435 Devon Park Drive, Building 800
Wayne, PA 19087-1945

~~Phone:~~~~610.293.0600~~
~~Toll-Free: 877.506.7371~~
~~Fax:~~~~610.293.0601~~
Phone: 610-293-0600
Toll-Free: 877-506-7371
Fax: 610-293-0601

Internet: www.safeguard.com

SAFEGUARD SCIENTIFICS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholder:

You are invited to attend the Safeguard Scientifics, Inc. ~~2008~~2009 Annual Meeting of Shareholders.


DATE:		~~July 23, 2008~~August 28, 2009

TIME:		7:8:00 a.m. Eastern ~~time~~Time

PLACE:		~~Boston Harbor Hotel~~Dolce Valley Forge ~~70 Rowes Wharf~~301 West DeKalb Pike ~~Boston, MA 02110~~King of Prussia, PA 19406 ~~617.439.7000~~610-337-1200

RECORD DATE:		Only shareholders who owned stock at the close of business on ~~June 2, 2008,~~July 20, 2009, can vote at this meeting and any adjournments that may take place.

ITEMS OF BUSINESS:		1. To elect 11nine directors;

		2. To consider and vote upon a proposal to amend and restate our ~~Second Amended and Restated Articles~~2004 Equity Compensation Plan to increase the number of ~~Incorporation to effect a reverse stock split~~shares of our ~~outstanding~~ common stock ~~at an exchange ratio of not less than 1-for-4~~reserved for issuance thereunder by 7,000,000 shares, or from 6,000,000 shares to 13,000,000 shares, and ~~not more than 1-for-8,~~to make certain other clarifying changes and authorize our Board of Directors, in its discretion, to implement the reverse stock split within this range at any time prior to our 2009 annual meeting of shareholders by filing an amendment to our Second Amended and Restated Articles of Incorporation;updates;

		3. To consider and vote upon a proposal to ratify the appointment of KPMG LLP as Safeguard’s independent registered public accounting firm for the fiscal year ending December 31, ~~2008;~~2009; and

		4. To consider such other business as may properly come before the meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON AUGUST 28, 2009

The proxy statement and our annual report for the fiscal year ended December 31, 2008 are available at
www.safeguard.com/proxy.

We also will report on Safeguard’s ~~2007~~ business results and other matters of interest to our shareholders. You will have an opportunity at the meeting to ask questions, make comments and meet our management team.

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

QUESTIONS AND ANSWERS ABOUT THE MEETING AND THE PROPOSALS

Q:		*When and where is the annual meeting?*

A:		Safeguard’s annual meeting is being held on ~~Wednesday, July 23, 2008~~Friday, August 28, 2009 at 7:8:00 a.m. Eastern Time at the ~~Boston Harbor Hotel, 70 Rowes Wharf, Boston, MA 02110.~~Dolce Valley Forge, 301 West DeKalb Pike, King of Prussia, PA 19406. You may obtain directions to the meeting at www.safeguard.com/dolce.

Q:		*Do I need a ticket or proof of Safeguard ownership to attend the annual meeting?*

A:		You will not need a ticket to attend the annual meeting.However, only persons with evidence of stock ownership, or who are guests of Safeguard, may attend and be admitted to the annual meeting.Photo identification, such as a valid driver’s license or passport, will be required. If you are not a shareholder of record but hold shares through a broker, trust company, bank or other nominee, you will need to provide proof of beneficial ownership on the record date, such as a legal proxy from your broker, trust company, bank or other nominee, your most recent brokerage account statement prior to ~~June 2, 2008,~~July 20, 2009, a copy of the voting instruction form provided by your broker, trustee or other nominee, or other similar evidence of ownership.If you do not have photo identification and proof that you own Safeguard shares, you will not be admitted to the meeting.

Q:		*Why am I receiving these materials?*

A:		You are receiving Safeguard’s annual report, notice of annual meeting, proxy statement and a proxy card or voting instruction form because you owned shares of Safeguard stock on ~~June 2, 2008,~~July 20, 2009, the record date for determining the shareholders entitled to vote at the annual meeting. This proxy statement contains detailed information relating to the proposals on which we would like you, as a shareholder, to vote. The proxy card or voting instruction form is used for voting on the proposals. The annual report, notice of annual meeting and proxy statement also are available on the Internet at www.safeguard.com/proxy.

Q:		*How many shares must be present to hold the meeting?*

A:		To hold the meeting, a quorum must be present. A quorum is a majority of ~~the~~our outstanding shares, which may be represented at the meeting either in person or by proxy. Proxies received but marked as abstentions or containing broker non-votes on a particular matter will be included in the calculation of the number of shares entitled to vote for the purpose of determining the presence of a quorum.

Q:		*What am I voting on?*

A:		You are being asked to vote on:

	1.		The election of 11nine directors who have been nominated to serve on Safeguard’s Board of Directors (“Board”);

A proposal to amend and restate our ~~Second Amended and Restated Articles~~2004 Equity Compensation Plan to increase the number of ~~Incorporation to effect a reverse stock split~~shares of our ~~outstanding~~ common stock ~~at an exchange ratio of not less than 1-for-4~~reserved for issuance thereunder by 7,000,000 shares, or from 6,000,000 shares to 13,000,000 shares, and ~~not more than 1-for-8,~~to make certain other clarifying changes and authorize our Board, in its discretion, to implement the reverse stock split within this range at any time prior to our 2009 annual meeting of shareholders by filing an amendment to our Second Amended and Restated Articles of Incorporation;updates; and

A proposal to ratify the appointment of KPMG LLP as Safeguard’s independent registered public accounting firm for the ~~2008~~2009 fiscal year.

We also will consider other business that properly comes before the annual meeting.

Q:		*How does Safeguard’s Board of Directors recommend I vote?*

A:		Unless you instruct otherwise on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of Safeguard’s Board. The Board recommends a vote:

	•		“FOR”the election of each Board nominee;

	•		“FOR”the proposal to amend and restate our ~~Second Amended and Restated Articles~~2004 Equity Compensation Plan to increase the number of ~~Incorporation to effect a reverse stock split~~shares of our ~~outstanding~~ common stock ~~at an exchange ratio of not less than 1-for-4~~reserved for issuance thereunder by 7,000,000 shares, or from 6,000,000 shares to 13,000,000 shares, and ~~not more than 1-for-8,~~to make certain other clarifying changes and authorize our Board, in its discretion, to implement the reverse stock split within this range at any time prior to our 2009 annual meeting of shareholders by filing an amendment to our Second Amended and Restated Articles of Incorporation;updates; and

	•		“FOR”the proposal to ratify the appointment of KPMG LLP as Safeguard’s independent registered public accounting firm for the fiscal year ending December 31, ~~2008.~~2009.

Our Board also requests discretionary authority to cumulate votes in the election of directors and to vote on any other matters that may properly arise at the meeting. If our Board gives no recommendation on any such matter, the proxy holders will vote in their own discretion.

		Our Board also requests discretionary authority to cumulate votes in the election of directors and to vote on any other matters that may properly arise at the meeting. If our Board gives no recommendation on any such matter, the proxy holders will vote in their own discretion.

Q:		*How many votes do I have?*

A:		Each share of Safeguard common stock outstanding on the record date is entitled to vote on all items being voted upon at the annual meeting. On the record date, we had ~~121,535,560~~122,314,312 shares of common stock issued and outstanding.

		Every shareholder may cast one vote for each share owned on the record date. In the election of directors, shareholders may elect to cumulate their votes as described below under“What does cumulative voting mean?”

Q:		*What does cumulative voting mean?*

A:		Cumulative voting applies only in the election of directors. It means that you may cast a number of votes equal to the number of Safeguard shares you own multiplied by the number of directors to be elected. For example, since 11nine directors are standing for election at the annual meeting, if you hold 100 shares of Safeguard stock, you may cast ~~1,100~~900 votes ~~(11~~(nine times 100) in the election of directors. You may distribute those votes among as few or as many of the 11nine nominees as you wish. In other words, in the example provided, you may cast all ~~1,100~~900 votes“FOR”one nominee or allocate your ~~1,100~~900 votes among two or more nominees, as long as the total equals ~~1,100~~900 votes.

		If you received a proxy card and wish to vote cumulatively, you must:

	•		Write the words “cumulate for” in the space provided under item 1 of the proxy card; and

	•		~~Write the name of each nominee and the number of votes to be cast for each nominee in that space.~~

		If you vote cumulatively, please check to be sure that the votes you cast add up to the number of shares you own multiplied by 11. If the number of votes does not add up correctly, your votes will not be counted until a properly completed proxy card has been received.

		~~The cumulative voting feature for the election of directors also is available by voting in person at the annual meeting; however, it is not available by telephone or the Internet. If you are the~~~~beneficial owner~~~~of shares held in street name and wish to vote cumulatively, you will need to contact your broker, bank or other nominee holder of your shares.~~

Write the name of each nominee and the number of votes to be cast for each nominee in that space.

If you vote cumulatively, please check to be sure that the votes you cast add up to the number of shares you own multiplied by nine. If the number of votes does not add up correctly, your votes will not be counted until a properly completed proxy card has been received.

The cumulative voting feature for the election of directors also is available by voting in person at the annual meeting; however, it is not available by telephone or the Internet. If you are thebeneficial ownerof shares held in street name and wish to vote cumulatively, you will need to contact your broker, bank or other nominee holder of your shares.

Q:		*What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”?*

A:		Most of Safeguard’s shareholders hold their shares through a broker, bank or other nominee rather than directly in their own name. There are important distinctions between shares held of record and those owned beneficially.

		Shareholder of Record

		If your shares are registered directly in your name with Safeguard’s transfer agent, BNY Mellon Shareowner Services, you are considered theshareholder of recordwith respect to those shares, and these proxy materials are being sent to you directly by Safeguard. As ashareholder of record, you have the right to grant your voting proxy directly to Safeguard or to vote in person at the meeting. If you are ashareholder of record, Safeguard has enclosed a proxy card for your use in voting your shares.

		Beneficial Owner

		If your shares are held in street name (such as in a brokerage account or by another nominee, such as a bank or trust company), you are considered thebeneficial ownerof the shares, and these proxy materials, together with a voting instruction form, are being forwarded to you by your broker or other nominee. As thebeneficial owner, you have the right to direct your broker or other nominee how to vote your shares, but unless you receive a proxy from your broker, you cannot vote your shares directly or by proxy — you must instruct your broker or other nominee as to how to vote your shares. You also are invited to attend the annual meeting. To vote your shares at the meeting, you will need a legal proxy from your broker or other nominee authorizing you to vote at the meeting.

Q:		*How do I vote my shares?*

A:		If you are ashareholder of record, there are three ways for you to vote by proxy:

	1.		Log on to the Internet at http://www.proxyvoting.com/sfe and follow the instructions at that site;

	2.		Call ~~1.866.540.5760~~1-866-540-5760 and follow the instructions; or

Sign and date each proxy card you receive, mark the boxes indicating how you wish to vote, and return the proxy card in the prepaid envelope provided.

		~~Telephone and Internet voting will close at 11:59 p.m. Eastern time the day prior to the annual meeting date.~~

		If you sign your proxy card but do not mark any boxes showing how you wish to vote, Brian J. Sisko and Deirdre Blackburn, as the proxies designated by our Board to act on behalf of shareholders, will vote your shares and cumulate your votes as recommended by our Board and, in their discretion, will vote on any other matters which may properly arise at the meeting.

		Telephone and Internet voting will close at 11:59 p.m. Eastern Time the day prior to the annual meeting date. If you sign your proxy card but do not mark any boxes showing how you wish to vote, Brian J. Sisko and Deirdre Blackburn, as the proxies designated by our Board to act on behalf of shareholders, will vote your shares and cumulate your votes as recommended by our Board and, in their discretion, will vote on any other matters which may properly arise at the meeting. If you are thebeneficial ownerof shares held in street name, you will receive a voting instruction form directly from your broker, bank or other nominee describing how to vote your shares. This form will, in most cases, offer you three ways to vote:

	1.		Via the Internet;

	2.		By telephone; or

	3.		By completing, signing and returning the voting instruction form in the accompanying prepaid envelope.

~~Whether you are a shareholder of record or the beneficial owner of the shares, you will need to have your proxy card or voting instruction form in hand when you call or log on to the Internet.~~

You should carefully follow any instructions sent by your broker, bank or other nominee to ensure that your instructions are received and your votes are cast as directed.

Whether you are a shareholder of record or the beneficial owner of the shares, you will need to have your proxy card or voting instruction form in hand when you call or log on to the Internet.

Q:		*What do I do if I change my mind after I vote my shares?*

A:		If you are ashareholder of record, you may change your vote at any time prior to the vote at the annual meeting by:

	1.		Re-voting by telephone or via the Internet (only your latest vote will be counted);

	2.		Submitting another proxy card with a later date (again, only your latest vote will be counted);

	3.		Sending written notice to our Secretary (which must be received at our corporate headquarters on or before the business day prior to the annual meeting) stating that you would like to revoke (that is, cancel) your proxy; or

	4.		Voting in person at the annual meeting.

If you are thebeneficial ownerof shares held in street name, you may submit new voting instructions by following the instructions provided by your broker, bank or other nominee. You also may vote in person at the annual meeting if you obtain a legal proxy from your broker or other nominee authorizing you to vote at the meeting.

Attendance at the annual meeting will not cause your previously granted proxy to be revoked unless you specifically request such a revocation. If you are ashareholder of recordand wish to vote at the meeting, you may do so by presenting your completed proxy card or ballot to the judge of election. If you are abeneficial ownerof shares held in street name and wish to vote at the meeting, you must present a legal proxy from your broker or other nominee to the judge of election along with your ballot.

		~~If you are the~~~~beneficial owner~~of shares held in street name, you may submit new voting instructions by following the instructions provided by your broker, bank or other nominee. You also may vote in person at the annual meeting if you obtain a legal proxy from your broker or other nominee authorizing you to vote at the meeting.

		~~Attendance at the annual meeting will not cause your previously granted proxy to be revoked unless you specifically request such a revocation. If you are a~~~~shareholder of record~~~~and wish to vote at the meeting, you may do so by presenting your completed proxy card or ballot to the judge of election. If you are a~~~~beneficial owner~~~~of shares held in street name and wish to vote at the meeting, you must present a legal proxy from your broker or other nominee to the judge of election along with your ballot.~~

Q:		*What is the required vote for a proposal to pass?*

A:		Election of Directors.The 11nine nominees who receive the highest number of“FOR”votes at the annual meeting will be elected as directors. A properly executed proxy that withholds authority to vote with respect to the election of one or more directors will not be voted with respect to the director or directors indicated and will not be taken into account in determining the outcome of the election; however, it will be counted for purposes of determining whether there is a quorum.

		Other Proposals.For the ~~other proposals, including an amendment~~proposal to amend and restate our ~~Second Amended and Restated Articles~~2004 Equity Compensation Plan, the affirmative vote of ~~Incorporation to effect~~ a ~~reverse stock split~~majority of the votes cast at ~~the discretion~~a meeting at which a quorum representing a majority of our ~~Board,~~outstanding voting stock is present, either in person or by proxy, and voting on the 2004 Equity Compensation Plan, will be required.

		For the ratification of the appointment of our independent registered public accounting firm, and each other proposal that may be properly brought before the meeting, the affirmative vote of a majority of the votes cast by all the shareholders entitled to vote for the proposal will be ~~required.~~ required, so long as a quorum representing a majority of our outstanding voting stock is present, either in person or by proxy.

		A properly executed proxy marked“ABSTAIN”with respect to any ~~such matter~~proposal will be counted for purposes of determining whether there is a quorum. However, under Pennsylvania law, a proxy marked“ABSTAIN”is not considered a vote cast. Accordingly, an abstention could affect the approval of the amendment and restatement of our 2004 Equity Compensation Plan but will have no effect on the ~~approval of these~~other proposals. Broker non-votes (which are explained in the next question) are not counted in the tally of votes“FOR”or“AGAINST”a proposal and, therefore, have no effect on the proposal, assuming a quorum is present.

Q:		Q:*Will my shares be voted if I do not sign and return my proxy card or voting instruction form?*

A:		A:They could be. If you are ashareholder of recordand donot provide a proxy, your shares willnot be voted unless you attend the meeting and vote your shares. If you are abeneficial ownerof shares held in street name and you do not provide your broker with voting instructions, your broker or other nomineemay either use its discretion to vote your shares on “routine” matters or leave your shares unvoted. ~~All matters expected to be voted on at~~The ratification of the ~~annual meeting are~~appointment of our independent registered public accounting firm is considered “routine” by the New York Stock Exchange (“NYSE”). However, for matters deemed “non-routine” by the NYSE, such as the amendment and restatement of our 2004 Equity Compensation Plan, your broker or other nominee would not be able to vote without your instructions, in which case your shares would be considered “broker non-votes” on that particular matter. ~~No matters expected to be voted on at the annual meeting are considered non-routine by the NYSE.~~

Q:		*Who will count the votes?*

A:		A representative of Safeguard will count the votes and act as the judge of election.


Q:		*What does it mean if I get more than one proxy card or voting instruction form?*

A:		It may mean that you have multiple accounts at the transfer agent or hold your shares in more than one brokerage account.Please provide voting instructions for all proxy cards and voting instruction forms that you receive.If you are ashareholder of record, we encourage you to contact our transfer agent to obtain information about how to combine your accounts. You may contact our transfer agent at the following address and telephone numbers:

Safeguard Scientifics, Inc.
c/o BNY Mellon Shareowner Services
P. O. Box 358015
Pittsburgh, PA 15252-8015


Toll Free:	~~800.851.9677~~	1-800-851-9677
TDD Hearing Impaired:	~~800.231.5469~~	1-800-231-5469
International:	~~201.680.6578~~	1-201-680-6578
International TDD Hearing Impaired:	~~201.680.6610~~	1-201-680-6610

		If you are ashareholder of record, you also can find information on transferring shares and other useful shareholder information on our transfer agent’s web site at www.bnymellon.com/shareowner/isd.

Q:		*What is “householding” and how does it affect me?*

A:		If you and other residents at your mailing address are thebeneficial ownerof shares held in street name, your broker, bank or other nominee may have notified you that your household will receive only one annual report and proxy statement for each company in which you hold stock through that broker, bank or other nominee. This practice is commonly referred to as “householding” and potentially provides extra convenience for shareholders and cost savings for companies. Unless you responded that you did not want to participate in householding, you were deemed to have consented to the process. Therefore, your broker or other nominee will send only one copy of our annual report and proxy statement to your address; however, each shareholder in your household should continue to receive a separate voting instruction form.

		If you are thebeneficial ownerof shares held in street name and you would like to receive your own set of our annual report and proxy statement in the future, or if you share an address with another Safeguard shareholder and together both of you would like to receive only a single set of Safeguard annual documents, please contact Broadridge by telephone at ~~800.542.1061.~~1-800-542-1061. Be sure to provide Broadridge with your name, the name of your brokerage firm, bank or other nominee, and your account number.

		If you are currently subject to householding and would like to receive an individual copy of this year’s annual report or proxy statement, we will promptly send a copy to you if you send a written request to Safeguard Scientifics, Inc., Attention: Investor Relations, 435 Devon Park Drive, Building 800, Wayne, PA 19087-1945 or call ~~877.506.7371.~~1-877-506-7371.

ELECTION OF DIRECTORS

Item 1 on Proxy Card

Directors are elected annually and serve until the next annual meeting of shareholders. ~~There~~Effective as of the completion of the annual meeting, our Board will consist of nine members; therefore, there are 11nine nominees for election this year. All of the nominees are currently serving as directors. Each nominee has consented to serve until the next annual meeting if elected. You will find a biography for each nominee below. If any director is unable to stand for re-election after distribution of this proxy statement, the Board may reduce its size or designate a substitute. If the Board designates a substitute, proxies voting on the original director candidate will be cast for the substituted candidate.

~~The Board recommends a vote~~THE BOARD RECOMMENDS A VOTE “FOR” ~~each nominee. The 11 nominees who receive the highest number of affirmative votes will be elected as directors.~~EACH NOMINEE. THE NINE NOMINEES WHO
RECEIVE THE HIGHEST NUMBER OF AFFIRMATIVE VOTES WILL BE ELECTED AS
DIRECTORS.

Peter J. Boni, age ~~62,~~63, joined Safeguard as President and Chief Executive Officer and a member of the Board in August 2005. Mr. Boni also is a director of Clarient, Inc. Positions held include Operating Partner for Advent International, Inc., a global private equity firm with $10 billion under management (April 2004 to August 2005); Chairman and Chief Executive Officer of Surebridge, Inc., an applications outsourcer serving the mid-market (March 2002 to April 2004); Managing Principal of Vested Interest LLC, a management consulting firm (January 2001 to March 2002); and President and Chief Executive Officer of Prime Response, Inc., an enterprise applications software provider (February 1999 to January 2001).

Michael J. Cody, age ~~58,~~59, has served on our Board since 2006. Positions held include Vice President, Corporate Development, Raytheon Company, a technology provider in defense, homeland security and other worldwide governmental markets (June 2009 to present); Senior Vice President of Corporate Development (November 2007 to ~~present)~~March 2009) of Ensign-Bickford Industries, a provider of ordnance initiation systems for the aerospace and defense industries, chemical processing, renewable energy and pet food palatability products; Partner, Meadowood Capital, LLC, a private equity firm (April 2007 to November 2007); Vice President of Corporate Development, responsible for mergers, acquisitions and divestitures at EMC Corporation, a provider of products, services and solutions for information storage and management (1998 until his retirement in March 2007); Director of Corporate Development at United Technologies Corporation, a diversified technology company (1993 to 1998); Managing Director of the investment banking group at Price Waterhouse (1990 to 1993); and Vice President of Investment Banking at Kidder Peabody & Co. (1980 to 1989).

Julie A. Dobson, age ~~51,~~52, has served on our Board since 2003. Ms. Dobson also is a director of American Water Works Company, Inc., PNM Resources, Inc. and non-executive Chairperson of the Board of LCC International, Inc. Positions held include Chief Operating Officer (1998 until February 2002) of TeleCorp PCS, Inc., a wireless/mobile phone company that was acquired by AT&T Wireless, Inc. in late 2001; President of Bell Atlantic Corporation’s New York/ New Jersey Metro Region mobile phone operations (1997 to 1998); and a number of executive positions during her 18-year career with Bell Atlantic Corporation, including sales, operations, and strategic planning and development in the chief executive officer’s office.

~~Robert E. Keith, Jr~~., age 66, has served on our Board since 1996 and was appointed Chairman of the Board in October 2001, prior to which he served as Vice Chairman since February 1999. Mr. Keith also is a director of Internet Capital Group, Inc. Positions held include Managing Director of TL Ventures, a group of venture capital funds, and its predecessor funds (1988 to present); senior adviser to, and co-founder of, EnerTech Capital Partners (1996 to present); member of the Office of the Chief Executive of Safeguard (April 2001 to October 2001); and President (1991 to December 2002) and Chief Executive Officer (February 1996 to December 2002), of Technology Leaders Management, Inc., a private equity capital management company.

Andrew E. Lietz, age ~~69,~~70, has served on our Board since 2003. Mr. Lietz also is a director of Amphenol Corporation and DDi Corp. ~~and a member of the Board of Trustees of the University System of New Hampshire.~~ Positions held include Managing Director and Founder of Rye Capital Management, LLC, a private equity investment firm (2001 to present); Executive Chairman (late 2000 until mid 2002) of Clare Corporation, a designer and manufacturer of integrated circuits, solid-state relays and electronic switches, which was acquired by Ixys Corporation in June 2002; President and Chief Executive Officer (1995 to 2000) of, and several other executive positions during his 16-year career with, Hadco Corporation, a global manufacturer of electronic interconnect products and services; and a variety of positions at IBM Corporation.

George D. McClelland, age ~~61,~~63, has served on our Board since 2006. Positions held include Chairman, CEO and Founder of eSecLending, a provider of securities lending services to the pension industry (2000 to 2001); a director of Riverstone Networks, Inc. and Storage Networks, Inc.; Senior Vice President, responsible for managing many of the portfolio companies of United Asset Management Corporation, a public holding company (1994 to 2001); multiple corporate management roles at FMR Corp., a diversified financial services company (1987 to 1991); and Corporate Treasurer of Data General Corporation, a technology company (1972 to 1987).

Jack L. Messman, age ~~68,~~69, has served on our Board since 1994. Mr. Messman also is a director of AMG Advanced Metallurgical Group N.V., RadioShack Corporation and Timminco Limited. Positions held include Chairman of the Board and Chief Executive Officer of Novell, Inc., a provider of infrastructure software products focused around Linux and identity management (2001 to 2006); Chief Executive Officer and President of Cambridge Technology Partners (Massachusetts), Inc., an e-business systems integration company (August 1999 until its acquisition by Novell, Inc. in July 2001); Chairman and Chief Executive Officer of Union Pacific Resources Group Inc., an independent oil and gas exploration and production company (April 1991 to August 1999); and Chairman and Chief Executive Officer of USPCI, Inc., Union Pacific’s environmental services company (May 1988 to April 1991).

~~Dr. John W. Poduska, Sr.,~~age 70, has served on our Board since 1987. Dr. Poduska also is a director of Novell, Inc. and Anadarko Petroleum Corporation. Positions held include Chairman of Advanced Visual Systems, Inc., a provider of visualization software and solutions (January 1992 to December 2001); President and Chief Executive Officer of Stardent Computer, Inc, a computer manufacturer (December 1989 to December 1991); and Founder, Chairman and Chief Executive Officer of Stellar Computer, Inc., a computer manufacturer and the predecessor of Stardent Computer, Inc. (December 1985 to December 1989).

John J. Roberts, age ~~63,~~64, has served on our Board since 2003. Mr. Roberts also is a director of Armstrong World Industries, Inc. and Vonage Holdings Corp. and a trustee of Pennsylvania Real Estate Investment Trust. Mr. Roberts is a C.P.A. Positions held include Global Managing Partner and a Member of the Leadership Team of PricewaterhouseCoopers LLP at the time of his retirement in June 2002, completing a 35-year career with the professional services firm during which he served in a variety of client service and operating positions.

Dr. Robert J. Rosenthal, age ~~51,~~52, has served on our Board since 2007. ~~Dr. Rosenthal also is a member of the Board of Advisors of the University of Maryland.~~ Positions held include President, Chief Executive Officer and a director of Magellan Biosciences, Inc., a provider of clinical diagnostics and life sciences research tools (October 2005 to present); President, Chief Executive Officer and a director of TekCel, Ltd., a provider of life sciences research tools (October 2003 to January 2007); President and Chief Executive Officer of Boston Life Sciences, Inc., a diagnostic and therapeutic development company (July 2002 to October 2003); President and Chief Executive Officer of Magellan Discovery Technologies, LLC, a life sciences acquisition company (January 2001 to July 2002); Senior Vice President of PerkinElmer Corporation and President of its instrument division (March 1999 to November 2000); and in various executive positions at Thermo Optek Corporation (September 1995 to February 1999).

CORPORATE GOVERNANCE AND BOARD MATTERS

Safeguard’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters for the Board’s Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee are available at www.safeguard.com/governance. Shareholders also may obtain a print copy of these documents, at no cost, by writing to our Secretary at 435 Devon Park Drive, Building 800, Wayne, PA 19087-1945. The Code of Business Conduct and Ethics is applicable to all employees of Safeguard, including each of our executive and financial officers, and the members of our Board. Safeguard intends to post information regarding amendments to or waivers from our Code of Business Conduct and Ethics (to the extent applicable to Safeguard’s directors or executive officers) in the Corporate Governance section of our website. Our website is not part of this proxy statement. All references to our website address are intended to be inactive textual references only.

Board Independence.Safeguard’s common stock is listed on the New York Stock Exchange, which we refer to below as the “NYSE.” To assist the Board in making independence determinations, the Board has adopted categorical standards which are reflected in our Corporate Governance Guidelines. Generally, under these standards, a director does not qualify as an independent director if any of the following relationships exist:

Currently or within the previous three years, the director has been employed by us, someone in the director’s immediate family has been one of our executive officers, or the director or someone in the director’s immediate family has been employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;

The director or someone in the director’s immediate family is a current partner of a firm that is our internal or external auditor, the director is a current employee of the firm, someone in the director’s family is a current employee of the firm who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice, or the director or someone in the director’s immediate family is a former partner or employee of such a firm and personally worked on our audit within the last three years;

The director or someone in the director’s immediate family received, during any 12-month period within the last three years, more than $100,000 in direct compensation from us (other than director and committee fees and pension or other forms of deferred compensation for prior service that are not contingent in any way on continued service);

The director is a current employee or holder of more than 10% of the equity of another company, or someone in the director’s immediate family is a current executive officer or holder of more than 10% of the equity of another company, that has made payments to or received payments from us, in any of the last three fiscal years of the other company, that exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues; or

The director is a current executive officer of a charitable organization to which we have made charitable contributions in any of the charitable organization’s last three fiscal years that exceed the greater of $1 million or 2% of that charitable organization’s consolidated gross revenues.

•		Currently or within the previous three years, the director has been employed by us; someone in the director’s immediate family has been one of our executive officers; or the director or someone in the director’s immediate family has been employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee;

•		The director is a current partner or employee, or someone in the director’s immediate family is a current partner of, a firm that is our internal or external auditor; someone in the director’s immediate family is a current employee of the firm and personally works on our audit; or the director or someone in the director’s immediate family is a former partner or employee of such a firm and personally worked on our audit within the last three years;

•		The director or someone in the director’s immediate family received, during any 12-month period within the last three years, more than $120,000 in direct compensation from us (other than director and committee fees and pension or other forms of deferred compensation for prior service that are not contingent in any way on continued service);

•		The director is a current employee or holder of more than 10% of the equity of another company, or someone in the director’s immediate family is a current executive officer or holder of more than 10% of the equity of another company, that has made payments to or received payments from us, in any of the last three fiscal years of the other company, that exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues; or

•		The director is a current executive officer of a charitable organization to which we have made charitable contributions in any of the charitable organization’s last three fiscal years that exceed the greater of $1 million or 2% of that charitable organization’s consolidated gross revenues.

The Board has determined that, of our current Board members, Michael Cody, Julie Dobson, Andrew Lietz, George MacKenzie, George McClelland, Jack Messman, John Poduska, John Roberts and Robert Rosenthal have no direct or indirect material relationships with us other than their directorship and, therefore, are independent within the meaning of the NYSE listing standards and satisfy the categorical standards contained in our Corporate Governance Guidelines.

Board Structure and Committee Composition.At the date of this proxy statement, Safeguard’s Board has 11 members and ~~four standing~~five current committees. The Board held ~~seven~~nine meetings in ~~2007.~~2008. Each incumbent director attended at least 75% of the total number of meetings of the Board and ~~committees~~committee(s) of which he or she was a member. Directors are invited, but not required, to attend annual meetings of Safeguard shareholders. ~~All~~Ten directors ~~who were serving on~~attended our ~~Board at the time of the meeting attended the 2007~~2008 annual meeting of shareholders. Under our Corporate Governance Guidelines and NYSE listing standards, non-employee directors meet in executive session at each regularly scheduled Board meeting, outside of the presence of any management directors and any other members of Safeguard’s management, ~~who may otherwise be present,~~ and during at least one session per year, only independent directors are present. The Chairperson of the Nominating & Corporate Governance Committee

presides at these sessions. The table below describes the membership of each of the ~~standing~~current committees during ~~2007~~2008 and the number of meetings held by each of these committees during ~~2007.~~2008.

Nominating &
Acquisition Audit Compensation Corporate Governance

Number of Meetings held in 2007
7 11 8 6
Membership:

Peter J. Boni ü
Michael J. Cody ü ü
Julie A. Dobson † Chairperson
Robert E. Keith, Jr. Chairperson
Andrew E. Lietz † Chairperson
George MacKenzie Chairperson
George D. McClelland ü ü
Jack L. Messman ü ü
John W. Poduska, Sr. ü ü
John J. Roberts ü ü
Robert J. Rosenthal ü ü
8

Nominating &
Corporate Strategy
Acquisition Audit Compensation Governance Committee
Number of Meetings held in 2008
3 16 9 4 3
Membership:

Peter J. Boni ü ü
Michael J. Cody ü ü ü
Julie A. Dobson Chairperson
Robert E. Keith, Jr. (1) Chairperson
Andrew E. Lietz Chairperson
George MacKenzie Chairperson
George D. McClelland ü ü Chairperson
Jack L. Messman ü ü
John W. Poduska, Sr. (1) ü ü ü
John J. Roberts ü ü
Robert J. Rosenthal ü ü ü


		An†~~denotes former committee member. Ms. Dobson~~
(1)		Mr. Keith and ~~Mr. Lietz served on~~Dr. Poduska will be retiring from the ~~Audit Committee and Compensation Committee, respectively, until June 2007; Messrs. McClelland and Cody were appointed to~~Board as of the ~~Compensation Committee and Nominating & Corporate Governance Committee, respectively, in June 2007. Dr. Rosenthal was appointed to the Acquisition Committee when he joined~~date of our ~~Board in July 2007 and to the Audit Committee in September 2007.~~annual meeting

Acquisition Committee.The Board has delegated to the Acquisition Committee the authority to approve, between regularly scheduled Board meetings, the following transactions:

Follow-on transactions in existing partner companies involving amounts between $5 million and $20 million;

New transactions involving amounts between $10 million and $20 million; and

Divestitures of existing partner companies involving amounts between $10 million and $20 million.

