<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>
CYBEX COMPUTER PRODUCTS 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
[CYBEX COMPUTER PRODUCTS CORPORATION LOGO]
4912 RESEARCH DRIVE
HUNTSVILLE, ALABAMA 35805
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 23, 1996
TO THE SHAREHOLDERS:
The annual meeting of Shareholders of Cybex Computer Products
Corporation (the "Company") will be held at the Marriott Hotel, Five Tranquility
Base, Huntsville, Alabama 35805, on the 23rd day of July, 1996, at 10:30 A.M.
(local time), for the following purposes:
(1) To elect a Board of Directors to serve until the next annual
meeting or until their successors are duly elected.
(2) To consider and act upon a proposal to ratify the engagement of
the accounting firm of Coopers & Lybrand L.L.P. as independent
public accountants for the current fiscal year.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
We hope you will attend the meeting and take an active part in it.
Details concerning those matters to come before the meeting are set forth in the
accompanying proxy statement for your inspection. Whether you plan to attend
the meeting or not, please execute the enclosed proxy and return it in the
return envelope which is enclosed for your convenience.
The annual report of your Company for the fiscal year ended March 31,
1996, is enclosed. We hope you will find it informative.
Pursuant to a resolution adopted by the Board of Directors of the
Company, the close of business on June 17, 1996, has been fixed as the date for
determination of Shareholders entitled to notice of this meeting and to vote at
the meeting.
/s/ Remigius G. Shatas,
------------------------------------------
Secretary
BY ORDER OF THE BOARD OF DIRECTORS
Dated June 18, 1996.
<PAGE> 3
June 18, 1996
[CYBEX COMPUTER PRODUCTS CORPORATION LOGO]
4912 RESEARCH DRIVE
HUNTSVILLE, ALABAMA 35805
ANNUAL MEETING OF SHAREHOLDERS
JULY 23, 1996
PROXY STATEMENT
INTRODUCTION
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors for use at the annual meeting of
shareholders of Cybex Computer Products Corporation ("Cybex" or the "Company")
to be held at the Marriott Hotel, Five Tranquility Base, Huntsville, Alabama
35805, on July 23, 1996 at 10:30 a.m. (local time). Please sign and return the
proxy in the enclosed return envelope so the Common Stock you own will be voted
in accordance with your wishes. Proxies may be solicited by personal
interview, telephone or mail. Banks, brokerage houses and other custodians,
nominees or fiduciaries will be requested to forward soliciting materials to
their principals and to obtain authorization for the execution of proxies and
will be reimbursed for their reasonable out-of-pocket expenses incurred in that
process. The Company will bear the cost of the solicitation of proxies, which
is expected to be nominal. The Company intends to cause this proxy statement
to be mailed to shareholders on or about June 21, 1996. The proxy must be
returned by July 22, 1996.
If the enclosed proxy is properly executed, returned and not revoked,
it will be voted in accordance with the instructions given by the shareholder,
and if no instructions are given, will be voted (a) FOR the election as
directors of the nominees as listed and described in this Proxy Statement, (b)
FOR ratification of the appointment of the firm of Coopers & Lybrand L.L.P. as
independent auditors of the Company and (c) FOR the recommendations of
Directors on any other proposal that may properly come before the meeting. The
persons named as proxies in the enclosed form of proxy were selected by the
Company's Board of Directors.
PROXY IS REVOCABLE
If, after you send in your proxy, you change your mind and desire to
revoke your proxy, you may do so by giving notification of such intent to the
Secretary of the Company in writing at any time prior to the commencement of
this annual meeting. Also, your proxy may be revoked by submitting a
later-dated proxy or by attending the meeting and voting in person. Unmarked
proxies received by the Company will be voted in favor of each of the proposals
herein specified and as directed by the attorneys-in-fact as to any other
matter which may come before the meeting.
DATE OF RECORD
The close of business on June 17, 1996, has been set as the record
date for the purpose of determining shareholders entitled to vote at the annual
meeting. Each share of Common Stock is entitled to one vote on all matters.
<PAGE> 4
OUTSTANDING SECURITIES
On June 17, 1996, there were issued and outstanding 5,504,383 shares
of Common Stock of the Company, which constitute all of the voting securities
of the Company.
BUSINESS TO BE CONSIDERED AT ANNUAL MEETING OF SHAREHOLDERS
It is expected that the following business will be considered and
action taken thereon at the annual meeting:
(1) To elect a Board of Directors to serve until the next annual
meeting or until their successors are duly elected.
