by
the performance of the executive officer or changes in his responsibilities.
The Compensation Committee believes that the increases it adopted in January
1995 are in line with current trends at comparable companies, while also
reflecting the Company's growth and performance to such date.
Bonuses
The annual cash bonus component of an executive officer's
compensation depends upon the officer's performance, that of the Company and,
if the executive officer has responsibility for a particular department or
business unit, the performance of that department or business unit. The
Compensation Committee believes that an executive officer's responsibility for
the success of his business unit and of the Company increases as his duties
expand. Accordingly, a larger proportion of a more senior executive officer's
compensation generally will be variable, performance-based incentive
compensation, compared to that of other executive officers.
In addition, the Compensation Committee reviews information
derived from executive compensation surveys comparing the percentage of salary
represented by performance-based bonuses for both the Company's officers and
key personnel and the average such percentage for other companies. The
Company's incentive bonuses typically constitute a substantially greater
proportion of base salary than the average for other companies, although such
bonuses are reduced substantially if the performance of the Company fails to
meet earnings and other targets, as was the case in 1995.
-10-
<PAGE> 13
Mr. Assaf's bonus is determined with reference to a broad
range of criteria, including the Company's financial results generally, the
achievement of, or failure to achieve, budgetary goals, the Company's growth,
his contribution to the realization of the Company's strategic plan and other
objectives, and his role in expanding the Company's businesses and its
leadership in its markets. Certain officers, including Messrs. Buck, Gillette,
Price and Witter, receive incentive bonuses based primarily on performance
goals for the business unit or revenue-producing operations for which they are
responsible. In general, bonuses for fiscal 1995, including Mr. Assaf's bonus,
were significantly below bonuses awarded in the two prior fiscal years, due to
the Company's disappointing earnings performance this past year.
Stock-Based Incentives
The Company believes that stock options are a very important
component of executive compensation because they encourage an executive to
remain in the Company's employ and link long-term rewards to stock price
appreciation. The Stock Incentive Plan Committee recognizes that such
long-term incentives will motivate executives to balance pressures to manage
for the short-term with the steps necessary to assure the Company's future
vitality. Under the Company's regular stock option incentive program, options
typically are granted annually.
In the first quarter of fiscal 1995, the Stock Incentive Plan
Committee worked closely with compensation consultant Towers Perrin to design a
further long-term incentive program under the 1995 Plan to reward those
corporate officers, certain directors of the Company and other key management
personnel who contribute significantly to the realization of the Company's
strategic goals. The Board of Directors adopted the LTIP, as well as the 1995
Plan under which LTIP awards are made early in fiscal 1995. The stockholders
approved the 1995 Plan in November 1994. The LTIP has since been implemented
by the Stock Incentive Plan Committee. Awards granted under the LTIP are
designed to serve as longer-term incentives than yearly option grants under the
1995 Plan, and are not expected to be made on an annual basis. In particular,
options and restricted stock awarded under the terms of the LTIP have longer
vesting schedules than has been the case with most prior option grants to
participants, with earlier vesting in whole or in part if certain four-year
performance goals, based on cumulative earnings per share and changes in the
price of the Company's Common Stock compared to changes in the prices of
comparable securities of companies competing with the Company, are achieved.
In effect, the LTIP establishes a framework to determine the composition, size
and vesting of such long-term incentive awards, and is an extension of the
Company's policy that performance is essential to determining an officer's
total compensation, both in the short and long term.
In determining the size of a grant to an executive officer or
participating director under the regular stock option incentive program, the
Stock Incentive Plan Committee considers the number of shares that would be
thought to be a meaningful incentive for long-term performance, given the
participant's position, responsibilities, level of cash compensation and
expected contributions, as well as the recommendations of employee benefits
consultants who have studied levels of such compensation at comparable
companies. At times, the Stock Incentive Plan Committee also takes into
account whether extraordinary effort would be required to reach particular
objectives in succeeding periods. The size of the options granted under the
terms of the LTIP for fiscal 1995 was based on recommendations developed by
Towers Perrin, the compensation levels of the grantees and the Stock Incentive
Plan Committee's evaluation of the entire package of long-term, stock-based
incentives granted to each participant. In fiscal 1994 the Stock Incentive
Plan Committee adopted a new vesting schedule with respect to options granted
to certain executive officers under its regular stock option program, placing
more emphasis on achieving results that will enhance the value of the Company's
Common Stock.
In addition to the options granted under the 1995 Plan
pursuant to the LTIP, in fiscal 1995 the Company made awards of restricted
stock, the terms of the vesting of which are set forth
-11-
<PAGE> 14
in the LTIP and are intended to create incentives to enhance the Company's
performance and achievement of its strategic goals over the following four
fiscal years. As it did to determine the number of stock options awarded under
the LTIP in fiscal 1995, the Stock Incentive Plan Committee considered
recommendations by Towers Perrin, as well as the grantees' overall compensation
and specifically, long-term incentives, to determine the number of restricted
shares to be awarded to each participating executive.
Additional Factors Relating to CEO's Compensation
The Committees measured Mr. Assaf's performance in fiscal 1995
by the standards discussed above, and with consideration of his role in
building a strong management organization with the depth and experience to
implement the Company's long-term strategic plan.