Audit Committee.The Audit Committee’s responsibilities, which are described in detail in its charter, include, among other duties, the responsibility to:

Assist the Board in fulfilling its responsibilities regarding general oversight of the integrity of Safeguard’s financial statements, Safeguard’s compliance with legal and regulatory requirements, and the performance of Safeguard’s internal audit function;

Interact with and evaluate the performance, qualifications and independence of Safeguard’s independent registered public accounting firm;

Review and approve related party transactions; and

Prepare the report required by SEC regulations to be included in the proxy statement.

The Audit Committee has the sole authority to retain, set compensation and retention terms for, terminate and oversee the relationship with Safeguard’s independent registered public accounting firm (which reports directly to the Audit Committee). The Audit Committee also oversees the activities of the internal auditor, reviews the effectiveness of the internal audit function and approves the appointment of the internal auditor. The Audit Committee has the authority to obtain advice, counsel and assistance from internal and external legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties and to receive appropriate funding from Safeguard for such advice and assistance. The full responsibilities of the Audit Committee are set forth in the Audit Committee Charter, which is reviewed annually by the Committee. The Audit Committee Charter is available through the Corporate Governance link on our website at www.safeguard.com/governance.

The Board has determined that each member of the Audit Committee meets the independence requirements established by SEC regulations, the NYSE listing standards and by our Corporate Governance Guidelines. The Board has determined that Messrs. MacKenzie, McClelland and Roberts and Dr. Rosenthal are “audit committee financial experts” within the meaning of the SEC regulations, and the Board has determined that each member of the Audit Committee has accounting and related financial management expertise within the meaning of the NYSE

Compensation Committee.The Compensation Committee’s responsibilities, which are described in detail in its charter, include, among other duties, the responsibility to:

~~Approve the philosophy for compensation of our executive officers and other employees;~~

~~Establish compensation (including base salary, incentive compensation and equity-based programs) for our Chief Executive Officer and other executive officers;~~

~~Administer the long- and short-term compensation and performance-based incentive plans (which are cash and equity based);~~

~~Approve employment agreements and perquisites provided to our executive officers;~~

~~Review management’s recommendations for our broad-based employee benefit plans;~~

~~Evaluate and recommend to the Board the compensation for all non-employee directors for service on the Board and its committees; and~~

~~Review and discuss with management the Compensation Discussion and Analysis and recommend to the Board its inclusion in our Form 10-K and proxy statement.~~

•		Approve the philosophy for compensation of our executives and other employees;

•		Establish compensation (including base salary, incentive compensation and equity-based programs) for our Chief Executive Officer and other executive officers;

•		Administer the long- and short-term compensation and performance-based incentive plans (which are cash and equity based);

•		Approve employment agreements and perquisites provided to our executive officers;

•		Review management’s recommendations for our broad-based employee benefit plans;

•		Evaluate and recommend to the Board the compensation for all non-employee directors for service on the Board and its committees; and

•		Review and discuss with management the Compensation Discussion and Analysis and recommend to the Board its inclusion in our Form 10-K and proxy statement.

The Compensation Committee Charter is available through the Corporate Governance link on our website at www.safeguard.com/governance. The Board has determined that each member of the Compensation Committee meets the independence requirements established in the NYSE listing standards and by our Corporate Governance Guidelines.

A discussion of some of the Compensation Committee’s processes and procedures for the consideration and determination of executive compensation is contained in “Compensation Discussion and Analysis—Setting Executive Compensation.” Additional processes and procedures include the following:

•

Meetings.The Compensation Committee generally meets at least five times each year, with additional meetings being scheduled as needed. The annual committee calendar is established prior to the beginning of each year, and agendas for each meeting are established in consultation with the Compensation Committee Chairperson. The Compensation Committee meets in executive session during or prior to the end of each regularly scheduled meeting.

•

Role of Consultant. ~~The Compensation~~During the second half of 2007, the Committee ~~has~~had retained Mercer LLC as its consultant to assist the Committee in its evaluation of executive and director compensation for 2008. After the individual consultant from Mercer who was working with the Committee left Mercer to join Semler Brossy Consulting Group LLC, the Committee retained the services of ~~a third party compensation consultant~~Semler Brossy to assist the Compensation Committee in its deliberations regarding ~~senior~~ executive and director compensation. ~~Hewitt Associates LLC served as~~Specifically, the Compensation Committee’s ~~consultant from December 2003 until October 2007, at which time~~consultants provide the ~~Compensation Committee retained Mercer LLC, a wholly owned subsidiary of Marsh & McLennan Companies, Inc. Specifically, the consultant provides the Compensation~~ Committee with information relating to competitiveness of pay levels, compensation design, market trends and technical considerations concerning both ~~executive officers~~executives and directors and ~~assists~~assist the Compensation Committee with the reporting of executive compensation under the SEC’s proxy disclosure rules. These services, which are provided in support of decision-making by the Compensation Committee, are the only formal services that the compensation consultant performs for Safeguard. From time to time since its hire, ~~Mercer~~Semler Brossy has provided miscellaneous data and research to the Compensation Committee relating to various compensation topics generally. The consultant reports to and acts at the direction of, and attends selected meetings as requested by, the Chairperson of the Compensation Committee. The Compensation Committee has the sole authority to hire and terminate ~~the consultant~~consultants and evaluates the performance of its ~~consultant~~consultant(s) annually.

•

Role of Executive Team. Our Chief Executive Officer, Chief Financial Officer and General Counsel, with the assistance of other company employees as ~~he requests, provides~~they request, provide support to the Compensation Committee by preparing materials to assist the Committee in making its compensation decisions; conferring with the Committee and its consultant on the selection of peer companies and industries used for comparison purposes; providing suggestions to the Committee in the area of executive compensation, including suggestions in the context of terms of employment agreements, performance

Nominating & Corporate Governance Committee.The Nominating & Corporate Governance Committee’s responsibilities, which are described in detail in its charter, include, among other duties, the responsibility to:

Establish criteria for the selection of directors;

~~Consider~~Evaluate and consider qualified Board candidates, including those recommended by shareholders;

Recommend to the Board the nominees for director, including nominees for director in connection with Safeguard’s annual meeting of shareholders;

Conduct an annual evaluation of the Board and its members and oversee the evaluations of each of the Board committees;

Take a leadership role in shaping Safeguard’s corporate governance policies, including developing and recommending to the Board Safeguard’s Corporate Governance Guidelines and Code of Business Conduct and Ethics;

Evaluate the performance of the Chief Executive Officer; and

Monitor the process of succession planning for the Chief Executive Officer and executive management.

The Nominating & Corporate Governance Committee Charter is available through the Corporate Governance link on our website at www.safeguard.com/governance. The Board has determined that each member of the committee meets the independence requirements established in the NYSE listing standards and by our Corporate Governance Guidelines.

The Nominating & Corporate Governance Committee may use any number of methods to identify potential nominees, including personal, management and industry contacts; recruiting firms; and, as described below under the heading “Process for Submission of Shareholder Recommendations for Board Nominees,” candidates recommended by shareholders. ~~During 2007, Safeguard retained Korn/Ferry International to assist in identifying potential board candidates~~

Strategy Committee.The Strategy Committee works with ~~life sciences expertise. Following interviews by~~ Safeguard management to maintain a cooperative, interactive strategic planning process, including the identification and ~~board members with several potential board candidates, Mr. Boni recommended Dr. Rosenthal to~~setting of strategic goals and expectations. The Committee also assists management in the ~~Nominating & Corporate Governance Committee as a potential candidate for Safeguard’s Board. Following completion~~evaluation of ~~their consideration of this Board candidate, the Nominating & Corporate Governance Committee recommended to our Board,~~strategic alternatives and our Board appointed, Dr. Rosenthal as a director in July 2007. The Nominating & Corporate Governance Committee recommended the nomination of, and our Board nominated, Dr. Rosenthal for election as a director by our shareholders at the 2008 annual meeting.initiatives.

Annual Performance Evaluations.The directors and Nominating & Corporate Governance Committee annually assess the performance of the Board based on input from all directors. The Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee also annually assess their respective performance and committee processes.

Review and Approval of Transactions with Related Persons.The Board has adopted a written policy which charges the Audit Committee with the responsibility of reviewing with management at each regularly scheduled meeting and determining whether to approve any transaction (other than a transaction that is available to all employees generally on a non-discriminatory basis) between us and our directors, director nominees and executive officers or their immediate family members. Between regularly scheduled meetings of the Audit Committee, management may preliminarily approve a related party transaction, subject to ratification of the transaction by the Audit Committee. If the Audit Committee does not ratify the transaction, management will make all reasonable efforts to cancel the transaction.

Communications with Safeguard’s Board and Audit Committee.Any shareholder or other interested party may communicate with our Board or any specified non-management director(s) by addressing the communication as follows:

c/o Secretary
Safeguard Scientifics, Inc.
435 Devon Park Drive, Building 800
Wayne, PA 19087-1945

All communications are initially reviewed by our Secretary. The Chairperson of the Audit Committee is advised promptly of any communication that alleges misconduct on the part of Safeguard’s management or raises legal, ethical or compliance concerns about Safeguard’s policies or practices.

Safeguard’s Audit Committee also has established procedures for confidential, anonymous submission of complaints by employees and for receipt, retention and treatment of complaints, from whatever source, received by Safeguard, regarding accounting, internal accounting controls or auditing matters. All such communications are initially sent to the Chairperson of the Audit Committee and, if requested by the Chairperson, may be sent to the other members of the Audit Committee. Any person who desires to contact the Audit Committee may do so by addressing correspondence to Chairperson, Audit Committee, care of our Secretary at the address noted above.

The Chairperson of the Audit Committee also receives updates on other communications to the Board, Audit Committee or non-employee directors that raise issues related to the affairs of Safeguard but which do not fall into the two prior categories. The Chairperson of the Audit Committee determines which of these communications he would like to see.

Our Secretary maintains a log of all communications, which is available for review upon request of any member of the Board. Typically, we do not forward to our non-management directors communications from our shareholders or other communications which are of a personal nature or not related to the duties and responsibilities of the Board, including, without limitation, business plan or other business opportunity submissions; inquiries related to products or services provided by Safeguard’s companies; spam, junk mail and mass mailings; resumes and other forms of job inquiries; surveys or polls; business solicitations or advertisements; and any material that relates to improper or irrelevant topics or is unduly hostile, threatening, illegal or similarly unsuitable.

Process for Submission of Shareholder Recommendations for Board Nominees. In considering candidates, the Nominating & Corporate Governance Committee seeks the following attributes for director nominees:

A strong record of personal integrity and ethical conduct;

A leader in the companies or institutions with which he or she is affiliated;

Competencies, skills and experiences that are complementary to the background and experience represented on Safeguard’s Board and that meet the needs of Safeguard’s strategy and business;

A willingness and ability to devote sufficient time to fulfill his or her responsibilities to Safeguard and our shareholders;

The ability to represent the long-term interests of our shareholders; and

The ability to provide relevant advice and counsel to management and best perpetuate the success of Safeguard’s business.

The Nominating & Corporate Governance Committee considers properly submitted shareholder recommendations of director candidates in substantially the same manner as it considers director candidate recommendations from other sources. Any shareholder recommendation must include the following: the nominee’s name and the information about the nominee that would be required in a proxy statement under the SEC’s rules; information about the relationship between the nominee and the nominating shareholder; proof of the number of shares of Safeguard common stock that the nominating shareholder owns and the length of time the shares of Safeguard common stock have been owned; and a letter from the nominee certifying his or her willingness to serve, if elected, as a director.

Recommendations should be directed to:

Chairperson, Nominating & Corporate Governance Committee
c/o Secretary
Safeguard Scientifics, Inc.
435 Devon Park Drive, Building 800
Wayne, PA 19087-1945

Board Compensation.During ~~2007,~~2008, each of our non-employee directors was compensated for his or her service as a director as shown in the table below:


Compensation Item	Amount
Annual Board Retainers:
Chairman of the Board	$	50,000
Other Directors		35,000
Additional Annual Chairperson Retainers:
Audit Committee		15,000
Compensation Committee		7,500
Nominating & Corporate Governance Committee		5,000
Meeting Attendance Fees:
Board		2,000
Committee		1,500

In light of Safeguard’s efforts to conserve cash resources in the current economic climate and management’s commitment to Safeguard’s efforts to increase shareholder value, the Board implemented for 2009 a requirement that each director defer at least 25% of the retainer and meeting fees payable to each director for service on the Safeguard Board and its committees during 2009. Directors will receive deferred stock units in lieu of such deferred fees as more fully described below.

We also reimburse our directors for expenses they incur to attend our Board and Committee meetings and ~~to attend a~~for attendance at one director’s continuing education program during each calendar ~~year.~~year or the reasonable cost of one year’s membership in an organization which is focused on director education. At the request of Safeguard, non-employee directors of Safeguard also may, from time to time, be asked to act as Safeguard’s designated member on the Board of Directors of a Safeguard partner company. In exchange for providing such board service, Safeguard will directly compensate each such director on a per meeting basis at rates ranging from $500 to $2,000 for attendance at each in-person meeting or telephonic board meeting. Safeguard also will reimburse each such director for all out-of-pocket expenses incurred by him or her in connection with such service, subject to being reimbursed by the particular partner company as circumstances dictate.

Each director who is not an employee of Safeguard receives an initial option grant to purchase 50,000 shares of Safeguard common stock upon the earlier of the date of Safeguard’s annual meeting of shareholders or at the end of the quarter following the director’s initial election to the Board. ~~Since 2005, each non-employee director~~Directors also ~~has received an~~receive recurring annual service ~~option grant to purchase 25,000 shares. Historically, recurring~~grants. Recurring annual service grants to directors, which previously had generally ~~have~~ been made in December of each ~~year. Beginning in~~year, have been awarded, since 2007, ~~the Compensation Committee determined that, as a matter of best practice, the annual service option grants to directors would be awarded~~ on the date of Safeguard’s annual meeting of ~~shareholders.~~shareholders as a matter of best practice. Since 2005, the recurring annual service grant has consisted of a stock option grant to purchase 25,000 shares of Safeguard common stock. Starting in 2008, as part of the annual service grant, directors also received 12,500 deferred stock units, as more fully described below, in addition to the stock option grant. Directors’ stock options have an eight-year term. Initial stock option grants vest as to 25% of the underlying shares on each of the first four anniversaries of the grant date. Annual service stock option and deferred stock unit grants fully vest on the first anniversary of the grant ~~date.~~date or, if earlier, once a director reaches age 65. The exercise price of stock options is equal to the ~~fair market value~~average of ~~a share~~the high and low trading prices of our common stock, as reported on the NYSE composite tape, on the grant date. The deferred stock units represent the right to receive shares of Safeguard common stock, on a one-for-one basis, on or about the first anniversary of the date upon which the director leaves the Safeguard Board. On ~~May 24, 2007,~~July 23, 2008, each non-employee director received an annual service ~~option~~ grant of stock options to purchase 25,000 shares at an exercise price of ~~$2.64~~$1.19 per share. Upon his appointment to the Board, on July 25, 2007, Dr. Rosenthal received an initial option grant to purchase 50,000 shares at an exercise price of $2.44 per share. For the Board service year beginning with our 2008 annual meeting of shareholders, in addition to our non-employee directors’ annual service option grant, each non-employee director also will receiveshare and 12,500 deferred stock ~~units annually. The deferred stock unit grants will fully vest on the first anniversary of the grant date. The deferred stock units are payable, on a one-for-one basis, in shares of~~ units.

Safeguard ~~common stock following an individual’s termination of service on the Safeguard Board.~~

~~Safeguard~~also maintains a Group Deferred Stock Unit Program for Directors (“Directors’ DSU Program”) which allows each director, at his or her election, to receive deferred stock units in lieu of retainer and meeting fees paid to directors for service on the Safeguard Board (“Directors’ Fees”). The deferral election applies to Directors’ Fees to be received for the calendar year following the year in which the election is made and remains in effect for each subsequent year unless the director elects otherwise by the end of the calendar year prior to the year in which the services are rendered. The number of

deferred stock units awarded is determined by dividing the Directors’ Fees by the fair market value of Safeguard’s stock on the date on which the director would have otherwise received the Directors’ Fees. Each director also receives a number of matching share units, based on the same fair market value calculation, equal to 25% of the Directors’ Fees deferred. A director is always fully vested in Directors’ Fees deferred; the matching share units vest fully on the first anniversary of the date the matching share units are credited to the director’s ~~account.~~account or, if earlier, once a director reaches age 65. Each deferred stock unit entitles the director to receive one share of Safeguard common stock on or about the first anniversary of the date upon which the director leaves the Safeguard Board. A director also may elect to receive the stock in annual installments over a period of up to five years after leaving the Board.

Director Compensation ~~– 2007.~~— 2008.The following table provides information on compensation earned during ~~2007~~2008 by each non-employee director who served on our Board at any time during ~~2007:~~2008:


	Fees Earned or		Stock		Option		All Other				Fees Earned or		Stock		Option		All Other
	Paid in Cash		Awards		Awards		Compensation		Total		Paid in Cash		Awards		Awards		Compensation		Total
Name	($)(1)		($)(2)(3)(5)		($)(3)(4)(5)		($)(6)		($)(7)		($)(1)		($)(2)(3)(5)		($)(3)(4)(5)		($)(6)		($)(7)

Michael J. Cody		64,000		—		72,054		1,250		137,304	$	76,500	$	6,561	$	37,890	$	1,512	$	122,463
Julie A. Dobson		77,500		1,663		57,198		—		136,361		95,000		11,295		21,209		—		127,504
Robert E. Keith, Jr.		73,000		16,999		37,653		—		127,652		70,500		34,249		14,265		—		119,014
Andrew E. Lietz		66,000		—		42,853		—		108,853		70,000		14,875		14,265		—		99,140
George MacKenzie		80,500		—		57,198		—		137,698		98,000		6,561		21,209		673		126,443
George D. McClelland		74,500		5,730		70,632		1,250		152,112		102,500		27,922		36,487		1,200		168,109
Jack L. Messman		65,000		—		37,653		1,250		103,903		63,500		27,313		14,265		—		105,078
John W. Poduska, Sr.		65,500		—		37,653		1,250		104,403		69,000		14,875		14,265		—		98,140
John J. Roberts		72,500		51		57,198		—		129,749		87,000		6,561		21,209		—		114,770
Robert J. Rosenthal (8)		28,717		—		7,152		—		35,869		86,000		6,561		22,774		1,500		116,835


(3)		The directors’ aggregate holdings of deferred stock units and stock options to purchase shares of our common stock (both vested and unvested), as of December 31, ~~2007,~~2008, were as follows:

Deferred
Name Stock Units Stock Options

Michael J. Cody — 100,000
Julie A. Dobson 6,554 122,500
Robert E. Keith, Jr. 154,462 229,500
Andrew E. Lietz — 155,000
George MacKenzie — 144,500
George D. McClelland 23,806 100,000
Jack L. Messman 20,654 154,500
John W. Poduska, Sr. — 154,500
John J. Roberts 26,779 155,000
Robert J. Rosenthal (8) — 50,000

Deferred
Name Stock Units Stock Options
Michael J. Cody 12,500 125,000
Julie A. Dobson 38,978 147,500
Robert E. Keith, Jr. 242,589 232,000
Andrew E. Lietz 12,500 180,000
George MacKenzie 12,500 169,500
George D. McClelland 141,906 125,000
Jack L. Messman 88,387 157,000
John W. Poduska, Sr. 12,500 157,000
John J. Roberts 39,279 180,000
Robert J. Rosenthal 12,500 75,000


(4)		These amounts do not represent compensation actually received. Rather, these amounts represent the aggregate expense we recognized for financial statement reporting purposes for the fiscal year ended December 31, ~~2007~~2008 for stock options awarded during and prior to ~~2007,~~2008, in accordance with FAS 123(R). In accordance with SEC rules, the amounts shown exclude the effect of estimated forfeitures related to service-based vesting conditions. The fair value of the stock options is estimated at the date of grant using the Black-Scholes option-pricing model. The grant date fair values of the stock options issued during ~~2007~~2008 were as follows: ~~Dr. Rosenthal — $68,850; and~~ each of Ms. Dobson and Messrs. Cody, Keith, Lietz, MacKenzie, McClelland, Messman, Poduska, Roberts and ~~Roberts~~Rosenthal — ~~$37,653.~~$14,265. For a discussion of valuation assumptions, see footnote 2 to the Summary Compensation Table under the heading “Executive Compensation.”

(5)		Our equity compensation plans provide for the accelerated vesting of ~~deferred stock units and~~ stock options granted to non-employee directors upon retirement from the Board on or after their 65^th ~~birthday.~~birthday, and deferred stock units also are fully vested once a director reaches age 65. Messrs. Keith, Lietz, Messman and Poduska ~~are currently eligible for accelerated vesting if they retire.~~have each reached age 65. In accordance with FAS 123(R), the amounts shown for these four directors include the entire expense for all grants awarded to them during ~~2007.~~2008.

(6)		The amounts in this column represent reimbursement of expenses incurred by these directors for attendance at a director’s continuing education ~~program.~~program or a director’s reasonable annual dues for a membership organization focused on director education.

(7)		Directors also are eligible for reimbursement of expenses incurred in connection with attendance at Board and Committee meetings. These amounts are not included in the table above.

~~(8)~~		~~Dr. Rosenthal joined our Board in July 2007.~~

Stock Ownership Guidelines.Our stock ownership guidelines provide that within five years of December 31, 2005 (for directors who served on our Board at that date) or by the end of the fifth full calendar year after joining our Board, each non-employee director should attain an equity position in our common stock equal to two times the annual cash Board retainer. Shares counted toward these guidelines include:

~~Shares beneficially owned by the director;~~

~~Vested shares of restricted stock;~~

~~Vested deferred stock units that have been credited to the director; and~~

~~Shares underlying vested, in-the-money options.~~

•		Shares beneficially owned by the director;

•		Vested shares of restricted stock;

•		Vested deferred stock units that have been credited to the director; and

•		Shares underlying vested, in-the-money options.

At December 31, ~~2007,~~2008, each non-employee director had achieved this ownership goal or was working toward meeting the required ownership level.

~~APPROVAL OF AN AMENDMENT~~PROPOSAL TO ~~OUR SECOND AMENDED~~AMEND AND ~~RESTATED~~RESTATE THE
~~ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR~~
~~OUTSTANDING COMMON STOCK AT AN EXCHANGE RATIO OF NOT LESS~~
~~THAN 1-FOR-4 AND NOT MORE THAN 1-FOR-8 AND AUTHORIZING OUR BOARD~~
~~OF DIRECTORS TO IMPLEMENT THE REVERSE STOCK SPLIT WITHIN THIS~~
~~RANGE AT ANY TIME PRIOR TO OUR 2009 ANNUAL MEETING OF~~
~~SHAREHOLDERS BY FILING AN AMENDMENT TO OUR SECOND AMENDED AND~~
~~RESTATED ARTICLES OF INCORPORATION~~SAFEGUARD SCIENTIFICS, INC. 2004 EQUITY COMPENSATION PLAN

Item 2 on Proxy Card

~~Overview~~On July 13, 2009, the Board unanimously approved the amendment and restatement of the Safeguard Scientifics, Inc. 2004 Equity Compensation Plan (the “2004 Plan”), subject to approval by our shareholders at the annual meeting, to:

~~Our~~
• increase the number of shares of Safeguard common stock authorized for issuance under the 2004 Plan by 7,000,000 shares, from 6,000,000 to 13,000,000 shares;
• with respect to the number of shares of Safeguard common stock subject to each grant under the 2004 Plan, provide that in the event of an adjustment to the number or kind of shares outstanding by reason of a stock dividend, spinoff, recapitalization, merger, reorganization, consolidation, combination or exchange of shares, reclassification or change in par value, or by reason of any other extraordinary or unusual event affecting outstanding Safeguard common stock as a class without the receipt of consideration, any fractional shares resulting from such adjustment shall be eliminated by rounding any portion of a share down to the nearest whole number;
• prohibit granting dividend equivalents in connection with stock options or stock appreciation rights;
• clarify that incentive stock options shall only be exercisable by the participant during the participant’s lifetime and shall not be assignable or transferable other than by will or the laws of inheritance after the participant’s death;
• clarify that nonqualified stock options may be assigned in whole or in part during a participant’s lifetime only to one or more family members of the participant or to a trust or other entity established exclusively for one or more of such family members;
• prohibit repricing of stock appreciation rights unless the shareholders approve the repricing; and
• make other clarifying changes and updates.

The Board has ~~adopted a resolution authorizing Safeguard~~directed that the proposal to ~~submit to~~amend and restate the ~~shareholders of the Company a proposed amendment~~2004 Plan be submitted to our Second Amended and Restated Articles of Incorporation to effect a reverse stock split of our outstanding shares of common stock, at an exchange ratio of not less than 1-for-4 and not more than 1-for-8,shareholders for their approval at the ~~discretion of our Board.~~annual meeting. Shareholder approval of ~~this proposal will authorize~~the amendment and restatement of the 2004 Plan is being sought (i) so that compensation attributable to grants under the 2004 Plan may continue to qualify for an exemption from the $1,000,000 deduction limit under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) in order for incentive stock options to meet the requirements of the Code, and (iii) in order to meet the NYSE listing requirements. If our ~~Board, in its discretion, to effect a reverse stock split,~~shareholders do not approve the amendment and restatement of the 2004 Plan at ~~such specific exchange ratio within~~ the ~~approved range as they deem appropriate, at any time prior to our 2009~~ annual meeting, ~~of shareholders. Our Board believes that approval of a proposal granting this discretion to~~ the ~~Board to effect a reverse stock split~~amendment and to determine the exchange ratio, as opposed to approval of an immediate reverse stock split at a specific ratio, will provide our Board with maximum flexibility to react to current market conditions and to therefore maximize Safeguard’s chances of achieving the purposesrestatement of the ~~reverse stock split, if implemented,~~2004 Plan will not become effective, and ~~to act in the best interests of Safeguard and our shareholders.~~

To effect the reverse stock split, we would file an amendment to our Second Amended and Restated Articles of Incorporation with the Pennsylvania Secretary of State. The form of amendment to our Second Amended and Restated Articles of Incorporation to effect the proposed reverse stock split is attached to this proxy statement as Annex 1. If our Board elects to implement a reverse stock split approved by our shareholders, then the number of ~~issued and outstanding~~shares authorized for issuance under the 2004 Plan will not be increased.

As of July 13, 2009, there were 19,868,041 shares of ~~our~~Safeguard common stock ~~would~~subject to outstanding stock options, 847,777 shares underlying outstanding deferred stock units, and 1,194,772 shares subject to unvested restricted stock awards. As of July 13, 2009, our 2001 Associates Equity Compensation, which does not permit grants to executive officers or directors, had approximately 1.7 million shares available for future issuance. Our 2004 Plan, which is the only existing plan under which grants may be ~~reduced in accordance with the selected exchange ratio~~made to executive officers and directors, only had approximately 513,000 shares available for the reverse stock split. Any fractional share resulting from the selected exchange ratio for the reverse stock split will be converted into a right to receive cash in the amount described below. The par value of our common stock would remain unchanged at $0.10 per share. The reverse stock split would become effective upon the filing of the amendment to our Second Amended and Restated Articles of Incorporation with the Pennsylvania Secretary of State. Our Board may elect not to implement a reverse stock split, in its discretion, even if the proposal to grant our Board the discretion to effect a reverse stock split is approved by our shareholders.future issuance.

~~Purposes of the Proposed Reverse Stock Split~~

~~Our~~The Board believes that the ~~reverse~~number of shares of Safeguard common stock ~~split should enhance~~currently available for issuance or transfer under the ~~acceptability and marketability~~2004 Plan is not sufficient in view of our ~~common stock~~compensation structure and strategy and succession planning process. The Board has concluded that our ability to attract, retain and motivate top quality management and employees is material to our success and would be enhanced by our continued ability to grant equity compensation under the ~~financial community~~2004 Plan. In addition, the Board believes that our interests and the ~~investing public~~interests of our shareholders will be advanced if we can continue to offer our employees, notably at the senior management level, advisors, consultants, and ~~may mitigate any reluctance on~~non-employee directors the ~~part of certain brokers~~opportunity to acquire or increase their proprietary interests in us. If the proposed amendment and investors to trade in our common stock. Many institutional investors have policies prohibiting them from holding stocks in their own portfolios which trade at prices below certain levels. These policies reduce the number of potential investors in Safeguard’s common stock at its current market price. In addition, analysts at many leading brokerage firms are reluctant to recommend stocks to their clients, or monitor the activity of stocks, that trade at a price per share below certain levels. A variety of brokerage house policies and practices also tend to discourage individual brokers within those firms from dealing in stocks that trade at a price per share below certain levels. Some of those policies and practices pertain to the payment of brokers’ commissions and to time-consuming procedures that function to make the handling of such stocks unattractive to brokers from an economic standpoint. Additionally, because brokers’ commissions on such stocks generally represent a higher percentagerestatement of the ~~stock price than commissions on higher-priced stocks,~~2004 Plan is not approved, Safeguard will not be able to grant any awards to eligible participants once all the ~~current share price of~~shares reserved for issuance under the 2004 Plan have been used. Safeguard believes that the inability to grant sufficient equity incentives will significantly impair our ~~common stock can result in an individual shareholder paying transaction costs that represent a higher percentage of total share value than would~~ability to be competitive with the ~~case if our share price were higher. This factor also may limit the willingness of institutions to purchase our stock.~~companies with which Safeguard and its subsidiaries compete for top talent.

~~Since January 2005,~~Votes may be cast (i) FOR, (ii) AGAINST or (iii) may ABSTAIN. Approval of the ~~closing price~~amendment and restatement of ~~our common~~the 2004 Plan requires a majority of the votes cast at a meeting at which a quorum representing a majority of all outstanding voting stock ~~has ranged from a low of $0.99 per share to a high of $3.18 per share, with an average closing price of $2.01 per share. With the shares trading~~is present, either in such a range, small moves in absolute terms in the price per share of our common stock translate into disproportionately large swings in the price on a percentage basis. These swings tend to bear little relationship to our financial conditionperson or by proxy, and ~~results of operations.~~

~~In our Board’s view, these factors have contributed to a relatively low level of interest in Safeguard~~voting on the ~~part~~2004 Plan.

The material terms of ~~investment analysts, brokers~~the proposed amendment and ~~professionals and individual investors,~~restatement of the 2004 Plan are summarized below. A copy of the full text of the 2004 Plan is attached to this Proxy Statement as Exhibit A. This summary of the 2004 Plan is not intended to be a complete description of the 2004 Plan. This summary is qualified in its entirety by the actual text of the 2004 Plan to which ~~tends to depress~~reference is made.

THE BOARD BELIEVES THAT THE AMENDMENT AND RESTATEMENT OF THE 2004 PLAN IS IN
THE BEST INTERESTS OF SAFEGUARD AND ITS SHAREHOLDERS AND THEREFORE, IT
RECOMMENDS A VOTE “FOR” THE AMENDMENT AND RESTATEMENT.

Purpose of the ~~market for our common stock. Our Board has thus proposed having~~Plan.The 2004 Plan provides the ~~discretion to effect a reverse stock split as a means of increasing the per share market price of our common stock.~~

~~Factors Influencing the Board of Directors’ Discretion in Implementing the Reverse Stock Split~~

~~Our Board intends to implement a reverse stock split if it believes that such an action is in the best interests~~employees of Safeguard and ~~our shareholders. Such determination, as well as the determination~~its affiliated entities, non-employee directors, and advisors who perform services at Safeguard’s request with an opportunity to receive grants of stock appreciation rights, stock options, stock units, performance units, stock awards, dividend equivalents and other stock-based awards. The purpose of the ~~specific ratio~~2004 Plan is to ~~be utilized, will be based on factors such as existing~~encourage participants to contribute materially to Safeguard’s growth, thereby benefiting Safeguard’s shareholders and ~~expected marketability and liquidity~~aligning the economic interests of the participants with those of our ~~common stock; prevailing market conditions; and~~shareholders.

Shares Subject to the ~~likely effect on~~Plan.Subject to adjustment as discussed below, the ~~market price~~2004 Plan authorizes the issuance of ~~our common stock. Our Board also will consider factors such as~~up to the ~~historical and projected performance~~sum of ~~our common stock; our projected performance; prevailing market and industry conditions; and general economic trends; and will place emphasis on~~ the ~~expected closing price~~following: (i) 7,000,000 new shares of ~~our~~Safeguard common stock, ~~over the short and longer period following the effectiveness of the reverse stock split.~~

No further action on the part of our shareholders would be required to either effect or abandon the reverse stock split. Notwithstanding approval of the reverse stock split proposal by the shareholders, our Board may, in its discretion, determine to delay the effectiveness of the reverse stock split up until our 2009 annual meeting of shareholders or choose not to implement the reverse stock split at all.

