<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SENSORMATIC ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 22, 1996
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 November 22, 1996, at 10 A.M., local time, for the following
purposes:
1. To elect two directors to serve for a term of three years
and until their successors are elected and qualified; and
2. To approve an amendment to the Company's 1995 Stock Incentive
Plan to increase the total number of shares of the Company's
Common Stock that may be issued under such Plan by 2,000,000;
and
3. To transact such other business as may be properly brought
before the meeting.
Only stockholders of record at the close of business on September 24,
1996, 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
Boca Raton, Florida
September 30, 1996
<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 November 22,
1996, at 10 A.M., local time, or at any adjournment or adjournments thereof.
Only stockholders of record at the close of business on September 24, 1996,
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, for the proposal to
approve the amendment to the Company's 1995 Stock Incentive Plan, 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. The
approval of the amendment to increase the number of shares that may be issued
under the Company's 1995 Stock Incentive Plan requires the affirmative vote of
a majority of the votes cast on such proposal, provided that the total vote
cast represents over 50% of all shares entitled to vote thereon. For purposes
of determining the number of votes cast with respect to a particular matter,
only those cast "for" or "against" are included. 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 only to determine the
existence of a quorum at the Annual Meeting.
This Proxy Statement and the accompanying proxy are being sent on or about
September 30, 1996, 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 $8,000, 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 located at 951 Yamato Road, Boca Raton, Florida,
33431-4425.
<PAGE> 4
VOTING SECURITIES AND SECURITY OWNERSHIP
Only stockholders of record at the close of business on September 24,
1996, will be entitled to vote at the Annual Meeting of Stockholders and any
adjournment thereof. At the close of business on September 24, 1996, there
were outstanding 73,964,135 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 September 24, 1996, no person
beneficially owned more than five percent of the outstanding shares of Common
Stock of the Company except as set forth in the table below. Each named person
beneficially owned, as of the dates set forth below, the number of shares of
Common Stock listed opposite its name, and, unless otherwise noted below, each
such person had sole voting and investment power over such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENTAGE
OF BENEFICIAL OWNER SHARES OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
State of Wisconsin Investment Board 7,097,800 (1) 9.6%
P.O. Box 7842
Madison, Wisconsin 53702
Edward C. Johnson 3d, 5,825,000 (2) 7.9%
Abigail P. Johnson and
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
Capital Guardian Trust Company 4,735,500 (3) 6.4%
333 South Hope Street
Los Angeles, California 90071
Quantum Industrial Partners LDC 4,319,300 (4) 5.8%
Kaya Flamboyan 9
Curacao, Netherlands Antilles
QIH Management Investor, L.P.
QIH Management, Inc.
888 Seventh Avenue
New York, New York 10106
George Soros
888 Seventh Avenue
New York, New York 10106
Purnendu Chatterjee
888 Seventh Avenue
New York, New York 10106
</TABLE>
(1) Reflects shares beneficially owned as of June 30, 1996, according to a
statement on Form 13F, dated July 26, 1996.
(2) Reflects shares beneficially owned as of August 31, 1996, according to a
statement on Schedule 13G, dated May 10, 1996, as amended through
Amendment Number 1 thereto dated September 10, 1996. According to such
Schedule 13G, FMR Corp. ("FMR") and Mr. Johnson have sole investment power
and no voting power over 5,685,100 shares and, through FMR's control of
Fidelity Management Trust Company, have sole voting power over 70,400
shares, no voting power over 69,500 shares and sole investment power over
-2-
<PAGE> 5
139,900 shares. Edward C. Johnson 3d, Abigail P. Johnson, members of their
family and associated trusts may be deemed to form a controlling group with
respect to FMR.
(3) Reflects shares beneficially owned as of June 28, 1996, according to a
statement on Form 13F, dated August 8, 1996, filed by Capital Guardian
Trust Company. According to such Form 13F, Capital Guardian Trust Company
has sole voting power over 3,508,800 shares, no voting power over
1,226,700 shares and shared investment power over 4,735,500 shares.
(4) Reflects shares beneficially owned as of June 28, 1996, according to a
statement on Form 13F, dated August 14, 1996. As set forth in a statement
on Schedule 13D, dated September 15, 1995, as amended through Amendment
Number 1 thereto, dated February 9, 1996, Quantum Industrial Partners LDC
("Quantum Industrial"), QIH Management Investor, L.P. ("QIHMI"), QIH
Management, Inc. ("QIH Management"), George Soros and Purnendu Chatterjee
beneficially owned 4,121,150 shares held by Quantum Industrial and, with
the exception of Quantum Industrial, had shared voting and investment
power over all such shares. Quantum Industrial had no voting or
investment power over any such shares. Mr. Soros also held 1,530,550
shares, over which he had sole voting and investment power. Dr.
Chatterjee is the beneficial owner of 526,258 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 240,400 shares held by Winston Partners, L.P., of which CFM is the
sole general partner.
________________________________
The following table sets forth information as to the Common Stock of the
Company beneficially owned as of September 24, 1996, 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> <C>
Ronald G. Assaf .................................. 1,545,817 (1) 2.1%
Thomas V. Buffett ................................ 50,175 (2) *
Timothy P. Hartman ............................... 91,666 (3) *
Jerome M. LeWine ................................. 153,500 (4) *
James E. Lineberger .............................. 762,649 (5) 1.0%
Dr. Arthur G. Milnes ............................. 30,000 (6)(12) *
Garrett E. Pierce ................................ -- --
Terry W. Price ................................... 39,861 (7) *
John T. Ray, Jr. ................................. 38,500 (8)(12) *
Robert A. Vanourek ............................... 160,000 (9) *
Gerd Witter ...................................... 24,800 (10) *
All directors and executive officers as a group .. 3,174,511 (11)(12) 4.2%
</TABLE>
________________________________
* Less than 1%.