Mr. Assaf was a founder of the Company and has been a driving
force in its growth over twenty-five years. The Company has become, and
remains, the leading electronic article surveillance supplier in every market
in which it competes. Mr. Assaf has led the Company's efforts to develop
technical innovations, improve quality, increase efficiency and aggressively
pursue new areas of growth, internally and by acquisitions and strategic
alliances. He initiated the Company's strategic plan, which has evolved and
continues to evolve under his leadership. The strategic plan has provided the
structure for achieving the Company's market expansion and technology
development goals, emphasizing diversification of its product lines and the
broadening of its markets. The Committees believe that Mr. Assaf's
leadership, vision and management of the Company have fueled the growth in the
Company's revenues, from less than $100 million seven years ago to more than
$889 million in fiscal 1995. Mr. Assaf's continued efforts and commitment to
the Company remain important to the achievement of its strategic goals.
<TABLE>
<CAPTION>
Compensation Committee Stock Incentive Plan Committee
---------------------- ------------------------------
<S> <C>
Jerome M. LeWine Arthur G. Milnes
Arthur G. Milnes John T. Ray, Jr.
John T. Ray, Jr.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company established a Stock Purchase Loan Plan (the "Loan
Plan") in 1979 under which officers, directors and certain designated key
employees may borrow an amount equal to the purchase price of shares of the
Company's Common Stock purchased upon exercise of their respective stock
options ("Option Shares") and an amount approximating the amount of income tax
liability resulting from the exercise of such options. Under the Loan Plan,
loans generally bear interest at the rate of 4% per annum, payable annually.
Loans are required to be secured and to comply with Federal Reserve margin
requirements, to the extent applicable. The loans generally are due within
five years of the date of the loan, upon cessation of employment or upon the
sale of the Option Shares, whichever occurs first. (Information regarding loans
to directors and executive officers under the Loan Plan is set forth below
under "Stock Purchase Loan Plan.")
The firm of Christy & Viener, of which Mr. LeWine is a
partner, acts as counsel to the Company and also performs legal services for
the Company's domestic and foreign subsidiaries. The firm received fees in the
aggregate amount of approximately $2,084,000 for legal services rendered to the
Company and its subsidiaries during the fiscal year ended June 30, 1995.
-12-
<PAGE> 15
SUMMARY COMPENSATION TABLE
The following table shows compensation for services rendered
in all capacities to the Company and its subsidiaries during fiscal 1995, 1994
and 1993 by the Chief Executive Officer, by the former Chief Operating Officer,
who resigned from his offices with the Company effective June 30, 1995, and by
the next four highest-paid executive officers of the Company.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------- ----------------------------
Name and Principal Other Annual Restricted All Other
------------------ Salary Bonus Compensation Stock Awards Options/SARS Compensation
Position Year ($)(1) ($) ($)(2) ($)(3) (#)(4) ($)
-------- ---- ------ ------- ------------ --------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf, 1995 521,154 200,000 -- 726,669 150,000 54,166 (6)(7)(8)(9)
Chairman of the Board of 1994 464,615 425,000 -- -- 75,000 79,054 (6)(7)(8)(9)
Directors, President and 1993 415,484 370,000 -- -- 1,200,000 51,046 (7)(8)(9)
Chief Executive Officer (5)
- -------------------------------------------------------------------------------------------------------------------------------
Michael E. Pardue (10), 1995 277,095 100,000 -- -- 35,000(11) 50,220 (7)(8)(9)(12)
Executive Vice President, 1994 241,038 205,000 -- -- 35,000 40,959 (7)(8)(9)(12)
Chief Operating Officer 1993 202,476 165,000 -- -- 75,000 11,069 (7)(8)(9)(12)
and Chief Financial Officer
- -------------------------------------------------------------------------------------------------------------------------------
Gerd Witter, 1995 209,365 83,960 -- 305,638 47,000 76,830 (9)(12)
President, Sensormatic 1994 215,405 153,513 -- -- 20,000 60,516 (9)(12)
Europe(13) 1993 229,488 316,560 -- -- 45,000 10,120 (9)(12)
- -------------------------------------------------------------------------------------------------------------------------------
C. Dawson Buck, 1995 297,506 30,955 -- 258,856 42,000 145,833 (14)
Senior Vice President and 1994 276,900 61,595 -- -- 20,000 111,581 (14)
President, Sensormatic 1993 198,854 116,218 -- -- 75,000 18,505 (14)
International (14)
- -------------------------------------------------------------------------------------------------------------------------------
Dennis C. Gillette, 1995 162,445 129,000 -- 246,381 41,000 95,444 (7)(8)(9)(12)
Senior Vice President 1994 154,443 137,300 -- -- 20,000 79,295 (7)(8)(9)(12)
1993 144,750 134,900 -- -- 37,500 18,692 (7)(8)(9)
- -------------------------------------------------------------------------------------------------------------------------------
Terry W. Price, 1995 193,640 50,500 -- 184,006 34,000 36,171 (7)(8)(16)
Group Vice President, 1994 180,203 54,200 99,929 (15) -- 20,000 27,867 (7)(8)(16)
Commercial/Industrial 1993 172,569 47,300 34,491 (17) -- 15,000 13,457 (7)(8)(16)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annual raises generally are effective near the beginning of a calendar
year. The amounts set forth for each fiscal year reflect amounts
actually paid during that fiscal year, including about six months at
the prior year's annual rate and about six months at the annual rate
for such fiscal year.