~~Potential Effects of the Proposed Reverse Stock Split~~

~~The immediate effect of a reverse stock split would be to reduce the~~plus (ii) that number of shares of ~~our outstanding~~Safeguard common stock ~~and~~subject to ~~increase~~outstanding grants under the ~~trading price~~2004 Plan as of our common stock. However, we cannot predict the specific effect of any reverse stock split upon the market price of our common stock. Based on the data we have reviewed leading up to this proposal, it appearsJuly 13, 2009, plus (iii) that sometimes a reverse stock split improves stock performance and sometimes it does not, and sometimes a reverse stock split improves overall market capitalization and sometimes it does not. We cannot assure you that the trading price of our common stock after the reverse stock split will rise in proportion to the reduction in the number of shares remaining available for issuance under the 2004 Plan but not subject to previously exercised, vested or paid grants as of ~~our common stock outstanding as a result of the reverse stock split. Also, we cannot assure you that a reverse stock split would lead to a sustained increase in the trading price of our common stock.~~July 13, 2009. The ~~trading price of our common stock may change due to a variety of factors, such as our operating results and other factors related to our business and general market conditions.~~

~~As a summary and~~2004 Plan provides for ~~illustrative purposes only,~~ the following ~~table reflects~~maximum limits for grants to any individual during any calendar year: (i) the ~~approximate~~maximum number of shares subject to grants is 1,500,000; (ii) the maximum dividend equivalents that may accrue may not exceed $500,000; and (iii) the maximum amount payable for grants expressed in dollar amounts is $1,000,000.

These limits will be adjusted by the Committee for stock splits, stock dividends, recapitalizations, mergers, consolidations or reorganizations, a reclassification or change in the par value of our ~~common~~ stock, ~~that would~~or other similar transactions affecting our stock.

Shares used to make grants may be ~~outstanding as a result~~issued directly by us or purchased on the open market and then transferred to participants by us. If and to the extent options granted under the 2004 Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, or if any stock appreciation rights, stock units, performance units, stock awards, dividend equivalents or other stock-based awards are forfeited or terminated, the shares subject to such grants shall again be available for purposes of the ~~potential reverse~~2004 Plan. Shares of stock ~~split ratios within~~surrendered in payment of the ~~range based on 121,535,560~~option price of an option or any withholding taxes shall again be available for issuance or transfer under the 2004 Plan. To the extent any grants are paid in cash and not in shares of ~~our common~~ stock, ~~outstanding as~~any shares previously reserved for issuance or transfer under the 2004 Plan with respect to such grants shall again be available for issuance or transfer under the 2004 Plan.

Administration of the ~~record date, without accounting for fractional shares, which will be cashed out:~~

Proposed Reverse Stock Split Percentage Reduction Shares to be Outstanding

1-for-4 75 % 30,383,890
1-for-5 80 % 24,307,112
1-for-6 83 % 20,255,927
1-for-7 86 % 17,362,223
1-for-8 88 % 15,191,945

Plan.The ~~resulting decrease in~~Compensation Committee administers the ~~number~~2004 Plan. An administrative committee comprised of ~~shares of our common stock outstanding could potentially impact~~Safeguard employees appointed by the ~~liquidity of our common stock on the NYSE, especially in the case of larger block trades.~~Committee performs ministerial functions.

~~Our Board recently approved a stock repurchase program. Pursuant~~The Committee has the sole authority to ~~that program, which was publicly announced~~administer and interpret the 2004 Plan, and the Committee’s determinations relating to the interpretation and operation of the 2004 Plan shall be conclusive and binding on ~~May 7, 2008, we may repurchase up to $10 million of our common stock~~all persons having interest in the ~~open market~~2004 Plan or in ~~privately negotiated transactions. The repurchase program was adopted by our Board independently~~any awards granted under the 2004 Plan. Specifically, the Committee is authorized to:

•		determine the individuals to whom grants will be made;

•		determine the type, size and terms of the grants;

•		determine the time grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability;

•		determine the form and timing of payment under grants; and

•		make factual determinations and adopt or amend appropriate rules, regulations, agreements, and instruments for implementing the 2004 Plan and the conduct of its business.

Eligibility and Award Estimates.All employees of Safeguard and its affiliated companies (including employees who are officers or members of the ~~decision~~Board) and certain advisors are eligible to ~~submit~~receive grants under the ~~instant reverse stock split proposal to our shareholders. We cannot predict with any certainty~~2004 Plan. Because the ~~effect~~granting of ~~any actual stock repurchases which we may undertake nor can we predict any combined effect of any such stock repurchases and any reverse stock split which may be effected if~~awards under the ~~instant proposal~~2004 Plan is ~~approved. Based on data which our Board reviewed leading up to~~at the ~~approval~~discretion of the ~~stock repurchase program,~~Committee, it ~~appears that sometimes such a program results in a higher stock price per share, but sometimes it does not. Any effect of~~is not possible to indicate which persons may receive grants under the repurchase program on our stock price will be taken into consideration by our Board in effecting any reverse stock split. Any repurchases made by Safeguard will reduce the number of outstanding shares of our common stock.

~~Effects on Ownership by Individual Shareholders~~

~~Shareholders should recognize that if a reverse stock split is effected, they will own a smaller number of shares than they currently own (approximately equal~~2004 Plan or to estimate the number of shares ~~owned immediately prior~~which may be subject to grants awarded under the 2004 Plan.

Type of Awards.Grants under the 2004 Plan may consist of the following:

•		stock appreciation rights;

•		incentive stock options;

•		nonqualified stock options;

•		stock units;

•		performance units;

•		stock awards;

•		dividend equivalents; or

•		other stock-based awards.

Stock Appreciation Rights.The Committee may grant stock appreciation rights (“SARs”). A SAR gives a participant the right to receive the appreciation in the value of Safeguard stock over a specified period of time. The amount of this benefit is equal to the ~~reverse~~difference between the fair market value of the stock ~~split divided by four, five, six, seven or eight, depending~~ on ~~which split ratio~~the exercise date and the base amount of the SAR. Generally, the base amount of a SAR is ~~implemented and after giving effect~~equal to the ~~cash-out for fractional shares as described below). The reverse~~per share exercise price of the related stock ~~split would not affect any shareholder’s percentage ownership interests in Safeguard~~option or, ~~proportionate voting power, except to~~if there is no related option, the ~~extent that the reverse stock split would otherwise result in any of Safeguard’s shareholders receiving cash in lieu~~fair market value of a fractional share. As described below, shareholders otherwise entitled to fractional shares as a result of the reverse stock split will be entitled to cash payments in lieu of such fractional shares. These cash payments will reduce the number of post-reverse stock split shareholders to the extent there are shareholders presently who own less than the number of sharesshare of Safeguard common stock ~~required to receive one share~~ on the date the SAR is granted. The Committee may pay this benefit in cash, in stock, or a ~~post-reverse~~combination of cash and stock.

The Committee may grant SARs separately or in tandem with a stock ~~split basis.~~

~~Effect on Convertible Debentures, Options, Deferred Stock Units and Other Securities~~

~~As a result~~option. SARs may be granted when the stock option is granted or later while it remains outstanding, although in the case of ~~a reverse~~an incentive stock ~~split, all outstanding convertible debentures, options, deferred stock units and other securities entitling their holders to purchase or obtain shares of our common stock would~~option, SARs may be ~~adjusted, as required by~~granted only at the ~~terms of these securities. In particular, such adjustments would:~~

~~reduce~~time the number of shares of Safeguard common stock issuable upon conversion of such convertible debentures proportionately based upon the reverse stock split ratio selected by our Board and proportionately increase by the same factor the conversion price of such convertible debentures;

~~reduce the number of shares of Safeguard common stock issuable upon~~option is granted. Upon the exercise of a tandem SAR, the related stock option terminates to the extent of an equal number of shares. SARs shall be subject to such ~~options proportionately based upon the reverse stock split ratio selected by our Board~~vesting and ~~proportionately increase~~other restrictions specified by the ~~same factor~~Committee, and the ~~exercise price per share~~Committee may accelerate the exercisability of ~~such options. Also, we would reduce~~any or all outstanding SARs at any time for any reason.

SARs generally may only be exercised while the participant is employed by or providing services to Safeguard or during an applicable period after termination of employment.

Stock Options.

Grant of Stock Options. The Committee may grant incentive stock options or nonqualified stock options, or any combination of the ~~same factor the number of shares reserved for issuance under our existing~~two; however, incentive stock ~~option and equity compensation plans;~~

~~reduce the number of shares~~options may be granted only to employees of Safeguard ~~common stock payable in connection with such deferred stock units proportionately based upon the reverse stock split ratio selected by our Board; and~~

or its subsidiaries.

~~reduce the voting rights of each Series A Preferred Share and the multiple at which the rate of dividends payable for, and liquidation preference of, each Series A Preferred Share~~Option Price. The option exercise price is determined by ~~multiplying 1,000 by a fraction,~~ the ~~numerator~~Committee at the time of ~~which is~~grant and may be equal to or greater than the ~~number of shares of common~~fair market value on the grant date. Historically, stock ~~outstanding immediately after such reverse stock split and~~options have been granted with an exercise price equal to the ~~denominator of which is the number of shares of common stock that were outstanding immediately prior to such reverse stock split. The Board designated the terms~~fair market value of the ~~Series A Preferred Shares in connection with~~shares on the ~~adoption of a shareholder rights plan in 2000. There are no Series A Preferred Shares issued or outstanding.~~grant date.

A reverse stock split would not affect any of the rights currently accruing to holders of our common stock, convertible debentures, options, deferred stock units or other securities convertible into our common stock.

~~Other Effects on Outstanding Shares~~

If our Board of Directors implements a reverse stock split, then the rights and preferences of the outstanding shares of our common stock would remain the same after the reverse stock split. Each share of our common stock issued pursuant to the reverse stock split would be fully paid and nonassessable.

~~While we expect that~~Term and Exercisability of Stock Options. At the ~~reverse~~time of grant, the Committee in its sole discretion will determine when stock ~~split will result~~options are exercisable and when they expire. The Committee has the authority to accelerate vesting at any time for any reason. The Committee may allow an option to be exercised at a time prior to the time at which the option would otherwise be fully exercisable, in which event the participant would receive restricted shares or be granted interests in restricted shares in a book entry system.

Exercise of Options.A participant may exercise an ~~increase~~option by delivering notice of exercise to Safeguard together with payment of the exercise price for the option. The exercise price may be paid in any of the following ways:

•		in cash;

•		by delivering shares of Safeguard common stock already owned by the participant having a fair market value equal to the exercise price or by attestation to ownership of shares of stock having a fair market value equal to the exercise price, provided the tendered shares have been held by the participant long enough to avoid adverse accounting consequences to Safeguard;

•		by “cashless exercise” of a stock option effected by delivering a notice of exercise to Safeguard and a securities broker with instructions to the broker to deliver to Safeguard out of the sale proceeds the amount necessary to pay the exercise price; or

•		any other method of payment the Committee may approve.

Termination of Stock Options as a Result of Termination of Employment, Disability or Death. Generally, except as provided in the ~~market price~~grant instrument or as otherwise may be determined by the Committee, an option may only be exercised while a participant is employed by or providing service to Safeguard or during an applicable period after termination of ~~our common~~employment.

Stock Units.The Committee may grant stock units to an employee, non-employee director or advisor representing a right to receive a share of stock or an amount based on the ~~reverse~~value of a share of stock. The Committee shall determine the number of stock ~~split~~units to be granted and shall establish the terms and conditions for payment of stock units. Unless the Committee provides for a complete or partial exception, stock units are forfeited if the participant’s employment or service to Safeguard is terminated or if other conditions of the grant are not met. The Committee may grant stock units contingent upon the participant’s taking certain specified actions as the Committee sees fit, including, but not ~~increase~~limited to, deferral of compensation by the ~~market price~~participant.

Performance Units.The Committee may grant performance units to an employee or non-employee director representing a right to receive a share of ~~our common~~ stock ~~in proportion~~or an amount based on the value of a share of stock if specified performance goals are met. The Committee shall determine the number of performance units to be granted and shall establish the ~~reduction in~~performance goals and other conditions for payment of performance units. Unless the Committee provides for a complete or partial exception, performance units are forfeited if the participant’s employment or service to Safeguard is terminated or if conditions of the grant are not met.

Stock Awards.The Committee may issue or transfer shares pursuant to a stock award to an employee or non-employee director which may be subject to restrictions which lapse over a period of time or according to other criteria established by the Committee. The Committee shall determine whether a stock award will be granted, the number of shares ~~of our common stock outstanding or result in a permanent increase in~~that will be awarded, the ~~market price (which depends on many factors, including our performance, prospects and other factors that may~~consideration to be ~~unrelated~~paid for the shares, if any, the restrictions applicable to the ~~number of shares outstanding).~~

Ifstock award, and when and how the restrictions will lapse. Unless the Committee provides for a ~~reverse~~complete or partial exception, stock ~~split~~awards as to which the restrictions have not lapsed are forfeited if the participant’s employment or service to Safeguard is effected and the market price of our common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. Furthermore, the liquidity of our common stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse stock split. In addition, the reverse stock split will likely increase the number of our shareholders who own “odd-lots” (less than 100 shares). Shareholders who hold “odd-lots” typically will experience an increase in the cost of selling their shares, as well as potentially greater difficulty in effecting such sales. Brokerage commissions andterminated or if other ~~costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lot” even multiples of 100 shares.~~

~~Our common stock is currently registered under Section 12(b)~~conditions of the ~~Securities Exchange Act of 1934. As~~grant are not met. Until the restrictions on transfer have lapsed, a ~~result, we are subject to the periodic reporting and other requirements~~participant may not sell, assign, transfer, pledge or otherwise dispose of the ~~Securities Exchange Act.~~shares of restricted stock. The ~~proposed reverse stock split would not affect~~Committee shall determine to what extent and under what conditions a participant shall have the ~~registration of our common stock under the Securities Exchange Act~~right to vote shares and receive any dividends or ~~the listing of our common stock~~other distributions paid on the ~~NYSE. If a reverse stock split is effected, our common stock would continue to be listed on~~shares during the ~~NYSE under the symbol “SFE,” although it would be considered a new listing with a new CUSIP number.~~restriction period.

~~Authorized Shares of Common Stock~~

If we implement the reverse stock split, we also would reduce the number of authorized shares of our common stock as designated by our amendment to our Second Amended and Restated Articles of Incorporation. The number of issued and outstanding shares of common stock and the number of shares remaining available for issuance under our authorized pool of common stock would decrease proportionately. However, we would still have a number of additional shares of common stock available for issuance from time to time for corporate purposes such as raising additional capital, acquisitions of companies or assets and sales of stock or securities convertible into common stock.

~~Procedure for Effecting the Proposed Reverse Stock Split and Exchange of Stock Certificates~~

If our shareholders approve the reverse stock split proposal, our Board may elect whether or not to declare a reverse stock split, as well as the specific exchange ratio, at any time before our 2009 annual meeting of shareholders. The reverse stock split would be implemented by filing the appropriate amendment to our Second Amended and Restated Articles of Incorporation with the Pennsylvania Secretary of State, and the reverse stock split would become effective on the date the filing is accepted by the Pennsylvania Secretary of State.

If the reverse stock split is effected, shareholders holding certificated shares will be required to exchange their stock certificates for new book entry shares (“New Book Entry Shares”) representing the appropriate number of shares of our common stock resulting from the reverse stock split. Our transfer agent, BNY Mellon Shareowner Services, would act as the exchange agent for purposes of implementing the exchange of stock certificates for New Book Entry Shares. As soon as practicable after the effective date, shareholders and holders of securities convertible into our common stock would be notified of the effectiveness of the reverse stock split. Each shareholder of record on the effective date would receive a letter of transmittal from our transfer agent advising of the procedure for surrendering stock certificates representing the number of shares of our common stock prior to the reverse stock split (“Old Stock Certificates”) in exchange for New Book Entry Shares. Pursuant to applicable rules of the NYSE, a shareholder’s Old Stock Certificates representing shares of our common stock cannot be used for either transfers or deliveries made on the NYSE; thus a shareholder must exchange Old Stock Certificates representing shares of our common stock for the New Book Entry Shares in order to do so.

~~YOU SHOULD NOT DESTROY YOUR OLD STOCK CERTIFICATES AND YOU SHOULD NOT SUBMIT YOUR OLD STOCK CERTIFICATES FOR EXCHANGE UNTIL YOU ARE REQUESTED TO DO SO.~~Dividend Equivalents.The Committee may grant dividend equivalents in connection with grants (other than options and SARs) under the 2004 Plan subject to such terms and conditions, including the achievement of performance goals, as the Committee deems appropriate. Dividend equivalents, which may be accrued as a cash obligation, converted to stock units, or paid in stock, may be paid to participants currently or may be deferred. The Committee shall determine whether dividend equivalents will accrue interest.

~~As soon~~Other Stock-Based Grants.The Committee may grant other awards that are based on, measured by or payable in stock to employees or non-employee directors on such terms and conditions as ~~practicable after~~ the ~~surrender~~Committee deems appropriate.

Qualified Performance-Based Compensation.The Committee may determine that stock units, performance units, stock awards, dividend equivalents and other stock-based grants granted to ~~our transfer agent of~~ an ~~Old Stock Certificate, together with a duly executed letter of transmittal~~employee shall be considered qualified performance-based compensation. For grants that are intended to be qualified as performance-based compensation, the Committee must establish objective performance goals that must be met, the period during which performance will be measured, the maximum amounts that may be paid if the performance goals are met, and any other ~~documents~~conditions that the ~~transfer agent~~Committee deems appropriate and consistent with the 2004 Plan and legal requirements. The Committee will establish the performance goals, in writing, at the beginning of the performance period, or during a period that is no later than the earlier of either 90 days after the beginning of the performance period or the date on which 25% of the performance period has been completed, or such other date that is permitted under the Code. The performance goals will be based on objectively determinable criteria, either in absolute terms or in comparison to publicly available industry standards or indices, such as earnings, revenue, operating margins and statistics, operating or net cash flows, financial return and leverage ratios, total shareholder returns, market share, or strategic business criteria consisting of one or more penetration goals, geographic business expansion goals, cost targets, customer satisfaction goals, product development goals, goals relating to acquisitions or divestitures, or any other objective measure derived from any of the foregoing criteria. The performance goals may ~~specify,~~relate to the ~~transfer agent~~participant’s business unit or the performance of Safeguard as a whole, or any combination of the foregoing. The Committee shall certify and announce the results for each performance period immediately following the announcement of Safeguard’s financial results for the performance period. If the performance goals are not met, the grants subject to such performance goals will be forfeited. The Committee may provide that grants shall be payable or restrictions shall lapse, in whole or in part, in the event of a participant’s death or disability during the performance period, a change of control or under other circumstances consistent with the Treasury regulations and rulings under Code Section 162(m).

Deferrals.The Committee may permit or require a participant to defer receipt of the payment of cash or delivery of shares that would otherwise be due to a participant in connection with any grant upon such terms and conditions as the Committee establishes consistent with Code Section 409A.

Termination or Amendment.The Board may amend or terminate the 2004 Plan at any time, provided, however, that the Board shall not amend the 2004 Plan without approval of the shareholders if such approval is required to comply with the Code or applicable laws or with applicable stock exchange requirements. The 2004 Plan will terminate on July 12, 2019 unless terminated earlier by the Board or extended by the Board with the approval of the shareholders. Grants made prior to termination will remain in effect after termination of the 2004 Plan unless the participant consents or unless the Committee revokes or amends a grant in accordance with the terms of the 2004 Plan. The termination of the 2004 Plan will not impair the power and authority of the Committee with respect to outstanding grants.

Adjustment Provisions.The Committee will adjust the number and exercise price of outstanding grants, as well as the number and kind of shares available for grants and individual limits for any single participant under the 2004 Plan, to appropriately reflect any of the following events:

•		a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares;

•		a merger, reorganization or consolidation;

•		a reclassification or change in par value;

•		any other extraordinary or unusual event affecting the outstanding common stock as a class without Safeguard’s receipt of consideration; or

•		a substantial reduction in the value of outstanding shares of common stock as a result of a spinoff or Safeguard’s payment of an extraordinary dividend or distribution.

Change of Control.Subject to certain exclusions specified in the 2004 Plan, a Change of Control means the first to occur of any of the following events: (i) an acquisition by any individual, entity or group of beneficial ownership of 20% of more of either the then outstanding shares of Safeguard common stock or the combined voting power of the then outstanding voting securities of Safeguard entitled to vote in the election of directors; (ii) a change in the composition of the Board such that the individuals who constitute the Incumbent Board as defined in the 2004 Plan cease to constitute at least a majority of the Board; or (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Safeguard. The Committee may modify the definition of Change of Control for a particular grant as the Committee deems appropriate to comply with Code Section 409A.

Upon a Change of Control, unless the Committee determines otherwise, (i) Safeguard will provide each participant who holds outstanding grants with written notice of the change of control; (ii) all outstanding options or SARs will become fully exercisable; (iii) the restrictions and conditions on all outstanding stock awards will lapse; (iv) all stock units and performance units will become payable in cash or in stock in an amount not less than the fair market value of the stock to which the units relate; and (v) dividend equivalents and other stock-based awards will become payable in full, in cash or in stock, in amounts determined by the Committee.

Upon a Change of Control where Safeguard is not the surviving corporation, or survives only as a subsidiary of another corporation, all outstanding stock options and SARs that are not exercised will be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation) and other outstanding grants will be converted to similar grants of the surviving corporation (or a parent or subsidiary of the surviving corporation).

Alternatively, in the event of a Change of Control, the Committee may take any of the following actions with respect to any or all outstanding grants without the consent of the participant: (i) require that participants surrender outstanding options and SARs in exchange for payment in cash or stock, as determined by the Committee, in an amount by which the then fair market value of the underlying stock exceeds the exercise price of the options or the base amount of the SARs, if any; (ii) after giving participants an opportunity to exercise the options and SARs, terminate outstanding options and SARs, at such time as the Committee deems appropriate or (iii) with respect to participants holding stock units, performance units, dividend equivalents or other stock-based awards, deliver to participants a payment in settlement of such awards in such amount and form as the ~~person~~Committee may determine.

Federal Income Tax Consequences.The current federal income tax treatment of grants under the 2004 Plan is generally described below. This is not a complete description of tax consequences. Local, state and other taxing authorities also may tax grants under the 2004 Plan, and there may be different tax consequences under certain circumstances.

Incentive Stock Options.There generally are no federal income tax consequences to a participant or to Safeguard upon the grant of an incentive stock option.

A participant will not recognize income for purposes of the regular federal income tax upon the exercise of an incentive stock option. However, for purposes of the alternative minimum tax, in ~~whose name such Old Stock Certificate had been issued New Book Entry Shares.~~the year in which an incentive stock option is exercised, the amount by which the fair market value of the shares acquired upon exercise exceeds the exercise price will be treated as an item of adjustment and included in the computation of the recipient’s alternative minimum taxable income.

~~Until surrendered as contemplated herein, each Old Stock Certificate shall be deemed at~~A participant will recognize income when he or she sells stock acquired upon exercise of an incentive stock option. If the shares acquired upon exercise of an incentive stock option are disposed of after two years from the date the option was granted and after one year from the ~~effective~~ date the shares were transferred upon the exercise of the ~~proposed reverse stock split to represent that reduced number~~option, the participant will recognize long-term capital gain or loss in the amount of ~~full shares of our common stock resulting from~~ the ~~reverse stock split, except that holders of Old Stock Certificates would~~difference between the amount realized on the sale and the exercise price. Safeguard will not be entitled to ~~receive~~ any ~~dividends or other distributions,~~corresponding tax deduction.

If a participant disposes of the shares acquired upon exercise of an incentive stock option before satisfying both holding period requirements (a disqualifying disposition), any gain recognized on the disposition will be taxed as ordinary income to the extent of the difference between the fair market value of the shares on the date of exercise (or the sale price, if ~~any, that may be declared~~less) and ~~payable by~~the exercise price. Safeguard ~~after the effective date until they surrender their Old Stock Certificates for exchange.~~

~~Any shareholder whose Old Stock Certificate has been lost, destroyed or stolen~~generally will be entitled to ~~New Book Entry Shares~~a deduction in that amount. The gain, if any, in excess of the amount recognized as ordinary income will be a long-term or short-term capital gain, depending upon the length of time the shares were held before the disposition.

Nonqualified Stock Options.A participant who receives a nonqualified stock option will recognize no income at the time of the grant of the option. Upon exercise of a nonqualified stock option, a participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares of our stock on the date of exercise over the option price. The basis in shares acquired upon exercise of a nonqualified stock option will equal the fair market value of such shares at the time of exercise, and the holding period of the shares (for capital gain purposes) will begin on the date of exercise. In general, Safeguard will be entitled to a business expense deduction in the same amount and at the same time as the participant recognizes ordinary income.

Upon the sale of the shares acquired by the exercise of a nonqualified stock option, a participant will have a capital gain or loss (long-term or short-term depending upon the length of time the shares were held) in an amount equal to the difference between the amount realized upon the sale and the participant’s adjusted tax basis in the shares (the exercise price plus the amount of ordinary income recognized by the participant at the time of exercise of the nonqualified stock options).

Stock Units and Performance Units.A participant who receives a stock unit or performance unit will not recognize taxable income until the unit is paid to the participant, however, such grants may be subject to the requirements of Code Section 409A (see discussion below under Section 409A). When the unit is paid, the participant will recognize ordinary income in an amount equal to the fair market value of the stock and cash, if any, paid to the participant. Safeguard generally will be entitled to a business expense deduction in the same amount.

Stock Awards.A participant who receives a stock award generally will not recognize taxable income until the stock is transferable by the participant or no longer subject to a substantial risk of forfeiture for federal tax purposes, whichever occurs first. When the stock is either transferable or is no longer subject to a substantial risk of forfeiture, the participant will recognize ordinary income in an amount equal to the fair market value of the shares at that time, less any amounts paid for the shares. A participant may elect to recognize ordinary income when a stock award is granted in an amount equal to the fair market value of the shares at the date of grant, determined without regard to the restrictions. Safeguard generally will be entitled to a corresponding business expense deduction in the year in which the participant recognizes ordinary income.

Dividend Equivalents and Other Stock-Based Grants.A participant will recognize ordinary income when dividend equivalents and other stock-based awards are paid to the participant, in an amount equal to the cash and the fair market value of any shares paid to the participant, however, such grants may be subject to the requirements of Code Section 409A (see discussion below under Section 409A). Safeguard generally will be entitled to a corresponding business expense deduction when the participant recognizes ordinary income.

Stock Appreciation Rights.A participant generally will not recognize any income upon the grant of SARs. Upon exercise of a SAR, the participant will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery. In that taxable year, Safeguard will receive a federal income tax deduction in an amount equal to the ordinary income which the participant has recognized.

Transfer of Stock Options.The Committee may permit a participant to transfer nonqualified stock options to family members or one or more trusts or other entities for the benefit of family members, according to such terms as the Committee may determine. Generally, the participant will not recognize income at the time the participant makes a gift of a nonqualified stock option to family members, one or more trusts or other entities for the benefit of family members. When the transferee later exercises the option, the participant (and not the transferee) must recognize ordinary income on the difference between the fair market value of the stock and the exercise price, and appropriate arrangements must be made to satisfy applicable withholding requirements.

For federal gift tax purposes, if the participant transfers a stock option before the stock option has become exercisable, the transfer will not be considered by the Internal Revenue Service to be a completed gift until the stock option becomes exercisable. The value of the gift will be determined when the stock option becomes exercisable. Gifts of stock options may qualify for the gift tax annual exclusion. If the participant dies after ~~complying~~transferring a stock option in a completed gift transaction, the transferred stock option may be excluded from the participant’s estate for estate tax purposes if the applicable estate tax requirements have been met.

Tax Withholding.All grants under the 2004 Plan are subject to applicable tax withholding requirements. We have the right to deduct from all grants paid in cash, or from other wages paid to a participant, any taxes required by law to be withheld with respect to the grant. If grants are paid in shares of common stock, we may require a participant to pay the amount of any taxes that we are required to withhold or may deduct the amount of withholding taxes from other wages paid to the participant. If approved by the Committee, the income tax withholding obligation with respect to grants paid in common stock may be satisfied by having shares withheld up to an amount that does not exceed the participant’s minimum marginal tax rate for federal (including FICA), state and local tax liabilities. The Committee also may permit a participant to tender other shares to supplement such withholding.

Million Dollar Deduction Limit.The Internal Revenue Service limits our ability to deduct compensation of more than $1 million that is paid to an individual who, on the last day of the taxable year, is either our principal executive officer or among the three other most highly compensated executive officers for that taxable year as reported in our proxy statement. This limitation on deductions does not apply to certain types of compensation, including qualified performance-based compensation. Grants of stock options and SARs generally will meet the requirements of “performance-based compensation.” Stock awards, stock units and dividend equivalents generally will not qualify as, and performance units may not qualify as, “performance-based compensation.”

Section 409A.Code Section 409A applies to nonqualified deferred compensation. Stock options and SARs granted under the 2004 Plan will generally not be subject to Code Section 409A because the exercise price of the stock options and the base amount of the SARs will not be less than fair market value on the date of grant and they will not contain a deferral feature. Stock awards also will generally not be subject to Code Section 409A. Stock units, dividend equivalents and other stock-based awards will generally be subject to the requirements of Code Section 409A if the recognition of income by the recipient of such awards occurs in any calendar year after the year in which such awards become vested. Grants made under the 2004 Plan that are subject to Code Section 409A are intended to comply with the requirements ~~that we and our transfer agent customarily apply in connection with lost, destroyed or stolen stock certificates.~~

~~No service charges, brokerage commission or transfer taxes will be payable by any holder~~ of ~~an Old Stock Certificate, except that if any New Book Entry Shares are to be issued in a name other than that in which~~Code Section 409A. If the ~~Old Stock Certificate is registered, it will be a condition~~requirements of ~~such issuance that (i) the person requesting such issuance must pay any applicable transfer taxes or establish to our satisfaction that such taxes~~Code Section 409A are not ~~payable; (ii)~~met with respect to grants subject to Code Section 409A, the ~~transfer complies with all applicable federal and state securities laws; and (iii) the surrendered certificate is properly endorsed and otherwise in proper form for transfer.~~

~~Shareholders who hold uncertificated shares, either as existing holders of book entry shares or as beneficial owners through brokerage or other “street name” accounts, would not~~participant may be required to ~~take any further actions~~currently include such amounts in the participant’s taxable income and additional taxes may be assessed on such amounts, including interest and a 20% penalty tax.

Securities Authorized for Issuance under Equity Compensation Plans

Our equity compensation plans provide a broad-based program designed to ~~effect~~attract and retain talent while creating alignment with the ~~exchange. They will have their holdings electronically adjusted to give effect to the reverse~~long-term interests of our shareholders. Employees at all levels participate in our equity compensation plans. In addition, members of our Board of Directors (“Board”) and members of our Technology and Life Sciences Advisory Boards (“Advisory Boards”) receive stock ~~split by our transfer agent (through the NYSE’s Direct Registration System) or, for beneficial owners, by their brokers, banks or other nominees which hold the shares in “street name”~~options for their ~~benefit.~~

~~All shares underlying convertible debentures, options,~~service on our Board and Advisory Boards, respectively. Members of our Board also receive deferred stock unit awards and are eligible to defer directors’ fees and receive deferred stock units with a value equal to the directors’ fees deferred and ~~other securities also would be automatically adjusted on~~matching deferred stock units equal to 25% of the ~~effective date.~~directors’ fees deferred.

~~Fractional Shares~~Our Board is authorized to administer our equity compensation plans, adopt, amend and repeal the administrative rules relating to the plans, and interpret the provisions of the plans. Our Board has delegated to the Compensation Committee of the Board (the “Compensation Committee”) authority to administer our equity compensation plans.

~~Implementation~~Our Compensation Committee has the authority to select the recipients of ~~a reverse stock split will result in some shareholders being due a fractional share~~grants under our equity compensation plans and determine the terms and conditions of ~~our common stock. Shareholders who are due fractional shares because~~the grants, including but not limited to (i) the number of shares of common stock ~~they held before~~covered by such grants; (ii) the ~~reverse stock split would not be evenly divisible based~~type of grant; (iii) the dates or events upon which such grants vest; (iv) the ~~reverse stock split ratio selected by our Board will be entitled~~exercise price of options (which is equal to ~~a cash payment in U.S. dollars (without interest or deduction) in respect of such fractional shares. The cash payment for a fractional share will be determined on~~ the ~~basis~~average of the ~~average closing price~~high and low prices of a share of our common stock as reported on the ~~NYSE consolidated~~New York Stock Exchange composite tape ~~for~~on the ~~10 trading days immediately preceding~~grant date) or the ~~effective date~~consideration to be paid in connection with restricted stock, stock units or other stock-based grants (which may be no consideration); and (iv) the term of the ~~reverse~~grant. Stock options typically vest as follows: (i) time-based stock ~~split (as adjusted for that reverse~~options vest 25% on the first anniversary of the grant date and in 36 equal monthly installments thereafter; (ii) market-based stock ~~split). If any shareholder owns,~~options vest upon the achievement of certain specified levels of improvement in ~~total, fewer than~~Safeguard’s stock price; and (iii) performance-based stock options vest based upon the ~~number of shares to be converted into one share~~aggregate cash produced as a result of exit transactions involving certain of our partner companies relative to the ~~reverse~~amount of cash deployed in connection with such partner companies. Deferred stock ~~split,~~units issued to directors are payable, on a one-for-one basis, in shares of Safeguard common stock following a director’s termination of service on the Board. Deferred stock units issued to directors in lieu of cash compensation are fully vested at grant; deferred stock unit awards and matching deferred stock units awarded to directors generally vest on the first anniversary of the grant date.