(1) Includes 1,134,500 shares issuable upon exercise of options. Also
includes 64,217 shares allocated to Mr. Assaf's account under the
Employee Stock Ownership Plan (the "ESOP") as of June 30, 1996, 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.
-3-
<PAGE> 6
(2) Includes 37,500 shares issuable upon exercise of options.
(3) Includes 6,666 shares issuable upon exercise of options.
(4) Includes 150,000 shares issuable upon exercise of options.
(5) Includes 240,000 shares issuable upon exercise of options. Also includes
16,387 shares allocated to Mr. Lineberger's account under the ESOP as of
June 30, 1996, over which Mr. Lineberger has sole voting power.
(6) Includes 27,500 shares issuable upon exercise of options.
(7) Includes 30,000 shares issuable upon exercise of options. Also includes
556 shares allocated to Mr. Price's account under the ESOP as of June 30,
1996, over which Mr. Price has sole voting power.
(8) Includes 27,500 shares issuable upon exercise of options.
(9) Includes 150,000 shares issuable upon exercise of options.
(10) Includes 15,000 shares issuable upon exercise of options.
(11) Includes 1,992,316 shares issuable upon exercise of options and 116,415
shares allocated to executive officers under the ESOP as of June 30,
1996, over which executive officers exercise sole voting power.
(12) Does not include a total of 70,615 shares (less than 1% of the shares of
the Company's outstanding Common Stock) held under the ESOP as of June
30, 1996, 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 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 Ronald G. Assaf and Dr. Arthur G. Milnes, who have
been nominated by the Board of Directors as directors to serve until the Annual
Meeting of Stockholders in 1999 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.
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<PAGE> 7
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 November 22, 1996. The terms of office of the other two classes do not
expire until the Annual Meetings of Stockholders in 1997 and 1998,
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 1999:
RONALD G. ASSAF (a) ................ 61 1966 Chairman of the Board of Directors
DR. ARTHUR G. MILNES (b)(e)(f)(g) .. 74 1968 Director
Continuing Directors to serve until
Annual Meeting of Stockholders in 1997:
JEROME M. LeWINE (a)(f)(g) ......... 56 1974 Director
TIMOTHY P. HARTMAN (c)(d) .......... 57 1995 Director
ROBERT A. VANOUREK (a) ............. 54 1995 President, Chief Executive Officer
and Director
Continuing Directors to serve until
Annual Meeting of Stockholders in 1998:
THOMAS V. BUFFETT (b)(c)(d) ........ 60 1992 Director
JAMES E. LINEBERGER (a)(c)(d)....... 59 1968 Chairman of the Executive
Committee and Director
JOHN T. RAY, JR. (b)(d)(e)(g)....... 58 1989 Director
</TABLE>
- ---------------------
<TABLE>
<S> <C>
(a) Member of the Executive Committee (e) Member of the Stock Incentive Plan Committee
(b) Member of the Audit Committee (f) Member of the Technology Committee
(c) Member of the Finance Committee (g) Member of the Compensation Committee (until
(d) Member of the Governance Committee September 6, 1996)
</TABLE>
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.
In August 1996, Mr. Assaf retired as Chief Executive Officer of the Company.
He continues to serve as Chairman of the Board. 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
-5-
<PAGE> 8
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 was Chairman of NationsBank of Texas until
his retirement in June 1996, and also was a director and Vice Chairman of its
parent corporation until he retired in 1994. 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. In August 1996, Mr. Vanourek was appointed Chief
Executive Officer of the Company. From 1992 until he joined the Company, Mr.
Vanourek was President and Chief Executive Officer of Recognition
International, Inc. ("Recognition"), a provider of document processing
hardware, software and services worldwide, which merged with BancTek, Inc. in
October 1995. 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, Governance,
Stock Incentive Plan and Technology Committees. Until September 6, 1996, the
Company had a standing Compensation Committee, whose responsibilities were
assumed at that time by the newly-created Governance Committee.
-6-
<PAGE> 9
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. 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 17 times during the 1996 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 Finance Committee met five times during
the past fiscal year.
The Governance Committee was formed in September 1996 to address corporate
governance issues generally. The Committee will, among other things, evaluate
the performance of the Company's Chief Executive Officer and other executive
officers and will assume the responsibilities previously carried out by the
Compensation Committee. The Governance Committee will also have responsibility
for reviewing the composition of the Board, evaluating its performance and
considering the qualifications of prospective nominees to serve as directors.
Stockholders may recommend nominees for consideration by the Governance
Committee by submitting such recommendations, in writing, to the Committee in
care of the Secretary of the Company. The Governance Committee has not yet met
during fiscal 1997.
The Compensation Committee, through September 6, 1996, when its
responsibilities were assumed by the Governance Committee, was responsible for
implementing the Company's cash compensation policies and determining the
salaries, bonuses and certain other benefits of executive officers of the
Company. It also from time to time made recommendations to the Board of
Directors regarding other compensation matters. The Compensation Committee met
nine times during the 1996 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 eight times during the 1996
fiscal year.
The Technology Committee reviews the Company's research and development
projects and technological developments on behalf of the Board of Directors and
advises the Board on the significance and potential of such developments. The
Technology Committee met six times during the 1996 fiscal year.
The Board of Directors held nine meetings during the 1996 fiscal year. No
director of the Company during the last fiscal year attended fewer than 82% of
the aggregate number of meetings of the Company's Board of Directors and of all
committees of the Board of Directors on which he served.