(2) With the exception of Mr. Price, none of the named executive officers
of the Company received reportable amounts of Other Annual
Compensation for fiscal 1993, 1994 or 1995 which would be required to
be disclosed herein.
(3) Restricted stock was first awarded to participants in the Company's
1995 Long-Term Incentive Program (the "LTIP") adopted in fiscal 1995
under the 1995 Stock Incentive Plan (the "1995 Plan"). The total
undiscounted value of aggregate restricted stock holdings of each of
the named executive officers as of the date of grant is set forth in
this column, although vesting is contingent on Company performance
requirements as well as continued employment with the Company.
Dividends payable on restricted stock awards pursuant to
-13-
<PAGE> 16
the 1995 Plan and the LTIP are held by the Company and paid to the
grantee upon vesting, if and when vesting occurs. As of June 30,
1995, the value of the restricted stock held by the named executive
officers was $827,150, $347,900, $294,650, $280,450 and $209,450 for
Messrs. Assaf, Witter, Buck, Gillette and Price, respectively.
(4) The options granted in fiscal 1993 have been adjusted to reflect the
Company's 3-for-2 stock split in November 1993. Options granted in
fiscal 1995 include options granted under the terms of the LTIP. The
Company has not issued any stock appreciation rights to the named
executive officers. See footnote 1 to the table "Option/SAR Grants in
Last Fiscal Year" for summary terms of options granted.
(5) Mr. Assaf was President of the Company throughout fiscal 1995. In
October 1995, Robert A. Vanourek became President and Chief Operating
Officer of the Company.
(6) Includes a contribution of $33,720 toward the funding of a $3,000,000
death benefit provided by the Company. The Company has purchased a
life insurance policy on Mr. Assaf, the death benefit of which will
reimburse the Company for a portion of this commitment.
(7) Includes contributions made by the Company under its Employee Stock
Ownership Plan, which is a defined contribution plan, to or for the
benefit of the eligible named executive officers. Under the ESOP, the
Company makes an annual contribution to a trust fund for the benefit
of participants in an amount determined by the Board of Directors.
Fund assets are required to be invested primarily in the Company's
Common Stock. The trust fund holds shares which it previously
acquired from the Company at a price of $8.46 per share, paid for by
delivery of a promissory note of the ESOP's trustee. Principal and
interest of the note are payable from the proceeds of the Company's
annual contributions. As the indebtedness is retired, a proportionate
amount of the purchased shares are allocated to the accounts of
eligible employees under such plan. In fiscal 1995, the Company
contributed $761 each for the accounts of Messrs. Assaf, Pardue,
Gillette and Price.
(8) Includes contributions made by the Company under its Sensor Save Plan
("SSP"), which is a defined contribution plan, to or for the benefit
of the eligible named executive officers. The SSP is a 401(k) plan
under which the Company makes annual contributions as determined by
the Board of Directors and additional contributions matching a
proportion of participating employees' voluntary contributions. In
fiscal 1995, the Company contributed $3,375 each to the accounts of
Messrs. Assaf, Pardue, Gillette and Price.
(9) Includes contributions made by the Company under or in connection with
the Executive Salary Continuation Plan ("ESCP"), which is a plan that
provides for defined deferred compensation benefits, to or for the
benefit of the eligible named executive officers. Under the ESCP, a
participating executive officer will receive an annual retirement
benefit of an amount determined by the Board of Directors multiplied
by a percentage equal to the participant's vested interest as of the
date of the participant's termination of employment. Benefits
generally vest over a 15-year schedule and are payable in monthly
installments for 15 years from the later of the participant's
attainment of retirement age (60) or the participant's actual
retirement from employment with the Company, or, if earlier, from the
participant's death. The Company has purchased life insurance
policies on the participants and anticipates that the cash surrender
value and death benefits of such policies will reimburse the Company
for a portion of its obligations under the ESCP. The Company's
contributions toward the funding of benefits under the ESCP during
fiscal 1995 were $12,260, $13,348, $24,130 and $27,398 for Messrs.
Assaf, Pardue, Witter and Gillette, respectively. Based upon the ESCP
as presently in effect, Messrs. Assaf, Witter and Gillette, assuming
their respective vested interests will be 100% upon attaining
retirement
-14-
<PAGE> 17
age, could expect to receive annual retirement benefits under the ESCP
of $255,000, $100,000 and $102,000, respectively, as last determined
by the Board of Directors.
(10) Mr. Pardue resigned as a director and officer of the Company,
effective June 30, 1995. See the last paragraph of this Section
regarding the Company's severance arrangements with Mr. Pardue.
(11) The options granted to Mr. Pardue during fiscal 1995 were canceled as
of June 30, 1995.