The 2001 Plan provides for the grant of nonqualified stock options, stock appreciation rights, restricted stock, performance units, and other stock-based awards to employees, consultants or advisors of Safeguard and its subsidiaries, provided that ~~shareholder’s share would~~no grants can be ~~converted into a fractional share~~made under this plan to executive officers and directors of Safeguard. Under the NYSE rules that were in effect at the time this plan was adopted in 2001, shareholder approval of the plan was not required. This plan is administered by the Compensation Committee which, as described above, has the authority to issue equity grants under the 2001 Plan and to establish the terms and conditions of such grants. Except for the persons eligible to participate in the 2001 Plan and the inability to grant incentive stock options under the 2001 Plan, the terms of the 2001 plan are substantially the same as the other equity compensation plans approved by our shareholders (which have been described in previous filings).

A total of 5,400,000 shares of our common stock are authorized for issuance under the 2001 Plan. At December 31, 2008, 1,865,544 shares were subject to outstanding options, 1,803,809 shares were available for future issuance, and 1,730,647 shares had been issued under the 2001 Plan. If any option granted under the 2001 Plan expires or is terminated, surrendered, canceled or forfeited, or if any shares of restricted stock, performance units or other stock-based grants are forfeited, the unused shares of common stock and, therefore, that shareholder would receive only cash in place of the fractional share as a result of the implementation of the reverse stock split. After the reverse stock split, shareholders would have no further interest in Safeguard with respect to any cashed-out shares. A person otherwise entitled to a fractional interest would not have any voting, dividend or other rights except to receive payment as described above.

~~No Appraisal Rights~~

~~No appraisal rights are~~covered by such grants will again be available for grant under the ~~Pennsylvania Business Corporation Law or under our Second Amended and Restated Articles of Incorporation or Amended and Restated Bylaws~~2001 Plan.

Our Board is authorized to make appropriate adjustments in connection with ~~this proposal.~~the 2001 Plan to reflect any stock split, stock dividend, recapitalization, liquidation, spin-off or other similar event. The 2001 Plan also contains provisions addressing the consequences of any Reorganization Event or Change in Control (as such terms are defined in the 2001 Plan). If a Reorganization or Change of Control Event occurs, unless the Compensation Committee determines otherwise, all outstanding options and stock appreciation rights (SARs) that are not exercised will be assumed by, or replaced with comparable options or rights by, the surviving corporation (or a parent of the surviving corporation), and other outstanding grants will be converted to similar grants of the surviving corporation or a parent of the surviving corporation). Notwithstanding that provision, the Compensation Committee has the authority to take one or both of the following actions: (i) require that grantees surrender their outstanding options and SARs in exchange for a payment by Safeguard in cash or company stock, as determined by the Compensation Committee, in an amount equal to the amount by which the then fair market value of the shares of stock subject to the unexercised options and SARs exceeds the exercise price of the options or the base amount of the SARs, as applicable, or (ii) after giving grantees an opportunity to exercise their outstanding options and SARs or otherwise realize the value of all of their other grants, terminate any or all unexercised options, SARs and grants at such time as the Compensation Committee deems appropriate.

During 2005, the Compensation Committee granted “employee inducement” awards to two newly hired executive officers. The awards were granted outside of Safeguard’s existing equity compensation plans in accordance with NYSE rules and consisted of options to purchase up to an aggregate of 6,000,000 shares of Safeguard common stock. During 2007 and 2008, the Compensation Committee granted similar “employee inducement” awards to two other and one other, respectively, newly hired executive officers. These awards were likewise granted outside of Safeguard’s existing equity compensation plans in accordance with NYSE rules and consisted of options to purchase up to an aggregate of 4,000,000 shares of Safeguard common stock. All of these “employee inducement” awards were granted with an eight-year term and a per share exercise price equal to the average of the high and low prices of Safeguard common stock on the grant date. Following his termination of employment in May 2008, the employment inducement awards held by one of the executive officers to whom inducement grants were awarded in 2007, for an aggregate of 1,500,000 shares of Safeguard common stock, expired without value. Of the shares underlying the “employee inducement” awards that were outstanding at December 31, 2008, 2,125,000 shares are subject to time-based vesting, with an aggregate of 531,250 shares vesting on the first anniversary of the grant date and 1,593,750 shares vesting in 36 equal monthly installments thereafter. The remaining 6,375,000 shares underlying the “employee inducement” awards that were outstanding at December 31, 2008, vest incrementally based upon the achievement of certain specified levels of increase in Safeguard’s stock price. With the exception of the market-based vesting provisions, the terms and provisions of the employee inducement awards are substantially the same as options previously awarded to other executives under Safeguard’s equity compensation plans.

The following table provides information as of December 31, 2008, about the securities authorized for issuance under our equity compensation plans.

Equity Compensation Plan Information

Number of Securities
Remaining Available for
Number of Securities to Weighted-Average Future Issuance Under
Be Issued Upon Exercise Exercise Price of Equity Compensation Plans
of Outstanding Options, Outstanding Options, (Excluding Securities
Warrants and Rights Warrants and Rights (1) Reflected in Column (a))
Plan Category (a) (b) (c)
Equity compensation plans approved by security holders (2) 10,735,307 $ 1.7922 1,737,471
Equity compensation plans not approved by security holders (3) 10,365,544 $ 1.5673 1,803,809
Total 21,100,851 $ 1.6757 3,541,280


(1)		The weighted average exercise price calculation excludes 1,086,141 shares underlying outstanding deferred stock units included in column (a) which are payable in stock, on a one-for-one basis.

(2)		Represents awards granted, and shares available for issuance, under the 1999 Equity Compensation Plan and the 2004 Equity Compensation Plan. The 1999 Equity Compensation Plan expired by its terms on February 10, 2009. Includes 695,230 shares underlying deferred stock units awarded for no consideration and 390,911 shares underlying deferred stock units awarded to directors in lieu of all or a portion of directors’ fees. Payments in respect of deferred stock units are generally distributable following termination of employment or service, death, permanent disability or retirement. The value of the deferred stock units was approximately $2.2 million based on the fair value of the stock on the various grant dates. The deferred stock units issued to directors in lieu of cash compensation are fully vested at grant; deferred stock unit awards and matching deferred stock units awarded to directors generally vest on the first anniversary of the grant date.

(3)		Includes awards granted and shares available for issuance under the 2001 Plan and 8,500,000 “employee inducement” awards.

~~Accounting Consequences~~

The par value of our common stock would remain unchanged at $0.10 per share after the reverse stock split. As a result of the reverse stock split, the common stock value on our consolidated balance sheet will be reduced in proportion to the size of the reverse stock split, and additional paid-in capital will be increased by the same amount. Our shareholders’ equity, in the aggregate, will remain unchanged.

~~Federal Income Tax Consequences~~

The following is a summary of the federal income tax consequences of a reverse stock split based on current law, including the Internal Revenue Code of 1986, as amended, is for general information only, and does not purport to be complete. The tax treatment of a shareholder may vary depending upon the particular facts and circumstances of such shareholder, and the discussion below may not address all the tax consequences for a particular shareholder. For example, foreign, state and local tax consequences are not discussed below. Accordingly, notwithstanding anything to the contrary, each shareholder should consult his or her tax advisor to determine the particular tax consequences to him or her of a reverse stock split, including the application and effect of federal, state, local and/or foreign income tax and other laws.

Generally, a reverse stock split will not result in the recognition of gain or loss for federal income tax purposes (except with respect to any cash received in lieu of a fractional share as described below). The adjusted basis of the new shares of common stock will be the same as the adjusted basis of old shares of common stock exchanged for such new shares of common stock. The holding period of the new, post-split shares of common stock resulting from implementation of the reverse stock split will include the shareholder’s respective holding periods for the pre-split shares of common stock exchanged for the new shares of common stock.

A shareholder who receives cash in lieu of a fractional share will be treated as if we had issued a fractional share to the shareholder and then immediately redeemed the fractional share for cash. Such shareholder should generally recognize gain or loss, as the case may be, measured by the difference between the amount of cash received and the basis of such shareholder’s pre-split shares of common stock corresponding to the fractional share, had such fractional share actually been issued. Such gain or loss will be capital gain or loss (if such stock was held as a capital asset), and any such capital gain or loss will generally be long-term capital gain or loss to the extent such shareholder’s holding period exceeds 12 months.

We have not sought, and will not seek, any ruling from the Internal Revenue Service or an opinion of tax counsel with respect to the matters discussed herein. Our beliefs regarding the tax consequences of the reverse stock split are not binding upon the Internal Revenue Service or the courts, and there can be no assurance that the Internal Revenue Service or the courts will accept the positions expressed above. The state and local tax consequences of the reverse stock split may vary significantly as to each shareholder, depending upon the state in which he or she resides.

~~Votes Required for Approval of Proposal No. 2~~

~~The affirmative vote of a majority of the votes cast by all the shareholders entitled to vote for this proposal will be required for approval. A properly executed proxy marked~~~~“ABSTAIN”~~~~with respect to this proposal will be counted for purposes of determining whether there is a quorum. However, under Pennsylvania law, a proxy marked~~~~“ABSTAIN”~~~~is not considered a vote cast. Accordingly, an abstention will have no effect on the approval of this proposal.~~

~~Annex Relating to Proposal No. 2.~~

~~The form of an amendment to our Second Amended and Restated Articles of Incorporation is attached to this proxy statement as Annex 1.~~

~~RATIFICATION OF~~PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP

Item 3 on Proxy Card

The Audit Committee, composed entirely of independent, non-employee members of the Board, approved the reappointment of KPMG LLP (“KPMG”) as Safeguard’s independent registered public accounting firm for the fiscal year ending December 31, ~~2008,~~2009, and the Board has recommended that our shareholders ratify the appointment. If the shareholders do not ratify the appointment, the Audit Committee may reconsider its recommendation and may retain KPMG or another accounting firm without resubmitting the matter to shareholders. Even if the shareholders ratify the appointment of KPMG, the Audit Committee may select another firm if it determines such selection to be in the best interest of Safeguard and its shareholders.

Services provided to Safeguard and its subsidiaries by KPMG in fiscal ~~2007~~2008 and fiscal ~~2006~~2007 are described below under “Independent Registered Public Accounting Firm—Audit Fees.” Representatives of KPMG are expected to attend the annual meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

~~Votes Required for Approval of Proposal No. 3~~

Ratification requires the affirmative vote of a majority of the votes cast by all shareholders entitled to vote on the proposal.

~~Recommendation of the Board of Directors~~

~~The Board recommends a vote~~~~“FOR”~~~~the proposal to ratify the appointment of~~THE BOARD RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT
OF KPMG ~~as Safeguard’s independent registered public accounting firm for the year ending December~~AS SAFEGUARD’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE YEAR ENDING DECEMBER 31, ~~2008.~~2009.

Independent Registered Public Accounting Firm—Audit Fees

The following table presents fees for professional services rendered by KPMG LLP for the audit of Safeguard’s consolidated financial statements for fiscal ~~2007~~2008 and fiscal ~~2006~~2007 and fees billed for audit-related services, tax services and all other services rendered by KPMG for fiscal ~~2007~~2008 and fiscal ~~2006.~~2007. This table includes fees billed to Safeguard’s consolidated subsidiaries for services rendered by KPMG.


	2007		2006
					2008		2007
Audit Fees (1)	$	2,148,774	$	1,999,974	$	1,513,691	$	2,148,774
Audit-Related Fees (2)		17,500		99,786		—		17,500
Tax Fees (3)		331,740		379,119		282,606		331,740
All Other Fees		—		—		—		—


Total	$	2,498,014	$	2,478,879	$	1,796,297	$	2,498,014

AUDIT COMMITTEE REPORT

The Audit Committee assists the Board of Directors in fulfilling its responsibilities regarding general oversight of the integrity of Safeguard’s financial statements, Safeguard’s compliance with legal and regulatory requirements, the performance of Safeguard’s internal audit function, review and approval of related party transactions, and the performance, qualifications and independence of Safeguard’s independent registered public accounting firm.

Safeguard’s management has primary responsibility for the financial reporting process, including the system of internal controls, and for preparation of Safeguard’s consolidated financial statements in accordance with accounting principles generally accepted in the United States. Safeguard’s independent registered public accounting firm is responsible for auditing those financial statements and issuing opinions as to the conformity of Safeguard’s audited financial statements with accounting principles generally accepted in the United States and the effectiveness of Safeguard’s internal control over financial reporting.

Throughout the year, the Audit Committee regularly meets with management of Safeguard, Safeguard’s independent registered public accounting firm and Safeguard’s internal auditor. The Audit Committee also regularly meets with each of these groups separately in closed sessions. In this context, the Audit Committee hereby reports as follows:

	1.		The Audit Committee reviewed Safeguard’s audited consolidated financial statements for fiscal year ~~2007~~2008 and met and held discussions with management and KPMG regarding the audited financial statements.

	2.		The Audit Committee discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61 (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

	3.		The Audit Committee received the written disclosures and the letter from KPMG required by ~~Independence Standards~~applicable requirements of the Public Company Accounting Oversight Board ~~Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions~~regarding the independent accountant’s communications with the Audit ~~Committees)~~Committee concerning independence and discussed with KPMG its independence.

	4.		Based on the review and discussion referred to in paragraphs 1 through 3 above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Safeguard’s Annual Report on Form 10-K for fiscal year ~~2007.~~2008.

Members of the Audit Committee:


~~George MacKenzie, Chairperson~~		~~George D. McClelland~~		~~John J. Roberts~~		George MacKenzie, Chairperson George D. McClelland John J. Roberts Robert J. Rosenthal

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND OFFICERS

The following table shows the number of shares of Safeguard common stock beneficially owned (unless otherwise indicated) as of June ~~2, 2008,~~30, 2009, by each person known to us to be the beneficial owner of more than 5% of our outstanding shares of common stock, our current directors, persons named in the Summary Compensation Table in this proxy statement, and our current directors and current executive officers as a group. For purposes of reporting total beneficial ownership, shares that may be acquired within 60 days of June ~~2, 2008~~30, 2009 through the exercise of Safeguard stock options are included. On June ~~2, 2008,~~30, 2009, there were ~~121,535,560~~122,314,312 shares of common stock outstanding and ~~4,271,650~~5,216,858 shares underlying stock options held by executive officers and directors as a group that were exercisable within 60 days of June ~~2, 2008.~~30, 2009.


					Shares													Shares
	Outstanding				Beneficially									Outstanding				Beneficially
	Shares		Options		Owned Assuming		Percent of			Other Stock-Based				Shares		Options		Owned Assuming		Percent of			Other Stock-Based
	Beneficially		Exercisable		Exercise of		Outstanding			Holdings (2)				Beneficially		Exercisable		Exercise of		Outstanding			Holdings (2)
Name	Owned		Within 60 Days		Options		Shares (1)			Vested		Unvested		Owned		Within 60 Days		Options		Shares (1)			Vested		Unvested

Dimensional Fund Advisors LP 1299 Ocean Avenue Santa Monica, CA 90401 (3)		7,842,467		—		7,842,467		6.5	%		—		—		6,471,267		—		6,471,267		5.3	%		—		—
T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202 (4)															6,375,402		—		6,375,402		5.2	%		—		—
Peter J. Boni		190,000		1,590,412		1,780,412		1.4	%		—		—		585,144		1,861,245		2,446,389		2.0	%		—		—
Michael J. Cody		7,500		62,500		70,000		*			—		—		7,500		100,000		107,500		*			19,092		1,648
Julie A. Dobson		40,500		122,500		163,000		*			12,138		1,950		40,500		147,500		188,000		*			50,798		4,815
Robert E. Keith, Jr.		153,366		224,250		377.616		*			177,318		7,590		153,366		232,000		385,366		*			305,036		—
Andrew E. Lietz		45,000		155,000		200,000		*			—		—		45,000		180,000		225,000		*			19,991		—
George MacKenzie		10,500		144,500		155,000		*			—		—		10,500		169,500		180,000		*			19,349		1,712
George D. McClelland		10,000		75,000		85,000		*			53,532		9,793		10,000		112,500		122,500		*			175,513		19,668
Jack L. Messman		38,000		144,000		182,000		*			30,654		2,500		38,000		157,000		195,000		*			142,654		—
John W. Poduska, Sr.		12,500		144,000		156,500		*			—		—		12,500		157,000		169,500		*			19,242		—
John J. Roberts		—		155,000		155,000		*			26,779		—		—		180,000		180,000		*			45,871		1,648
Robert J. Rosenthal		—		12,500		12,500		*			—		—		—		50,000		50,000		*			19,092		1,648
James A. Datin		60,072		784,789		844,861		*			—		—		405,626		920,205		1,325,831		1.1	%		—		—
John A. Loftus (4)		61,827		441,563		503,390		*			—		—
Raymond J. Land (4)		26,100		12,893		38,993		*			—		—
Kevin L. Kemmerer															243,200		532,727		775,927		*			—		—
Brian J. Sisko		10,000		40,618		50,618		*			—		—		202,834		165,618		368,452		*			—		—
Steven J. Feder		16,959		640,590		657,549		*			—		—
Stephen T. Zarrilli		—		150,000		150,000		*			—		—		74,000		251,563		325,563		*			—		—

Executive officers and directors as a group (15 persons) (5)		632,438		4,271,650		4,904,088		3.9	%		300,421		21,833
Raymond J. Land (5)															—		—		—		*
Executive officers and directors as a group (15 persons) (6)															1,828,170		5,216,858		7,045,028		5.5	%		816,638		31,139

COMPENSATION DISCUSSION AND ANALYSIS

Overview

The Compensation Committee (for purposes of this analysis, the “Committee”) is responsible for establishing our company-wide compensation ~~philosophy and~~philosophy; for determining the compensation provided to the individuals who serve as our Chief Executive Officer, Chief Financial Officer and the other individuals included in the Summary Compensation Table (collectively referred to as the “named executive officers”); and for approving the compensation for our other ~~senior executives.~~executives, based on recommendations of our named executive officers. As of the date hereof, for purposes of this analysis our ~~senior~~ executive group is comprised of a total of ~~eight~~11 persons, including the named executive ~~officers.~~officers as well as six other company employees who each hold the title of vice president. The Committee reviews our compensation philosophy each year to ~~assure~~ensure that its principles and objectives are aligned to our overall business strategy and aligned with the interests of our shareholders in increasing the value of our common stock over the ~~long-term.~~long term. We seek to apply a consistent philosophy across our executive rank, not just among our named executive officers.

Compensation Philosophy and Objectives

Our overall goals in compensating our ~~senior~~ executives are to:

Attract, retain and motivate executives who are particularly qualified, as a result of their prior professional experience, to shape Safeguard’s business model and pursue our business plan, and whose experience and skills can be leveraged across our partner companies to facilitate the partner companies’ growth and success;

Promote and reward the achievement of short-term and long-term corporate and individual objectives that our Board and management believe will lead to long-term growth in shareholder value; and

Encourage meaningful equity ownership and the alignment of executive and shareholder interests as an incentive to increase shareholder value.

The executive compensation program the Committee has created is intended to: provide an appropriate mix of fixed and variable, at-risk cash compensation; balance rewards for short-term performance with our ultimate goal of producing long-term shareholder value; link variable compensation as directly as possible to value creation; and facilitate executive recruitment and retention. There is no pre-established target for the allocation between either cash or non-cash; short-term or long-term compensation; and/or fixed or variable items of compensation. Rather, the Committee reviews information provided by ~~management as~~its consultant (as well as ~~its consultant~~information which may be provided by management) to determine the appropriate level, both on an absolute and a relative basis, and mix of each of these components.

During ~~2007,~~2008, we used the following principal elements of compensation to meet our overall goals:


Base Pay	à	Fixed compensation, based on competitive market practice and existing salary levels, that rewards an executive’s core competencies relative to his skills, experience, responsibility and anticipated contributions to us and our partner companies;

Annual Cash Incentives	à	Variable, at-risk, performance-based incentive compensation, based on competitive market practice and existing incentive compensation levels, that rewards an executive’s contributions towards the achievement of short-term corporate objectives and achievement of individual performance objectives;

Long-Term Incentives	à	Equity awards that encourage executive ownership of our stock and promote continued employment with us during the long-term vesting period, thereby aligning our executives’ interests with those of our shareholders regarding increases in shareholder value through improvement in our stock price over the long-term;


Health and Welfare Benefits	à	Benefits that are part of our broad-based employee benefit programs, including medical, dental, life insurance, and disability plans, our 401(k) plan and our nonqualified deferred compensation ~~plan;~~plan (contributions to which have been discontinued for 2009 and beyond);

Perquisites	à	Limited additional benefits that are available to certain of our ~~senior~~ executives; and

Severance and ~~Change-in-~~ ~~Control~~Change-in-Control Arrangements	à	Severance benefits that are payable in the event a termination of employment occurs without cause or for good ~~reason~~reason. These committed benefits are intended to help us retain our named executive officers and ~~which provide retention incentives for~~certain of our ~~senior~~other executives, ~~as well as~~providing us with continuity of executive management in the event of an actual or threatened change in control.

Role of Named Executive ~~Team~~Officers in Compensation Decisions

The Committee makes or has final approval authority regarding all compensation decisions with respect to our ~~senior~~ executives. Within the parameters approved by the Committee each year, ~~senior management is~~our named executive officers are responsible for evaluating and setting compensation with respect to our other employees.

Our Chief Executive Officer, Chief Financial Officer and General Counsel, each a named executive officer, with the assistance of other company employees, ~~as he requests, provides~~provide support to the Committee by preparing materials to assist the Committee in making its compensation decisions; conferring with the Committee and its consultant on the selection of peer companies and industries used for comparison purposes; providing suggestions to the Committee in the area of executive compensation, including suggestions in the context of terms of employment agreements, performance measures and targets under our management incentive plan, and equity awards; suggesting or recommending alternative approaches to certain elements of our executive compensation philosophy; and, ultimately, implementing the Committee’s compensation decisions. Management also provides the Committee with comprehensive tally sheets on an annual basis to facilitate the Committee’s review of the total compensation of our ~~senior executives.~~named executive officers. The tally sheets include both historical data and estimated forward looking amounts for the current calendar year. The tally sheets summarize: cash compensation (salary, actual/target cash incentive awards and perquisites); the dollar value of benefits provided; potential severance amounts payable under various scenarios; and outstanding equity awards held by each ~~senior~~ executive.

In determining the compensation of our Chief Executive Officer, the Committee considers the results of the performance assessment conducted each year by our Nominating & Corporate Governance Committee, which includes our Chief Executive Officer’s self-assessment of achievement of his individual prior year objectives and the assessment of his performance by each Board member. The Committee also discusses its compensation views with our Chief Executive Officer directly. Our Chief Executive Officer is not present when the Committee makes its determinations concerning his compensation.

Our Chief Executive Officer annually assesses each other ~~senior executive’s~~named executive officer’s performance and makes a recommendation to the Committee concerning achievement of individual objectives. Our other named executive officers annually assess the other executives who report to them and make recommendations to our Chief Executive Officer ~~also~~concerning the achievement of individual objectives by such executives. Our Chief Executive Officer makes recommendations to the Committee concerning salary adjustments and equity ~~and non-equity~~ grants to the named executive officers and, based on the recommendations of our other ~~senior~~named executive officers, our other executives. In determining the compensation of ~~other senior~~our executives, the Committee considers our Chief Executive Officer’s assessment and recommendations. However, other than for compensation that has been established contractually or under quantitative formulas established by the Committee each year under our management incentive plan, the Committee exercises its own discretion in determining whether to accept or modify our Chief Executive Officer’s recommendations. These individuals are not present when the Committee and our Chief Executive Officer review their performance or when the Committee makes its determinations concerning their compensation.

From time to time during the year, our Chief Executive Officer may recommend to the Committee one-time cash bonuses or stock option or other equity grants to certain ~~senior~~ executives or other employees relating to instances of superior performance. The Committee acts on such recommendations on a case-by-case basis.

Role of Consultant

~~Hewitt Associates~~Semler Brossy Consulting Group, LLC assisted the Committee in its deliberations regarding executive ~~officer~~ and director compensation ~~levels for 2007.~~matters during 2008. Specifically, ~~Hewitt Associates~~Semler Brossy provided information relating to competitiveness of pay levels, compensation design, specific equity grant matters, market trends and technical considerations, concerning both named executive officers and ~~directors, and~~directors. Semler Brossy also assisted the Committee with the reporting ~~in the 2007 proxy statement~~ of executive compensation matters relating to 2008 under ~~the SEC’s proxy~~applicable SEC disclosure rules. These services, which were provided in support of decision-making by the Committee, are the only services that ~~Hewitt Associates~~Semler Brossy performed for Safeguard. ~~Hewitt Associates~~Semler Brossy reported to and acted at the direction of, and attended selected meetings as requested by, the Chairperson of the Committee.

The Committee, which has the sole authority to hire and terminate its consultant, evaluates the performance of its consultant annually. ~~During 2007, the~~The Committee not only evaluated the services provided by Hewitt Associates but also solicited and reviewed proposals from Hewitt Associates and a number of other compensation consulting firms concerning the Committee’s 2008 compensation decisions. Following its evaluation, the Committee directlyhad initially retained Mercer LLC as its consultant during the second half of 2007 to assist the Committee in its evaluation of ~~senior~~ executive and director

compensation for ~~2008 and~~2008. After the individual consultant from Mercer who was working with the ~~reporting in this proxy statement of executive compensation under the SEC’s proxy disclosure rules. Because~~Committee left Mercer ~~was hired in October 2007,~~to join Semler Brossy, the Committee ~~also consulted with Mercer concerning certain of its deliberations regarding payments~~decided to retain Semler Brossy so as to be ~~made under~~able to continue working with the ~~2007 MIP.~~individual consultant.

Setting Executive Compensation

The Committee believes that a significant portion of each ~~senior~~ executive’s total compensation should be variable or “at-risk.” ~~These variable components are not guaranteed.~~It is the view of the Committee that the greater the ability of an executive (based on his role and responsibilities at the Company) to impact the Company’s achievement of its short- and long-term objectives, the greater the percentage of such executive’s overall compensation which should be “at-risk.” The ~~components that make up the~~ Committee principally utilizes variable/at-risk ~~portion of our executive compensation program are of two different types:~~ cash and ~~equity. The~~equity compensation (under a programmatic plan) to accomplish its objectives in this regard. As described below under “2008 Compensation Program — Cash Incentives,” the Committee provides at-risk ~~variable cash component requires~~target bonus levels under the ~~achievement of strategic and operating~~Company’s MIP (as defined below) to the Company’s executives. Payments against such targets are determined by the Committee based on both corporate ~~objectives,~~achievement as well as personal achievement. Payments may be made in cash and/or equity, in the ~~achievement~~Committee’s discretion. Neither the actual awards to be made under the MIP or otherwise nor the minimum long-term value of ~~individual performance objectives, before~~ any ~~cash payment~~equity grants made is triggered. Theoretically, the same achievements are required to drive stock price appreciation, which makes it possible for senior executives to realize value from stock options and other equity incentive awards granted as long-term incentives.guaranteed.

As described above, management provides the Committee with comprehensive tally sheets on an annual basis to facilitate the Committee’s review of the total compensation of our ~~senior executives.~~named executive officers. The Committee has found these tally sheets to be useful in its evaluation of the total compensation program for our ~~senior executives.~~named executive officers. From time to time, the Committee requests supplemental information be included in such tally sheets as its discussions require.

~~The~~

Specifically with regard to our named executive officers, the Committee from time to time, and at least annually, has reviewed a comparison of each element of total compensation against a group of specific companies and industries against which we believe we compete for talent and for shareholder investment, including the venture capital and private equity industries, as well as by reference to industry-specific compensation surveys. The analysis provided by ~~Hewitt Associates~~Mercer in December ~~2006~~2007 for purposes of the Committee’s consideration of ~~2007~~2008 cash and total compensation levels measured our compensation against data from the following sources:


Proxy ~~data~~Peer Group Data	à	~~The following two comparator groups were specifically identified by us~~ ~~in consultation with Hewitt:~~

		•	Business development companies, registered investment companies and holding companies that are representative of the unique nature of our business model for a publicly owned company. Included in this group were: Allied Capital Corporation; American Capital Strategies, Ltd.; Ares Capital Corp.; Blackrock Kelso Capital; Capital Southwest Corporation; Harris & Harris Group, Inc.; Hercules Technology Growth Capital, Inc.; Internet Capital Group, Inc.; ~~Leucadia National Corporation;~~ MCG Capital Corporation; MVC Capital, Inc.; ~~TICC~~NGP Capital ~~Corp.;~~Resources; Patriot Capital Funding; Prospect Capital; and ~~Wesco Financial Corporation; and~~

		•	Operating companies that are representative of peers to certain of our partner companies. Included in this group were: Actuate Corporation; Answerthink, Inc.; Bio-Reference Laboratories, Inc.; Ciber, Inc.; Covansys Corporation; Cytyc Corporation; i2 Technologies, Inc.; JDA Software Group, Inc.; Keane, Inc.; Logility, Inc.; Manhattan Associates, Inc.; Point.360; S1 Corporation; and SapientTechnology Investment Capital Corp.

~~Culpepper Global Compensation &~~ ~~Benefits Survey - 2006~~	à	The following industry cuts from this survey were selected to be representative of our partner companies while the size scope was selected to represent the unique business model of Safeguard and the skill set of the executives needed to execute our strategy:

		•	~~Life sciences companies with $200 to $600 million in revenue; and~~

		•	~~Software companies with $200 to $600 million in revenue.~~


~~Mercer Private~~ ~~Equity Firms~~Corporate Venturing and Venture Capital Survey Data	à	Surveys used included the following: 2007 Mercer AERD Survey 2007/2008 Watson Wyatt Report on Top Management Compensation 2007 The ~~following cuts from this survey were selected as comparables based on assets under management:~~
~~Compensation Survey~~
~~Report — 2006~~		• ~~Private firms with over $500 million committed capital and median committed capital of $1,300 million; and~~

		• ~~All private firms with median committed capital of $719 million.~~

Private Equity ~~Analyst-Holt~~	à	~~The following cuts from this survey were selected as comparables based on assets under management and geographical location:~~
~~Compensation~~
~~Study~~ Analyst — ~~2006 Edition~~		• ~~Independent ventures;~~

		• ~~Mid-size independent ventures with $300 — $1,000 million assets under management; and~~

		• ~~Northeastern United States independent venture firms with median assets under~~ ~~management of $628 million.~~ Holt Compensation Study

The Committee annually evaluates the companies and surveys used for comparison purposes to be certain that the comparables reviewed by the Committee remain appropriate. For 2007, based on surveys and other information available to us, the Committee utilized data derived from the private equity industry as a proxy for data relating to the venture capital industry, which data was not readily available. In connection with its 2008 compensation review, the Committee determined that reviewing compensation from multiple perspectives was still appropriate given Safeguard’s unique business model. ~~However, the~~The Committee felt that the analysis could be improved by refining the comparables utilized. In particular, the Committee eliminated the comparisons to operating companies that ~~are~~were representative of peers to certain of Safeguard’s partner companies and limited the industry classifications and asset size parameters of companies used as proxy comparables.

Prior to 2006, we historically targeted base pay levels generally at or near the 50^th percentile of base salaries for executives having comparable duties and responsibilities to our ~~senior executives.~~named executive officers. Total compensation, including both annual cash incentives and long-term incentives, was targeted historically to fall at or near the 75^th percentile of total compensation for executives having substantially comparable duties and responsibilities to our ~~senior executives,~~named executive officers, assuming achievement of Safeguard’s corporate, and officers’ individual, objectives. However, recognizing that our business strategy, industry focus and diverse array of partner companies make comparisons to other companies difficult, and based on the inherent challenge in matching companies, job positions and skill sets, the Committee has viewed some of these comparisons as more appropriate for some positions than for others and has looked to this data for general guidance rather than rigid adherence to specific percentages. The Committee continues to review compensation in comparison to the historically targeted 50^th and 75^th percentiles for base pay and total compensation, respectively, but has determined that the overall objectives of our compensation philosophy would be better achieved through flexibility in determining pay levels to address differences in duties and responsibilities, individual experience, skill levels and achievements, and any retention concerns.

~~2007~~2008 Compensation Program

Base Pay.Base pay is established initially on the basis of several factors, including market competitiveness; past practice; individual performance and experience; the level of responsibility assumed; the level of skills and experience that can be leveraged across our partner companies to facilitate their growth and success; and individual employment negotiations with newly hired executives. Each of our named executive officers has an employment agreement with us which sets ~~his~~a minimum base salary. The Committee acknowledges, in particular, that as ~~senior executives~~named executive officers leave Safeguard and new officers are hired, candidates for hire typically will review publicly available information regarding our existing compensation levels and will condition their interest in working for Safeguard upon receiving compensation comparable to that of the officer they are replacing and of other ~~senior~~ executives of Safeguard. This situation ~~impacts~~would impact the Committee’s ability to measurably ~~change~~reduce overall compensation levels ~~over short periods of time.~~for any new senior executives, if any such reductions were deemed appropriate by the Committee.