(2) To ratify the engagement of the accounting firm of Coopers &
Lybrand L.L.P. as independent public accountants for the
current fiscal year.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
ELECTION OF BOARD OF DIRECTORS
INTRODUCTION
The present Board of Directors consists of 5 members, four (4) of whom
were elected to the Board of Directors at the Company's 1995 annual meeting of
Shareholders. The Company's Bylaws authorize a Board of Directors consisting
of no less than 3 nor more than 15 persons. As provided in the Company's
Bylaws, the Board of Directors, at a meeting on September 20, 1995, increased
to five (5) the number of members to serve on the board and elected Douglas
Pritchett to fill the new position. All of the present members of the Board of
Directors are nominees for election to the Board of Directors at this meeting.
Each nominee has expressed his willingness to serve as a Director during the
coming year. Each Director is to serve for a term of one year or until his
successor is duly elected and qualified. Proxies cannot be voted for a greater
number of persons than the number of nominees named. The five nominees
receiving the highest number of votes at the annual meeting will be elected as
Directors. (Abstentions and broker non-votes will not affect the tally of
votes cast in the election. A "non-vote" occurs when a broker, or other
fiduciary, holding shares for a beneficial owner votes on one proposal but
lacks authority from the owner to vote on another proposal.) It is the
intention of the proxy holders to vote FOR the election of all of the nominees
listed below in the absence of contrary direction. Should any nominee become
unavailable for election for any presently unforeseen reason, the Board of
Directors of the Company will determine how the proxies will be voted.
2
<PAGE> 5
NOMINEES
The following table sets forth for each nominee for election as a
Director, the principal occupation or employment of such individual for the
past five years, the year in which he became a Director, and the number of
shares of Common Stock of the Company beneficially owned on March 31, 1996.
Unless otherwise stated, the nominee exercises sole voting and investment power
over all shares of Common Stock beneficially owned.
<TABLE>
<CAPTION>
Approximate Percent of
Beneficial Total
Served Ownership of Outstanding
as Common Stock Common Stock
Principal Occupation for Director of of
Name of Nominee the Past Five Years Age Since Company Company
--------------- ------------------------ --- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Stephen F. Thornton Chairman of the Board of 56 1984 609,237(1) 10.7%**
Directors since 1987;
President and Chief Executive
Officer of the Company since
1984.
Remigius G. Shatas Senior Vice President, Chief 48 1984 396,685(2) 6.7%**
Technical Officer and
Secretary of the Company since
1995; Chief Technical Officer,
Secretary and Treasurer of the
Company from 1984 to 1995.
David S. Butler President of Electronic 54 1984 117,265(3) 2.0%
Manufacturer's Agents, a
manufacturer's representative,
since 1974.
Oscar L. Pierce Director of the Company since 64 1988 207,200(4) 3.6%
1988; retired as a Vice
President of Universal Data
Systems, Inc. in 1985.
Douglas E. Pritchett Director of the Company since 40 1995 1,000 *
1995; Chief Financial Officer
of Barber Dairies, Inc. since
1992; Partner, Coopers &
Lybrand L.L.P. from 1987 to
1992.
- ------------------------
</TABLE>
* Owns less than 1% of the total outstanding Common Stock of the Company.
** Owns 5% or more of the total outstanding Common Stock of the Company. The
address for this beneficial owner of 5% or more of the Company's Common
Stock is c/o Cybex Computer Products Corporation, 4912 Research Drive,
Huntsville, Alabama 35805.
(1) Includes 329,862 shares owned directly by Stephen F. Thornton; 127,375
shares owned by Judy Thornton, his wife; and 152,000 shares held by the
Thornton Family Limited Partnership, of which Mr. Thornton is a general
partner and as to which he may be deemed to share voting and investment
power.
(2) Includes 294,435 shares owned directly by Remigius G. Shatas; 2,250 shares
owned by his wife; and 100,000 shares held by Shatas Partners, Ltd., of
which Mr. Shatas is a general partner and as to which he may be deemed to
share voting and investment power.
(3) Includes 103,515 shares owned directly by David S. Butler (of which 6,125
shares are represented by options exercisable within sixty days by him
under the Company's Employee Stock Option Plan); 11,500 shares held by him
in his 401(k)
3
<PAGE> 6
Plan; 1,125 shares owned by his wife; and 1,125 shares held in the name of
his minor child, as to which he may be deemed to share voting and
investment power.
(4) Includes 207,200 shares owned directly by Oscar L. Pierce (of which 45,500
shares are represented by options exercisable within sixty days by him
under the Company's Employee Stock Option Plan).
Oscar L. Pierce is the brother-in-law of Stephen F. Thornton. These
two individuals beneficially own, in the aggregate, 816,437 shares (of which
45,500 shares are represented by options exercisable within sixty days by Oscar
L. Pierce under the Company's Employee Stock Option Plan), constituting
approximately 14% of the total outstanding Common Stock of the Company.