(12) Includes contributions made by the Company under or in connection with
the Senior Executive Defined Contribution Retirement Plan (the "Senior
Executive Plan"), which is a target benefit defined contribution plan,
to or for the benefit of the eligible named executive officers. Under
the Senior Executive Plan, which was established by the Company in
fiscal 1994 for certain senior officers, a participant will receive an
annual retirement benefit equal to the lesser of (i) the benefit
previously targeted for such participant by the Board of Directors and
(ii) the benefit which could be paid out of such participant's
investment account under the Senior Executive Plan, the annual yield
of which will be determined by the chief executive officer of the
Company, subject to the approval of the Board of Directors or a
committee thereof, in each case multiplied by a percentage equal to
the participant's vested interest as of the date of the participant's
termination of employment. Benefits under the Senior Executive Plan
generally vest over a 15-year schedule, but a participant who has ten
or more years of service and is employed by the Company immediately
prior to his normal retirement is deemed to be 100% vested upon
retirement. Benefits are payable in monthly installments for 15 years
after the later to occur of the participant's attainment of retirement
age (60) or his actual retirement from employment with the Company,
or, if earlier, the participant's death. Upon a change in control of
the Company, the monthly benefit payable under the Senior Executive
Plan would become equal to the targeted benefit and the participant's
benefit under the Senior Executive Plan would become 100% vested. The
Company has purchased life insurance policies on the participants and
anticipates that the cash surrender value and death benefits of such
policies will reimburse the Company for substantially all its
obligations under the Senior Executive Plan. The Company's
contributions toward the funding of benefits under the Senior
Executive Plan during fiscal 1995 were $31,200, $52,700 and $61,500
for Messrs. Pardue, Witter and Gillette, respectively. Based upon the
Senior Executive Plan as presently in effect, Messrs. Witter and
Gillette, assuming their respective vested interests will be 100% upon
attaining retirement age and the yield from their respective
investment accounts will be sufficient to fund their respective
targeted benefits (as last determined by the Board of Directors),
could expect to receive annual retirement benefits under the Senior
Executive Plan of $68,000 and $41,000, respectively.
(13) Although Mr. Witter's cash compensation is presented in U.S. dollars,
such compensation is determined and payable in German marks.
Fluctuations in the rate of exchange between the two currencies from
year to year result in fluctuations in the cash compensation of Mr.
Witter as reported from year to year in U.S. dollars.
(14) Although Mr. Buck's cash compensation is presented in U.S. dollars,
such compensation is determined and payable in British pounds
sterling. Fluctuations in the rate of exchange between the two
currencies from year to year will result in fluctuations in the cash
compensation of Mr. Buck as reported in U.S. dollars. Amounts of All
Other Compensation include contributions made by the Company for the
benefit of Mr. Buck under a defined benefit pension plan sponsored by
ASH, his former employer (the "ASH Plan"), and under a defined
contribution money purchase plan for the Company's employees located
in the United Kingdom (the "U.K. Plan"). In connection with its
acquisition of the European EAS, CCTV and exception monitoring loss
prevention systems division of ASH ("ALPS") in fiscal
-15-
<PAGE> 18
1993, the Company agreed to preserve the level of benefits of certain
ASH employees, including Mr. Buck, who joined the Company as a result
of such acquisition. The Company made a contribution in the amount of
$18,505 under the ASH Plan to continue temporarily Mr. Buck's
participation in such plan until July 31, 1993. On August 1, 1993,
Mr. Buck became a participant in the U.K. Plan, and his accrued
benefits under the ASH Plan have been transferred to the U.K. Plan.
Pension benefits under the U.K. Plan are payable in monthly
installments from the later to occur of the participant's attainment
of retirement age (60) or his actual retirement from employment with
the Company, or, if earlier, the participant's death. In addition,
the U.K. Plan provides for early retirement at age 50, with the
consent of the Company. Under the U.K. Plan, benefits vest over a
two-year period and are funded from a participant's investment account
under such Plan. In order to meet the projected level of retirement
benefits that Mr. Buck would have received under the ASH Plan, the
Company contributed during fiscal 1995 $145,833 (or 46% of Mr. Buck's
pensionable salary) to Mr. Buck's account under the U.K. Plan; in
addition, Mr. Buck contributed 4% of his pensionable salary to such
account. The Company expects that its funding rate for Mr. Buck's
pension benefits will remain constant until his retirement.
(15) Of this total Other Annual Compensation, $74,510 represents
reimbursement for taxes paid by Mr. Price as a result of his
relocation to Florida in fiscal 1993. The balance includes benefits
paid under the Company's Executive Medical Reimbursement Plan,
membership dues and an automobile allowance.
(16) Includes contributions made by the Company under or in connection with
the Key Executive Supplemental Retirement Plan (the "KESRP"), a plan
providing for deferred defined compensation benefits for certain
executive officers and other key employees not covered by the Senior
Executive Plan or by the ESCP. In the case of Mr. Price, the KESRP
would provide ten years of monthly payments of a targeted benefit
determined by the Chief Executive Officer with the approval of the
Board, subject to periodic reviews and other factors. The award
vests 5% after three years of service, an additional 5% for each year
of service through eight years of service, and an additional 10% for
each year through fifteen years of service. The vested interest of a
participant who has ten or more years of service and is employed by
the Company immediately prior to his normal retirement (age 62) is
deemed to be 100% upon such retirement. The full targeted benefit is
payable to the participant's beneficiary or his estate in the event of
death or disability while actively employed by the Company. Upon a
change in control of the Company, the monthly benefit payable under
the KESRP would become equal to the targeted benefit and the
participant's benefit under the KESRP would become 100% vested. The
Company has invested in insurance contracts on the lives of KESRP
participants to provide the primary source of funds for benefit
payments under the KESRP. The Company's contribution toward the
funding of benefits under the KESRP during fiscal 1995 was $30,185 for
Mr. Price. Based upon the KESRP as presently in effect, and assuming
his interest would be 100% upon attaining normal retirement age, Mr.