Base salaries typically are reviewed annually (at the end of one year and the beginning of the upcoming calendar year) by the Committee, as well as in connection with a promotion or other changes in job responsibilities. As noted above, Safeguard competes for executive talent with venture capital and private equity firms. In considering whether to adjust base salary levels of any of our executives for ~~2007,~~2008, the Committee took into account:

The ~~private equity market~~proxy peer group and survey data provided by Hewitt Associates (which showed that base salaries for Messrs. Boni, Datin and Loftus ranged from approximately 14% to 50%, depending upon position, below the medians in the Mercer and Holt private equity compensation studies);Mercer;

The Committee’s assessment of ~~Mr. Boni’s initial base salary, which was somewhat below market based on~~ the ~~private equity median values noted in the consultant’s survey data, as well as Mr. Boni’s~~Company’s overall performance during ~~his first full year as our President~~2007 and ~~Chief Executive Officer; and~~

~~Mr. Boni’s assessment of~~ the individual performance of each of ~~the other~~our named executive ~~officers.~~officers; and

United States economic conditions, in general.

Based on the Committee’s review of the market data and its desire to bring base salaries closer to the median base salaries in venture capital and private equity; align the compensation of Messrs. Datin and Loftus to reflect their comparable roles within our organization; and provide for internal consistency in 2007 base salary increases, in December 2006,foregoing, the Committee ~~approved the following changes in~~determined that base salary levels for our then ~~named executive officers for 2007 as shown below:~~

Name 2006 Base Salary 2007 Base Salary

Peter J. Boni $ 600,000 $ 650,000
James A. Datin $ 375,000 $ 390,000
John A. Loftus $ 275,000 $ 390,000
Steven J. Feder $ 325,000 $ 340,000

~~During 2007, the Committee also approved the following employment agreements which established the compensation terms for newly hired executive officers based on employment negotiations:~~

Raymond J. Land joined us as Senior Vice President and Chief Financial Officer in June 2007 at an initial base salary of $325,000. Mr. Land’s base salary was based on the salary paid to his predecessor as our Chief Financial Officer, adjusted to reflect that Mr. Land would not be assuming the Chief Administrative Officer title which his predecessor also held; and

Brian J. Sisko joined us as Senior Vice President and General Counsel in August 2007 at an initial base salary of $340,000. Mr. Sisko’s base salary was based on his prior experience as the general counsel of multiple public companies, his experience in the private equity and venture capital industries, and the salary paid to his predecessor as our General Counsel.

Subsequent to the departure of Christopher Davis as the Company’s Chief Administrative and Financial Officer in December 2006 and until Mr. Land assumed the position of Chief Financial Officer in June 2007, Stephen Zarrilli served as our Acting Senior Vice President, Acting Chief Administrative Officer and Acting Chief Financial Officer. Under the terms of his consulting agreement with us, Mr. Zarrilli received a retainer of $2,500 per day, subject to a maximum monthly retainer of $50,000, and a retainer of $50,000 during the 30-day transition period following Mr. Land’s commencement of employment. During 2007, we paid Mr. Zarrilli $327,500 for his services.

~~Beginning in December 2007, the Committee reviewed its compensation philosophy and the market data provided by Mercer and determined that 2008 base salary levels for our~~ named executive officers satisfied the Committee’s stated objectives for the role of fixed cash compensation within our overall compensation philosophy and ~~would remain~~made no changes to such base salary levels for 2008, despite the ~~same~~fact that the Committee approved an aggregate 4% budgetary increase in salary levels for all other of the Company employees, including other executives.

In May 2008, John Loftus, who was at the time the Company’s Executive Vice President — Technology, resigned. Following Mr. Loftus’ departure, Kevin Kemmerer, the Company’s Senior Vice President — Technology, assumed Mr. Loftus’ responsibilities and become a named executive officer of the Company. Mr. Kemmerer was subsequently promoted to Executive Vice President and Managing Director, Technology. In connection with his change in responsibilities and promotion, the Committee, based upon our CEO’s recommendation and upon the Committee’s review of the information provided by the Committee’s consultant, raised Mr. Kemmerer’s annual base salary rate to $325,000 from $275,000 during 2008 and to $357,500 effective January 1, 2009.

During 2008, the Committee also approved the employment agreement which established the compensation terms for the Company’s current Chief Financial Officer, Stephen Zarrilli, who joined the Company following the departure of Raymond J. Land. Mr Zarrilli joined us as Senior Vice President and Chief Financial Officer in ~~2007.~~June 2008 at an initial base salary of $340,000. Mr. Zarrilli’s base salary was determined based on the Committee’s review of Mr. Zarrilli’s experience and capabilities and with reference to the salary that was paid to his predecessor as our Chief Financial Officer, adjusted to reflect the elimination of certain executive perquisites that Mr. Land had been receiving.

During late 2008, the Committee undertook its annual review of executive compensation. Based upon the recommendation of the named executive officers, and on the Committee’s review of information provided by Semler Brossy, as well as the Company’s financial performance and the general status of the United States economy, the Committee determined that base salary levels for our current named executive officers satisfied the Committee’s stated objectives for the role of fixed cash compensation within our overall compensation philosophy and made no changes to such base salary levels for 2009. Based upon the recommendation of our CEO, the Committee did grant nominal base salary increases to certain of our other executives in recognition of their professional growth and accomplishments and additional responsibilities assumed by them.

Cash Incentives.

Incentive Opportunity.In April ~~2007,~~2008, the Committee adopted the ~~2007~~Company’s Management Incentive Plan (the ~~“2007 MIP”~~“MIP”) and the particular corporate and personal objectives and target award levels for 2008 to provide a variable ~~cash incentives~~incentive to each of our ~~senior~~ executives and other employees based on ~~2007~~2008 performance. The ~~2007~~2008 MIP program, which emphasized teamwork among members of management to achieve key business objectives under our ~~2007~~2008 strategic plan, was based on the following mix of corporate and individual objectives for our ~~senior executives and professional staff.~~executives:

80% on the achievement of corporate objectives; and

20% on the achievement of individual objectives.

We believe that short-term compensation (such as base salary and annual cash incentive awards) should not be based on the short-term performance of our stock, whether favorable or unfavorable, but rather on our executives’ management of the Company towards achieving our goal of long-term growth in shareholder value. We also believe that under our MIP, all of our executives ~~and professional staff~~ should earn their incentive payments based on the same relative weighting of corporate and individual objectives. The price of our stock should, in the long term, reflect our performance, and the performance of our stock will directly affect the value of stock options and other equity incentive awards provided to our ~~senior~~ executives as part of our compensation program.

Performance Measures.To align the ~~2007~~2008 MIP with our ~~2007~~2008 business strategy, the Committee established the following corporate objectives and weightings (representing 80% (or up to 80 points) of the total ~~2007~~2008 MIP target award):


Weighting				Corporate Objectives

~~30%~~20	%		Achievement of specified levels of deployment of capital in new ~~partner companies; capital funding based on reserves established at initial acquisition of certain~~ partner companies; and/or funding to support growth through acquisitions or other strategic opportunities (but excluding working capital funding) for existing partner companies, with achievement being measured based on ~~a matrix involving~~the Committee’s view of the value of results achieved relative to the amount of capital deployed and the number of transactions completed;

~~30%~~	10	%		Achievement of capital generation through exit transactions ~~(including~~and/or progress towards such exit transactions, ~~by our partner companies as well as transactions by us relating to our interests in partner companies),~~ with achievement being ~~measured~~determined in the Committee’s discretion based on ~~a matrix involving the amount~~its estimation of ~~capital generated and the number of transactions completed;~~value created;

~~20%~~	30	%		Achievement of explicit milestones or specified levels of revenues or profitability for the 1514 partner companies in which we held an interest as of the adoption of the ~~2007~~2008 MIP (assuming the consummation of certain then-pending exit transactions), with each measure selected to reflect the respective partner company’s stage of growth and with greater emphasis being placed on those companies ~~reported as consolidated~~ in which we exercise a greater level of influence and control based on our ~~financial statements;~~ownership interest, board representation, etc. and with the Committee retaining the ability, in its discretion, to assign value to milestones achieved, etc.; and

~~20%~~	40	%		Overall corporate performance of Safeguard, based on the Committee’s subjective evaluation.

The Committee established these objectives by taking into consideration the sales of certain Company partner companies which were pending as of the adoption of the 2008 MIP; the stage of development of each of the Company’s remaining partner companies; the anticipated relative levels of focus to be applied by management against the various aspects of the Company’s business model during the 2008 fiscal year; and the anticipated level of difficulty in achieving our ~~2007~~2008 business ~~plan and~~plan. The Committee also wished to increase (relative to prior years) the level of discretion which it reserved to itself in reaching final determinations of achievement levels reached. At least in part, this desire arose from the Committee’s ~~judgment~~realization that, as circumstances change throughout a given fiscal year, specific formulas or guidelines for measuring achievement set in the beginning of ~~acceptable performance.~~a year, if strictly applied, may well prove to result in compensation grants that do not match actual shareholder value creation. The award criteria were designed to provide management with a meaningful ~~opportunity to meet~~guideline for meeting the Committee’s criteria for a target award but not guarantee achievement or make achievement somewhat inevitable. This approach ~~was~~is also intended to provide ~~increased economic incentives for~~the possibility of exceeding ~~the~~ target ~~award~~awards and some economic recognition, albeit reduced, for near achievement of the target.

In connection with the ~~development~~finalization of the ~~2007~~2008 MIP, each ~~then~~ executive ~~officer~~ also prepared written individual ~~objectives that were reviewed and approved by our Chief Executive Officer.~~objectives. Our Chief Executive Officer’s individual objectives were reviewed and approved by the Committee. Each other named executive officer’s individual objectives were reviewed and approved by our Chief Executive Officer, and each other executive’s individual objectives were reviewed and approved by one of our named executive officers. The individual objectives varied depending upon each participant’s roles and responsibilities.

Consistent with their respective employment agreements and the Company’s overall compensation philosophy, the Committee set the following variable ~~cash~~ target awards for ~~2007~~2008 for our then eligible named executive officers:


	Target Variable		Target Variable
Name(1)	Cash Incentive		Incentive (2)

Peter J. Boni	$	650,000	$	650,000
James A. Datin	$	390,000	$	390,000
John A. Loftus	$	390,000
Steven J. Feder	$	250,000
John A. Loftus (3)			$	390,000
Brian J. Sisko			$	250,000
Raymond J. Land (3)			$	195,000

Payouts.Under the terms of our 2008 MIP, the Committee had the ability to make payments to participants in cash and/or equity. There was no requirement that any particular portion of any payments made be made in any particular form. In ~~February 2008,~~early 2009, the Committee reviewed our performance against the quantitative and qualitative corporate objectives set forth above and preliminarily determined the following payout levels, subject to ~~final approval upon~~ completion of the audits of our ~~2007~~2008 financial statements and internal controls over financial reporting, which ~~final approval~~completion occurred on ~~April 1, 2008.~~March 19, 2009.

Target
Incentive Payout
Level
Corporate Objectives (in points) (in points) Factors Affecting Determination

Capital Deployment 24 22 Deployment of $57.4 million of newly committed capital in 12 transactions — $47.4 million relating to acquisitions of new partner companies (Advanced BioHealing, Beyond.com, Avid Radiopharmaceuticals, Cellumen, Bridgevine, Veralyte, and a stealth pre-launch technology company); the balance related to capital funded to existing partner companies based on reserves established at the time of acquisition. No credit was given for capital deployment to support partner companies outside of amounts properly reserved for follow-on funding or otherwise earmarked for specific merger and acquisition transactions.

Capital Generation 24 6 Generation of $30.7 million of capital through exit transactions.

Partner Company Performance 16 8 Achievement by approximately one-half of our partner companies of explicit milestones or specified levels of revenue or profitability.

Overall Corporate Performance 16 16 Overall corporate performance, including execution of our business strategy; deal sourcing and pipeline development; organizational staffing and development; facilitating partner company milestone achievements; building value in our partner companies through strategy, management and performance; and management of core corporate functions, including performance of our investor relations and marketing programs, financial reporting and other compliance responsibilities, and management of our corporate operating budget. The Committee specifically noted the following significant 2007 achievements in its review:

• Continued execution of our strategy of eliminating from our roster of partner companies those companies that no longer fit within our stated areas of capital deployment focus and accomplishing new capital deployment in partner companies that do fit our current parameters;

• Reception and better understanding of our business model by the financial markets/institutional investors;

• Improvement in our ability to establish a consistent communication platform with our investors;

• Continued upgrading of our advisory boards and the efficient and meaningful utilization of such advisory board members to assist our partner companies to increase their value to us; and

• Continued improvement in the overall view of our partner companies regarding the value that we bring to our partner company relationships.

Total Points 80 52 (which equates to 65% achievement of corporate objectives)


	Target		Payout
	Incentive		Level
Corporate Objectives	(in points)		(in points)		Factors Affecting Determination
Capital Deployment		16		6	Deployment of $15.8 million of newly committed capital in four transactions — all relating to acquisitions of new partner company interests (Swaptree, Molecular Biometrics, Tengion and Garnett Biotherapeutics); no credit was given for follow-on funding to existing partner companies. The Committee also took into consideration the conscious effort of management to temper the levels of cash deployment as the fiscal year progressed and as available cash was utilized to repurchase a portion of the Company’s debt.

Monetization		8		6	Accomplishment of the bundled sale of interests in five of our legacy partner companies in a difficult secondary market transaction in a challenging economic environment, albeit at a price less than originally anticipated.

Partner Company Performance		24		12	Achievement by approximately 64 percent of our partner companies of explicit milestones or minimum specified levels of revenue or profitability. Particular note was made of significant positive developments at two of our largest partner companies, but also acknowledged was the slower than targeted development of certain other partner companies.

Overall Corporate Performance		32		16	Overall corporate performance, including execution of our business strategy; exploration of alternate sources of funding/capital structures; restructuring of the Company’s commercial debt; opportunistic repurchase of outstanding convertible debt of the Company; deal sourcing and pipeline development; organizational staffing and development; facilitating partner company milestone achievements; building value in our partner companies through strategy, management and performance; and management of core corporate functions, including performance of our investor relations and marketing programs, financial reporting and other compliance responsibilities, and management of our corporate operating budget. A dominant factor in the Committee’s analysis was the poor performance of the Company’s stock price throughout the year. The Committee specifically noted the following significant 2008 achievements in its review:

					• Operational cost savings achieved;

					• Progress towards commercial debt restructure (accomplished in early 2009);

					• The restructuring of the Company’s D&O coverage at a significant cost savings; and

					• The market repurchase of $43 million of debt at a significant discount to market.

Total Points		80		40	(which equates to 50% achievement of corporate objectives)

At the end of the year, each ~~senior~~ executive also completed a self-assessment of his achievement of individual objectives (representing 20% (or up to 20 points) of the total ~~2007~~2008 MIP target award). The Chief Executive

Based on its review of the achievement of both quantitative and qualitative ~~2007~~2008 MIP objectives, the Committee (i) authorized the ~~payment of an aggregate company-wide pool equal~~following individual awards to ~~approximately 70% of the 2007 MIP target, with payment to each participant, other than~~ the Company’s ~~senior executive group, made up, as of year-end 2007, of eight eligible persons, including the~~ named executive officers and, in the aggregate, the following award to ~~be determined by management based upon an assessment of~~ the achievement of individual objectives, with individual performance being capped at 110%; and (ii) limited acknowledgment of personal achievement for each of Messrs. Boni, Datin and Loftus, and for our other seniorCompany’s 10 eligible executives as a ~~group,~~group. In making its determinations regarding whether and in what proportions the Committee would authorize payments to be made to our executives under the 2008 MIP, the Committee considered the recommendation of our named executive officers that a ~~maximum~~portion of ~~90%~~such payments be made in the form of ~~personal objectives.~~

~~Based~~restricted stock of the Company. This recommendation was made by our named executive officers in light of the Company’s efforts to conserve cash resources in the current economic climate and to demonstrate management’s commitment to the Company’s efforts to increase shareholder value. The Committee determined, based also on consultations with the Committee’s ~~review~~independent consultant and analysis of data related to target incentive payment practices being followed within the Company’s peer group and throughout the United States public marketplace, as a whole, to pay (1) 50% of 2008 MIP payments to our named executive officers, and (2) 75% of 2008 MIP payments to our other executives in cash and to pay the remainder in the form of restricted stock. The Committee determined that paying a lower percentage of the ~~2007 MIP and the actual achievements of Safeguard and our individual senior executives, the Committee approved the following 2007 MIP payments~~total award in cash to the named executive officers ~~eligible~~appropriately reflects their line-of-sight to the overall results and the greater percentage of total executive compensation that should be variable in nature (and linked to shareholder value).

Based on the recommendation of the named executive officers, the Committee approved the payment of 25% of 2008 MIP payments to our other executives in the form of restricted stock. It was the view of the Committee that the payment of 50% of our named executive officers’ 2008 MIP payment in the form of restricted stock versus the 25% figure utilized for our other executives appropriately reflects the greater percentage of total executive compensation that should be variable in nature (and linked to shareholder value created) for the senior-most executives at the Company. For purposes of determining the specific number of shares of restricted stock to be issued to each executive, the Committee decided that it would be appropriate to use a ~~payment~~trailing 30-day average of the Company’s closing stock price as of February 9, 2009 ($0.664), the day of the Committee’s decision to pay a portion of the 2008 MIP payments in the form of restricted stock (the “principal shares”). In recognition of the deferral of a portion of this year’s earned award, the Committee also determined that, in addition to each principal share of restricted stock to be issued, calculated as described above, an additional .44163 shares of restricted stock would be issued. Initially, the Committee had desired to issue an additional .5 shares for each principal share, but they determined to limit the number of additional shares issued to our named executive officers to the number of shares available under the ~~2007~~Company’s 1999 Equity Compensation Plan, as opposed to also utilizing shares available under the Company’s 2004 Equity Compensation Plan. Assuming the continued employment of the particular executive as of such dates, the restricted shares issued vest as follows: 25% on the first anniversary of grant and the remaining 75% thereafter in 24 equal monthly installments over the next two years. Vesting of such restricted stock may be accelerated in certain circumstances. The issuance of additional shares of restricted stock beyond the principal shares in the 2008 MIP ~~(which~~payments does not establish a policy or precedent going forward. The Committee will view each year independently.

The cash amounts pertaining to our named executive officers are also presented in the Summary Compensation Table under “Non-Equity Incentive Plan ~~Compensation”). Such~~Compensation.” The cash portions of such amounts were paid following the completion of the audit of our financial statements. The restricted shares were issued in 2009 and will be reported in next year’s proxy statement.


							Total Variable
	Payout Level		Approved Variable		Payout		Incentive		Total Cash		Restricted
Name	(in points)		Cash Incentive		Level (1)		Payment		Amount (2)		Shares (3)

Peter J. Boni		70	$	455,000		56	$	364,000	$	182,000		395,144
James A. Datin		70	$	273,000		58	$	226,200	$	113,100		245,554
John A. Loftus		70	$	273,000
Kevin L. Kemmerer						56	$	173,366	$	86,683		188,200
Brian J. Sisko						60	$	150,000	$	75,000		162,834
Eligible executives, as a group (10 persons)(4)						58	$	1,263,647	$	719,343		1,181,751

As noted above, we compete for executive talent with venture capital and private equity firms, and we review comparative information regarding venture capital and private equity industry compensation practices. In such industries, executives (referred to as “managing partners”) typically have compensation programs ~~that include~~heavily weighted towards long-term incentive, structured as a share of the fund’s profits, payable in cash (referred to as “carry”). We currently do not provide our executives with a cash compensation program tied directly to gains from our sales of our partner company holdings. Instead, we ~~attempt~~have to ~~utilize~~date utilized our equity compensation plans as an alternative to approximate the economic benefit that would be provided by a carry. The initial equity awards made to our ~~senior executives~~named executive officers were based on our assessment of the carry which would typically be provided to our executives in positions of comparable responsibility at private equity and/or venture capital ~~firms.~~firms at that time. For example, based upon information available to the Committee through its consultant, as well as directly through the professional experience of Committee members, a managing partner of a venture capital or private equity firm would typically expect a carry ranging from about 1% to 5% of profits realized on portfolio transactions. To provide a different, but somewhat comparable, long-term economic benefit to our named executive officers, we ~~grant~~granted stock options to our named executive officers, with each officer’s aggregate stock option grants ranging ~~in the aggregate~~ from about 1% to 5% of our outstanding shares of common stock, dependent upon the individual’s position and responsibilities. The ultimate potential value of the grants ~~which generally are made upon hire, are~~is intended ~~by the Committee to cover a multi-year period and~~ to be competitive with those held by comparable executives in the comparison data reviewed by the Committee (as adjusted for the senior executive’s experience).

~~Since~~The Committee’s deliberations with regard to long-term incentives during 2008 were made increasingly challenging by a variety of factors — the current economic environment impacted the opportunity to realize the value of long-term incentives, and the retentive value of long-term incentive grants made to the named executives upon hire declined precipitously through the course of the year. In an effort to better approximate a “carry” approach, the Committee considered a variety of alternatives for long-term incentives, including cash, restricted stock, and stock options, with all of these approaches tied to gains derived by the Company from sales of our partner company interests. The Committee decided to continue the use of options as the principal component of its long-term incentive program, but changed the performance criteria for new grants from the “market-based” approach (described below) which has been utilized since 2005, to the “capital-return” approach (described below). The Committee believes this vehicle best ties the reward to the factors critical to the creation of shareholder value.

Our stock options are granted with an exercise price equal to the average of the high and low trading prices of our common stock on the date of ~~grant,~~grant. Therefore, the options will have value only if the market price increases after that date and, in the case of options that vest upon achievement of specified ~~stock price levels,~~performance milestones, only if the specified ~~stock price levels~~performance milestones are achieved. We refer to options that vest upon achievement of specified ~~stock price levels~~performance milestones as “performance-based” options. At present, we have issued and outstanding two types of performance-based options: “market-based vesting” ~~options. The~~options and “capital-return” options (initiated in 2008). Both of these types of performance-based options are described in detail below.

In general, for executive personnel, the Committee has established the following ~~allocation~~model for allocating option grants (both initial and any annual grants) between options which are subject to simple time-based vesting and ~~market-based vesting for our executive officers:~~performance-based options:

25% of the total underlying shares are subject to time-based vesting; of such amount, 25% vests on the first anniversary date of the grant date and the remaining 75% vests in 36 equal monthly installments on the same date of each month thereafter; and

75% of the total underlying shares are subject to ~~market-based~~performance-based vesting.

The Committee believes that ~~granting 75% of the principal~~allocating option grants ~~held by our executive officers based on~~in such a ~~market-based vesting model~~fashion aligns the long-term interests of Safeguard management and our shareholders. The Committee may infrequently grant options allocated in a different manner, in special circumstances. All option grants to our named executive officers in 2008 were allocated in the above manner.

Based in general on the circumstances created by the general market collapse in the Fall of 2008 and, in particular, the poor performance of the Company’s stock price, during 2008, the Committee also solicited advice from its consultant as well as from the Company’s legal advisors regarding the possibility of undertaking a stock option exchange initiative. Despite the fact that the large majority of the Company’s outstanding stock options have exercise prices which are significantly above the Company’s current public share price, the Committee did not deem it appropriate or advisable to undertake any exchange at this time. The Committee continues to assess the impact on executive and non-executive retention and incentive which the circumstances at present create.

Market-based Options.Our ~~senior~~market-based vesting options vest as the Company’s per share price on the NYSE achieves certain specified levels in excess of the exercise price of such options. The Committee began utilizing these market-based vesting options during 2005 and continued to utilize them through the second quarter of 2008. Our executives ~~generally~~ will not benefit from such option grants unless ~~the Safeguard~~our stock price achieves and sustains a targeted stock price (based on the average closing price of a share of our common stock as reported on the NYSE ~~consolidated~~composite tape for 20 consecutive trading days).

The following table shows the per share stock price levels at which portions of the shares underlying the market-based vesting options granted in 2005 and 2006 to Messrs. Boni, Datin and ~~Loftus~~Kemmerer will vest:


Percentage of Shares Underlying Options That Vest	Per Share Stock Price		Per Share Stock Price

First 10%	$	2.0359	$	2.0359
Next 20%	$	3.1548	$	3.1548
Next 30%	$	4.6466	$	4.6466
Final 40%	$	6.5114	$	6.5114

~~Upon joining Safeguard, Mr. Land~~Capital-Return Options.During the third quarter of 2008, based upon discussions with the Committee’s consultant and ~~Mr. Sisko received stock options~~in an attempt to ~~purchase 1,500,000 shares and 1,000,000 shares, respectively. These option grants met~~1) formally incorporate the ~~employment inducement award exemption provided under Section 303A.08~~granting of equity as part of the ~~NYSE Listed Company Manual. Of these stock options awarded, 25%~~annual total compensation package; 2) better approximate the “carry” concept described above; and 3) better link compensation to two principal elements of the ~~stock~~Company’s business plan for producing enhanced shareholder value, increasing the value of our partner company interests and consummating exit transactions to realize such value, the Committee formulated the following capital-return option model. The principle behind the capital-return model is to vest options ~~were subject~~as partner company exit transactions produce aggregate cash returns to ~~time-based~~the Company in excess of certain predetermined levels. In order to create a starting point for the use of this vesting ~~and 75%~~approach, the Committee formed a group consisting of all of the ~~stock~~Company’s partner companies existing as of September 30, 2008, other than Clarient (The “Initial Group”) and tied the vesting of the performance-based options ~~were subject~~issued on such date to predetermined levels of net cash proceeds returned to the ~~market-based~~Company based on exit transactions involving the Initial Group. Vesting of these options will be calculated annually as of the anniversary date of the grant. Vesting will only begin to occur after a hurdle amount of proceeds are produced and all options will become vested upon achievement of a predetermined target amount of proceeds. After such hurdle amount is reached, the options will vest on a linear basis relative to additional proceeds produced beyond the hurdle amount and the target amount until such time as 100% of the options are vested when the target amount of proceeds is reached. Adjustments to the hurdle amount and the target amount will be made if and when the Company deploys additional capital into any of the Initial Group. It is contemplated that, on an annual basis going forward, on or about the anniversary date of the formation of the Initial Group, the Committee will create an additional grouping of partner companies defined as companies into which the Company first deployed capital during the preceding 12 months. The vesting ~~model described~~of any stock option issuances to be made at that time (or within the next 12 months) in the ~~following table:~~

Subject to ~~executive officers were made during 2007.~~

Weavailability under our shareholder approved equity compensation plans, we expect to continue to use stock options and other equity awards as part of our executive compensation program, including ~~market-based vesting~~performance-based options. ~~We expect to make appropriate adjustments in the per share stock price levels and vesting schedules used for additional market-based vesting option grants based on our stock price level.~~

Stock ~~Option~~Option/Equity Granting Process.The Committee is responsible for equity grants under our equity compensation plans. The Committee approves and grants all equity awards to our ~~senior~~ executives, employees and advisory board members, with the exception of those grants for which the Committee has delegated authority to the Chief

Executive Officer which are described below. Equity grants to directors are generally approved by the Board; however, in those cases where the Board has approved the size and form of recurring annual service grants, the Committee may authorize grants without further Board approval.

Grants may be made at regularly scheduled meetings or at special meetings convened to approve compensation arrangements for newly hired executive officers or for executive officers who have been promoted or are otherwise subject to changes in responsibilities. During 2007, the Committee determined that, as a matter of best practice, recurring grants to directors and advisory board members would be made on the date of Safeguard’s annual meeting of shareholders. During 2008, the Committee further determined that it would also begin utilizing the end of the Company’s fiscal third quarter each year as an acceptable and administratively convenient time to make annual determinations regarding executive equity compensation matters. It is presently contemplated that, at that time in each calendar year going forward, and in connection with the process described above regarding the Company’s capital-return option model, the Committee may issue additional options (or other forms of incentive equity) to some or all of the Company’s executives. This annual process was established in 2008 in recognition of the fact that the core of the Company’s senior management team was established beginning in 2005 and that, based on the term of the Company’s option grants, it would be appropriate to begin an annual option review and potential programmatic supplemental grant designed to deliver an annual long-term incentive value relative to each executive’s roles and responsibilities. The Committee believes that granting equity on an annual basis will 1) provide greater alignment between the performance achieved and the value realized; 2) reinforce equity value as an important component of each executive’s annual total compensation; and 3) recognize the executives’ ongoing role in achieving results rather than the point in time that they joined the Company.

The Committee has delegated to our Chief Executive Officer the authority to make equity grants between regularly scheduled Committee meetings (primarily to new hires and new advisory board members), provided that the aggregate number of shares granted may not exceed 300,000 shares, the maximum number of shares allocated to any one employee may not exceed 125,000 shares and the aggregate number of shares allocated to any one advisory board member may not exceed 5,000 shares. A report is made to the Committee at each of its regularly scheduled meetings regarding any grants that our Chief Executive Officer has approved since the date of the last report, following which the aggregate number of shares available is reset to 300,000 shares. The Chief Executive Officer is not authorized to make equity grants to ~~senior~~ executives or directors without prior Committee approval of the specific grant contemplated.

It recently has become our practice to make all employee grants of options, subject to limited exceptions for new hires, on fixed quarterly grant dates. Grants to newly retained consultants or advisors may be made on the later of the date the award is approved or the date of commencement of services. The exercise price for all stock options granted under our equity compensation plans is the average of the high and low trading prices of our common stock as reported on the NYSE ~~consolidated~~composite tape on the date of grant, which we believe reflects common practice.

Nonqualified Deferred Compensation.Our ~~senior~~ executives may defer compensation under our qualified 401(k) plan (subject to the limits imposed by the Internal Revenue Code) but generally, ~~are~~due to the structure of our 401(k) plan, the most highly compensated of our executives (including our named executive officers) were not eligible to receive matching company contributions under that ~~plan. Our senior~~plan for calendar years through 2008. In lieu of such a matching 401(k) contribution, such executives ~~are~~were eligible to participate in our nonqualified deferred compensation plan, which is an unfunded plan that does not allow deferral of compensation but does allow participants to obtain credits, in the form of Safeguard contributions ~~that are~~ allocated to accounts for the benefit of participants. We ~~offer~~offered this nonqualified deferred compensation plan to ~~selected employees~~those executives excluded from matching contributions in light of their ineligibility to obtain a ~~company~~Company matching contribution under our qualified 401(k) plan. During 2008, the Committee approved a change to our 401(k) plan which will allow matching contributions for all of our employees for calendar years beginning with 2009. Therefore, no further contributions are expected to be made under our non-qualified deferred compensation plan for calendar years beyond 2008. Amounts accrued for prior periods will continue to be credited to prior participants in accordance with the terms of the plan. Additional information regarding participation in this plan by named executive officers can be found below under “Executive Compensation—Nonqualified Deferred Compensation ~~– 2007.~~— 2008.”

Perquisites ~~(fringes)~~(fringe benefits).Contractually, certain of our ~~senior~~ executives are entitled to a few benefits that are not otherwise available to ~~all of~~ our ~~employees.~~employees generally. We do not provide a defined benefit pension arrangement, post-retirement health coverage or similar benefits for any of our executives. During 2008, we provided universal life insurance coverage ranging from $750,000 to $1,000,000 to each of our named executive officers. ~~The~~In addition, the following additional perquisites wewere provided to all of our named executive officers in fiscal ~~2007 consisted of the following:~~2008, other than to Mr. Zarrilli:

$10,000 annual car allowance;

$8,000 non-accountable annual expense allowance;

~~Universal life insurance coverage ranging from $750,000 to $1,000,000;~~ and

Up to $5,000 reimbursement annually for medical, vision or dental expenses not covered under our other benefit ~~plans; and~~

~~Certain relocation expenses and related tax obligations under the terms of negotiated employment agreements.~~plans.

The Committee believes that these perquisites, which represent a relatively modest portion of each named executive officer’s compensation, are not out of the ordinary for executives of the caliber that we ~~need~~needed to be able to attract to Safeguard. These perquisites are taken into consideration by the Committee in determining total compensation payable to the named executive officers. It is the Committee’s stated intention to begin to treat certain of such perquisites as fully discretionary in the case of any new hires to our senior executive ranks.

Severance and Change-in-Control Arrangements

~~Messrs. Boni, Datin, Sisko and Zarrilli each have agreements~~Each of our named executive officers has an agreement with Safeguard which ~~provide~~provides certain benefits in the event of termination of ~~their~~his employment by Safeguard without “cause” or by the officer for “good reason” (as defined in the agreements). Messrs. Land and Loftus voluntarily resigned as Safeguard employees in May ~~2008.~~2008 and, therefore, received no severance payments.

Upon the occurrence of a termination event, each executive will be entitled to those benefits outlined in his agreement with us, which may include a multiple of his then current base salary, payment of his pro rata bonus for the year of termination or a multiple of the greater of his target bonus for the year of termination or the average of his actual bonuses for up to the last three years, accelerated vesting of equity awards and extension of the post-termination exercise period within which some or all of the equity awards held by the executive may be exercised, coverage under our medical, health and life insurance plans for a designated period of time, and outplacement services or office space. See “Potential Payments upon Termination or Change in Control” ~~in this proxy statement~~elsewhere herein for a summary of the specific benefits that each executive will receive upon the occurrence of a termination event.