As required by the Securities and Exchange Commission rules under
Section 16 of the Securities and Exchange Act of 1934, the Company notes that
during Fiscal 1996 one director, David Butler, filed one untimely report on
transactions in the Company's Common Stock.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the last fiscal year, the Board of Directors met on five
occasions. No incumbent Director attended fewer than 75% of the aggregate
number of Board and committee meetings on which such Board member served.
Directors fees of $3,750 were paid to Messrs. Butler and Pierce and $2,500 was
paid to Mr. Pritchett in Fiscal 1996. In addition, Mr. Pritchett, as chairman
of the Audit Committee, received $2,500 in additional fees in Fiscal 1996.
The Company has an Audit Committee consisting of Oscar L. Pierce, David
S. Butler and Douglas Pritchett which met on two occasion(s) during the fiscal
year ended March 31, 1996. The purpose of the Audit Committee is to advise the
Board of Directors with respect to the scope of the annual audit and with
respect to any recommendations made by the auditors of the Company concerning
the internal accounting controls of the Company, monitoring the Company's
financial policies and control procedures, monitoring the non-audit services
provided by the Company's auditors and reviewing all potential conflict of
interest situations.
The Company has a Compensation Committee consisting of Oscar L. Pierce,
David S. Butler and Douglas E. Pritchett, which met on two occasions during the
fiscal year ended March 31, 1996. The purpose of the Compensation Committee is
to review and approve salaries and benefits for the executive officers of the
Company and to administer the 1995 Employee Stock Option Plan of the Company.
The Company does not have a Nominating Committee.
OFFICERS
The offices held by Stephen F. Thornton and Remigius G. Shatas are
designated in the Nominees chart appearing on page 3 of this Proxy Statement.
Robert R. Asprey, age 45, has been employed by the Company since 1986 and was
elected Vice President of the Company in 1986, Senior Vice President-Engineering
and Director of Engineering of the Company in 1995 and Senior Vice President,
Chief Scientist of the Company in 1996. Doyle C. Weeks, age 50, has been
employed by the Company since 1995 and was elected Senior Vice President-
Finance, Chief Financial Officer and Treasurer of the Company in 1995. Mr. Weeks
served as Vice President-Finance, Chief Financial Officer and Treasurer of
Phoenix Microsystems, Inc. from 1985 to 1994 and was elected to the Board of
Directors in 1994. Beginning in 1991, Mr. Weeks also served as Secretary of
Phoenix Microsystems and as Vice President-Finance and Administration, and
Secretary and Treasurer of TxPort, Inc., both of which manufactured
telecommunications test equipment and transmission equipment. R. Byron Driver,
age 55, has been employed by the Company since 1992 and was elected Senior Vice
President-Operations and Chief
4
<PAGE> 7
Operating Officer in 1995. From 1985 to 1992, he was vice president of
Astrocom Corporation, a data communications company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company knows of no person (excluding officers and Directors of the
Company) who may be deemed to own beneficially more than five percent of the
outstanding Common Stock of the Company.
The following table presents information as of March 31, 1996,
concerning the beneficial ownership of the Company's Common Stock by certain of
its executive officers.
<TABLE>
<CAPTION>
Stock Beneficially Owned
------------------------
Name and Address Title of Class # of Shares(1) % of Class
---------------- -------------- -------------- ----------
<S> <C> <C> <C>
Stephen F. Thornton Common 609,237 10.7%
Huntsville, AL
Remigius G. Shatas Common 396,685 6.7%
Huntsville, AL
Robert R. Asprey Common 275,375 4.8%
Huntsville, AL
Doyle C. Weeks Common 2,150 *
Huntsville, AL
R. Byron Driver Common 61,925 1.0%
Huntsville, AL
All officers and Common 1,670,587 30.7%
directors as a group
(8 persons)
</TABLE>
_____________________________
* Less than 1%
(1) The amounts shown represent the total shares beneficially owned by such
individuals together with shares that are issuable upon the exercise of
all stock options which are currently exercisable. Specifically, the
following individual has the right to acquire the shares indicated after
his name, upon the exercise of such options: R. Byron Driver, 16,875 and
all officers and directors as a group, 68,500.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table is a summary of certain
information concerning the compensation earned by the Company's chief executive
officer and each of the other four most highly compensated executive officers
during the last three fiscal years.