Compensation of Directors
During fiscal 1996, the directors of the Company (other than Messrs. Assaf
and Vanourek) received annual compensation for all services as follows: Mr.
Lineberger, $155,000; Mr. Buffett, $80,000; Mr. Hartman, $20,000; Mr. LeWine,
$50,000; Dr. Milnes, $33,200; Mr. Ray,
-7-
<PAGE> 10
$20,000; and, in the cases of Dr. Milnes and Messrs. Ray and Hartman, an
additional $3,000 for each meeting of the Board of Directors (other than
telephonic meetings); Dr. Milnes and Mr. Ray received an additional $3,000 for
service on the Audit Committee, and an additional $3,000 for service on
compensation committees; and Mr. Hartman received an additional $3,000 for
service on the Finance Committee. In Mr. Lineberger's case, such compensation
reflects his services as a director, Chairman of the Executive Committee and a
member of the Finance Committee. Mr. Lineberger also participated in various
benefit plans for executive officers of the Company. Under the Company's
Executive Salary Continuation Plan (described below in Note 8 to the "Summary
Compensation Table") Mr. Lineberger will receive annual retirement benefits
currently fixed at $112,500.
In addition, the directors of the Company participate in either the
Directors Stock Option Plan (the "Directors Plan") or the 1995 Plan. The
Directors Plan provides for annual, non-discretionary grants of 10-year options
to purchase 7,500 shares of Common Stock (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, and exercisable on a cumulative
basis in three equal annual installments. In fiscal 1996, Dr. Milnes and Mr.
Ray each received options to purchase 7,500 shares of Common Stock under the
Directors Plan. Mr. Hartman received an initial grant of an option to purchase
20,000 shares when he became eligible to participate in the Directors Plan in
July 1995. Messrs. Lineberger and LeWine received options to purchase a total
of 20,000 and 15,000 shares of Common Stock, respectively, under the 1995 Plan.
Messrs. Assaf and Vanourek 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, $40,000
for Mr. Buffett and $20,000 for each of Dr. Milnes, Mr. Ray and Mr. Hartman.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK INCENTIVE PLAN COMMITTEES
Through fiscal 1996 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, implemented
the Company's compensation programs. The Compensation Committee had
responsibility for, among other things, 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 Company's Long-Term Incentive
Program ("LTIP"). In fiscal 1996, the Compensation Committee and the Stock
Incentive Plan Committee received from the Company's Chief Executive Officer
recommendations with respect to compensation of the Company's other executive
officers and met with him to evaluate such executives' performance and, at
times, to discuss the bases for his
-8-
<PAGE> 11
recommendations. The Committees met without the Chief Executive Officer to
evaluate his performance and to determine compensation of all executive
officers.
The members of the Compensation Committee and the Stock Incentive Plan
Committee provide the following report, each being responsible for the portions
thereof which refer to them or their separate functions.
Compensation Policy
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 that 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 1996 Performance
Fiscal 1996 was a difficult year for the Company. After an extensive
review of its operations, cost structure and products, the Company undertook in
fiscal 1996 a substantial restructuring and reorganization of its business
units and product lines, with the goal of reducing costs, increasing
efficiencies and improving gross margins. This restructuring had a significant
adverse impact on operations and results, and, together with special charges
and other factors, caused the Company to miss its earnings and other overall
corporate goals for fiscal 1996.
The Company believes that it is addressing the problems that have affected
its recent performance and has assembled a management team capable not only of
implementing corrective measures, but also of leading the Company into a new
era of sustained growth. Notwithstanding the dislocations of the restructuring
and special charges in fiscal 1996, the Company's business remains vital.
Revenues for the entire year were up approximately $100 million, or 12%, over
fiscal 1995. New products and technology, including improved Ultra-Max labels
and deactivators, were brought to market. The Company also made a significant
contribution to the 1996 Centennial Olympic Games in Atlanta as a corporate
sponsor and the official supplier of electronic security equipment.
Base Salary
Base compensation for executive officers reflects 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. The Compensation Committee relied on
information from a variety of sources to determine competitive cash
compensation ranges, including executive compensation surveys conducted by
employee benefit consulting firms. The base salaries of the Company's
executive officers in the past have generally been set at or below the median
salaries reported for comparable positions.
Base salaries generally are modified annually 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 did not adopt in fiscal 1996 any salary increases
for the Company's executive officers.
-9-
<PAGE> 12
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. Certain officers,
including Messrs. Witter and Price, receive incentive bonuses based primarily
on performance goals for the business unit or revenue-producing operations for
which they are responsible and in part on the achievement of overall corporate
goals. The bonuses for the Company's executive officers with broad corporate
responsibilities, such as the Chief Executive Officer and the Chief Financial
Officer, are based largely on the financial performance of the Company overall.
The Company 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 a year such as fiscal 1996, however, when the Company failed to meet
expectations, bonuses were reduced substantially and foregone in cases where
they were based primarily on overall corporate financial performance.
Accordingly, bonuses awarded executive officers generally for fiscal 1996 were
significantly below bonuses awarded in prior fiscal years. In addition, based
on the Company's financial results, Messrs. Assaf and Lineberger did not
expect, and were not awarded, bonuses in fiscal 1996.
Both Mr. Vanourek and Mr. Pierce were entitled to guaranteed bonuses for
fiscal 1996, and Mr. Witter was guaranteed a bonus for the second half of
fiscal 1996, under their respective employment agreements with the Company.
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.
Awards granted under the LTIP are designed to serve as longer-term
incentives than yearly option grants under the 1995 Plan. 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 are achieved. Although awards of options and restricted
stock were made under the LTIP in fiscal 1995, no additional grants were made
thereunder in fiscal 1996.