Price could expect to receive annual retirement benefits of $46,250.
(17) Represents reimbursement for taxes paid by Mr. Price as a result of
his relocation to Florida in fiscal 1993.
The Company has an employment agreement with Mr. Assaf which
expires June 30, 1996, providing for Mr. Assaf to receive a minimum annual
salary of $435,000. The Company also has an employment agreement with Mr.
Vanourek, terminable by the Company on 30 days' notice, pursuant to which he
will receive a base salary of $425,000 per annum and a guaranteed bonus of
$350,000 for the first year of his employment. Mr. Vanourek is entitled to two
years' severance if his employment terminates under certain circumstances. The
Company also has an employment agreement with Mr. Witter, providing for a
minimum annual salary of 313,000 German marks until
-16-
<PAGE> 19
October 31, 1996, and with Mr. Buck, providing for a minimum annual salary of
188,500 British pounds sterling plus an annual cost of living increase, which
is terminable upon two years' notice.
Michael E. Pardue resigned his positions as director and
executive officer of the Company, effective June 30, 1995. The Company has
entered into a Termination Agreement with Mr. Pardue, pursuant to which the
Company will make payments totaling $1,029,000 to Mr. Pardue during the period
ending July 1, 1997, in consideration of Mr. Pardue's agreement, among others,
not to compete with the business of the Company. Pursuant to the Termination
Agreement, the options granted to Mr. Pardue during fiscal 1993 and 1994 will
remain in effect for their original terms (ten years from the date of grant).
(Options and a restricted stock award granted Mr. Pardue in fiscal 1995 were
canceled as of June 30, 1995.) Pursuant to the Termination Agreement, the
Company has no further obligations to Mr. Pardue under its executive retirement
plans.
-17-
<PAGE> 20
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to
options granted to each person named in the Summary Compensation Table during
fiscal 1995. In addition, in accordance with Securities and Exchange
Commission rules, there are shown hypothetical gains that would exist for the
options granted, based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term. The named officers will realize no gain on these options unless
the price of the Common Stock increases above the exercise price for such
options, which will benefit all stockholders proportionately. No stock
appreciation rights have been awarded by the Company.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
Percent of Potential Realizable Value at
Options/ Total Assumed Annual Rates of Stock Price
SARS Options/SARS Appreciation for
Granted in Granted to Exercise Option Term(2)
Fiscal Employees in or Base Expiration --------------
Name Year(1) Fiscal Year Price Date 5%($) 10%($)
---- ------- ----------- ----- ---------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 75,000 15.5% $28.50 2/3/05 1,344,300 3,406,600
75,000 $31.1875 12/3/04 1,471,000 3,727,900
Michael E. Pardue 35,000 3.6% $28.50 6/30/95(3) -- --
Gerd Witter 15,000 4.9% $28.50 2/3/05 268,900 681,300
32,000 $31.1875 12/3/04 627,600 1,590,600
C. Dawson Buck 15,000 4.4% $28.50 2/3/05 268,900 681,300
27,000 $31.1875 12/3/04 529,600 1,342,000
Dennis C. Gillette 15,000 4.3% $28.50 2/3/05 268,900 681,300
26,000 $31.1875 12/3/04 510,000 1,292,300
Terry W. Price 15,000 3.5% $28.50 2/3/05 268,900 681,300
19,000 $31.1875 12/3/04 372,700 944,400
- --------------------------------------------------------------------------------------------------------------
All Optionees 964,966 100% $28.99 $ 17,591,300 $ 44,579,700
(participants)(4)
- --------------------------------------------------------------------------------------------------------------
All Stockholders' $ 1,354,264,000 $ 3,431,970,900
Potential Realizable
Value at Assumed
Growth Rates(5)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options granted during the period were granted pursuant to the
1995 Stock Incentive Plan (the "1995 Plan"), at the fair market value
on the date of grant. Certain options were granted under the 1995
Plan subject to the additional requirements of the Company's Long-Term
Incentive Program (the "LTIP"). All options granted to the named
executives have terms of ten years and, with respect to annual grants
made after January 1994 under the Company's Stock Incentive Plans,
become exercisable in full after the fifth anniversary of the date of
grant or at such earlier date on which the fair market value of the
Company's Common Stock has exceeded the exercise price by at least 35%
for at least ten consecutive trading days, provided such earlier date
is after the first anniversary of the date of grant. Options granted
under the terms of the LTIP become exercisable in whole or in part on
the date on which the Company releases earnings data for fiscal 1998,
to the extent certain
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<PAGE> 21
performance standards are achieved, and, to the extent they have not
become exercisable on such earlier date, on November 3, 2004. Options
granted under the 1995 Plan and its predecessors to other officers,
and to the named executives prior to the 1994 fiscal year, generally
have terms of ten years and become exercisable on a cumulative basis
in three equal annual installments, commencing on the first
anniversary of the date of grant.