<TABLE>
<CAPTION> LONG-TERM
COMPENSATION
--------------
ANNUAL NO. OF
COMPENSATION SECURITIES
------------------------ UNDERLYING All Other
NAME/POSITION YEAR SALARY BONUS OPTIONS Compensation(1)
------------- ---- --------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Stephen F. Thornton, Chairman of the 1996 $154,800 $11,399 0 $5,021
Board, CEO and President 1995 150,000 108,262(2) 0 3,487
1994 131,150 40,124 28,125 2,403
Remigius G. Shatas, Senior Vice 1996 129,942 9,475 0 3,085
President, Chief Technical Officer 1995 125,773 105,545(3) 0 2,061
and Secretary 1994 118,756 36,292 28,125 1,548
Robert R. Asprey, Senior Vice 1996 115,371 8,411 0 2,572
President - Engineering 1995 111,505 102,014(4) 0 1,966
1994 105,098 31,707 28,125 1,396
R. Byron Driver, Senior Vice 1996 102,450 7,468 0 2,086
President - Operations and Chief 1995 99,122 35,084(5) 0 1,055
Operating Officer 1994 92,879 28,262 28,125 932
Doyle C. Weeks, Senior Vice 1996 100,939 22,506 10,000 2,599
President - Finance, Chief Financial 1995 12,000 2,177 33,750 -0-
Officer and Treasurer 1994 -0- -0- -0- -0-
</TABLE>
____________________________________
(1) The amounts listed in this column represent for 1996, and 1995 and 1994,
respectively: (i) employer contributions to Section 401(k) Plan: Stephen F.
Thornton, $2,178, $2,442 and $1,450; Remigius G. Shatas, $1,971, $2,061 and
$1,548; Robert R. Asprey, $1,460, $1,966 and $1,396; R. Byron Driver,
$1,036, $1,055 and $932; and Doyle C. Weeks, $1,627, $0 and $0; (ii) life
insurance premiums: Stephen F. Thornton, $2,269, $1,045 and $953; Remigius
G. Shatas, $540, $0 and $0; Robert R. Asprey, $538, $0 and $0; R. Byron
Driver, $478, $0 and $0; and Doyle C. Weeks, $432, $0 and $0; and (iii)
disability insurance premiums: Stephen F. Thornton, $574, $0 and $0;
Remigius G. Shatas, $574, $0 and $0; Robert R. Asprey, $574, $0 and $0; R.
Byron Driver, $572, $0 and $0; and Doyle C. Weeks, $540, $0 and $0.
(2) Includes a one-time extraordinary bonus of $60,000 paid to Mr. Thornton to
compensate him for past service to the Company when he was undercompensated,
and a one-time bonus of $10,427, which the Company paid in lieu of a Section
401(k) plan contribution for Fiscal 1994.
(3) Includes a one-time extraordinary bonus of $60,000 paid to Mr. Shatas to
compensate him for service to the Company when he was undercompensated, and
a one-time bonus of $9,494, which the Company paid in lieu of a 401(k) plan
contribution for Fiscal 1994.
(4) Includes a one-time extraordinary bonus of $60,000 paid to Mr. Asprey to
compensate him for past service to the Company when he was undercompensated,
and a one-time bonus of $8,365, which the Company paid in lieu of a 401(k)
plan contribution for Fiscal 1994.
(5) Includes a one-time bonus of $4,803 paid to Mr. Driver, which the Company
paid in lieu of a 401(k) plan contribution for Fiscal 1994.
6
<PAGE> 9
Option Grants Table. The following table sets forth certain
information concerning individual grants of stock options made during Fiscal
1996 to each of the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL EXERCISE ANNUAL RATES OF STOCK
OPTIONS OPTIONS GRANTED OR BASE PRICE APPRECIATION
GRANTED TO EMPLOYEES IN PRICE EXPIRATION FOR OPTION TERMS (2)
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------- ------------ -------- --------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Doyle C. Weeks 10,000 11.7 $17.00 7/26/05 276,900 440,900
</TABLE>
------------------------
(1) All options outstanding were issued under the Company's 1995 Employee
Stock Option Plan. Options are exercisable 20% per year commencing on
the first anniversary date of the grant date.
(2) Based upon the market price on the date of grant and an annual
appreciation at the rate stated of such market price through the
expiration date of such options. The dollar amounts under these columns
are the result of calculations at the 5% and 10% rates set by the SEC
and, therefore, are not intended to forecast possible future
appreciation, if any, of the Company's stock price. The Company did not
use an alternative formula for a grant date valuation, as the Company is
not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
7
<PAGE> 10
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
Table. The following sets forth certain information concerning the exercise of
stock options during Fiscal 1996 by each of the Named Executive Officers and
the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF
SECURITIES SECURITIES UNEXERCISED VALUE OF
SHARES UNDERLYING UNDERLYING IN-THE- UNEXERCISED
ACQUIRED UNEXERCISED UNEXERCISED MONEY IN-THE-MONEY
ON VALUE OPTIONS AT OPTIONS AT OPTIONS AT OPTIONS AT
EXERCISE REALIZED(1) FY-END (#) FY-END (#) FY-END ($) FY-END ($)
NAMES (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- --------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen F. 247,500 3,731,188 0 0 0 0
Thornton(2)
Remigius G. 146,250 2,230,094 0 0 0 0
Shatas
Robert R. 146,250 2,223,063 0 0 0 0
Asprey
Doyle C. 0 0 0 43,750 0 382,499
Weeks
R. Byron 45,000 549,999 16,875 0 206,250 0
Driver
Total 585,000 8,734,344 16,875 43,750 206,250 382,499
</TABLE>
____________________________
(1) 427,500 shares exercised for May of 1995 reflect gain realized assuming a
strict price of 17.00.