In determining the size of a grant to an executive officer or
participating director under either the regular stock option incentive program
or the LTIP, 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 and
stock-based incentive compensation, and expected contributions, as well as the
recommendations of employee benefits consultants who have studied such
compensation at comparable companies.
In 1993, the Internal Revenue Service enacted Section 162(m) of the
Internal Revenue Code, which limits the deductibility of executive compensation
in excess of $1,000,000 per year. However, this limitation does not apply to
performance-based compensation, provided certain conditions are satisfied. The
Company's policy is generally to preserve the federal income
-10-
<PAGE> 13
tax deductibility of compensation paid to its executives. Accordingly, to the
extent feasible, the Company has taken action to preserve the deductibility of
certain stock-based incentive awards to its executive officers under the 1995
Plan. However, notwithstanding the Company's general policy, the Governance
Committee and the Stock Incentive Plan Committee retain the authority to
authorize compensation that may not be deductible if they believe that it is in
the interest of the Company to do so. Other elements of compensation, including
perquisites and cash and other bonuses, even those based on performance, may
also cause a covered executive officer's income to exceed deductible limits.
Additional Factors Relating to CEO's Compensation
The Committees measured Mr. Assaf's performance in fiscal 1996 by the
above standards and with consideration of his role in implementing the
restructuring described above, recruiting the Company's new Chief Executive
Officer and rebuilding the management organization. Mr. Assaf, a founder of
the Company, has been a driving force in its growth for thirty years. Mr.
Assaf led the Company's efforts to develop technical innovations, diversify its
product lines and expand its markets and presence worldwide. It was the belief
of the Committees that Mr. Assaf's continued availability and commitment to the
Company would contribute to the Company's future success. Accordingly, the
Board and the Committees approved a five-year agreement with Mr. Assaf assuring
the Company of his services over that period. Mr. Assaf continues as Chairman
of the Board and will provide consulting services to the Company under such
agreement.
<TABLE>
<S> <C>
Compensation Committee Stock Incentive Plan Committee
---------------------- ------------------------------
John T. Ray, Jr., Chairman John T. Ray, Jr., Chairman
Jerome M. LeWine Arthur G. Milnes
Arthur G. Milnes
</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 $2,088,085 for legal services rendered to the Company
and its subsidiaries during the fiscal year ended June 30, 1996.
-11-
<PAGE> 14
SUMMARY COMPENSATION TABLE
The following table shows compensation for services rendered in all
capacities to the Company and its subsidiaries during fiscal 1996, 1995 and
1994 by the Chief Executive Officer and by the next four highest-paid executive
officers of the Company.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ------------------------
Restricted
Stock All Other
Salary Bonus Other Annual Awards Options/SARS Compensation
Name and Principal Position Year ($)(1) ($) Compensation ($) ($)(2) (#)(3) ($)
- --------------------------- ---- ------- ------- -------------------- ---------- ------------ ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf, 1996 545,000 -- 58,566 (14) -- 100,000 104,110 (5)(6)(7)(8)
Chairman of the Board of 1995 521,154 200,000 -- 726,669 150,000 54,166 (5)(6)(7)(8)
Directors and Chief 1994 464,615 425,000 -- -- 75,000 79,054 (5)(6)(7)(8)
Executive Officer (4)
- ---------------------------------------------------------------------------------------------------------------------------
Robert A. Vanourek, 1996 302,408 233,333 -- -- 450,000 61,563 (10)
President and Chief 1995 -- -- -- -- -- --
Operating Officer (9) 1994 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Gerd Witter,
President, Sensormatic 1996 301,309 110,806 -- -- 50,000 63,434 (8)(10)
Europe and Senior Vice 1995 209,365 83,960 -- 305,638 47,000 76,830 (8)(10)
President (11) 1994 215,405 153,513 -- -- 20,000 60,516 (8)(10)
- ---------------------------------------------------------------------------------------------------------------------------
Garrett E. Pierce, 1996 138,462 150,000 -- -- 200,000
Senior Vice President and 1995 -- -- -- -- -- --
Chief Financial Officer 1994 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Terry W. Price, 1996 203,000 63,807 -- -- 50,000 13,021 (6)(7)(13)
President, Commercial/ 1995 193,640 50,500 -- 184,006 34,000 36,171 (6)(7)(13)
Industrial Worldwide 1994 180,203 54,200 99,929 (12) -- 20,000 27,867 (6)(7)(13)
Operations/Senior Vice
President
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In fiscal 1995 and 1994, annual raises were effective near the beginning
of a calendar year. The salaries set forth for each fiscal year reflect
amounts actually paid during that fiscal year, including, in fiscal 1995
and 1994, about six months at the prior year's annual rate and about six
months at the annual rate for such fiscal year.
(2) Restricted stock was 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 and/or
continued employment with the Company. Dividends payable on restricted
stock awards pursuant to 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, 1996, the value of the restricted stock held by the named
executive officers was $381,538, $160,475 and $96,613 for Messrs. Assaf,
Witter and Price respectively.
-12-
<PAGE> 15
(3) 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.
(4) Mr. Assaf was Chairman of the Board and Chief Executive Officer of the
Company throughout fiscal 1996 and President of the Company until October
1995, when Robert Vanourek became President. In August 1996, Mr.
Vanourek became Chief Executive Officer of the Company.
(5) Includes a contribution of $33,720 toward the funding of a $1,000,000
death benefit provided by the Company. The Company no longer provides
this benefit to Mr. Assaf.