(2) The potential realizable value of these options does not take into
account any taxes or other expenses that might become payable as a
result of exercise. The Company expresses no opinion and makes no
representation that this level of appreciation will, in fact, be
realized.
(3) Mr. Pardue resigned as an officer and director of the Company
effective June 30, 1995. The options issued to him in fiscal 1995
were canceled as of that date.
(4) Calculated based on the weighted average exercise price of all options
granted during fiscal 1995 ($28.99), and assuming all options have a
term of ten years.
(5) Calculated based on the weighted average exercise price of all options
granted during fiscal 1995 ($28.99), and assuming the exercise of
outstanding warrants issued in connection with an acquisition and
stock price appreciation at the indicated rates over the same period
used to calculate the individuals' potential realizable value.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth as to each person named in the
Summary Compensation Table the specified information with respect to option
exercises during fiscal 1995 and the status of their options at the end of
fiscal 1995.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in--the--Money (2)
Number of Options/SARs at Fiscal Options/SARS at
Shares Value Year--End Fiscal Year--End ($)(3)
Acquired on Realized -------------------------- -----------------------
Name Exercise ($)(1) Exercisable Nonexercisable Exercisable Nonexercisable
---- -------- ---------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 0 0 825,000 625,000 $ 15,534,600 $ 8,605,862
Michael E. Pardue 37,500 $276,895 0 60,000 0 448,125(4)
Gerd Witter 25,001 365,017 0 82,000 0 600,505
C. Dawson Buck 25,000 438,550 0 87,000 0 765,612
Dennis C. Gillette 30,000 656,547 55,000 73,500 860,000 450,875
Terry W. Price 0 0 25,000 59,000 458,750 326,937
</TABLE>
(1) The "value realized" represents the difference between the exercise
price of the option shares and the market price of the option shares
on the date the option was exercised. The value realized was
determined without considering any taxes which may become payable in
respect of the sale of any such shares.
(2) "In-the-money" options are options whose exercise price was less than
the market price of Common Stock at June 30, 1995.
(3) Based on a stock price of $35.50 per share, which was the closing
price of a share of Common Stock reported on the New York Stock
Exchange on June 30, 1995.
-19-
<PAGE> 22
(4) Mr. Pardue resigned as an officer and director of the Company
effective June 30, 1995. The options (and a restricted stock
award) issued to him in fiscal 1995 were canceled on that
date. Options granted to Mr. Pardue in fiscal 1993 and 1994
remain in effect for their original terms (ten years from the
date of grant).
-20-
<PAGE> 23
PERFORMANCE GRAPH
The SEC requires the Company to present a line graph comparing
cumulative, five-year stockholder returns on an indexed basis with the Standard
& Poor's 500 Stock Index (the "S&P 500") (or another broad-based index) and
either a nationally-recognized industry standard or a group of peer companies
selected by the Company. The Company has selected, for purposes of this
performance comparison, nine public companies (the "Self-Constructed 1995 Peer
Group") believed to offer security products or services similar to those
offered by the Company, and the provision of which products or services
represents a significant portion of their respective businesses. A list of
these companies follows the graph below. The graph assumes that $100 was
invested on June 1, 1990, in each of the Common Stock, the S&P 500 and the 1995
Self-Constructed Peer Group (weighted on the basis of capitalization), and that
all dividends were reinvested.
(CHART)
<TABLE>
<CAPTION>
Measurement Period 1994 1995 S&P
(Fiscal Year Covered) Sensormatic Peer Group Peer Group 500
- --------------------- ----------- ---------- ----------- ----
<S> <C> <C> <C> <C>
1990 100 100 100 100
1991 172 111 94 107
1992 199 120 104 122
1993 292 139 133 138
1994 325 134 143 140
1995 404* 160 155 177
</TABLE>
The Self-Constructed 1995 Peer Group consists of the following companies: ADT
Ltd.; Automated Security Holdings Ltd.; Borg-Warner Security Corp.; Checkpoint
Systems, Inc.; Diebold, Incorporated; Pinkerton's, Inc.; Pittway Corp.; Vicon
Industries, Inc. and The Wackenhut Corporation.
- ------------------------------
* Based on the market price of the Company's Common Stock at June 30,
1995, which was $35.50. At September 30, 1995, the price of the
Common Stock was $23.00. A stockholder's cumulative return on his
investment in the Company would have been $262.00 if calculated
through that date.
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<PAGE> 24
In prior fiscal years, the Company's self-constructed peer
group did not include ADT, Automated Security Holdings, Borg-Warner Security,
Pinkerton's or Pittway, but did include Knogo Corporation ("Knogo") and
Minnesota Mining and Manufacturing Co. ("3M"). With the Company's acquisition
of Knogo's international business in fiscal 1995, Knogo ceased to be publicly
traded. Knogo North America Inc., a spin-off of Knogo, which operates the
United States, Puerto Rico and Canada businesses formerly belonging to Knogo,
has been publicly traded for an insufficient period of time to be included in
the Self-Constructed 1995 Peer Group. (Data for the peer group previously used
by the Company, without Knogo, is plotted above as "1994 Peer Group" to permit
comparison with the Self-Constructed 1995 Peer Group.) While 3M offers
security products and services believed to be comparable to those offered by
the Company, such products and services represent a very small portion of 3M's
business overall. Nevertheless, 3M's performance represented over 90% of the
1994 Peer Group's comparative performance because of 3M's size and the
requirement that peer group performance data be weighted based on the included
companies' capitalization. In order to compare the Company's performance
against that of companies with a similar focus on security products and
services, the Company eliminated 3M from the 1994 Peer Group and added the
entities listed above, whose main business is the security industry, to create
the Self-Constructed 1995 Peer Group.