Unlike “single trigger” change-in-control arrangements that pay out immediately upon a change in control, most of the benefits to which our named executive officers are entitled under their agreements in the event of a “change in control” require a “double trigger,” namely a change in control coupled with a loss of employment or a substantial change in job duties. We believe a “double trigger” provides retention incentives as well as continuity of management in the event of an actual or threatened change in control. However, we note that the acceleration of the vesting of the stock options that ~~were~~have been granted to Mr. Boni ~~when he joined Safeguard in 2005~~ require only a “single trigger” to be effective –— that is, only a change in control. This arrangement was specifically negotiated by Mr. Boni as a condition to his agreement to join Safeguard. Since equity represents a significant portion of Mr. Boni’s total compensation, we believe that this “single trigger” can be an important retention device during ~~change–in-control~~change-in-control discussions.

Steven J. Feder, our former Senior Vice President and General Counsel, resigned in August 2007. We and Mr. Feder agreed that Mr. Feder’s resignation would be treated as having been for good reason, as defined in his agreement with us, and Mr. Feder received the severance benefits described in that agreement consisting of the following:

Stock Ownership Guidelines

Our Board established stock ownership guidelines, effective December 31, 2005, that are designed to closely align the long-term interests of our named executive officers with the long-term interests of our shareholders. The guidelines provide that each named executive officer should attain an equity position in our common stock equal to two times annual base salary. The ownership level should be achieved (i) within five years of December 31, 2005 for executive officers who were employed on that date or (ii) for individuals who were not employees on December 31, 2005, by the end of the fifth full calendar year following the year in which the executive officer was hired. The Nominating & Corporate Governance Committee monitors compliance as of the end of each calendar year. Shares counted toward these guidelines include:

Shares beneficially owned by the executive officer;

Vested shares of restricted stock;

Vested deferred stock units that have been credited to the executive officer; and

Shares underlying vested, in-the-money options.

Based on information they have provided to us, our named executive officers are working toward meeting the guidelines within the prescribed time ~~frame.~~frames.

Prohibition on Speculation in Safeguard Stock

Our company policy on securities trading by company personnel prohibits our named executive officers, directors and other employees from engaging in activities with regard to our stock that can be considered as speculative, including but not limited to, short selling (profiting if the market price of our securities decreases); buying or selling publicly traded options (e.g., a put option, which is an option or right to sell stock at a specific price prior to a specified date, or a call option, which is an option or right to buy stock at a specific price prior to a specified date); and hedging or any other type of derivative arrangement that has a similar economic effect. Our executive officers and directors also are ~~also~~ prohibited from pledging, directly or indirectly, our common stock or the stock of any of our partner companies, as collateral for indebtedness.

COMPENSATION COMMITTEE REPORT

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and the Company’s proxy statement.

Members of the Compensation Committee:


Julie A. Dobson, Chairperson		George D. McClelland		John J. Roberts

EXECUTIVE COMPENSATION

Summary Compensation Table –— Fiscal Years Ended December 31, 2008, 2007 and 2006

The table below is a summary of total compensation paid to or earned by our named executive officers for the fiscal years ended December 31, 2008, 2007 and 2006.

Change in
Pension Value
Non-Equity and
Incentive Nonqualified
Plan Deferred All Other
Stock Option Compen- Compensation Compen-
Name and Salary Bonus Awards Awards sation Earnings sation Total
Principal Position Year ($) ($)(1) ($)(2) ($)(2) ($)(3) ($)(4) ($)(5) ($)

Peter J. Boni
President and Chief
2007 650,000 — — 710,745 455,000 267 116,049 1,932,061
Executive Officer
2006 600,000 — — 1,185,249 684,000 — 248,935 2,718,814

Raymond J. Land (6)(7)
Senior Vice President and Chief Financial Officer
2007 182,292 109,375 — 292,344 — — 32,367 616,378

James A. Datin
Executive Vice President and Managing Director, Life Sciences
2007
2006 390,000
375,000 —
— —
— 435,321
713,813 273,000
382,500 267
— 47,441
44,989 1,146,029
1,516,302

John A. Loftus (6)
Executive Vice President and Managing Director, Technology
2007
2006 390,000
275,000 —
275,000 33,330
1,461 448,866
745,102 273,000
308,000 3,667
7,684 42,919
43,279 1,191,782
1,655,526

Brian J. Sisko (7)Senior Vice President and General Counsel
2007 126,410 91,096 — 148,345 — — 6,238 372,089

Steven J. Feder (8)
Former Senior Vice President and General Counsel
2007
2006 231,461
325,000 —
25,000 —
— 260,453
300,142 —
185,500 272
— 700,552
45,783 1,192,738
881,425

Stephen T. Zarrilli (9)
Former Acting Senior Vice President, Acting Chief Administrative Officer and Acting Chief Financial Officer
2007
2006 327,500
15,000 —
— —
— 44,563
25,577 —
— —
— —
— 372,063
40,577


														Change in
														Pension Value
												Non-Equity		and
												Incentive		Nonqualified
												Plan		Deferred		All Other
							Stock		Option			Compen-		Compensation		Compen-
Name and			Salary		Bonus		Awards		Awards			sation		Earnings		sation		Total
Principal Position	Year		($)		($)(1)		($)(2)		($)(2)			($)(3)		($)(4)		($)(5)		($)
Peter J. Boni		2008		650,000		—		—		578,521			182,000		—		74,323		1,484,844
President and Chief		2007		650,000		—		—		710,745			455,000		267		116,049		1,932,061
Executive Officer		2006		600,000		—		—		1,185,249			684,000		—		248,935		2,718,184

James A. Datin		2008		390,000		—		—		354,414			113,100		—		46,961		904,475
Executive Vice President		2007		390,000		—		—		435,321			273,000		267		47,441		1,146,029
and Managing Director,		2006		375,000		—		—		713,813			382,500		—		44,989		1,516,302
Life Sciences

Kevin L. Kemmerer (6)		2008		309,337		—		—		191,722			86,683		—		45,081		632,823
Executive Vice President and Managing Director, Technology

Brian J. Sisko		2008		340,000		50,000		—		260,295			75,000		—		48,109		773,404
Senior Vice President and		2007		126,410		91,096		—		148,345			—		—		6,238		372,089
General Counsel

Stephen T. Zarrilli (7)		2008		198,333		113,750		—		123,750			—		—		14,006		449,839
Senior Vice President and		2007		327,500		—		—		44,563			—		—		—		372,063
Chief Financial Officer		2006		15,000		—		—		25,577			—		—		—		40,577

Raymond J. Land (8)		2008		135,417		—		—		(267,792	)				—		21,559		(110,816	)
Former Senior Vice		2007		182,292		109,375		—		292,344			—		—		32,367		616,378
President and Chief Financial Officer


(1)		For 2008, the amount reported for Mr. Zarrilli represents an amount paid to him when he returned to Safeguard as an employee in June 2008 in lieu of participation in our Management Incentive Plan (MIP) for 2008. For 2007, the amounts reported for Messrs. ~~Land~~Sisko and ~~Sisko~~Land represent amounts paid to ~~each of Messrs. Land and Sisko~~them upon their ~~respective hires~~hire in lieu of ~~payments under Safeguard’s 2007 management incentive plan (100% of such payments, net of taxes, was required to be used by each of them to purchase Safeguard common stock~~participation in ~~orderly open market purchases in accordance with our insider trading procedures). Amounts earned by Messrs. Boni, Datin and Loftus under~~ our 2007 ~~Management Incentive Plan are reported under “Non-Equity Incentive Plan Compensation.”~~MIP.


(2)		These amounts do not represent compensation actually received. Rather, these amounts represent the aggregate expense we recognized for financial statement reporting purposes for the fiscal year ended December 31, ~~2007~~2008 for ~~restricted stock awards and~~ stock options granted during and prior to ~~2007,~~2008, in accordance with FAS 123(R). In accordance with SEC rules, the amounts shown exclude the effect of estimated forfeitures related to service-based vesting conditions other than forfeitures that actually occurred during ~~2007. In August 2007,~~2008. The stock options held by Mr. ~~Feder~~Land were forfeited, ~~359,410~~in accordance with the terms of his stock option agreements, following his termination of employment. Therefore, under FAS 123(R), the expenses previously reported with respect to the stock options that Mr. Land forfeited were ~~subject to market-based vesting upon his termination of employment.~~reversed, and, in accordance with SEC rules, the reversal resulted in the negative amount shown in the table. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years indicated:

Grants of Plan-Based Awards — ~~2007~~2008

The following table shows non-equity incentive plan awards and option awards granted during ~~2007~~2008 to our named executive officers. There were no stock awards granted to our named executive officers during ~~2007.~~2008.


									All Other		All Other																All Other		All Other
									Stock		Option																Stock		Option							Grant
									Awards:		Awards:		Exercise				Grant Date										Awards:		Awards:			Exercise				Date Fair
									Number of		Number of		or Base				Fair Value										Number of		Number of			or Base				Value of
			Estimated Possible Payouts Under						Shares of		Securities		Price of		Market		of Stock				Estimated Possible Payouts Under						Shares of		Securities			Price of		Market		Stock and
			Non-Equity Incentive Plan Awards(1)						Stock or		Underlying		Option		Price on		and Option				Non-Equity Incentive Plan Awards (1)						Stock or		Underlying			Option		Price on		Option
	Grant		Threshold		Target		Maximum		Units		Options		Awards		Grant Date		Awards		Grant		Threshold		Target		Maximum		Units		Options			Awards		Grant Date		Awards
Name	Date		($)		($)		($)		(#)		(#)(2)		($/Sh)		($/Sh)(3)		($)(4)		Date		($)		($)		($)		(#)		(#)(2)			($/Sh)		($/Sh)(3)		($)(4)

Peter J. Boni		4/24/07		—		650,000		975,000		—		—		—		—		—		4/22/08		—		650,000		975,000		—		—			—		—		—

Raymond J. Land		6/11/07		—		109,375		—		—		—		—		—		—
		6/11/07		—		—		—		—		375,000		2.620		2.640		560,513		9/30/08		—		—		—		—		900,000	(5)		1.235		1.25		490,090
		6/11/07		—		—		—		—		1,125,000		2.620		2.640		1,651,462		9/30/08		—		—		—		—		300,000	(6)		1.235		1.25		177,660

James A. Datin		4/24/07		—		390,000		585,000		—		—		—		—		—		4/22/08		—		390,000		585,000		—		—			—		—		—
																				9/30/08		—		—		—		—		450,000	(5)		1.235		1.25		245,045
John A. Loftus		4/24/07		—		390,000		585,000		—		—		—		—		—
																				9/30/08		—		—		—		—		150,000	(6)		1.235		1.25		88,830

Kevin L. Kemmerer																				4/22/08		—		309,583		464,375		—		—			—		—		—
																				6/30/08		—		—		—		—		375,000	(7)		1.275		1.24		281,571
																				6/30/08		—		—		—		—		125,000	(6)		1.275		1.24		78,563
																				9/30/08		—		—		—		—		375,000	(5)		1.235		1.25		204,204
																				9/30/08		—		—		—		—		125,000	(6)		1.235		1.25		74,025

Brian J. Sisko		8/20/07		—		91,096		—		—		—		—		—		—		4/22/08		—		250,000		375,000		—		—			—		—		—
		8/20/07		—		—		—		—		250,000		2.106		2.090		284,175		9/30/08		—		—		—		—		98,500	(5)		1.235		1.25		53,638
		8/20/07		—		—		—		—		750,000		2.106		2.090		921,359		9/30/08		—		—		—		—		31,500	(6)		1.235		1.25		18,654

Steven J. Feder		4/24/07		—		250,000		375,000		—		—		—		—		—
Stephen T. Zarrilli																				6/30/08		—		—		—		—		1,125,000	(7)		1.275		1.24		844,713
																				6/30/08		—		—		—		—		375,000	(6)		1.275		1.24		235,688
Stephen T. Zarrilli		—		—		—		—		—		—		—		—		—
																				9/30/08		—		—		—		—		26,250	(5)		1.235		1.25		14,294
																				9/30/08		—		—		—		—		8,750	(6)		1.235		1.25		5,182

Raymond J. Land																				4/22/08		—		195,000		292,500		—		—			—		—		—


(7)		These options are subject to market-based vesting and vest upon the achievement of the following per share stock price levels (based on the average closing price of a share of our common stock as reported on the NYSE composite tape for 20 consecutive trading days):


Percentage of Shares Underlying Options That Vest	Per Share Stock Price
First 20%	$	3.1548
Next 30%	$	4.6466
Next 40%	$	6.5114
Final 10%	$	7.2246

In addition to vesting upon the achievement of a specified per share stock price level, the shares underlying the options may vest on a pro rata basis on each six-month anniversary of the grant date if the per share stock price is between the designated levels (based on the highest average closing price of a share of our common stock as reported on the NYSE composite tape for 20 consecutive trading days during each six-month period).

Outstanding Equity Awards at Fiscal Year-End ~~– 2007~~— 2008

The following table shows the equity awards we have made to our named executive officers that were outstanding at December 31, ~~2007.~~2008.


	Option Awards											Stock Awards				Option Awards													Stock Awards
						Equity																Equity
						Incentive Plan																Incentive Plan
						Awards:																Awards:
	Number of			Number of		Number of						Number of						Number of		Number of		Number of							Number of
	Securities			Securities		Securities						Shares or		Market Value				Securities		Securities		Securities							Shares or		Market Value
	Underlying			Underlying		Underlying						Units of		of Shares or				Underlying		Underlying		Underlying							Units of		of Shares or
	Unexercised			Unexercised		Unexercised		Option				Stock That		Units of Stock				Unexercised		Unexercised		Unexercised			Option				Stock That		Units of Stock
	Options			Options		Unearned		Exercise		Option		Have Not		That Have				Options		Options		Unearned			Exercise		Option		Have Not		That Have
	(#)(1)			(#)(1)(2)		Options		Price		Expiration		Vested		Not Vested		Grant		(#)(1)		(#)(1)(2)		Options			Price		Expiration		Vested		Not Vested
Name	Exercisable			Unexercisable		(#)(2)(3)		($)		Date		(#)(2)(4)		($)(5)		Date		Exercisable		Unexercisable		(#)(2)			($)		Date		(#)		($)
Peter J. Boni		583,333			416,667		—		1.2750		08/16/13		—		—		08/16/05		833,333		166,667		—			1.275		08/16/13		—		—
		861,245	(3)		—		2,138,755		1.2750		08/16/13		—		—		08/16/05		861,245		—		2,138,755	(3)		1.275		08/16/13		—		—
																	09/30/08		—		300,000		—			1.235		09/30/16		—		—
Raymond J. Land (8)		375,000			—		—		2.6200		06/11/15		—		—
		12,893			—		1,112,107		2.6200		06/11/15		—		—		09/30/08		—		—		900,000	(4)		1.235		09/30/16		—		—

James A. Datin		281,250			218,750		—		1.5600		09/07/13		—		—		09/07/05		406,250		93,750		—			1.560		09/07/13		—		—
		430,622	(3)		—		1,069,378		1.5600		09/07/13		—		—		09/07/05		430,622		—		1,069,378	(3)		1.560		09/07/13		—		—
																	09/30/08		—		150,000		—			1.235		09/30/16		—		—
John A. Loftus (8)		115,000			—		—		2.1700		05/13/10		28,551		51,392
																	09/30/08		—		—		450,000	(4)		1.235		09/30/16		—		—

Kevin L. Kemmerer																	06/14/04		100,000		—		—			2.335		06/14/12		—		—
																	12/15/04		125,000		—		—			2.125		12/15/12		—		—
																	06/06/05		21,875		3,125		—			1.030		06/06/13		—		—
																	10/25/05		39,583		10,417		—			1.380		10/25/13		—		—
																	10/25/05		114,832		—		285,168	(3)		1.380		10/25/13		—		—
																	02/12/06		86,124		—		213,876	(3)		1.975		02/21/14		—		—
		25,000			—		—		1.6850		12/18/10		—		—		06/30/08		—		125,000		—			1.275		06/30/16		—		—
		100,000			—		—		3.5600		12/19/11		—		—		06/30/08		—		—		375,000	(5)		1.275		06/30/16		—		—
		168,750			56,250		—		2.1250		12/15/12		—		—		09/30/08		—		125,000		—			1.235		09/30/16		—		—
		427,122	(3)		—		1,069,378		1.5550		09/13/13		—		—		09/30/08		—		—		375,000	(4)		1.235		09/30/16		—		—

Brian J. Sisko		250,000			—		—		2.1060		08/20/15		—		—		08/20/07		83,333		166,667		—			2.106		08/20/15		—		—
		—			—		750,000		2.1060		08/20/15		—		—		08/20/07		40,618		—		709,382	(5)		2.106		08/20/15		—		—
																	09/30/08		—		31,500		—			1.235		09/30/16		—		—
Steven J. Feder (6)		300,000			—		—		1.7800		08/19/10		—		—
																	09/30/08		—		—		98,500	(4)		1.235		09/30/16		—		—

Stephen T. Zarrilli																	12/15/06		150,000		—		—			2.335		06/11/10		—		—
		200,000			—		—		1.3800		08/19/10		—		—		06/30/08		—		375,000		—			1.275		06/30/16		—		—
		140,590	(3)		—		—		1.3800		08/19/08		—		—		06/30/08		—		—		1,125,000	(5)		1.275		06/30/16		—		—
																	09/30/08		—		8,750		—			1.235		09/30/16		—		—
Stephen T. Zarrilli		150,000	(7)		—		—		2.3350		06/11/10		—		—
																	09/30/08		—		—		26,250	(4)		1.235		09/30/16		—		—

Raymond J. Land (6)																	—		—		—		—			—		—		—		—


~~Expiration Date~~	~~Initial Vest Date~~	~~Subsequent Monthly Vest Dates~~

~~05/13/10~~	~~05/13/03~~	~~06/13/03 through 05/13/06~~
~~12/18/10~~	~~12/18/03~~	~~01/18/04 through 12/18/06~~
~~12/19/11~~	~~12/19/04~~	~~01/19/05 through 12/19/07~~
~~12/15/12~~	~~12/15/05~~	~~01/15/06 through 12/15/08~~
~~08/16/13~~	~~08/16/06~~	~~09/16/06 through 08/16/09~~
~~09/07/13~~	~~09/07/06~~	~~10/07/06 through 09/07/09~~
~~09/13/13~~	~~09/13/06~~	~~10/13/06 through 09/13/09~~
~~06/11/15~~	~~06/11/08~~	~~07/11/08 through 06/11/11~~
~~08/20/15~~	~~08/20/08~~	~~09/20/08 through 08/20/11~~

Lump sum distributions of the vested balance in a named executive officer’s account are made following termination of employment as follows:

•		~~Amounts that were earned and vested at December 31, 2005, are distributed within 30 business days following termination; and~~

•		~~The remaining amount is distributed six months following termination.~~

Amounts that were earned and vested at December 31, 2005, are distributed within 30 business days following termination; and

The remaining amount is distributed six months following termination.

A committee appointed by Safeguard’s Board selects the funds or indices that are used for purposes of calculating the earnings that are credited to each participant’s account based on a notional investment in the selected funds or indices. Since the plan’s inception, we have calculated earnings based on the performance of the notional investment in the Principal Investors Fund, Inc. Large-Cap S&P 500 Index Fund (PLFPX), which is one of the investment choices that had been available to participants in Safeguard’s 401(k) plan. The committee, in its discretion, may replace this fund and add new funds.

The following table shows contributions and earnings for ~~2007~~2008 and account balances at December 31, ~~2007~~2008, for the named executive officers. There were no withdrawals or distributions by the named executive officers during ~~2007.~~2008.


	Registrant								Registrant
	Contributions in Last		Aggregate Earnings		Aggregate Withdrawals/		Aggregate Balance		Contributions in Last		Aggregate Earnings			Aggregate Withdrawals/		Aggregate Balance
	Fiscal Year		in Last Fiscal Year		Distributions		at Last Fiscal Year End		Fiscal Year		in Last Fiscal Year			Distributions		at Last Fiscal Year End
Name	($)(1)		($)(1)		($)		($)(2)(3)		($)(1)		($)(1)			($)		($)(2)(3)
Peter J. Boni		16,875		267		—		33,642		17,250		(16,070	)		—		35,380
James A. Datin										17,250		(16,070	)		—		35,380
Kevin L. Kemmerer										17,250		(22,622	)		—		47,952
Brian J. Sisko										17,250		—			—		17,250
Stephen T. Zarrilli										—		—			—		—
Raymond J. Land		—		—		—		—		—		—			—		—
James A. Datin		16,875		267		—		33,642
John A. Loftus		16,875		3,667		—		93,868
Brian J. Sisko		—		—		—		—
Steven J. Feder		16,529		272		—		33,301
Stephen T. Zarrilli		—		—		—		—


Change in Control	à	A change in control generally occurs when:

		• A person becomes the beneficial owner of securities having 50% or more of the combined voting power of our securities;

		• Less than a majority of our Board consists of continuing directors (which means a director who either is a member of the Board as of the effective date of the change in control or is nominated or appointed to serve as a director by a majority of the then continuing directors);

		• We are subject to a merger or other business combination transaction as a result of which holders of a majority of our equity securities do not own a majority of the equity securities of the surviving company;

		• We sell all or substantially all of our assets or are liquidated.

During 2007, Mr. Zarrilli was not covered under our health, welfare and other employee benefit plans and received no compensation upon his termination of service in 2007 other than amounts earned during his term of service under the terms of his consulting agreement with us.

Payments Made upon Involuntary Termination of Employment without Cause or for Good Reason

Messrs. Boni, Datin, Kemmerer, Sisko and Zarrilli will receive the following benefits upon involuntary termination of employment without cause or for good reason:

Messrs. Boni, Datin and ~~Datin:~~Kemmerer:

	o•		A lump sum payment equal to ~~12 months of~~ the executive’s then current annual base salary and the greater of the executive’s target bonus (not less than 100% of current base salary) for the year of termination or the average of the executive’s actual bonuses for the last three completed fiscal years;

	o•		All vested stock options will remain exercisable for 12 months; and

	o•		12 months’ continued coverage under our medical ~~health~~ and ~~life insurance~~dental plans.

Messrs. Sisko and Zarrilli:

	o•		A lump sum payment equal to 1.5 times the executive’s then current base salary and the executive’s earned prorated bonus for the year of termination (commencing in 2009 for Mr. Zarrilli) ~~and 1.5 times the executive’s then current base salary;~~;

	o•		All time-vested stock options will fully vest and remain exercisable for 36 months and vested ~~market-based~~performance-based stock options will remain exercisable for 12 months;

	o•		12 months’ continued coverage under our medical, ~~health~~dental and life insurance plans; and

	o•		Up to $20,000 for outplacement services or office space.

Payments Made upon a Change in Control or Involuntary Termination of Employment without Cause or for Good Reason in Connection with a Change in Control

Upon a change in control, the stock options held by Mr. Boni that have not otherwise vested will become fully vested. Our named executive officers will not be entitled to any other payments or benefits (except those that are

Messrs. Sisko and Zarrilli:

	o•		A lump sum payment equal to 1.5 times the executive’s then current base salary and the executive’s earned prorated bonus for the year of termination (commencing in 2009 for Mr. Zarrilli) ~~and 1.5 times the executive’s then current base salary;~~;

	o•		All time-vested stock options will fully vest and remain exercisable for 36 months and all ~~market-based~~performance-based stock options that have not otherwise vested will vest and remain exercisable for 24 months;

	o•		12 months’ continued coverage under our medical, health and life insurance plans; and

	o•		Up to $20,000 for outplacement services or office space.

Other Payments Made upon Termination of Employment

Regardless of the manner in which a named executive officer’s employment terminates, he also generally will receive payments and benefits that are provided on a non-discriminatory basis to our employees upon termination of employment, including the following:

Amounts earned during his term of employment;

~~Accrued~~Upon his death, disability or voluntary termination of employment, his accrued unused vacation pay;

Amounts contributed by us for the year of termination under our 401(k) plan or nonqualified deferred compensation plan (if he has completed the required hours of service, if any, and is an employee on the date as of which we make a contribution);

Distribution of accrued and vested plan balances under our 401(k) plan and nonqualified deferred compensation plan;

Reimbursement of eligible dental expenses for services incurred prior to termination;

Upon his death, disability or retirement on or after his 65th birthday, accelerated vesting of stock options subject to time-based vesting ~~and restricted stock awards~~ that have not otherwise vested and extension of the post-termination exercise period for all stock options from 90 days to 12 months; and

Upon his death or disability, accelerated vesting of restricted stock awards that have not otherwise vested; and

Upon his death or disability, payment of benefits under our other broad-based employee benefit programs, including short-term and long-term disability plans, life insurance program, accidental death and dismemberment plan and business travel insurance plan, as applicable.

The following table shows the potential incremental payments and benefits which the named executive officers would have been entitled to receive during ~~2007~~2008 upon termination of employment in each situation listed in the table below under their respective agreements and our broad-based employee benefit programs. The amounts shown do not include certain payments and benefits available generally to salaried employees upon termination of employment, such as distributions from our 401(k) and deferred compensation plans. The amounts shown in the table are based on an assumed termination as of December 31, ~~2007~~2008 and represent estimates of the maximum incremental amounts and benefits that would have been paid to each executive upon his termination which we have calculated: (i) by multiplying the ~~2007~~2008 annualized base salary for each named executive officer by the multiplier in

each scenario that is specified in each such executive’s agreement with us; (ii) for Messrs. Boni, Datin and ~~Datin,~~Kemmerer, by multiplying their respective ~~2007~~2008 target incentive awards by the multiplier in each scenario that is specified in their respective agreements with us; (iii) for Messrs. ~~Land, Loftus~~Sisko and ~~Sisko,~~Zarrilli, by assuming they would have been entitled to their respective ~~2007~~2008 annualized target incentive award for the full year; and (iv) by using our ~~2008~~2009 premium costs for calculating the value of the health and welfare benefits. ~~With the exception of~~ Mr. ~~Feder, whose employment was terminated~~Land has been excluded from this table because he received no severance benefits or payments in ~~August 2007, the~~connection with his voluntary resignation in May 2008. The actual amounts to be paid to each executive would depend on the time and circumstances of an executive’s separation from Safeguard. For Mr. Feder, the amounts included in the Summary Compensation Table under “All Other Compensation” and the amounts shown in the table below reflect the actual severance benefits that he received or will receive (with the exception of the medical and welfare benefits which are estimated based on our current premium costs).


					Life Insurance												Life Insurance
			Accrued		Proceeds or		Health and		Acceleration		Total				Accrued		Proceeds or		Health and		Acceleration		Total
	Salary and		Vacation		Disability		Welfare		of Equity		Termination		Salary and		Vacation		Disability		Welfare		of Equity		Termination
	Bonus		Pay		Income		Benefits		Awards		Benefits		Bonus		Pay		Income		Benefits		Awards		Benefits
Current	($)		($)		($)		($)		($)(1)		($)		($)		($)		($)		($)		($)(1)		($)

Peter J. Boni

• Normal Retirement (65+)		—		8,125		—		—		218,750		226,875		—		6,250		—		—		—		6,250
• Permanent disability		—		8,125		1,029,800		—		218,750		1,256,675		—		6,250		741,880		—		—		748,130
• Death		—		8,125		1,500,000		—		218,750		1,726,875		—		6,250		1,500,000		—		—		1,506,250
• Involuntary termination without cause or for good reason		1,300,000		8,125		—		51,830		—		1,359,955		1,300,000		—		—		11,910		—		1,311,910
• Change in control		—		—		—		—		1,341,597		1,341,597		—		—		—		—		—		—
• Change-in-control termination, involuntarily or for good reason		3,900,000		8,125		—		155,491		1,341,597		5,405,213		3,900,000		—		—		35,730		—		3,935,730


Raymond J. Land (2)

James A. Datin
• Normal Retirement (65+)		—		230		—		—		—		230		—		—		—		—		—		—
• Permanent disability		—		230		476,667		—		—		476,897		—		—		4,493,385		—		—		4,493,385
• Death		—		230		1,075,000		—		—		1,075,230		—		—		750,000		—		—		750,000
• Involuntary termination without cause or for good reason		682,500		230		—		59,554		—		742,284		780,000		—		—		15,940		—		795,940
• Change-in-control termination, involuntarily or for good reason		682,500		230		—		59,554		—		742,284		1,560,000		—		—		31,880		—		1,591,880


James A. Datin

Kevin L. Kemmerer
• Normal Retirement (65+)		—		4,875		—		—		52,500		57,375		—		3,750		—		—		—		3,750
• Permanent disability		—		4,875		4,727,450		—		52,500		4,784,825		—		3,750		3,515,363		—		—		3,519,113
• Death		—		4.875		1,140,000		—		52,500		1,197,375		—		3,750		750,000		—		—		753,750
• Involuntary termination without cause or for good reason		780,000		4,875		—		29,341		—		814,216		650,000		—		—		15,940		—		665,940
• Change-in-control termination, involuntarily or for good reason		1,560,000		4,875		—		58,683		309,151		1,932,709		1,300,000		—		—		31,880		—		1,331,880


John A. Loftus (2)

Brian J. Sisko
• Normal Retirement (65+)		—		—		—		—		51,392		51,392		—		3,923		—		—		—		3,923
• Permanent disability		—		—		4,452,500		—		51,392		4,503,892		—		3,923		3,494,010		—		—		3,497,933
• Death		—		—		1,140,000		—		51,392		1,191,392		—		3,923		750,000		—		—		753,923
• Involuntary termination without cause or for good reason		975,000		—		—		48,443		51,392		1,074,835		760,000		—		—		45,432		—		805,432
• Change-in-control termination, involuntarily or for good reason		975,000		—		—		48,443		313,389		1,336,832		760,000		—		—		45,432		—		805,432


Brian J. Sisko

Stephen T. Zarrilli
• Normal Retirement (65+)		—		4,250		—		—		—		4,250		—		3,923		—		—		—		3,923
• Permanent disability		—		4,250		3,698,067		—		—		3,702,317		—		3,923		3,605,700		—		—		3,609,623
• Death		—		4,250		1,090,000		—		—		1,094,250		—		3,923		750,000		—		—		753,923
• Involuntary termination without cause or for good reason		760,000		4,250		—		48,223		—		812,473		760,000		—		—		45,451		—		805,451
• Change-in-control termination, involuntarily or for good reason		760,000		4,250		—		48,223		—		812,473		760,000		—		—		45,451		—		805,451

Former

Steve J. Feder

• Termination for good reason		645,000		16,346		—		43,199		215,065		919,610

Relationships and Related Transactions with Management and Others

As part of our business, we ~~participate~~have in the past participated in the management of private equity funds. Robert E. Keith, Jr., Chairman of our Board, is the President and Chief Executive Officer of TL Ventures, the management company for TL Ventures III, TL Ventures IV, and TL Ventures V, and the Chairman of the management companies for EnerTech Capital Partners and EnerTech Capital Partners II. In December 2005, Safeguard sold substantially all of its interests in TL Ventures and EnerTech Capital Partners funds for approximately $24 million in cash with the buyers also assuming approximately $9 million of Safeguard’s remaining unfunded capital commitments to these funds. Safeguard retained certain limited rights and obligations related primarily to its former role as a general partner of some of the funds. Under certain circumstances, we may be required to return a portion or all the distributions we received as a general partner of a fund for further distribution to such fund’s limited partners (the “clawback”). The Company paid $3.0 million of its estimated clawback liabilities in 2008. Assuming for these purposes only that the funds were liquidated or dissolved on December 31, ~~2007~~2008 and the only distributions from the funds were equal to the carrying value of the funds on the December 31, ~~2007~~2008 financial statements, the maximum remaining clawback we would be required to return for our general partner interest is ~~$5.8~~$2.5 million.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and greater than 10% holders of our common stock to file with the SEC reports of ownership of our securities and changes in ownership of our securities. Based solely on our review of the copies of reports we have received and upon written representations from the reporting persons that no Form 5 reports were required to be filed by those persons, Safeguard believes there were no late filings by our directors and executive officers during ~~2007 other than one transaction reported late on a Form 5 by Michael J. Cody.~~2008. There were no known holders of greater than 10% of our common stock during ~~2007.~~2008.

OTHER MATTERS

Expenses of Solicitation

Safeguard will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. Upon request, we will reimburse brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy materials to our shareholders. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation.

Procedures for Submitting Shareholder Proposals

Proposals for Inclusion in the Proxy Statement.Under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, shareholders may present proper proposals for inclusion in Safeguard’s proxy statement for consideration at our next annual meeting of shareholders by submitting the proposals to Safeguard in a timely manner. To be included in our proxy statement for our ~~2009~~2010 annual meeting, shareholder proposals must be received by Safeguard no later than ~~February 10,~~December 15, 2009. Such proposals should be sent to:

Safeguard Scientifics, Inc.
Attention: Secretary
435 Devon Park Drive, Building 800
Wayne, PA 19087-1945

Additional Information

Safeguard’s annual report to shareholders for the year ended December 31, ~~2007,~~2008, including consolidated financial statements and the related notes thereto and other information with respect to Safeguard and our partner companies, ~~is being~~will be mailed, together with this proxy statement, on or about ~~June 10, 2008~~July 24, 2009, to shareholders of record as of the close of business on ~~June 2, 2008.~~July 20, 2009.