(2) Note: 101,250 options were exercised by Sharon J. Thornton, Vice
President of Accounting and Administration, who is also the wife of
Stephen F. Thornton.
401(k) Retirement Plan. The Company maintains a retirement plan pursuant to
Section 401(k) of the Internal Revenue Code of 1986, as amended (the "KPlan"),
which requires, subject to certain limited exceptions, three months of service
and a minimum of 1,000 hours worked annually to become a participant in the
KPlan. The Company will match 25% of an employee's contributions up to 6% of
the employee's compensation. The Company's expense for matching contributions
totaled $14,291, $31,571 and $32,353 for Fiscal 1994, Fiscal 1995, and Fiscal
1996, respectively.
The Company may make discretionary contributions to the KPlan in an
amount determined annually by the Board of Directors. The Company elected to
make discretionary contributions to the KPlan of $78,630, $228,842 and none for
Fiscal 1994, Fiscal 1995, and Fiscal 1996, respectively. Company contributions
are allocated to each participant on the basis of compensation. Participants
may make contributions to the Plan on a payroll deduction basis, and the
Company may make matching contributions on behalf of each participant. A
separate salary reduction account and matching employer contribution account
are maintained for each participant. All accounts are vested at retirement,
death, or disability. Upon any other termination of employment, matching and
discretionary contributions are vested after the fifth year of service.
Subject to certain restrictions and tax penalties, participants may make early
withdrawals from their salary reduction accounts.
8
<PAGE> 11
EMPLOYMENT AND CONFIDENTIALITY AGREEMENTS
Employment Agreements. The executive officers of the Company are parties
to Employment and Noncompetition Agreements ("Employment Agreements"). Each
Employment Agreement is effective as of April 1, 1995, and has a five-year term
that is automatically extended on April 1 of each year thereafter for one
additional year. Under each Employment Agreement, the employee receives an
annual base salary, subject to annual increases at the discretion of the
Compensation Committee, and is entitled to receive an annual bonus at the
discretion of the Compensation Committee and to participate in the Company's
1995 Employee Stock Option Plan and all other benefit programs generally
available to executive officers of the Company.
Under the terms of the Employment Agreements, Messrs. Thornton, Shatas
and Asprey have each agreed that during the term of his employment with the
Company and for a term of 18 months thereafter, he will not compete, without
the prior written consent of the Company, with the Company by engaging in any
capacity in any business which is competitive with the business of the Company.
Messrs. Weeks and Driver have agreed not to compete with the Company for a
period of 12 months after termination of employment with the Company.
Under the terms of the Employment Agreements, the Company may terminate
an executive's employment for "cause," which includes acts of (i) willful
dishonesty, fraud, or deliberate injury or attempted injury to the Company or
(ii) the executive's willful material breach of the Employment Agreement which
has resulted in material injury to the Company, in which event, the executive
shall receive salary, bonus, and other benefits through the date of
termination. Under the terms of the Employment Agreements, if a participating
executive is terminated by the Company without cause, he is entitled to receive
his accrued salary, earned bonus and other benefits through the date of
termination. In addition, each of Messrs. Thornton, Shatas and Asprey would
receive severance compensation equal to his base salary for a period of 18
months following the date of termination and an amount equal to his average
annual bonus during the two years immediately preceding his termination.
Messrs. Driver and Weeks would each receive severance compensation equal to his
base salary for a period of six months following the date of termination and an
amount equal to one-half his average annual bonus during the two years
immediately preceding his termination. At the executive officer's election, he
may receive a lump sum severance amount equal to the present value of such
severance payments (using a discount rate equal to the 90-day Treasury bill
interest rate in effect on the date of delivery of such election notice). The
executive officers are also entitled to accelerated vesting of any award
granted under the 1995 Employee Stock Option Plan upon termination without
cause.
If a "change-in-control" (acquisition of 20% or more of the Common Stock
without approval by the Board of Directors of the Company) occurs, each
executive officer may terminate his Employment Agreement and receive the
severance compensation described above.
The Company has agreed to indemnify each executive officer under his
Employment Agreement for certain liabilities arising from actions taken by the
executive officer within the scope of his employment.