Agreements Relating to Change in Control
The Board of Directors, in December 1988, authorized the
Company to enter into agreements (the "Agreements") providing for certain
protections and benefits for all executive and certain other officers in
connection with a change in control of the Company. The Agreements, among
other things, protect the value of stock options held by such persons, protect
their retirement benefits, provide for severance compensation in the event of
certain terminations of service and provide, in certain cases where the Company
is acquired at a premium over the market price for the Common Stock, a bonus
based on such premium.
For purposes of the Agreements, a "change in control" will be
deemed to have occurred if (a) any "person" or "group" of persons (as the terms
"person" and "group" are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934 and the rules thereunder) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the then outstanding securities of the
Company or (b) a change of more than 25% in the composition of the Board of
Directors occurs within a two-year period unless such change was approved in
advance by at least two-thirds of the previous directors.
Under the Agreements, upon the occurrence of a change in
control, all stock options become fully exercisable. In addition, in the case
of an acquisition of 50% or more of the Company's voting securities, or a
merger or certain other events which result in the elimination of the Common
Stock or a cessation of trading of the Common Stock in a nationally recognized
market, the Company may be required by the officers to purchase options or
stock held by them at the highest price per share paid in connection with the
change in control, less, in the case of unexercised options, the exercise price
(or, in the case of shares previously acquired upon exercise of options, a
price equal to the cost of such option shares (including related tax costs), if
greater).
The Agreements provide for the protection of compensation
levels and benefits during an attempted change in control and for three years
following a change in control. In addition, the Agreements provide for
severance compensation in amounts commensurate with previous annual
compensation in the event of certain terminations of service with the Company
following a change in control. Severance payments would be payable generally
for a period of up to 36 months, but not less than 24 months, in the event of
involuntary termination of service (other than for cause, as defined in the
Agreements) within 36 months following a change in control deemed
"non-approved" by the Board of Directors. In the case of Mr. Assaf, similar
payments would be payable following an "approved" change in control and
irrespective of the manner of
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<PAGE> 25
termination (other than for cause). Mr. Assaf is required to provide
consulting services to the Company during the period he receives severance
compensation following a voluntary termination of service. For other officers
generally, severance payments would be payable for up to one year in the event
of voluntary termination of service following a "non-approved" change in
control or involuntary termination of service following an "approved" change in
control. Involuntary termination is defined to include resignation following a
material change in responsibilities, a reduction in compensation or relocation.
The Agreements also provide, in the event of termination of
service of the officer following a "non-approved" change in control, that the
Company pay to such officer an amount equal to the non-vested portion of his
accounts under the Company's employee retirement plans (other than the ESCP).
The Agreements further provide, in the event of a change in
control involving the acquisition of 50% or more of the Company's voting
securities, or a merger or other transaction affecting the market in the Common
Stock as described above, for the payment of bonuses if the stockholders
receive a substantial premium over the market price of the Company's Common
Stock. The amounts of such bonuses are directly related to, and increase in
relation to increases in, the percentage of such premium.
Pursuant to the Agreements, the officers are obligated to
continue to make their services available to the Company during an attempted
change in control and for six months following a change in control.
In December 1988, the Company also entered into agreements
similar to the Agreements described above with certain non-executive officers,
other key employees and Mr. LeWine. In 1995, the Company authorized agreements
similar to the Agreements for other executive officers, including Mr. Vanourek.
Certain other officers and other key employees of the Company have also been
granted agreements providing for certain benefits following a "non-approved"
change in control.
In addition, in March 1989, the Company entered into an
agreement with Dr. Milnes, a director of the Company, containing provisions
with respect to options and stock held by him and the protection of retirement
benefits under the Directors Retirement Plan substantially similar to the
corresponding provisions in the Agreements. Such agreement for Dr. Milnes does
not provide for any severance benefits, bonus payments or similar benefits.
The Board of Directors of the Company believes that the
Agreements will help assure management's continued dedication to their duties
to the Company notwithstanding the occurrence of any change in control and in
particular, will enable management to assess objectively and impartially, and
advise the Board of Directors with respect to, any proposal received by the
Company regarding a change in control. In addition, such agreements will help
assure continued services to the Company by management and other key personnel.
Stock Purchase Loan Plan
Under the Company's Stock Purchase Loan Plan established in
1979 to facilitate the exercise of stock options, Mr. Lineberger had a loan
outstanding during the fiscal year ended June 30, 1995, in the maximum amount
of $1,321,817. The currently outstanding balance of the loan to Mr. Lineberger
is $996,817. The loan presently outstanding to Mr. Lineberger under the Loan
Plan was outstanding in March 1984 and, in accordance with amendments to the
Loan Plan adopted in March 1984, is non-interest bearing. No loans were made
or outstanding under the Loan Plan to any other director or executive officer
during fiscal 1995.