General

Our Internet website address included in this proxy statement is provided for the convenience of our shareholders. The information contained therein or connected thereto are not intended to be incorporated into this proxy statement. All references to our website address are intended to be inactive textual references only.

Safeguard is not aware of any other business to be presented at the annual meeting. If matters other than those described in this proxy statement should properly arise at the annual meeting, the proxies will use their discretion to vote on such matters.

BY ORDER OF THE BOARD OF DIRECTORS

Deirdre Blackburn
Secretary

~~June 4, 2008~~July 23, 2009

~~Annex 1~~EXHIBIT A

~~Form of Proposed Amendment to Second~~SAFEGUARD SCIENTIFICS, INC.
2004 EQUITY COMPENSATION PLAN

As Amended and Restated ~~Articles of Incorporation~~Effective July 13, 2009,
subject to Approval by the Company’s Stockholders

1.Purpose

The ~~first paragraph~~purpose of ~~Article 5~~^THthe Safeguard Scientifics, Inc. 2004 Equity Compensation Plan, as amended and restated (the “Plan”), is to provide (i) designated Company (as defined below) employees, (ii) certain advisors who perform services for the Company, and (iii) nonemployee members of the Company’s Board of Directors with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock units, stock appreciation rights, performance units, stock awards, dividend equivalents and other stock-based awards. The Company believes that the Plan will encourage the participants to contribute materially to the Company’s growth, thereby benefiting the Company’s stockholders, and will align the economic interests of the participants with those of the stockholders. The Plan was originally established by the Company’s Board of Directors effective April 6, 2004 and approved by the stockholders on June 11, 2004. The Plan was amended and restated effective October 21, 2008 to reflect the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) and to make certain other clarifying changes. Subject to approval by the stockholders of the Company, the Plan is hereby amended and restated to reflect an increase in ~~its entirety as follows:~~

5^TH ~~The Corporation shall be authorized to issue [*]~~the number of shares of ~~capital stock, which shall be divided into [*] shares~~Stock (as defined below) authorized for issuance hereunder, and to make clarifying changes and certain other changes.

2.Definitions

Whenever used in this Plan, the following terms will have the respective meanings set forth below:

(a) “Board”means the Company’s Board of ~~Common Stock, with a par value~~Directors as constituted from time to time.

(b) “Change of ~~ten cents ($.10) per share (the “Common Stock”), and 1,000,000 shares~~Control”means the first to occur of Preferred Stock, with a par value of ten cents ($.10) per share (the “Preferred Stock”), 150,000 of which are designated Series A Junior Participating Preferred Shares (the “Series A Preferred Shares”). Effective immediately upon the filingany of the ~~Articles~~following events:

(i) An acquisition by any individual, entity or group (within the meaning of ~~Amendment containing this Amendment with~~Section 13(d)(3) or 14(d)(2) of the ~~Pennsylvania Secretary~~Exchange Act) (a “Person”) of ~~State, every [*]~~beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding ~~shares of Common Stock shall without further action by this Corporation or the holder thereof be combined into and automatically become one share of Common Stock. The authorized~~ shares of Common Stock of the ~~Corporation~~Company (“Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (a “Control Purchase”); excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this definition, or (5) provided, however, that notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any Person acquires beneficial ownership of more than 20% of the Common Stock or the Outstanding Company Voting Securities as a result of the acquisition of Common Stock or Outstanding Company Voting Securities by the Company which reduces the amount of Common Stock or Outstanding Company Voting Securities; provided, that if after such acquisition by the Company such Person becomes the beneficial owner of additional Common Stock or Outstanding Company Voting Securities that increases the percentage of Common Stock or Outstanding Company Voting Securities beneficially owned by such Person, a Change of Control shall then occur; or

(ii) A change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board shall be ~~reduced proportionately~~hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this subsection (ii), that any individual who becomes a member of the Board subsequent to the ~~number~~Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of ~~shares set forth above in this Article 5~~^TH~~. No fractional share~~at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or whose membership on the Board was so approved by a board which itself consisted of a majority of directors elected by the Incumbent Board) shall be ~~issued~~considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in ~~connection with~~Rule 14a-11 of Regulation 14A promulgated under the ~~foregoing~~Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

(iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock ~~split. The Corporation shall pay to each shareholder who would otherwise be~~and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a ~~fractional share~~corporation which as a result of such ~~change~~transaction owns the ~~value~~Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such ~~fractional share based~~corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction, and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

(iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(v) Notwithstanding the foregoing, the Committee may modify the definition of Change of Control for a particular Grant as the Committee deems appropriate to comply with Code Section 409A.

(d) “Committee”means (i) with respect to Grants to Employees and Key Advisors, the Compensation Committee of the Board or its delegate or successor, or such other committee appointed by the Board to administer the Plan or its delegate or its successor, (ii) with respect to Grants made to Nonemployee Directors, the Board or its delegate, and (iii) with respect to Grants designated as “qualified performance-based compensation” under Code Section 162(m), a committee that consists of two or more persons appointed by the Board, all of whom shall be “outside directors” as defined under Code Section 162(m).

(e) “Company”means Safeguard Scientifics, Inc., any successor corporation, each corporation which is a member of a controlled group of corporations (within the meaning of Code Section 414(b)) of which the Company is a component member, any subsidiary at least 50% directly or indirectly owned by Safeguard Scientifics, Inc. (or any successor thereto)and any affiliate entity which, with the approval of the Committee, is deemed to constitute an entity controlled by Safeguard Scientifics, Inc.

(f) “Date of Grant”means the effective date of a Grant; provided, however, that no retroactive Grants will be made.

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(g) “Dividend Equivalent”means an amount determined by multiplying the number of shares of Stock or Stock Units subject to a Grant by the per-share cash dividend, or the per-share fair market value (as determined by the Committee) of any dividend in consideration other than cash, paid by the Company on its Stock on a dividend payment date, plus any interest earned on such amount.

(h)“Effective Date” means July 13, 2009.

(i) “Employee”means, unless otherwise determined by the Committee, an employee of the Company (including an officer or director who is also an employee) other than an individual (a) employed in a casual or temporary capacity (i.e., those hired for a specific job of limited duration), (b) whose terms of employment are governed by a collective bargaining agreement that does not provide for participation in this Plan, (c) characterized as a “leased employee” within the meaning of Code Section 414(d) who is a non-resident alien, or (d) classified by the Company as a “contractor” or “consultant,” no matter how characterized by the Internal Revenue Service, other governmental agency or a court; provided, however, that the Committee shall have the discretion to determine on a case by case basis whether and to what extent an employee of an affiliate shall be deemed an Employee. Any change of characterization of an individual by any court or government agency shall have no effect upon the classification of an individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.

(j) “Employed by, or providing service to, the Company” shall mean employment or service as an Employee of the Company, Key Advisor, or member of the Board (so that, for purposes of exercising Options and SARs and satisfying conditions with respect to Restricted Stock, Performance Units and Other Stock-Based Grants, a Participant shall not be considered to have terminated employment or service until the Participant ceases to be an Employee of the Company, Key Advisor, and member of the Board), unless the Committee determines otherwise. The Committee’s determination as to a Participant’s employment or other provision of services, termination of employment or cessation of the provision of services, leave of absence, or reemployment shall be conclusive on all persons unless determined to be incorrect.

(k)“Exchange Act”means the Securities Exchange Act of 1934, as amended.

(l) “Fair Market Value”means the average ~~closing price~~of the highest and lowest sales prices of a share of ~~the Corporation’s Common~~ Stock ~~as reported~~ on the New York Stock Exchange ~~Consolidated~~on the day on which Fair Market Value is being determined, as reported on the composite tape for transactions on the ~~10 trading days~~New York Stock Exchange. In the event that there are no Stock transactions on the New York Stock Exchange on such day, the Fair Market Value will be determined as of the immediately preceding day on which there were Stock transactions on that exchange. Notwithstanding the ~~effective date~~foregoing, in the case of ~~this Amendment (as adjusted~~a cashless exercise pursuant to Section 8(g), the Fair Market Value will be the actual sale price of the shares issued upon exercise of the Option.

(m) “Grant”means an Option, Stock Unit, Performance Unit, Stock Award, Dividend Equivalent, Stock Appreciation Right or Other Stock-Based Award granted under the Plan.

(n) “Grant Instrument”means the written agreement that sets forth the terms and conditions of a Grant, including all amendments thereto.

(o) “Incentive Stock Option”means a stock option that is intended to meet the requirements of Code Section 422, as described in Section 8.

(p)“Nonemployee Director”means a member of the Board who is not an employee of the Company.

(q) “Nonqualified Stock Option”means a stock option that is not intended to meet the requirements of Code Section 422, as described in Section 8.

(r) “Option”means an Incentive Stock Option or Nonqualified Stock Option to purchase Stock at the Option Price for ~~that reverse stock split).~~a specified period of time.


*		~~The Board of Directors shall be granted discretion to effect the reverse stock split at a ratio between 1-for-4 and 1-for-8.~~

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(s) “Option Price”means an amount per share of Stock purchasable under an Option, as designated by the Committee.

(t) “Other Stock-Based Award”means any Grant based on, measured by or payable in Stock (other than Grants described in Sections 7, 8, 9, 10, 11 and 12 of the Plan) as described in Section 13.

(u) “Participant”means an Employee, Nonemployee Director or Key Advisor designated by the Committee to participate in the Plan.

(v)“Performance Units”mean phantom units, as described in Section 10.

(w)“Plan”means this 2004 Equity Compensation Plan, as in effect from time to time.

(x) “Stock”means the common stock of Safeguard Scientifics, Inc. or such other securities of Safeguard Scientifics, Inc. as may be substituted for Stock pursuant to Section 5(c) or Section 18.

(y)“Stock Award”means an award of Stock, as described in Section 11.

(z) “Stock Unit”means an award of a phantom unit, representing one or more shares of Stock, as described in Section 9.

3.Administration

(a) Committee. The Plan shall be administered and interpreted by the Committee or its successor; ministerial functions may be performed by an administrative committee comprised of Company employees appointed by the Committee.

(b) Committee Authority.The Committee shall have the sole authority to (i) determine the individuals to whom Grants shall be made under the Plan, (ii) determine the type, size and terms and conditions of the Grants to be made to each such individual, (iii) determine the time when the Grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability, and (iv) amend the terms and conditions of any previously issued Grant, subject to the provisions of Section 21 below, and (v) deal with any other matters arising under the Plan.

(c) Committee Determinations.The Committee shall have full power and express discretionary authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

4.Grants

Grants under the Plan may consist of grants of Stock Appreciation Rights as described in Section 7, Incentive Stock Options and Nonqualified Stock Options as described in Section 8, Stock Units as described in Section 9, Performance Units as described in Section 10, Stock Awards as described in Section 11, Dividend Equivalents as described in Section 12 and Other Stock-Based Awards as described in Section 13. All Grants shall be made conditional upon the Participant’s acknowledgement, in writing or by acceptance of the Grant, that all decisions and determinations of the Committee shall be final and binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under such Grant. Grants under a particular Section of the Plan need not be uniform as among the Participants.

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5.Shares Subject to the Plan

(a) Shares Authorized.Subject to adjustment as described below, the total aggregate number of shares of Stock that may be issued under the Plan is the sum of the following (i) 7,000,000 new shares of Stock, plus (ii) that number of shares of Stock subject to outstanding Grants under the Plan as of July 13, 2009, plus (iii) that number of shares remaining available for issuance under the Plan but not subject to previously exercised, vested or paid Grants as of July 13, 2009. The shares may be authorized but unissued shares of Stock or reacquired shares of Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised or if any Stock Appreciation Rights, Stock Awards, Stock Units, Performance Units, Dividend Equivalents or Other Stock-Based Awards are forfeited or terminated, the shares subject to such Grants shall again be available for purposes of the Plan. Shares of Stock surrendered in payment of the Option Price of an Option or any withholding taxes, shall again be available for issuance or transfer under the Plan. To the extent that any Grants are paid in cash, and not in shares of Stock, any shares previously reserved for issuance or transfer under the Plan with respect to such Grants shall again be available for issuance or transfer under the Plan.

(b) Individual Limits. Grants under the Plan may be expressed in cash, in shares of Stock or in a combination of the two, as the Committee determines. The maximum aggregate number of shares of Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 1,500,000 shares, subject to adjustment as described below. A Participant may not accrue Dividend Equivalents during any calendar year in excess of $500,000. To the extent that Grants made under the Plan are expressed in dollar amounts, the maximum amount payable to any individual during any calendar year shall be $1,000,000.

(c) Adjustments.If there is any change in the number or kind of shares of Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Stock available for issuance under the Plan, the maximum number of shares of Stock with respect to which any individual may receive Grants in any year, the kind and number of shares covered by outstanding Grants, the kind and number of shares issued and to be issued under the Plan, and the price per share or the applicable market value of such Grants shall be equitably adjusted by the Committee, as the Committee deems appropriate, to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under such Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated by rounding any portion of a share down to the nearest whole number. In addition, the Committee shall have discretion to make the foregoing equitable adjustments in any circumstances in which an adjustment is not mandated by this subsection (c) or applicable law, including in the event of a Change of Control. Any adjustments to outstanding Grants shall be consistent with Code Sections 409A or 422, to the extent applicable. Any adjustments determined by the Committee shall be final, binding and conclusive.

6.Eligibility for Participation

(a) Eligible Persons. All Employees, including Employees who are officers or members of the Board, and all Nonemployee Directors shall be eligible to participate in the Plan. Advisors who perform services at the Company’s request (“Key Advisors”) shall be eligible to participate in the Plan.

(b) Selection of Participants. The Committee shall select the eligible parties to receive Grants and shall determine the number of shares of Stock subject to each Grant.

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7.Stock Appreciation Rights

(a) General Requirements. The Committee may grant Stock Appreciation Rights (“SARs”) to Employees, Nonemployee Directors and Key Advisors separately or in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. Unless the Committee determines otherwise, the base amount of each SAR shall be equal to the per share Option Price of the related Option or, if there is no related Option, the Fair Market Value of a share of Stock as of the Date of Grant of the SAR. In no event shall the base amount of the SAR be less than the Fair Market Value of a share of Stock as of the Date of Grant of the SAR.

(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified period shall not exceed the number of shares of Stock that the Participant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Stock purchased pursuant to such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Stock.

(c) Exercisability. A SAR shall be exercisable during the period specified by the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding SARs at any time for any reason. SARs may only be exercised while the Participant is employed by, or providing service to, the Company or during the applicable period after termination of employment. A tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable. No SAR may be exercised for cash by an officer or director of the Company or any of its subsidiaries who is subject to Section 16 of the Exchange Act, except in accordance with Rule 16b-3 under the Exchange Act.

(d) Value of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised, payable in cash, Stock or a combination thereof, as determined by the Committee. The stock appreciation for a SAR is the amount by which the Fair Market Value of the underlying Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described in Subsection (a).

(e) Form of Payment. The Committee shall determine whether the appreciation in a SAR shall be paid in the form of cash, shares of Stock, or a combination of the two, in such proportion as the Committee deems appropriate. For purposes of calculating the number of shares of Stock to be received, shares of Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Stock are to be received upon exercise of a SAR, cash shall be delivered in lieu of any fractional share.

8.Options

(a) General Requirements.The Committee may grant Options to Employees, Nonemployee Directors and Key Advisors upon such terms and conditions as the Committee deems appropriate under this Section 8.

(b) Number of Shares.The Committee shall determine the number of shares of Stock that will be subject to each Grant of Options.

(c)Type of Option and Price.

(i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options, or any combination of Incentive Stock Options and Nonqualified Stock Options. Incentive Stock Options may be granted only to Employees of the Company or its parents or subsidiaries, as defined in Code Section 424. Nonqualified Stock Options may be granted to Employees, Nonemployee Directors and Key Advisors. If an Option is not specifically designated as an Incentive Stock Option, then the Option shall be a Nonqualified Stock Option.

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(ii) The Option Price shall be determined by the Committee and may be equal to or greater than the Fair Market Value of a share of Stock on the Date of Grant; provided, however, that an Incentive Stock Option may not be granted to an Employee who, on the Date of Grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, as defined in Code Section 424, unless the Option Price per share is not less than 110% of the Fair Market Value of a share of Stock on the Date of Grant.

(d) Option Term. The Committee shall determine the term of each Option. The term of an Option shall not exceed ten years from the Date of Grant. However, an Incentive Stock Option that is granted to an Employee who, on the Date of Grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, as defined in Code Section 424, may not have a term that exceeds five years from the Date of Grant.

(e) Exercisability of Options.Options shall become exercisable in accordance with such terms and conditions, as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason. With the consent of the Committee, an Option may be exercised at a time prior to the time at which the Option would otherwise be fully exercisable, in which event the Participant shall receive shares of restricted stock (or be granted interests in restricted shares in a book entry system) on such terms and conditions as shall be determined by the Committee.

(f) Termination of Employment or Service. Except as provided in the Grant Instrument, or as otherwise may be determined by the Committee in its discretion, an Option may only be exercised while the Participant is employed by, or providing service to, the Company. The Committee shall specify in the Grant Instrument under what circumstances and during what time periods a Participant may exercise an Option after termination of employment or service.

(g) Exercise of Options. A Participant may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company or its designated agent. The Participant shall pay the Option Price and any withholding taxes for the Option:

(i) in cash,

(ii) with the approval of the Committee, by delivering shares of Stock owned by the Participant (including Stock acquired in connection with the exercise of an Option, subject to such restrictions as the Committee deems appropriate) and having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price, or by attestation (on a form prescribed by the Committee) to ownership of shares of Stock having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price,

(iii) by payment through a broker, provided the payment is made in accordance with procedures permitted by Regulation T of the Federal Reserve Board and such procedures do not violate applicable law, as determined by the Committee in its sole discretion, or

(iv) by such other method as the Committee may approve.

Shares of Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares pursuant to the Option, and any required withholding taxes, must be received by the time specified by the Committee depending on the type of payment being made.

(h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that if the aggregate Fair Market Value on the Date of Grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, as defined in Code Section 424, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary, as defined in Code Section 424.

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9.Stock Units

(a) General Requirements.The Committee may grant Stock Units to Employees, Nonemployee Directors and Key Advisors, upon such terms and conditions as the Committee deems appropriate under this Section 9. Each Stock Unit shall represent the right of the Participant to receive a share of Stock or an amount based on the value of a share of Stock. All Stock Units shall be credited to accounts on the Company’s records for purposes of the Plan.

(b) Terms of Stock Units.The Committee may grant Stock Units that are payable if specified performance goals or other conditions are met, or under other circumstances. Stock Units may be paid at the end of a specified period, or payment may be deferred to a date authorized by the Committee. The Committee shall determine the number of Stock Units to be granted, the requirements applicable to such Stock Units, and to the extent required by Code Section 409A, the specified payment events on which the Stock Units will be payable. Pursuant to the requirements of Section 12, the Committee may grant Dividend Equivalents with respect to Stock Units.

(c) Payment with respect to Stock Units.Payment with respect to Stock Units shall be made in cash, in Stock, or in a combination of the two, as determined by the Committee.

(d) Requirement of Employment, Service or Other Action.If a Participant ceases to be employed by, or providing service to the Company, or if other conditions established by the Committee are not met, the Participant’s unvested or contingent Stock Units shall be forfeited. The Committee may grant Stock Units contingent upon the Participant’s taking certain specified actions as the Committee sees fit, including, but not limited to, deferral of compensation by the Participant. The Committee may provide for complete or partial exceptions to the employment or service requirement as it deems appropriate.

10.Performance Units

(a) General Requirements.The Committee may grant Performance Units to an Employee or Nonemployee Director, upon such terms and conditions as the Committee deems appropriate under this Section 10. Each Performance Unit shall represent the right of the Participant to receive a share of Stock or an amount based on the value of a share of Stock, if specified performance goals are met. All Performance Units shall be credited to accounts on the Company’s records for purposes of the Plan.

(b) Terms of Performance Units.The Committee shall establish the performance goals and other conditions for payment of Performance Units. Performance Units may be paid at the end of a specified performance or other period, or payment may be deferred to a date authorized by the Committee. The Committee shall determine the number of Performance Units to be granted, the requirement applicable to such Performance Units, and to the extent required by Code Section 409A, the specified payment events on which the Performance Units will be paid. Pursuant to Section 12, the Committee may grant Dividend Equivalents with respect to Performance Units.

(c) Payment with respect to Performance Units. At the end of each performance period, the Committee shall determine to what extent the performance goals and other conditions of the Performance Units have been met and the amount, if any, to be paid with respect to the Performance Units. Payments with respect to Performance Units shall be made in cash, in Stock, or in a combination of the two, as determined by the Committee. Payment of Performance Units shall be made as set forth in the Grant Instrument, and, if applicable, shall be structured to comply with Code Section 409A.

(d) Requirement of Employment or Service.If a Participant ceases to be employed by, or providing service to the Company, or if other conditions established by the Committee are not met, the Participant’s Performance Units shall be forfeited. The Committee may provide for complete or partial exceptions to the employment or service requirement as it deems appropriate.

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11.Stock Awards

(a) General Requirements.The Committee may issue or transfer shares of Stock to an Employee or Nonemployee Director under a Stock Award, upon such terms and conditions as the Committee deems appropriate under this Section 11. Shares of Stock issued or transferred pursuant to Stock Awards may be issued or transferred for consideration or for no consideration (except as required by applicable law), and subject to restrictions or no restrictions, as determined by the Committee. The Committee may establish conditions under which restrictions on Stock Awards shall lapse over a period of time or according to such other criteria as the Committee deems appropriate, including restrictions based upon the achievement of specific performance goals. The period of time during which the Stock Award will remain subject to restrictions, if any, will be designated in the Grant Instrument as the “Restriction Period.”

(b) Number of Shares.The Committee shall determine the number of shares of Stock to be issued or transferred pursuant to a Stock Award and any restrictions applicable to such shares.

(c) Requirement of Employment or Service.If the Participant ceases to be employed by, or providing service to, the Company, or if other specified conditions are not met, the Stock Award shall terminate as to all shares covered by the Grant as to which the restrictions have not lapsed, and those shares of Stock must be immediately returned to the Company. The Committee may provide for complete or partial exceptions to the employment or service requirement as it deems appropriate.

(d) Restrictions on Transfer. During the Restriction Period, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of a Stock Award except upon death as described in Section 17. Each certificate for a share of Stock underlying a Stock Award shall contain a legend giving appropriate notice of the restrictions in the Grant. The Participant shall be entitled to have the legend removed from the stock certificate covering any shares as to which restrictions have lapsed. The Committee may determine that the Company will not issue certificates for shares of Stock underlying Stock Awards until all restrictions on such shares have lapsed, or that the Company will retain possession of certificates for shares of Stock underlying Stock Awards until all restrictions on such shares have lapsed. Alternatively, the Participant’s rights in the Stock Award shall be appropriately reflected in a book entry system maintained by the Company, and a stock certificate shall be issuable at the end of the Restriction Period.

(e) Right to Vote and to Receive Dividends. The Committee shall determine to what extent, and under what conditions, the Participant shall have the right to vote shares of Stock Awards and to receive any dividends or other distributions paid on such shares, during the Restriction Period. The Committee may determine that a Participant’s entitlement to dividends or other distributions with respect to a Stock Award shall be subject to achievement of performance goals or other conditions.

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12.Dividend Equivalents

The Committee may grant Dividend Equivalents in connection with Grants (other than Options and SARs) under the Plan, under such terms and conditions as the Committee deems appropriate under this Section 12. All Dividend Equivalents may be paid to Participants currently or may be deferred as determined by the Committee and set forth in the Grant Instrument. All Dividend Equivalents that are not paid currently shall be credited to accounts on the Company’s records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to Stock Units for the Participant. The Committee shall determine whether any deferred Dividend Equivalents will accrue interest. The Committee may provide that Dividend Equivalents shall be payable based on the achievement of specific performance goals. Dividend Equivalents may be payable in cash or shares of Stock or in a combination of two, as determined by the Committee.

13.Other Stock-Based Grants

The Committee may grant other awards that are based on, measured by or payable in Stock to Employees or Nonemployee Directors, on such terms and conditions as the Committee deems appropriate under this Section 13. Other Stock-Based Awards may be granted subject to achievement of performance goals or other conditions and may be payable in Stock or cash, or in a combination of the two, as determined by the Committee. The Committee may grant Dividend Equivalents with respect to Other Stock-Based Awards.

14.Qualified Performance-Based Compensation

(a) Designation as Qualified Performance-Based Compensation.The Committee may determine that Stock Units, Performance Units, Stock Awards, Dividend Equivalents or Other Stock-Based Awards granted to an Employee shall be considered “qualified performance-based compensation” under Code Section 162(m). The provisions of this Section 14 shall apply to any such Grants that are to be considered “qualified performance-based compensation” under Code Section 162(m). To the extent that Grants under this Plan designated as “qualified performance-based compensation under Code Section 162(m) are made, no such Grant may be made as an alternative to another Grant that is not designated as “qualified performance-based compensation” but instead must be separate and apart from all other Grants made.

(b) Performance Goals.When Grants that are to be considered “qualified performance-based compensation” are granted, the Committee shall establish in writing:

(i) the objective performance goals that must be met,

(ii) the period during which performance will be measured,

(iii) the maximum amounts that may be paid if the performance goals are met, and

(iv) any other conditions that the Committee deems appropriate and consistent with the Plan and the requirements of Code Section 162 for “qualified performance-based compensation.” The performance goals shall satisfy the requirements for “qualified performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the performance goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is payable upon achievement of the designated performance goals, but the Committee may reduce the amount of compensation that is payable upon achievement of the designated performance goals.

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(c) Criteria Used for Objective Performance Goals. In setting the performance goals for Grants designated as “qualified performance-based compensation” pursuant to this Section 14, the Committee shall use objectively determinable performance goals based on one or more of the following objective criteria, either in absolute terms or in comparison to publicly available industry standards or indices: earnings, revenue, operating margins and statistics, operating or net cash flows, financial return and leverage ratios, total stockholder returns, market share, or strategic business criteria consisting of one or more penetration goals, geographic business expansion goals, cost targets, customer satisfaction goals, product development goals, goals relating to acquisitions or divestitures, or any other objective measure derived from any of the foregoing criteria. In addition, in setting the performance goals for Grants not designated as “qualified performance-based compensation” for purposes of Code Section 162(m), the Committee may use such other goals as are developed in the Company’s operating plan for the performance period. The performance goals may relate to the Participant’s business unit or the performance of the Company as a whole, or any combination of the foregoing. Performance goals need not be uniform as among Participants.

(d) Timing of Establishment of Goals.The Committee shall establish the performance goals in writing either before the beginning of the performance period or during a period ending no later than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on which 25% of the performance period has been completed, or such other date as may be required or permitted under applicable regulations under Code Section 162(m).

(e) Announcement of Results. The Committee shall certify and announce the results for the performance period to all Participants after the Company announces the Company’s financial results for the performance period. If and to the extent that the Committee does not certify that the performance goals have been met, the applicable Grants for the performance period shall be forfeited or shall not be paid as applicable.

(f) Death, Disability or Other Circumstances.The Committee may provide that Grants shall be payable or restrictions shall lapse, in whole or in part, in the event of the Participant’s death or disability during the performance period, a Change of Control or under other circumstances consistent with the Treasury regulations and rulings under Code Section 162(m).

15.Deferrals

The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to the Participant in connection with any Grant. If any such deferral election is permitted or required, the Committee shall establish rules and procedures for such deferrals as it shall determine in its sole discretion, consistent with the applicable requirements of Code Section 409A.

16.Withholding of Taxes

(a) Required Withholding. All Grants under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company may require that the Participant or other person receiving or exercising Grants pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to such Grants, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Grants.

(b) Share Withholding. At the Company’s election, or if the Committee so permits, with respect to a Participant, the Company’s tax withholding obligation with respect to Grants paid in Stock may be satisfied by having shares withheld, at the time such Grants become taxable, up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities, provided, however, that at the Company’s sole discretion, a Participant may be permitted to tender other shares of Stock to the Company to supplement such withholding, but only if such action is not in violation of applicable law and does not result in materially disadvantageous tax, accounting or financial results to the Company. If the Committee permits a Participant to elect share withholding, the Participant’s election must be in a form and manner prescribed by the Committee and may be subject to the prior approval of the Committee.

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17.Transferability of Options

The transferability of Options granted under the Plan shall be governed by the following provisions:

(a) Incentive Stock Options. During the lifetime of the Participant, Incentive Stock Options shall be exercisable only by the Participant and shall not be assignable or transferable other than by will or the laws of inheritance following the Participant’s death.

(b) Nonqualified Stock Options — Limited Transferability. Except as otherwise specifically determined by the Committee, Nonqualified Stock Options shall be subject to the same limitation on transfer as Incentive Stock Options, except that the Committee may structure one or more Nonqualified Stock Options so that the Option may be assigned in whole or in part during the Participant’s lifetime to one or more family members of the Participant or to a trust established exclusively for one or more such family members, consistent with the applicable securities laws. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the Option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Committee may deem appropriate.

(c) Beneficiary Designation. Notwithstanding the foregoing, the Participant may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding Options, and those Options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding those Options. Such beneficiary or beneficiaries shall take the transferred Options subject to all the terms and conditions of the applicable agreement evidencing each such transferred Option, including (without limitation) the limited time period during which the Option may be exercised following the Participant’s death.

18.Consequences of a Change of Control

(a) Notice and Acceleration.Upon a Change of Control, unless the Committee determines otherwise, (i) the Company shall provide each Participant who holds outstanding Grants with written notice of the Change of Control, (ii) all outstanding Options and SARs shall automatically accelerate and become fully exercisable, (iii) the restrictions and conditions on all outstanding Stock Awards shall immediately lapse, (iv) all Stock Units and Performance Units shall become payable in cash or in Stock in an amount not less than the Fair Market Value of the Stock or the Stock to which the units relate, as determined by the Committee, and (v) Dividend Equivalents and Other Stock-Based Awards shall become payable in full in cash or in Stock, in amounts determined by the Committee.

(b) Assumption of Grants.Upon a Change of Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Options and SARs that are not exercised shall be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation), and other Grants that remain outstanding shall be converted to similar grants of the surviving corporation (or a parent or subsidiary of the surviving corporation).

(c) Other Alternatives.Notwithstanding the foregoing, subject to subsection (d) below, in the event of a Change of Control, the Committee may take any of the following actions with respect to any or all outstanding Grants, without the consent of any Participant: (i) the Committee may require that Participants surrender their outstanding Options or SARs in exchange for a payment by the Company, in cash or Stock as determined by the Committee, in an amount equal to the amount by which the then aggregate Fair Market Value subject to the Participant’s unexercised Options or SARs exceeds the aggregate Option Price or base amount, as applicable (if any), or (ii) after giving Participants an opportunity to exercise their outstanding Options or SARs, the Committee may terminate any or all unexercised Options or SARs, at such time as the Committee deems appropriate, and (iii) with respect to Participants holding Stock Units, Performance Units, Dividend Equivalents or Other Stock-Based Awards, the Committee may determine that such Participants shall receive a payment in settlement of such Stock Units, Performance Units, Dividend Equivalents or other Stock-Based Awards, in such amount and form as may be determined by the Committee; provided, that the payment amount shall deliver an equivalent value for such settled award. Such surrender, termination or settlement shall take place as of the date of the Change of Control or such other date as the Committee may specify.

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(d) Committee. The Committee making the determinations under this Section 18 following a Change of Control must be comprised of the same members as those members of the Committee immediately before the Change of Control. If the Committee members do not meet this requirement, the automatic provisions of subsections (a) and (b) shall apply, and the Committee shall not have discretion to vary them.

19.Other Transactions

The Committee may provide in a Grant Instrument that a sale or other transaction involving a subsidiary or other business unit of the Company shall be considered a Change of Control for purposes of a Grant or the Committee may establish other provisions that shall be applicable in the event of a specified transaction.

20.Requirements for Issuance or Transfer of Shares

No Stock shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance of such Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant made to any Participant hereunder on such Participant’s undertaking in writing to comply with such restrictions on the Participant’s subsequent disposition of such shares of Stock as the Committee shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Stock issued or transferred under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.

21.Amendment and Termination of the Plan

(a) Amendment.The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without approval of the stockholders of the Company if such approval is required in order to comply with the Code or applicable laws, or to comply with applicable stock exchange requirements. No amendment or termination of this Plan shall, without the consent of the Participant, impair any rights or obligations under any Grant previously made to the Participant, unless such right has been reserved in the Plan or the Grant Instrument, or except as provided in Section 23(b) below. Notwithstanding the preceding, the Board may amend the Plan at any time, without the consent of the Participant, to comply with applicable legal requirements or to ensure the various Grants awarded under this Plan maintain the designations given to them in the Plan, including, but not limited to, changes necessary to ensure an Option continues to be an Incentive Stock Option or to ensure qualified performance-based compensation continues to “qualified performance-based compensation” under Code Section 162(m).