(6) 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 1996, the Company contributed $603 each for the accounts
of Messrs. Assaf and Price.
(7) 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 1996, the
Company contributed $4,875 each to the accounts of Messrs. Assaf and
Price.
(8) 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 1996 were $58,594 and $7,434 for Messrs. Assaf and Witter,
respectively. Based upon the ESCP as presently in effect, Messrs. Assaf
and Witter could expect to receive annual retirement benefits under the
ESCP of $455,000 and $100,000, respectively, as last determined by the
Board of Directors.
(9) Mr. Vanourek was President and Chief Operating Officer of the Company
from October 1995 until August 12, 1996. At that time, he assumed the
position of Chief Executive Officer of the Company while continuing as
its President.
-13-
<PAGE> 16
(10) 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 or (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 1996 were $61,653, $0 and $56,000 for Messrs. Vanourek,
Pierce and Witter, respectively. Based upon the Senior Executive Plan as
presently in effect, Messrs. Vanourek, Pierce and Witter, 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 $387,500, $225,000 and $68,000, respectively.
(11) 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.
(12) 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.
(13) 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
-14-
<PAGE> 17
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 1996 was $5,520 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.
(14) Of this total, $16,011 represents imputed interest income resulting from
Mr. Assaf's loan under the Company's Stock Purchase Loan Plan and $15,850
represents imputed income from the use of a Company-provided automobile.
The balance includes benefits paid under the Company's Executive Medical
Reimbursement Plan, membership dues, tax preparation fees and a
miscellaneous expense allowance.
The Company has entered into an agreement with Mr. Assaf, effective August
12, 1996, pursuant to which he will provide consulting services over a
five-year period and for which he will receive annual cash compensation of
$455,000 and certain benefits. Mr. Assaf will not receive separate
compensation for his service as Chairman of the Board of Directors. The Company
also has an agreement with Mr. Vanourek, terminable by the Company on 30 days'
notice, pursuant to which he currently receives a base salary of $475,000 per
annum and will have a targeted bonus of not less than $350,000 per annum. Mr.
Vanourek is entitled to two years' severance if his employment terminates under
certain circumstances. Under Mr. Pierce's employment agreement with the
Company, which is terminable by the Company upon 30 days' notice, Mr. Pierce
currently receives a base salary of $320,000 per annum and will have a targeted
bonus of not less than $150,000 per annum. The Company also has an employment
agreement, terminable by the Company on 30 days' notice, with Mr. Witter, which
provides for a minimum annual salary of 462,000 German marks and two years'
severance if his employment terminates under certain circumstances.
-15-
<PAGE> 18
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides certain information with respect to options
granted to each person named in the Summary Compensation Table during fiscal
1996. In addition, in accordance with Securities and Exchange Commission
rules, there are shown hypothetical gains that would exist for the options
granted, based on assumed rates of annual compound stock price appreciation of
5% and 10% from the date the options were granted over the full option term.
The named officers will realize no gain on these options unless the price of
the Common Stock increases above the exercise price for such options, which
will benefit all stockholders proportionately. No stock appreciation rights
have been awarded by the Company.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------- Potential Realizable Value at
Assumed Annual Rates of Stock
Percent of Price Appreciation for
Options/ Total Option Term(2)
SARS Options/SARS --------------
Granted in Granted to Exercise
Fiscal Employees in or Base Expiration
Name Year(1) Fiscal Year Price Date 5%($) 10%($)
---- ------- ----------- ----- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 100,000 4.34% $18.1875 2/12/06 1,143,802 2,898,619
Robert A. Vanourek 450,000 19.53% $ 22.12 10/15/05 2,750,107 6,077,017
Gerd Witter 50,000 2.17% $18.1875 2/12/06 571,901 1,449,310
Garrett E. Pierce 200,000 8.68% $ 17.75 1/17/06 980,800 2,167,311
Terry W. Price 50,000 2.17% $18.1875 2/12/06 571,901 1,449,310
All Optionees
(participants)(3) 2,303,050 100% $ 18.85 $ 27,294,600 $ 69,170,000
- --------------------------------------------------------------------------------------------------------------------------------
All Stockholders' $903,840,496 $2,290,509,276
Potential Realizable
Value at Assumed
Growth Rates(4)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options granted during the period were non-qualified options granted
pursuant to the 1995 Stock Incentive Plan (the "1995 Plan") at fair
market value on the date of grant. Options granted to the named
executives and other officers of the Company have terms of ten years and,
like options granted under the Company's predecessor Stock Incentive
Plans, generally become exercisable on a cumulative basis in three equal
annual installments, commencing on the first anniversary of the date of
grant. Certain options granted to executive officers under the 1995 Plan
in fiscal 1995 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.
-16-
<PAGE> 19
(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) Calculated based on the weighted average exercise price of all options
granted during fiscal 1996 ($18.85), and assuming all options have a term
of ten years.
(4) Calculated based on the weighted average exercise price of all options
granted during fiscal 1996 ($18.85), and assuming stock price
appreciation at the indicated rates over the same period used to
calculate the individuals' potential realizable value.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth as to each person named in the Summary
Compensation Table the specified information with respect to option exercises
during fiscal 1996 and the status of their options at the end of fiscal 1996.
<TABLE>
<CAPTION> Value of Unexercised
Number of Unexercised in--the--Money (2)
Options/SARs at Fiscal Options/SARS at
Number of Shares Value Year--End Fiscal Year--End ($)(3)
Acquired on Realized -------------------------- -----------------------
Name Exercise ($)(1) Exercisable Nonexercisable Exercisable Nonexercisable
---- -------- -------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Ronald G. Assaf 90,500 $1,016,805 1,134,500 325,000 $ 0 $0
Robert A. Vanourek 0 $ 0 0 450,000 $ 0 $0
Gerd Witter 0 $ 0 15,000 117,000 $ 0 $0
Garrett E. Pierce 0 $ 0 0 200,000 $ 0 $0
Terry W. Price 0 $ 0 30,000 104,000 $46,875 $0
</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, 1996.