-23-
<PAGE> 26
Transactions with Management
On June 30, 1995, the Company's outstanding promissory note of
TSI Security Acquisition Corp. ("TSI"), a company in which Mr. Lineberger is
the principal investor, was exchanged for a new note of TSI payable to the
Company in the principal amount of $109,789, representing the obligation
outstanding under the old note. The new note is payable in installments from
1996 to 2000, bears interest at the rate of 10% per annum and is subordinate to
other indebtedness of TSI borrowed for working capital purposes.
Certain Filings
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, executive officers and persons who own beneficially
more than ten percent of the Company's outstanding Common Stock to file with
the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of Common Stock and other securities of the Company on
Forms 3, 4 and 5, and to furnish the Company with copies of all such forms they
file. Based on a review of copies of such reports, all of the Company's
directors and executive officers timely filed all reports required with respect
to fiscal 1995.
SUBMISSION OF STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be eligible for
inclusion in the Company's proxy material relating to its 1996 Annual Meeting
(currently scheduled to be held on November 15, 1996) it must be in writing and
received by the Secretary of the Company prior to June 4, 1996. Stockholders
wishing to bring any matter before a meeting should consult the Company's
By-Laws with respect to any applicable notice or other procedural requirements.
ANNUAL REPORT
All stockholders of record on October 23, 1995, have been
sent, or are concurrently being sent, a copy of the Company's 1995 Annual
Report, which contains certified financial statements of the Company for the
fiscal year ended June 30, 1995.
ANY PERSON WHO WAS A STOCKHOLDER OF THE COMPANY AT THE CLOSE
OF BUSINESS ON OCTOBER 23, 1995, MAY OBTAIN A COPY OF THE COMPANY'S 1995 ANNUAL
REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WITHOUT CHARGE, BY WRITTEN REQUEST TO THE COMPANY, 500 NORTHWEST 12TH AVENUE,
DEERFIELD BEACH, FLORIDA 33442-1795, ATTENTION: SHAREHOLDER RELATIONS.
ACCOUNTANTS
The Company's independent auditors, selected by the Board of
Directors, are Ernst & Young L.L.P, certified public accountants. Ernst &
Young, and its predecessor, Arthur Young & Company, have served as the
Company's auditors since 1969.
Representatives of Ernst & Young are expected to be present at
the Annual Meeting of Stockholders, and will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions at the meeting.
-24-
<PAGE> 27
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of
no matter other than those set forth herein which will be presented for
consideration at the Annual Meeting of Stockholders. If any other matter or
matters are properly brought before the meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, on such matters in accordance with their judgment.
WALTER A. ENGDAHL
Secretary
Deerfield Beach, Florida
October 30, 1995
-25-
<PAGE> 28
APPENDIX A
SENSORMATIC ELECTRONICS CORPORATION
PROXY - ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 14, 1995
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, a stockholder of SENSORMATIC ELECTRONICS
CORPORATION, a Delaware corporation (the "Company"), does hereby
P appoint RONALD G. ASSAF, WALTER A. ENGDAHL and MIGUEL A. FLORES, and
each of them, the true and lawful attorneys and proxies, with full
R power of substitution, for and in the name, place and stead of the
undersigned, to vote, as designated on the reverse side, all of the
O shares of stock of the Company which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders
X of the Company to be held at the Deerfield Beach/Boca Raton Hilton,
100 Fairway Drive, Deerfield Beach, Florida 33441, on December 14,
Y 1995, at 10 A.M., local time, and at any adjournment or adjournments
thereof.
SEE
REVERSE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SIDE
<PAGE> 29
Please mark
[X] votes as in
this example.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
<TABLE>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 2. To vote with discretionary authority with respect to
"FOR" THE NOMINEES. all other matters which may come before the
meeting.
1. ELECTION OF DIRECTORS. MARK HERE
FOR ADDRESS [ ]
NOMINEES: Thomas V. Buffet, James E. Lineberger CHANGE AND
and John T. Ray, Jr. NOTE AT LEFT
FOR WITHHELD NOTE: Your signature should appear the same as your name appears
ALL [ ] FROM ALL [ ] hereon. In signing as attorney, executor, administrator, trustee
NOMINEES NOMINEES or guardian, please indicate the capacity in which signing. When
signing as joint tenants, all parties in the joint tenancy must sign.
When a proxy is given by a corporation, it should be signed by an
authorized officer and the corporate seal affixed. No postage is
required if returned in the enclosed envelope and mailed in the
United States.
For, except vote withheld from the following nominee(s): The undersigned hereby revokes any proxy or proxies heretofore given
and ratifies and confirms all that the proxies appointed hereby, or
any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof. All of said proxies or their substitutes who shall
be present and act at the meeting, or if only one is present and
acts, then that one, shall have and may exercise all of the powers
hereby granted to such proxies. The undersigned hereby acknowledges
receipt of a copy of the Notice of Annual Meeting and Proxy Statement,
both dated October 30, 1995, and a copy of the Annual Report for the
[ ] ______________________________________ fiscal year ended June 30, 1995.
Signature: ________________________ Date ________________
Signature: ________________________ Date ________________
</TABLE>