Confidentiality Agreements. Each employee of the Company, including the
executive officers, have signed non-disclosure agreements pursuant to which
each has agreed not to disclose any of the Company's confidential information
and to assign to the Company any rights he or she may have in any design,
invention, software, process, trade secret, or intellectual property that
relates to or resulted from work performed at the Company.
9
<PAGE> 12
COMPENSATION COMMITTEE REPORT
Introduction. This report of the Compensation Committee of the Board of
Directors discusses the compensation policies and the basis for the
compensation paid to the Company's executive officers and to the Company's
Chief Executive Officer, Stephen F. Thornton, during the fiscal year ended
March 31, 1996.
The Company's policy with respect to executive compensation has been
designed to (1) adequately and fairly compensate executive officers in relation
to their responsibilities, capabilities and contributions to the Company, (2)
reward executive officers for the achievement of short-term operating goals and
for the enhancement of the long-term shareholder value of the Company; and (3)
align the interest of executive officers with those of the Company's
shareholders with respect to short-term operating results and long-term
increases in the price of the Company's stock.
The components of compensation paid to executive officers consist of
(1) base salary, (2) incentive compensation in the form of an annual bonus, (3)
options awarded by the Company under the 1995 Employee Stock Option Plan, (4)
amounts paid on behalf of executives under the Company's Section 401(k) plan
and (5) certain other benefits provided to executive officers.
The Compensation Committee establishes the general compensation policy
for the Company and has the responsibility for approving cash compensation and
increases in compensation paid to executive officers of the Company. The
Compensation Committee also administers the Company's 1995 Employee Stock
Option Plan. The Compensation Committee selects the individuals who will be
awarded options under the 1995 Employee Stock Option Plan and determines the
timing, pricing and amounts of options granted under the Plan, each in
accordance with the terms of the Plan. The Compensation Committee consists of
three non-employee directors of the Company. The Board of Directors of the
Company is responsible for determining annual contributions by the Company
under the Company's Section 401(k) plan.
The Company's executive compensation program has historically
emphasized the use of incentive based compensation to reward members of senior
management for the achievement of short-term operating goals and for increasing
the long-term shareholder value of the Company, and the Compensation Committee
intends to continue that policy. Annual bonus payments are discretionary and
are related primarily to the operating performance of the Company, in general,
and the executive, in particular. The Company has also utilized stock options
in the past to motivate a substantial number of employees, including the
executive officers, and to reward such employees for increases in the price of
the Company's stock. The Company believes that its compensation policies
reward management when the Company and its shareholders have benefitted from
short-term operating results and long-term increases in the price of the
Company's stock.
Executive officers are rewarded based upon corporate performance,
business unit performance and individual performance. Corporate performance
and business unit performance are evaluated by reviewing the extent to which
strategic and business plan goals are met, including such factors as
profitability, performance relative to competitors, timely product enhancements
and new product introductions. Individual performance is evaluated by
reviewing organizational and management development progress against set
objectives and the degree to which teamwork and Company values are fostered.
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Compensation Vehicles. The Company has had a long and successful history of
using a simple total compensation program that consists of cash- and
equity-based compensation. Having a compensation program that allows the
Company to successfully attract and retain key employees permits it to provide
useful products and services to customers, enhance shareholder value, motivate
technological innovation, foster teamwork, and adequately reward employees.
The compensation vehicles include cash-based and equity-based compensation.
Base Salary. Each year, the Compensation Committee reviews and approves the
base salaries paid by the Company to the executive officers. All of the
executive officers executed employment agreements with the Company that are
effective as of April 1, 1995. These employment agreements were entered into
prior to the Company's initial public offering completed in July 1995 and
provide for an initial base salary for each executive officer. Except for
Doyle C. Weeks, who was employed by the Company in 1995, the initial base
salary was determined by the Compensation Committee based on the executive's
salary for the previous year increased by a cost of living adjustment. Base
salaries for the executive officers have not been increased for Fiscal 1997 as
of the date of this report, but the Compensation Committee is reviewing the
base salaries of all executive officers for purposes of determining base
salaries for Fiscal 1997. The Compensation Committee believes that base
salaries earned by the Company's executive officers have historically been
reasonable in relation to the Company's performance.