(3) Based on a stock price of $16.375 per share, which was the closing price
of a share of Common Stock reported on the New York Stock Exchange on
June 30, 1996.
-17-
<PAGE> 20
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 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, 1991, in each
of the Common Stock, the S&P 500 and the Self-Constructed Peer Group (weighted
on the basis of capitalization), and that all dividends were reinvested.
SRM
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------
6/91 6/92 6/93 6/94 6/95 6/96
<S> <C> <C> <C> <C> <C> <C> <C>
Sensormatic Electrs Corp SRM 100 115 169 188 234 109
PEER GROUP PPEER1 100 111 139 145 153 254
S & P 500 I500 100 113 129 131 165 208
</TABLE>
The Self-Constructed 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.
-18-
<PAGE> 21
Agreements Relating to Change in Control
The Board of Directors, in 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 the chief executive officer of the Company, similar
payments would be payable following an "approved" change in control and
irrespective of the manner of termination (other than for cause). The chief
executive officer is required to provide consulting services to the Company
during a portion of 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.
-19-
<PAGE> 22
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 1988, the Company also entered into agreements similar to the
Agreements described above with certain non-executive officers, other key
employees and Mr. LeWine. 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 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. In 1996,
similar agreements were entered into with Messrs. Buffett, Hartman and Ray,
also directors of the Company.
Under their respective employment arrangements, the Company has also
agreed that Mr. Vanourek would be entitled to the change in control benefits
applicable to the chief executive officer and that Mr. Pierce would be entitled
to such benefits applicable to executive officers generally.
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. Assaf and Mr. Lineberger had
loans outstanding during the fiscal year ended June 30, 1996, in the maximum
amount of $1,781,648 and $996,817 respectively. Those amounts represent the
currently outstanding balances of the loans. The loan presently outstanding to
Mr. Lineberger was outstanding in March 1984 and, in accordance with amendments
to the Stock Purchase Loan Plan adopted in March 1984, was non-interest bearing
through March 1996. In February 1996 the Board of Directors extended the term
of Mr. Lineberger's loan to March 1998, with interest accruing thereon at 6%
per annum beginning after March 1996. The loan to Mr. Assaf was made during
fiscal 1996.
Transactions with Management
The Company holds a June 30, 1995, promissory note of TSI Security
Acquisition Corp. ("TSI"), a company in which Mr. Lineberger is the principal
investor, in original principal amount of $109,789. The 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. The outstanding principal balance of the TSI note at June 30, 1996,
was $99,789.
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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 officers
timely filed all reports required with respect to fiscal 1996, except that
Dennis Gillette, a Senior Vice President, filed a Form 4 reporting the June 15,
1995, sale of 3,056 shares of Common Stock on the open market several months
late and Timothy Hartman, a director of the Company, filed his Form 4 for
January 1996, reporting the open market purchase of 30,000 shares of Common
Stock, ten days late.
Certain Legal Proceedings
Three derivative actions have been filed against certain directors of the
Company in the Court of Chancery of the State of Delaware by Marion Lord and
Norman Rabinstein, Harry Lewis, and Alan Freberg on or about September 7,
September 13 and September 14, 1995, respectively. The complaints name Messrs.
Ronald G. Assaf, Thomas V. Buffett, Jerome M. LeWine, James E. Lineberger, John
T. Ray, Jr. and Dr. Arthur G. Milnes, six of the Company's current directors,
and Mr. Michael Pardue, a former director, as defendants, and the Company as
nominal defendant. The complaints assert, among other things, claims for
breach of fiduciary duties of care and loyalty, mismanagement and waste of
corporate assets. The plaintiffs, who claim to be stockholders of the Company,
seek restitution and/or damages in favor of the Company and imposition of a
constructive trust upon defendants' proceeds from trading activities in the
Company's securities allegedly based upon non-public information, together with
costs, attorneys' fees, accountants' fees, experts' fees and other relief.
These three actions have been consolidated. The Company intends to defend
vigorously against these actions.
PROPOSAL TO AMEND THE 1995 STOCK INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE
FOR ISSUANCE THEREUNDER
General
In early fiscal 1995, the Company and its stockholders approved the 1995
Plan and authorized 3,900,000 shares of Common Stock for issuance thereunder.
As of September 5, 1996, approximately 441,000 shares remained available for
issuance in connection with future grants under the 1995 Plan.
In September 1996, the Board of Directors approved an amendment to the
1995 Plan, subject to stockholder approval, to increase the number of shares of
Common Stock of the Company that may be issued under the 1995 Plan by 2,000,000
shares. This amendment is now being submitted to the stockholders for
approval.
The Board of Directors recommends approval of the amendment. The purpose
of the 1995 Plan is to aid the Company in attracting, retaining and motivating
officers, key employees and directors by providing them with incentives for
making significant contributions to the growth and profitability of the
Company. The 1995 Plan is designed to accomplish this goal by giving
participants a proprietary interest in the success of the Company, through the
grant of stock options and other incentive awards. The amendment, if approved,
would increase the total number
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<PAGE> 24
of shares authorized for issuance under the 1995 Plan to 5,900,000, leaving
approximately 2,441,000 shares available for future grants. The Board of
Directors believes that this additional share reserve is necessary to permit the
Company to make available competitive long-term incentives for Plan participants
to improve the Company's performance and thereby create stockholder value.