(b) No Repricing without Stockholder Approval. Notwithstanding anything in the Plan to the contrary, the Committee may not reprice Options or SARs, nor may the Board amend the Plan to permit repricing of Options or SARs, unless the stockholders of the Company provide prior approval for such repricing. The term “repricing” shall have the meaning given that term in Section 303A(8) of the New York Stock Exchange Listed Company Manual, as in effect from time to time, or any other substantially equivalent successor rule.

(c) Stockholder Approval for “Qualified Performance-Based Compensation.” If Grants denominated as “qualified performance-based compensation” are awarded under Section 14 above, the Plan must be reapproved by the Company’s stockholders no later than the first stockholders’ meeting that occurs in the fifth year following the year in which the stockholders previously approved the provisions of Section 14, if additional Grants are to be made under Section 14 and if required by Code Section 162(m) or the regulations thereunder. Any such reapproval shall not affect outstanding Grants made within the five-year period following the year in which the previous approval was obtained.

(d) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its Effective Date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the stockholders. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant.

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22.Effective Date of the Plan

The Plan, as amended and restated herein, shall be effective on July 13, 2009, subject to the approval of the Company’s stockholders within 12 months of the Effective Date.

23.Miscellaneous

(a) Grants in Connection with Corporate Transactions and Otherwise.Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Grants to employees thereof who become Employees, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company in substitution for a grant made by such corporation. The terms and conditions of the substitute Grants may vary from the terms and conditions of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute Grants.

(b) Compliance with Law. The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of Code Section 422 and that, to the extent applicable, all other Grants comply with the requirements of Code Section 409A. To the extent that any legal requirement of Code Sections 422 or 409A as set forth in the Plan ceases to be required under Code Sections 422 or 409A, that Plan provision shall cease to apply. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that the Plan and applicable Grants comply with the applicable provisions of Code Section 162(m) . To the extent that any legal requirement of Section 16 of the Exchange Act or Code Section 162(m) as set forth in the Plan ceases to be required under Section 16 of the Exchange Act or Code Section 162(m), that Plan provision shall cease to apply. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation without a Participant’s consent. The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree to limit its authority under this Section.

(c) Code Section 409A. The Plan is intended to comply with the applicable requirements of Code Section 409A and the regulations promulgated thereunder, to the extent applicable, and shall be administered in accordance with Code Section 409A to the extent Code Section 409A is applicable to the Plan or any Grant hereunder. Each Grant shall be subject to such terms as the Committee determines and shall be construed and administered such that the Grant either (i) qualifies for an exemption from the requirements of Code Section 409A, or (ii) satisfies such requirements. Grants of Performance Units, Stock Units, and similar Other Stock-Based Awards shall be structured in a manner consistent with the requirements of Code Section 409A and distributions shall only be made in a manner and upon an event permitted under Code Section 409A and, to the extent required under Code Section 409A, payments to a Participant who is a “specified employee” (within the meaning of such term under Code Section 40A) upon his or her separation from service shall be subject to a six-month delay and shall be paid within 15 days after the end of the six-month period following separation from service. All payments to be made upon a termination of employment or service shall only be made upon a “separation from service” under Code Section 409A. Except as permitted by Code Section 409A, in no event shall a Participant, directly or indirectly, designate the calendar year in which the distribution is made.

(d) Effect of Revisions to Accounting Standards or Applicable Law. In the event of revisions to accounting standards applicable to the Company or to applicable law, which revisions are viewed by the Committee as resulting in a material detriment to the Company, the Committee shall have the discretion to modify any Grant, Grant Instrument or related right or document issued under this Plan but only to the extent such modification does not result in a material detriment to the Participant.

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(e) Enforceability.The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

(f) Grants to Non-Exempt Employees. Options and SARs granted to persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the Date of Grant (except that Options and SARs may become exercisable, as determined by the Committee upon the Participant’s death, disability or retirement, or upon a Change of Control or other circumstances permitted by the applicable regulations).

(g) Funding of the Plan; Limitation on Rights. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company and any Participant or any other person. No Participant or any other person shall under any circumstances acquire any property interest in any specified assets of the Company. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.

(h) Rights of Participants. Nothing in this Plan shall entitle any Employee, Nonemployee Director or other person to any claim or right to receive a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employment or service of the Company.

(i) No Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Grant. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

(j) Employees Subject to Taxation Outside the United States. With respect to Participants who are subject to taxation in countries other than the United States, the Committee may make Grants on such terms and conditions as the Committee deems appropriate to comply with the laws of the applicable countries, and the Committee may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.

(k) Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan shall be governed and construed by and determined in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the conflict of laws provisions thereof.

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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.

Internet and telephone voting are available through 11:59 PM Eastern Time the day prior to the shareholder meeting date.

INTERNET
http://www.proxyvoting.com/sfe

Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.

TELEPHONE
1-866-540-5760

Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.

If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.

To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.

Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.

55083

6FOLD AND DETACH HERE6

UNLESS OTHERWISE INSTRUCTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.


	~~PROXY~~	Please mark your votes as indicated in this example		x

~~THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS~~The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2 and 3.

~~No matter how many shares you hold, we consider your vote important and encourage you to vote as soon as possible.~~ ~~When you sign and return this proxy card, you~~

~~• appoint Brian J. Sisko and Deirdre Blackburn (or any substitutes they may appoint), as proxies to vote your shares, as you have~~
~~instructed, at the annual meeting on July 23, 2008, and at any adjournments of that meeting;~~

~~• authorize the proxies to vote, in their discretion, upon any other business properly presented at the meeting; and~~

~~• revoke any previous proxies you may have signed.~~


	IF YOU DO NOT INDICATE HOW YOU WISH TO VOTE, THE PROXIES WILL VOTE (1) FOR ALL NOMINEES TO THE BOARD OF DIRECTORS; (2) FOR THE PROPOSAL TO AMEND THE SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT AN EXCHANGE RATIO OF NOT LESS THAN 1-FOR-4 AND NOT MORE THAN 1-FOR-8 AND AUTHORIZE THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO IMPLEMENT THE REVERSE STOCK SPLIT WITHIN THIS RANGE AT ANY TIME PRIOR TO OUR 2009 ANNUAL MEETING OF SHAREHOLDERS BY FILING AN AMENDMENT TO OUR SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION; (3) FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2008; AND (4) AS THEY MAY DETERMINE, IN THEIR DISCRETION, WITH REGARD TO ANY OTHER MATTER PROPERLY PRESENTED AT THE MEETING.


	~~(Continued and to be marked, dated and signed, on the other side)~~

~~Address Change/Comments~~ ~~(Mark the corresponding box on the reverse side)~~

5~~FOLD AND DETACH HERE~~5

~~You can now access your Safeguard Scientifics, Inc. account online~~
~~via Investor ServiceDirect~~^® ~~(ISD).~~

~~BNY Mellon Shareowner Services, Transfer Agent for Safeguard Scientifics, Inc., now makes it easy and convenient~~
~~for you to access current information on your shareholder account.~~


	•	~~View account status~~	•	~~Establish/change your PIN~~FOR ALL		WITHHELD FROM
	•	~~View certificate history~~	•	~~Access stock transfer forms and information~~
	•	~~Make address changes~~			NOMINEES		ALL NOMINEES	*EXCEPTIONS

1.		ELECTION OF DIRECTORS- Nominees:	o		o		o

~~Visit BNY Mellon Shareowner Services on~~

(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the ~~web at www.bnymelloninvestor.com/shareowner/isd.~~

~~For technical assistance, please call BNY Mellon Shareowner Services at 1-877-978-7778~~
~~between 9:00 a.m.~~“Exceptions” box above and ~~7:00 p.m. Monday-Friday Eastern Time.~~write the name of the nominee(s) in the space provided below.)

o		Preliminary Proxy Statement
o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12


(1)		Each director and named executive officer has the sole power to vote and to dispose of the shares (other than shares held jointly with an individual’s spouse) except 900 shares held by Mr. Keith’s spouse, as to which Mr. Keith disclaims beneficial ~~ownership, and 3,125 shares held by Mr. Feder’s spouse.~~ownership. An * indicates ownership of less than 1% of the outstanding shares.

(2)		The shares in this column represent deferred stock units that have been credited to each individual. The deferred stock units, which may not be voted or transferred, are payable, on a one-for-one basis, in shares of Safeguard common stock following an individual’s termination of service on the Safeguard Board. See “Corporate Governance and Board ~~Matters—~~Matters — Board Compensation.”

(3)		As reflected in Schedule 13G filed with the Securities and Exchange Commission, Dimensional Fund Advisors LP (“Dimensional”) is a registered investment advisor which furnishes investment advice to four investment companies and serves as investment manager to certain other commingled group trusts and separate accounts (the “Funds”). In its role, Dimensional possesses investment and/or voting power over the securities held by the Funds and may be deemed to have beneficial ownership of such shares. Dimensional disclaims beneficial ownership of such shares.

(4)		~~Messrs.~~As reflected in Schedule 13G filed with the Securities and Exchange Commission, these securities are owned by various individual and institutional investors for which T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

(5)		Mr. Land ~~and Loftus~~ voluntarily resigned as a Safeguard ~~employees~~employee in May 2008.

~~(5)~~(6)		Excludes Mr. ~~Feder,~~Land, who resigned ~~in August 2007, and Messrs. Land and Loftus, both of whom resigned in May 2008; includes Kevin Kemmerer, who became an executive officer~~ in May 2008.

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:

o		Fee paid previously with preliminary materials.

o		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:


		Phone:		610-293-0600
		Toll-Free:		877-506-7371
		Fax:		610-293-0601


(1)		Ms. Dobson deferred payment of 25%, and Messrs. Keith, McClelland and ~~McClelland~~Messman each deferred payment of 100%, of Directors’ Fees they earned for services provided during ~~2007.~~2008. Ms. Dobson ~~Mr.~~and Messrs. Keith, McClelland and ~~Mr. McClelland~~Messman each received deferred stock units in lieu of Directors’ Fees that they deferred and matching deferred stock units equal to 25% of the Directors’ Fees that they deferred. Directors who defer fees and receive deferred stock units are essentially investing in common stock equivalents that are initially valued based on the current market value of our common stock on the date of issuance. As a result, the value of their deferred stock units fluctuates with the market value of our common stock. Includes $2,500 and $19,500 paid to Mr. Cody and Ms. Dobson, respectively, for attending meetings as Safeguard’s designated member on the board of directors of two Safeguard partner companies.

(2)		These amounts do not represent compensation actually received. Rather, these amounts represent the aggregate expense we recognized for financial statement reporting purposes for the fiscal year ended December 31, ~~2007~~2008 for ~~matching~~the deferred stock units awarded during and prior to ~~2007,~~2008, in accordance with Statement of Financial Accounting Standards No. 123 (revised), which we refer to as “FAS 123(R).” In accordance with SEC rules, the amounts shown exclude the effect of estimated forfeitures related to service-based vesting conditions. ~~The~~Other than for deferred stock units which are received in lieu of Directors’ Fees that have been deferred, the fair value of the ~~matching~~ deferred stock units is determined by multiplying the number of shares underlying the ~~matching~~ deferred stock units by the average of the high and low trading prices of Safeguard’s common stock, as reported on the NYSE ~~consolidated~~composite tape, on the grant date. The grant date fair values of the ~~matching~~ deferred stock units issued toduring 2008 were as follows: Messrs. Cody, Lietz, MacKenzie, Poduska, Roberts and Rosenthal — $14,875 each; Ms. Dobson ~~and Messrs.~~— $19,845; Mr. Keith ~~and~~— $34,249; Mr. McClelland ~~during 2007 were $3,522, $16,999 and $12,687, respectively.~~— $40,750; Mr. Messman — $27,313. A portion of the matching deferred stock units issued during 2008 to ~~Mr.~~Ms. Dobson and Messrs. Keith ~~during 2007~~and McClelland related to fees deferred by ~~him~~them that were earned during the fourth quarter of ~~2006. These were the only matching deferred stock units issued to directors during~~ 2007. For a discussion of valuation assumptions, see footnote 2 to the Summary Compensation Table under the heading “Executive Compensation.”


	Deferred
Name	Stock Units		Stock Options

Michael J. Cody		—		100,000
Julie A. Dobson		6,554		122,500
Robert E. Keith, Jr.		154,462		229,500
Andrew E. Lietz		—		155,000
George MacKenzie		—		144,500
George D. McClelland		23,806		100,000
Jack L. Messman		20,654		154,500
John W. Poduska, Sr.		—		154,500
John J. Roberts		26,779		155,000
Robert J. Rosenthal (8)		—		50,000

•		increase the number of shares of Safeguard common stock authorized for issuance under the 2004 Plan by 7,000,000 shares, from 6,000,000 to 13,000,000 shares;

•		with respect to the number of shares of Safeguard common stock subject to each grant under the 2004 Plan, provide that in the event of an adjustment to the number or kind of shares outstanding by reason of a stock dividend, spinoff, recapitalization, merger, reorganization, consolidation, combination or exchange of shares, reclassification or change in par value, or by reason of any other extraordinary or unusual event affecting outstanding Safeguard common stock as a class without the receipt of consideration, any fractional shares resulting from such adjustment shall be eliminated by rounding any portion of a share down to the nearest whole number;

•		prohibit granting dividend equivalents in connection with stock options or stock appreciation rights;

•		clarify that incentive stock options shall only be exercisable by the participant during the participant’s lifetime and shall not be assignable or transferable other than by will or the laws of inheritance after the participant’s death;

•		clarify that nonqualified stock options may be assigned in whole or in part during a participant’s lifetime only to one or more family members of the participant or to a trust or other entity established exclusively for one or more of such family members;

•		prohibit repricing of stock appreciation rights unless the shareholders approve the repricing; and

•		make other clarifying changes and updates.


Proposed Reverse Stock Split	Percentage Reduction			Shares to be Outstanding

1-for-4		75	%		30,383,890
1-for-5		80	%		24,307,112
1-for-6		83	%		20,255,927
1-for-7		86	%		17,362,223
1-for-8		88	%		15,191,945


(1)		Audit fees include the aggregate fees for professional services rendered in connection with the audit of the consolidated financial statements included in our Annual Report on Form 10-K, the review of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, consents and other services related to SEC and other regulatory filings, and KPMG’s assurance services provided in connection with the assessment and testing of internal controls over financial reporting pursuant to Section 404 of the Sarbanes Oxley Act of 2002.

(2)		Audit-related fees include the aggregate fees billed by KPMG principally for audits of financial statements of certain employee benefit plans, statutory audits of non-U.S. subsidiaries and officer expense review.

(3)		Tax fees include the aggregate fees billed by KPMG for tax consultation and tax compliance services.


Name	2006 Base Salary		2007 Base Salary

Peter J. Boni	$	600,000	$	650,000
James A. Datin	$	375,000	$	390,000
John A. Loftus	$	275,000	$	390,000
Steven J. Feder	$	325,000	$	340,000


(1)		Mr. Kemmerer was not a named executive officer at the beginning of 2008. Mr. Kemmerer’s target variable incentive for 2008 was set at $309,583, after adjusting for Mr. Kemmerer’s promotion in September 2008 and the related increases in his compensation, both variable and fixed.

(2)		Payments under the 2008 MIP were payable in cash and/or equity.

(3)		Neither Mr. Loftus nor Mr. Land were employees of the Company as of year-end 2008 and, therefore, were not eligible for any payment under the 2008 MIP.


	Target Incentive		Payout Level
Corporate Objectives	(in points)		(in points)		Factors Affecting Determination

Capital Deployment		24		22	Deployment of $57.4 million of newly committed capital in 12 transactions — $47.4 million relating to acquisitions of new partner companies (Advanced BioHealing, Beyond.com, Avid Radiopharmaceuticals, Cellumen, Bridgevine, Veralyte, and a stealth pre-launch technology company); the balance related to capital funded to existing partner companies based on reserves established at the time of acquisition. No credit was given for capital deployment to support partner companies outside of amounts properly reserved for follow-on funding or otherwise earmarked for specific merger and acquisition transactions.

Capital Generation		24		6	Generation of $30.7 million of capital through exit transactions.

Partner Company Performance		16		8	Achievement by approximately one-half of our partner companies of explicit milestones or specified levels of revenue or profitability.

Overall Corporate Performance		16		16	Overall corporate performance, including execution of our business strategy; deal sourcing and pipeline development; organizational staffing and development; facilitating partner company milestone achievements; building value in our partner companies through strategy, management and performance; and management of core corporate functions, including performance of our investor relations and marketing programs, financial reporting and other compliance responsibilities, and management of our corporate operating budget. The Committee specifically noted the following significant 2007 achievements in its review:


(1)		In percentage terms versus targeted incentive amount.

(2)		50% of total payment for named executive officers; 75% of total payment for other executives.

(3)		Issued in lieu of cash for remaining portion of total payment. Includes principal shares as well as additional shares issued as described above.

(4)		Mr. Zarrilli is one of our named executive officers and our executive group, but he was not eligible for our 2008 MIP based on the terms of his employment agreement with the Company.


	2007			2006			2005			2004			2003
																2008			2007			2006			2005			2004
Service-Based Awards:
Dividend yield		0	%		0	%		0	%		0	%		0	%		0	%		0	%		0	%		0	%		0	%
Expected volatility		61	%		69	%		84	%		86	%		95	%		52	%		61	%		69	%		84	%		86	%
Average expected option life	5 years			5 years			5 years			5 years			5 years			5 years			5 years			5 years			5 years			5 years
Risk-free interest rate		4.5	%		4.7	%		4.4	%		3.6	%		3.0	%		3.1	%		4.5	%		4.7	%		4.4	%		3.6	%

Market-Based Awards:
Dividend yield		0	%		0	%		0	%		N/A			N/A			0	%		0	%		0	%		0	%		N/A
Expected volatility		55	%		62	%		67	%		N/A			N/A			59	%		55	%		62	%		67	%		N/A
Average expected option life	5 - 7 years			5 - 7 years			5 - 7 years				N/A			N/A		5 - 7 years			5 - 7 years			5 - 7 years			5 - 7 years				N/A
Risk-free interest rate		5.0	%		4.8	%		4.3	%		N/A			N/A			3.4	%		5.0	%		4.8	%		4.3	%		N/A

Performance-Based Awards:
Dividend yield																	0	%		N/A			N/A			N/A			N/A
Expected volatility																	50	%		N/A			N/A			N/A			N/A
Average expected option life																4.4 years				N/A			N/A			N/A			N/A
Risk-free interest rate																	3.0	%		N/A			N/A			N/A			N/A



		For information regarding the grant date fair value of awards granted in ~~2007,~~2008, see “Grants of Plan-Based Awards — ~~2007”~~2008” below.

(3)		For ~~2007,~~2008, the amounts reported in this column represent the cash payments made in ~~April 2008~~March 2009 for awards earned under our ~~2007 Management Incentive Plan, which is~~2008 MIP. As described in detail under “Compensation Discussion and Analysis — ~~2007~~2008 Compensation ~~Program.~~Program,” the Compensation Committee determined that amounts earned under the 2008 MIP by our named executive officers would be paid 50% in cash and 50% in restricted stock. The restricted stock, which was issued in February 2009, will be reported in the tables that will be included in our 2010 proxy statement.

(4)		For ~~2007,~~2008, Messrs. Boni, Datin and Kemmerer realized a notional loss of $16,070, $16,070 and $22,622, respectively, in the amounts ~~reported in this column represent~~credited to them under the ~~earnings on account balances under our nonqualified deferred compensation plan;~~Executive Deferred Compensation Plan; these ~~amounts also~~losses are reported below under “Nonqualified Deferred Compensation — ~~2007.~~2008.”

(5)		For ~~2007,~~2008, All Other Compensation included the following amounts:


	Perquisites		Nonqualified				Group Life						Nonqualified Deferred		Life		Group Life
	and Personal		Deferred		Life Insurance		Insurance		Severance		Perquisites		Compensation Plan or 401(k)		Insurance		Insurance
Name	Benefits		Compensation Plan		Premiums		Imputed Income		Benefits		and Personal Benefits		Matching Contribution		Premiums		Imputed Income

Peter J. Boni	$	65,101	$	16,875	$	30,509	$	3,564		—	$	23,000	$	17,250	$	30,509	$	3,564
James A. Datin												22,169		17,250		6,930		612
Kevin L. Kemmerer												22,881		17,250		4,640		310
Brian J. Sisko												22,917		17,250		7,420		522
Stephen T. Zarrilli												—		9,246		4,455		305
Raymond J. Land		6,956		16,875		7,265		1,271		—		13,386		—		7,265		908
James A. Datin		23,000		16,875		6,930		636		—
John A. Loftus		19,383		16,875		6,032		629		—
Brian J. Sisko		4,187		—		1,855		196		—
Steven J. Feder		19,327		16,529		4,465		231	$	660,000


		~~The~~For Messrs. Boni, Datin, Kemmerer, Sisko and Land, the perquisites and personal benefits include a $10,000 car allowance (prorated for individuals employed for less than the full year), an $8,000 non-accountable annual expense allowance, ~~(for Messrs. Boni, Datin, Loftus and Feder),~~ and reimbursement of up to $5,000 for medical, vision or dental expenses not covered under our other benefit plans. ~~The amount reported for Mr. Boni also includes $25,425 for reimbursement of relocation expenses and $16,676 for reimbursement of tax obligations to respect to such relocation reimbursement.~~ Our named executive officers also have occasional personal use of tickets to various sporting events at no incremental cost to us and are eligible to receive matching charitable contributions under our program, which is available to all employees, subject to a maximum of ~~$1,000~~$1,500 in matching contributions for each individual for each calendar year. The severance benefits reported for Mr. Feder represent the following lump sum payments that he received under his agreements with us dated November 17, 2004 and August 16, 2007: $510,000, representing one and one-half times his salary; $135,000, representing an amount equal to his pro rata 2007 MIP payout as of September 30, 2007; and $15,000 for outplacement fees. For further information, see “Compensation Discussion and Analysis—Severance and Change-in-Control Arrangements.”

(6)		~~Messrs. Land and Loftus voluntarily resigned as~~Mr. Kemmerer became an executive officer of Safeguard ~~employees~~ in ~~May~~April 2008.

(7)		~~Messrs. Land and Sisko joined Safeguard in June 2007 and August 2007, respectively.~~

~~(8)~~		~~Mr. Feder resigned in August 2007.~~

~~(9)~~		Mr. Zarrilli served, on a consulting basis, as our Acting Senior Vice President, Acting Chief Administrative Officer and Acting Chief Financial Officer from December 2006 until mid-June 2007 and rejoined Safeguard as an employee in June 2008 as our Senior Vice President and Chief Financial Officer.

(8)		Mr. Land resigned in May 2008. See footnote 2 for ~~a 30-day transition period following Mr. Land’s commencement of employment. Mr. Zarrilli was not covered under our health, welfare and other employee benefit plans (with the exception~~an explanation of the ~~stock option granted to him in December 2006 under his consulting agreement with us) and was not entitled to any~~negative amount of total compensation ~~upon his termination of service other than amounts earned during his term of service under the terms of his consulting agreement with us.~~reported for Mr. ~~Zarrilli was recently named as our Chief Financial Officer, effective June 2, 2008.~~Land.


(1)		These awards were made under the ~~2007 Management Incentive Plan (or, in the case of Messrs. Land and Sisko, payments made upon hire in lieu of participation in the 2007 Management Incentive Plan).~~2008 MIP. There were no mandatory minimum awards payable under the ~~2007 Management Incentive Plan~~2008 MIP and the maximum awards payable were 150% of the target amounts. The amounts in the table represent payouts that might have been achieved based on performance at target or maximum performance levels. Mr. Land voluntarily resigned in May 2008 and was not eligible for a payment under this plan. The cash amounts actually paid under this plan for ~~2007 to Messrs. Boni, Datin and Loftus~~2008 have been reported in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” As described in detail under “Compensation Discussion and Analysis — 2008 Compensation Program,” the Compensation Committee determined that amounts earned under the 2008 MIP by our named executive officers would be paid 50% in cash and 50% in restricted stock. The ~~amount actually paid under this plan for 2007~~restricted stock was issued in February 2009, is subject to ~~Mr. Feder is included in the severance benefits paid to him, which are~~vesting over a three-year period, and will be reported in the ~~Summary Compensation Table under “All Other Compensation.” For further information, see “Compensation Discussion and Analysis—2007 Compensation Program.”~~tables that will be included in our 2010 proxy statement.

(2)		The 375,000 options awarded to Mr. Land and the 250,000 options awarded to Mr. Sisko vest as to 25% of the underlying shares on the first anniversary date of the grant date and as to the remaining 75% of the underlying shares in 36 equal monthly installments thereafter. The 1,125,000 options awarded to Mr. Land and the 750,000 options awarded to Mr. Sisko are subject to market-based vesting and vest upon the achievement of the following per share stock price levels (based on the average closing price of a share of our common stock as reported on the NYSE consolidated tape for 20 consecutive trading days):


Percentage of Shares Underlying
Options That Vest	Per Share Stock Price

First 20%	$	3.1548
Next 30%	$	4.6466
Next 40%	$	6.5114
Final 10%	$	7.2246


		In addition to vesting upon the achievement of a specified per share stock price level, the shares underlying the options may vest on a pro rata basis on each six-month anniversary of the grant date if the per share stock price is between the designated levels (based on the highest average closing price of a share of our common stock as reported on the NYSE consolidated tape for 20 consecutive trading days during each six-month period).

		~~The~~ options have an eight-year term. ~~The options subject to time-based vesting will vest fully~~Vesting of equity awards may be accelerated upon ~~an individual’s~~ death, permanent disability, retirement on or after ~~his~~ 65th birthday, termination of employment for good reason or without cause, or termination of employment ~~without cause or for good reason (as defined~~ in ~~each individual’s employment agreement~~connection with ~~us). All options subject to time-based vesting and market-based vesting will vest fully upon an individual’s termination of employment without cause or for good reason within 18 months following~~ a change in ~~control.~~

		control, and, in the case of Mr. ~~Land’s unvested~~Boni’s stock options, ~~terminated~~ upon ~~his resignation~~the occurrence of a change in ~~May 2008; his vested options will remain exercisable until August 28, 2008.~~control. Further information regarding the equity awards that are subject to acceleration of vesting in each circumstance can be found below under “Potential Payments upon Termination or Change in Control.”

(3)		The market price reported in this column is the closing price of Safeguard common stock as reported on the NYSE ~~consolidated~~composite tape on the grant date. Under the terms of Safeguard’s equity compensation plans, the exercise price of an option is determined based upon the average of the high and low trading prices of Safeguard’s common stock as reported on the NYSE ~~consolidated~~composite tape on the grant date.

(4)		The amounts in this column represent the grant date fair value of the awards computed in accordance with FAS 123(R). For a discussion of the valuation assumptions, see footnote 2 to the Summary Compensation Table.

(5)		As described in detail under “Compensation Discussion and Analysis — Long-Term Incentives,” these options are subject to performance-based vesting and vest based on the aggregate cash produced as a result of exit transactions involving certain of our partner companies relative to the amount of cash deployed in connection with such partner companies.

(6)		These options vest as to 25% of the underlying shares on the first anniversary date of the grant date and as to the remaining 75% of the underlying shares in 36 equal monthly installments thereafter.


(1)		Unless otherwise identified by footnote, options are subject to time-based vesting, ~~vest as to~~with 25% of the underlying shares vesting on the first anniversary date of the grant date and the remaining underlying shares vesting in 36 equal installments on the same date of each month thereafter. ~~The vesting dates for each option are listed in the table below by expiration date:~~


(2)		Vesting of equity awards may be accelerated upon death, permanent disability, retirement on or after 65^th birthday, termination of employment for good reason or without cause, or termination of employment in connection with a change in control, and, in the case of Mr. Boni’s equity awards, upon the occurrence of a change in control. Further information regarding the equity awards that are subject to acceleration of vesting in each circumstance can be found below under “Potential Payments upon Termination or Change in Control.”


(3)		These options are market-based vesting options and vest ~~only~~ upon the achievement of improvement in Safeguard’s stock price. Achievement is measured based on the average daily closing price of Safeguard common stock as reported on the NYSE composite tape for 20 consecutive trading days. The following table shows the per share stock prices at which portions of the shares underlying ~~the~~these market-based vesting options ~~held by Messrs. Boni, Datin and Loftus~~ vest:


		~~The following table shows the per share stock prices at which portions of the shares underlying the market-based vesting options held by Messrs. Land and Sisko vest:~~


		In addition to vesting upon the achievement of a specified per share stock price, the shares underlying the options may vest on a pro rata basis on each six-month anniversary of the grant date if the per share stock price is between the designated stock prices (based on the highest average closing price of a share of our common stock as reported on the NYSE ~~consolidated~~composite tape for 20 consecutive trading days during each six-month period).

(4)		~~Mr. Loftus’ stock award would have vested~~As described in detail under “Compensation Discussion and Analysis — Long-Term Incentives,” these options are subject to performance-based vesting and vest based on the aggregate cash produced as a result of exit transactions involving certain of our partner companies relative to ~~50%~~the amount of ~~the shares on each of December 15, 2008 and December 15, 2009. Upon his voluntary resignation~~cash deployed in ~~May 2008, these unvested shares were forfeited.~~connection with such partner companies.

(5)		~~Under SEC rules,~~These options are market-based vesting options and vest upon the ~~value~~achievement of improvement in Safeguard’s stock price. Achievement is ~~calculated~~measured based on the ~~year-end~~average daily closing ~~stock~~ price ~~of $1.80 per share, as reported on the NYSE consolidated tape, multiplied by the number of shares that have not vested.~~

~~(6)~~		~~Under the terms of Mr. Feder’s agreements with Safeguard, upon his separation from our employment in August 2007:~~

		• ~~He forfeited options to purchase 359,410 shares that were subject to market-based vesting; and~~

		• ~~We accelerated the vesting of options to purchase 206,250 shares that were subject to time-based vesting.~~

~~(7)~~		Mr. Zarrilli’s option vested as to 30,000 underlying shares on March 27, 2007; 15,000 underlying shares on the first day of each of April 1, May 1, June 1 and July 1, 2007; and 75,000 underlying shares on July 11, 2007.

~~(8)~~		Mr. Land’s unvested options terminated upon his resignation in May 2008; his vested options will remain exercisable until August 28, 2008. The 1,069,378 unvested market-based options held by Mr. Loftus terminated upon his resignation in May 2008; his vested market-based options will remain exercisable until July 31, 2008; and his options subject to time-based vesting will continue to vest and remain outstanding until the end of the 90-day period following his termination of service, at our request, on the board of directors of certain of our partner companies.


~~(1)~~		~~The value realized on exercise is determined by multiplying the number of shares acquired on exercise by the difference between the average of the high and low trading prices~~ of Safeguard common stock as reported on the NYSE ~~consolidated~~composite tape onfor 20 consecutive trading days. The following table shows the ~~exercise date and~~per share stock prices at which portions of the ~~exercise price.~~shares underlying these market-based vesting options vest:



~~(2)~~		~~The value realized~~In addition to vesting upon the achievement of a specified per share stock price, the shares underlying the options may vest on ~~vesting is determined by multiplying the number of shares vested by the average~~a pro rata basis on each six-month anniversary of the ~~high and low trading~~grant date if the per share stock price is between the designated stock prices (based on the highest average closing price of ~~Safeguard~~a share of our common stock as reported on the NYSE ~~consolidated~~composite tape onfor 20 consecutive trading days during each ~~vesting date.~~six-month period).

(6)		Mr. Land’s options terminated following his voluntary resignation in May 2008.


(1)		Contributions are included in the Summary Compensation Table under “All Other Compensation.” Earnings in the last fiscal year are included in the Summary Compensation Table under “Change in Pension Value and Nonqualified Deferred Compensation Earnings.”

(2)		The balance in each named executive officer’s account consists of contributions credited by us and notional accrued gains or losses. In prior years, the amounts credited by us under this plan for the benefit of named executive officers were reported in our proxy statement as compensation in the Summary Compensation Table.

(3)		At December 31, ~~2007,~~2008, Mr. ~~Loftus~~Kemmerer was fully vested, and Messrs. Boni, Datin and ~~Feder~~Sisko had vested account balances of ~~$24,157, $24,157~~$28,776, $28,776 and ~~$27,116,~~$10,810, respectively. ~~Mr. Feder’s vested account balance was distributed to him in 2008.~~


Cause	à	Violation of any of our written policies; appropriation of a material business opportunity of our company; misappropriation of company assets; conviction of a felony or any other crime with respect to which imprisonment is a possible punishment; or breach of any material term of the executive’s employment agreement or any other agreement with, or duty owed to, us or any of our partner companies.

Good Reason	à	A material diminution, without the executive’s consent, in the nature or status of the executive’s position, title, reporting relationship, duties, responsibilities or authority; a material reduction of the executive’s base ~~salary or target bonus opportunity;~~salary; a material breach by us of the executive’s agreement; the relocation of our principal office by more than 30 to 35 miles; or an executive’s assignment, without his consent, to be based anywhere other than our principal office.

Peter J. Boni

George D. McClelland

Michael J. Cody

Jack L. Messman

Julie A. Dobson

John J. Roberts

Andrew E. Lietz

Robert J. Rosenthal

George MacKenzie