Annual Bonus. The employment agreements with the Company's executive officers
contemplate consideration of discretionary annual bonuses. The annual bonus is
designed to reward the achievement of short-term operating goals and long-term
increases in shareholder value. On April 29, 1996, the Compensation Committee
authorized the payment of bonuses to its executive officers and staff employees
based upon their respective performance and contribution toward the attainment
of the goals of the Company for the fiscal year ended March 31, 1996. During
the 1996 fiscal year, the goals of the Company were to complete its initial
public offering, increase net sales and net income, introduce new products,
introduce enhancements to existing products, expand the Company's customer base
and increase international sales. Substantially all of its goals for Fiscal
1996 were achieved. The Compensation Committee evaluated the performance of
each executive officer and concluded that the successful performance of the
Company during Fiscal 1996 was due largely to the efforts of all of the
executive officers. The amount of the bonuses was based upon a subjective
assessment of the performance of the Company during Fiscal 1996 and the
individual performance of the executive officers as compared with the Company's
and the executive's goals for the year. The Compensation Committee made the
decision to award bonuses to each executive officer in an amount equal to 7.3%
of the executive's base salary with the exception of Doyle C. Weeks, who
received an additional bonus of $15,000 at the completion of the Company's
initial public offering to reward him for the extraordinary effort he gave
during that period. The Compensation Committee determined the bonus for the
President and directed the President to pay bonuses to the remaining executive
officers and staff employees.
The opportunity for an annual cash bonus in the future will reflect
the degree to which an executive contributes to the realization of established
short term objectives of the Company and increasing long-term shareholder value
and is intended to be a substantial incentive for the executive officers to
achieve those objectives. Annual incentives and the combined annual cash
compensation are intended to be competitive with comparable market practices.
The Compensation Committee will establish target objectives of the Company and
the annual incentive bonuses to be made to the executive officers, relating to
the attainment of the objectives. The Compensation Committee is solely
responsible for determining any bonus for Mr. Thornton.
Stock Options. The purpose of the Company's 1995 Employee Stock Option Plan
(the "Plan") is to provide additional incentives to employees to work to
maximize shareholder value. The Company also recognizes that a stock incentive
program is a necessary element of a competitive compensation package
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for its employees. The Plan utilizes vesting periods to encourage key
employees to continue in the employ of the Company and thereby act as a
retention device for key employees. The Company believes that the program
encourages employees to maintain a long-term perspective. The Company grants
stock options annually to a broad-based group of the total employee population.
In Fiscal 1996, the Company granted options to purchase 92,625 shares of Common
Stock to certain key employees, of which options to purchase 10,000 shares were
granted to one executive officer, Doyle C. Weeks, which options were effective
July 27, 1995.
In determining the size of an option award for an executive officer, the
Compensation Committee's primary considerations are the "grant value" of the
award and the performance of the officer measured against the same performance
criteria described above under "Introduction" which is used to determine
salary. In addition to considering the grant value and the officer's
performance, the Committee also considers the number of outstanding unvested
options which the officer holds and the size of previous option awards to that
officer. The Company does not assign specific weights to these items. Options
to purchase shares of the Company's Common Stock are generally at the fair
market value of such shares as reported by the NASDAQ National Market System on
the date of grant. Under the terms of the Plan, the Compensation Committee has
sole authority, within the terms of the Plan, to select the employees who will
be granted options under the Plan and to determine the timing, pricing and
amount of options awarded. The Compensation Committee has adopted guidelines
with respect to the granting of options under the Plan to employees upon their
promotion to important managerial or supervisory classifications. These
guidelines, which were developed over a number of years, are designed to reward
employees upon promotion to important positions and to provide such employees
with the opportunity to share in increases in the long-term shareholder value
of the Company in amounts that are consistent with their managerial
responsibilities. The Compensation Committee believes that stock options
granted under the Plan reward executive officers only to the extent that
shareholders have benefitted from increases in the value of the Company's
stock.
CEO Compensation. Stephen F. Thornton has been President and Chief Executive
Officer ("CEO") of the Company since 1984 and Chairman of the board since 1987.
The Compensation Committee used the same compensation policy described above
for all employees to determine Mr. Thornton's Fiscal 1996 compensation. In
setting Mr. Thornton's compensation, the Compensation Committee made an overall
assessment of Mr. Thornton's leadership in achieving the Company's long-term
strategic and business goals. Mr. Thornton's base salary reflects a
consideration of both the Company's performance and Mr. Thornton's individual
performance. The Company does not assign specific weights to these categories.
In Fiscal 1995, Mr. Thornton's annual salary was $150,000, the amount
the Compensation Committee set effective April 1, 1994. In June 1995, the
Compensation Committee reviewed Mr. Thornton's salary in connection with the
preparation of his employment agreement. It considered the Company's financial
performance for Fiscal 1995 as compared with Fiscal 1994, the expected value
for the Company's common stock in the initial public offering and Mr.
Thornton's salary history. Based on this review, the Compensation Committee
increased Mr. Thornton's salary from $150,000 to $154,500 effective April 1,
1995. In April 1996, the Compensation Committee approved a bonus to Mr.
Thornton of $11,399 for Fiscal 1996, which was approximately 7.3% of base
salary, the same percentage awarded to all employees, except Doyle C. Weeks.
As of the date of this report, the Compensation Committee has not increased Mr.