Set forth below is a brief description of the principal features of the
1995 Plan.
General Terms
The 1995 Plan authorizes the Company to grant awards in the form of stock
options, both incentive stock options (within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")) and
non-qualified stock options, SARs and awards payable in stock, restricted stock
or cash. All of such awards may be granted singly, in combination or in
tandem, or in substitution for awards granted previously under the 1995 Plan or
any other plan of the Company. In addition, the 1995 Plan permits the Company
to extend dividend equivalency rights to awards made thereunder. The payment
or exercise of any awards, including stock options, under the 1995 Plan may be
conditioned on the satisfaction of various criteria, such as the achievement of
specific business objectives, attainment of growth rates and other comparable
measurements of the Company's performance. While some or all of the other
types of awards referred to above may be made from time to time, the Company
has principally granted stock options under the 1995 Plan and has also granted
restricted stock awards under its 1995 Long-Term Incentive Program under the
1995 Plan.
The 1995 Plan terminates in November 2004. If the amendment is approved,
the number of shares authorized for issuance thereunder would be increased to
5,900,000. Shares related to awards (or portions thereof) that are forfeited,
canceled or terminated, expire unexercised, are surrendered in exchange for
other awards, or are settled in cash in lieu of shares or in any other manner
such that shares covered by an award are not and will not be issued, will be
restored to the total number of shares available for issuance pursuant to
awards granted under the 1995 Plan. The aggregate number of shares issuable
pursuant to awards, or which may be used as a basis for SARs, granted to any
individual participant under the 1995 Plan is limited to 800,000 shares during
any three consecutive fiscal-year periods beginning after July 1, 1994, subject
to proportional adjustments as described below.
The 1995 Plan provides that, in the event of a stock split, stock
dividend, combination or reclassification of shares, recapitalization, merger,
consolidation or similar event, proportional adjustments will be made in (a)
the number of shares of the Company's Common Stock (i) reserved for issuance
under the 1995 Plan, (ii) available for options or other awards and for
issuance pursuant to options, or upon which SARs may be based, for individual
participants, and (iii) covered by outstanding awards; (b) the prices related
to outstanding awards; and (c) the appropriate fair market value and other
price determinations for such awards. In addition, equitable adjustments will
be made in the event of any other change affecting the Company's Common Stock
or any distribution (other than normal cash dividends) to stockholders of the
Company.
The 1995 Plan provides that it shall be administered by a Stock Incentive
Plan Committee designated by the Board of Directors (the "Committee"),
consisting of at least two directors who are not officers or employees of the
Company or any of its subsidiaries. The Committee has the sole authority,
among other things, to: grant awards; determine the terms, conditions and
limitations of awards (including any applicable performance criteria);
establish rules, procedures, regulations and guidelines relating to the 1995
Plan generally; and to interpret the 1995 Plan and award agreements entered
into pursuant to the Plan.
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<PAGE> 25
Officers, key employees and directors who are also officers or employees
of the Company or its subsidiaries or who have been designated by the Board of
Directors of the Company as eligible to receive awards under the 1995 Plan, are
eligible to participate in the 1995 Plan. Key employees are those employees
who hold positions of responsibility or whose performance, in the judgment of
the Committee, can have a significant effect on the growth and profitability of
the Company. The number of persons who are currently eligible to participate
in the 1995 Plan is approximately 550.
Generally, a 1995 Plan participant may exercise or receive payment of an
award only while employed by or associated with the Company or a subsidiary of
the Company, except that, under some circumstances, and subject to restrictions
and limitations imposed by the Committee, the Committee may permit exercise by,
or payment to, participants who have retired or become disabled, or who
otherwise have had their employment or association with the Company or a
subsidiary thereof terminated. In addition, if a participant dies while still
employed or associated with the Company or a subsidiary thereof, the estate,
heirs or beneficiaries of the deceased participant may, subject to restrictions
and limitations imposed by the Committee, exercise or receive payment in respect
of awards held by the participant at the time of death. In general, awards
granted under the 1995 Plan are not assignable or transferable by a participant,
except under the limited circumstances contemplated by the 1995 Plan.
The exercise price of an option granted under the 1995 Plan will be not
less than the fair market value of the Company's Common Stock on the date of
grant. (The closing sales price of a share of the Company's Common Stock was
$17.50 on September 24, 1996, as reported on the New York Stock Exchange.) The
exercise price of an option must be paid in full in cash at the time of
exercise, or, if permitted by the Committee, may be paid in whole or in part by
(a) tendering shares of Common Stock or surrendering another award granted
under the Plan or another benefit plan of the Company, (b) delivering a
promissory note issued by the participant to the Company pursuant to the terms
and conditions of the Company's Stock Purchase Loan Plan or otherwise as
determined by the Committee, or (c) any other means acceptable to the
Committee. In order to enable the Company to satisfy any tax payment
obligations resulting from any exercise of, or other payment on, an award under
the Plan, the Company has the right, among other things, to withhold an
appropriate amount from such payment or to withhold an appropriate number of
shares of the Company's Common Stock receivable by the participant, for payment
thereof.