Thornton's base salary for Fiscal 1997, but it is currently reviewing the base
salaries for all of the executive officers, including Mr. Thornton, and will
make recommendations for base salaries for Fiscal 1997.
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Members of the Compensation Committee
Oscar L. Pierce
David S. Butler
Douglas E. Pritchett
COMPENSATION OF DIRECTORS
No employee of the Company who is a member of the Board of Directors
receives compensation for serving as such. Messrs. Butler and Pierce received
$3,750 each as annual compensation in Fiscal 1996 and Mr. Pritchett received
$2,500 as annual compensation in Fiscal 1996 for serving on the Board of
Directors. Mr. Pritchett also received $2,500 in Fiscal 1996 as compensation
for serving as chairman of the Audit Committee. All directors are eligible to
receive reimbursement of travel expenses incurred in attending Board of
Directors and committee meetings.
As of March 31, 1996, options to purchase shares of the Company's Common
Stock had been granted to each of the three (3) outside directors: David S.
Butler - 2,500 shares at an exercise price of $17.00 per share; Oscar L. Pierce
- - 2,500 shares at an exercise price of $17.00 per share; and Douglas E.
Pritchett - 2,500 shares at an exercise price of $24.00 per share.
SHAREHOLDER RETURN PERFORMANCE
The following line graph compares the percentage change in the cumulative
total shareholder return on the Company's Common Stock from July 28, 1995, the
completion of the Company's initial public offering, to March 31, 1996, against
the cumulative total return of the NASDAQ Stock Market--U.S. and the cumulative
total return of a published group index for the NASDAQ Computer Manufacturer
group (Peer Group), provided by the NASDAQ Stock Market. The graph assumes the
investment on July 28, 1995, of $100 in Cybex Computer Products Corporation
Common Stock, the NASDAQ Stock Market--U.S. and the Peer Group. The cumulative
total return assumes reinvestment of dividends.
<TABLE>
<CAPTION>
July 1995 March 1996
--------- ----------
<S> <C> <C>
Cybex Computer Products Corporation $100 $ 82
NASDAQ Stock Market-US $100 $111
NASDAQ Computer Manufacturer $100 $117
</TABLE>
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SHAREHOLDERS LIST
A complete list of the Shareholders entitled to vote at the annual
meeting of Shareholders to be held on July 23, 1996, will be available for
inspection during normal business hours at the principal office of the Company
for a period of at least 10 days prior to the meeting, upon written request to
the Company by a Shareholder, and at all times during the annual meeting at the
place of the meeting.
SELECTION OF AUDITORS
Coopers & Lybrand L.L.P., independent certified public accountants, have
performed an audit of the financial statements of the Company for the fiscal
year ended March 31, 1996. Services provided by Coopers & Lybrand L.L.P.
included work related to the audit of the annual financial statements of the
Company, reviews of unaudited quarterly financial information and filings with
the Securities and Exchange Commission, and preparation of state and federal
income tax returns.
Coopers & Lybrand L.L.P., 1901 Sixth Avenue North, 1600 AmSouth Harbert
Plaza, Birmingham, Alabama 35203, is recommended for selection as the
independent certified public accountant of the Company for the current fiscal
year. A representative of Coopers & Lybrand L.L.P. is expected to attend this
meeting. He will be afforded the opportunity to make a statement if he
desires, and will be available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this Proxy Statement, Management knows of no other
business which will be presented for consideration at the meeting.
CYBEX COMPUTER PRODUCTS CORPORATION WILL PROVIDE WITHOUT CHARGE A COPY OF
ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, FOR ITS FISCAL YEAR ENDED MARCH 31, 1996, TO ANY BENEFICIAL
OWNER OF CYBEX COMPUTER PRODUCTS CORPORATION COMMON STOCK AS OF JUNE 17, 1996,
WHO REQUESTS IN WRITING A COPY OF SUCH FROM ITS CHIEF FINANCIAL OFFICER, DOYLE
C. WEEKS, C/O CYBEX COMPUTER PRODUCTS CORPORATION, 4912 RESEARCH DRIVE,
HUNTSVILLE, ALABAMA 35805.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
SHAREHOLDER PROPOSALS TO BE PRESENTED FOR CONSIDERATION AT THE NEXT
ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY MUST BE RECEIVED BY THE COMPANY
NO LATER THAN JANUARY 31, 1997.
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INCORPORATION BY REFERENCE
The Consolidated Financial Statements of the Company and Management's
Discussion and Analysis of Financial Conditions and Results of Operations, set
forth in the Company's Annual Report to Shareholders accompanying this Proxy
Statement, are hereby incorporated herein.
CYBEX COMPUTER PRODUCTS CORPORATION
By: /s/ Remigius G. Shatas
-------------------------------------
Remigius G. Shatas,
Secretary
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