The 1995 Plan may not, without the approval of the stockholders as set
forth therein, be amended to (i) materially increase the aggregate number of
shares of the Company's Common Stock that may be issued under the 1995 Plan
(except for adjustments pursuant to the 1995 Plan in connection with a stock
split, stock dividend, combination or reclassification of shares,
recapitalization, merger, consolidation or similar event, as described above),
(ii) materially increase the benefits accruing to participants (and the limit
on the aggregate number of shares that may be issued to any individual
participant during any three consecutive fiscal-year periods pursuant to
options, or which are used as a basis of SARs, may not be amended at all
without the approval of stockholders) or (iii) materially modify the
eligibility requirements of the 1995 Plan. The 1995 Plan may not be changed in
such a way as to alter, impair, amend, modify, suspend or terminate any rights
of a participant or any obligations of the Company under any award theretofore
granted in any manner adverse to such participant without the consent of such
participant.
Federal Income Tax Consequences
Under current federal tax laws and regulations and judicial
interpretations thereof, which are subject to change at any time, the following
are the federal income tax consequences generally arising with respect to
awards granted under the 1995 Plan. The grant of a stock option
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<PAGE> 26
or SAR will create no tax consequences for the participant or the Company. The
participant will have no taxable income upon exercising an incentive stock
option (except that the alternative minimum tax may apply), and the Company will
not receive a deduction when an incentive stock option is exercised. Upon
exercising an SAR or a non-qualified stock option, the participant must
recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the stock on the exercise date. At
such time, the Company will receive a deduction for the same amount (assuming
the applicable requirements of Section 162(m) of the Internal Revenue Code have
been met).
With respect to other awards granted under the 1995 Plan that are settled
in cash or stock that is either transferable or not subject to a substantial
risk of forfeiture, the participant must recognize ordinary income in an amount
equal to the cash or the fair market value of the shares received, when
received. The Company will receive a deduction for the same amount, provided
that, at the time the income is recognized, the participant either is not a
covered employee or does not have total compensation in excess of $1,000,000 for
the year of recognition (other than compensation that otherwise meets the
requirements of Section 162(m) of the Internal Revenue Code). With respect to
other awards granted under the 1995 Plan that are settled in stock that is
subject to restrictions as to transferability and subject to a substantial risk
of forfeiture, the participant must recognize ordinary income in an amount equal
to the fair market value of the shares received on the date the shares first
become transferable or not subject to a substantial risk of forfeiture,
whichever occurs earlier. At such time, the Company will receive a deduction
for the same amount, subject to the proviso set forth above in this paragraph.
The tax treatment upon disposition of shares acquired under the 1995 Plan
will depend on how long the shares have been held. In the case of shares
acquired through exercise of a stock option, the tax treatment will also depend
on whether or not the shares were acquired by exercising an incentive stock
option. There will be no tax consequences to the Company upon the disposition
of shares acquired under the 1995 Plan except that the Company may receive a
deduction in the case of the disposition of shares acquired under an incentive
stock option before the applicable incentive stock option holding period has
been satisfied.
Recommendation
The Board of Directors of the Company believes that it is in the best
interests of the Company and its stockholders to continue to offer the
long-term incentive compensation necessary in the current competitive business
environment to attract, retain and motivate key employees to make significant
contributions to the Company. Accordingly, the Board of Directors has adopted,
and recommends that the stockholders approve, the amendment to the 1995 Plan
increasing the total number of shares that may be issued under the 1995 Plan by
2,000,000.
Approval requires the affirmative vote of a majority of the votes cast at
the meeting, in person or by proxy, on such proposal, provided that the total
vote cast represents over 50% of all shares entitled to vote on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE
1995 STOCK INCENTIVE PLAN.
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<PAGE> 27
SUBMISSION OF STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be eligible for inclusion in the
Company's proxy material relating to its 1997 Annual Meeting (currently
scheduled to be held on November 14, 1997) it must be in writing and received
by the Secretary of the Company prior to June 6, 1997. 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 September 24, 1996, have been sent, or are
concurrently being sent, a copy of the Company's 1996 Annual Report on Form
10-K, which contains certified financial statements of the Company for the
fiscal year ended June 30, 1996.
ANY PERSON WHO WAS A STOCKHOLDER OF THE COMPANY AT THE CLOSE OF BUSINESS
ON SEPTEMBER 24, 1996, MAY OBTAIN ADDITIONAL COPIES OF THE COMPANY'S 1996 ANNUAL
REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WITHOUT CHARGE, BY WRITTEN REQUEST TO THE COMPANY, 951 YAMATO ROAD, BOCA RATON,
FLORIDA 33431-4425, 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.
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
Boca Raton, Florida
September 30, 1996
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<PAGE> 28
Appendix A
P R O X Y
SENSORMATIC ELECTRONICS CORPORATION
PROXY - ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 22, 1996
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, a stockholder of SENSORMATIC ELECTRONICS
CORPORATION, a Delaware corporation (the "Company"), does hereby appoint ROBERT
A. VANOUREK, WALTER A. ENGDAHL and GARRETT E. PIERCE, and each of them, the true
and lawful attorneys and proxies, with full 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 shares of stock of the Company which the undersigned
would be entitled to vote if personally present 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 November 22, 1996, at 10
A.M., local time, and at any adjournment or adjournments thereof.
[SEE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) REVERSE
SIDE]
<PAGE> 29
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES.
1. ELECTION OF DIRECTORS.
Nominees: Ronald G. Assaf and Dr. Arthur G. Milnes
FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES [ ]
For, except vote withheld from the following nominee:
[ ] __________________________________________________________________________
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 2.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE 1995 STOCK INCENTIVE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To vote with discretionary authority with respect to all other matters
which may come before the meeting.
NOTE: Your signature should appear the same as your name appears hereon. In
signing as attorney, executor, administrator, trustee 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.
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 September 30, 1996, and a copy of the Annual Report on
Form 10-K for the fiscal year ended June 30, 1996.
Signature: __________________________________________ Date ____________________
Signature: __________________________________________ Date ____________________
