SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934of1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)14a-
6(e) (2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
HARRIS & HARRIS GROUP, INC.
(Name of Registrant as Specified in its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
- ------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14-a-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 0-11:1
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
5) Total fee paid:
_______________________________________________________________
/1/ Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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
for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
_______________________________________________________________
4) Date Filed:
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HARRIS & HARRIS GROUP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 199926, 2000
TO THE SHAREHOLDERS OF HARRIS & HARRIS GROUP, INC.:
NOTICE IS HEREBY GIVEN that the 19992000 annual meeting of the
shareholders of Harris & Harris Group, Inc. (the "Company") will
be held on Wednesday, April 28, 1999,26, at 2:00 p.m., local time, at 780
Third Avenue (between 48th and 49th), New York, New York.York 10017.
This meeting has been called by the Board of Directors of the
Company, and this notice is being issued at its direction. It has
called this meeting for the following purposes:
1. To elect eight (8) directors of the Company to
hold office until the next annual meeting of
shareholders or until their respective
successors have been duly elected and qualified.
2. To approve the performance goals under the
Harris & Harris Group, Inc. Employee Profit-
Sharing Plan, effective as of January 1, 2000.
3. To ratify, confirm and approve the Board of
Directors' selection of Arthur Andersen LLP as
the Company's independent public accountant for
its fiscal year ending December 31, 1999.
3.2000.
4. To transact such other business as may properly
come before the meeting or any adjournment or
adjournments thereof.
Holders of common stock of record, at the close of business
on March 8, 199922, 2000 will be entitled to vote at the meeting.
Whether or not you expect to be present in person at the
meeting, please sign and date the accompanying proxy and return it
promptly in the enclosed business reply envelope, which requires
no postage if mailed in the United States.
By Order of the Board of Directors
March 24, 199929, 2000 Rachel M. Pernia
New York, New York Secretary
IMPORTANT: PLEASE MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
THE MEETING DATE IS APRIL 28, 1999.
26, 2000.
PROXY STATEMENT
HARRIS & HARRIS GROUP, INC.
Annual Meeting of Shareholders
April 28, 199926, 2000
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Harris & Harris Group, Inc. (the
"Company") to be voted at the 19992000 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on April 28, 199926, 2000 and at any adjournment thereof.
The Annual Meeting will be held on Wednesday, April 28, 199926, 2000 at 2:00
p.m., local time, at 780 Third Avenue, New York, New York.York 10017. At the
Annual Meeting, shareholders of the Company will be asked to elect eight
directors to serve on the Board of Directors of the Company and to hold office
until the next Annual Meeting and to vote on the other matters stated in the
accompanying Notice and described in more detail in this proxy statement.
The mailing address of the principal executive office of the Company is
One Rockefeller Plaza, Rockefeller Center, New York, New York 10020 (telephone
212-332-3600). The enclosed proxy card and this proxy statement and annual
report are being first transmitted on or about March 24, 199929, 2000 to shareholders
of the Company.
The Board of Directors has fixed the close of business on March 8, 199922, 2000
as the record date for the determination of shareholders of the Company
entitled to receive notice of, and to vote at, the Annual Meeting. At the
close of business on the record date, an aggregate of 10,436,6489,240,831 shares of
common stock were issued and outstanding. Each such share will be entitled to
one vote on each matter to be voted upon at the Annual Meeting. The presence,
in person or by proxy, of the holders of a majority of such outstanding shares
is necessary to constitute a quorum for the transaction of business at the
Annual Meeting.
Solicitation and Revocation; Vote Required
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All properly executed proxies received prior to the Annual Meeting will
be voted at the meeting in accordance with the instructions marked thereon or
otherwise as provided therein. Unless instructions to the contrary are
marked, shares represented by the proxies will be voted "FOR" all the
proposals.
Shares of stock representedAny proxy given pursuant to this solicitation may be revoked by a
properly signedshareholder at any time, before it is exercised, by written notification
delivered to the Secretary of the Company, by voting in person at the Annual
Meeting, or by executing another proxy bearing a later date. If your shares
1
are held for your account by a broker, bank or other institution or nominee,
you may vote such shares at the Annual Meeting only if you obtain proper
written authority from your institution or nominee that you present at the
Annual Meeting.
Approval of any of the matters submitted for stockholder approval
requires that a quorum be present. The presence, in person or by proxy, of at
least a majority of the total number of outstanding shares of common stock
entitled to vote is necessary to constitute a quorum. Abstentions and returned
proxybroker
non-votes will be treatedcounted as shares present at the Annual Meeting for purposes
of determining the existence of a quorum, without regardquorum. Broker non-votes are proxies
received by the Company from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to whether the proxy is marked as casting
a vote or abstaining. Likewise, where the record holder does notnor has discretionary power to vote on a particular matter because it does not have the power to vote shares
represented by the proxy (a "broker non-vote"), the shares will be treated as
present at the Annual Meeting for purposes of determining a quorum.
1matter.
For the election of Directors, each nominee must receive the
affirmative vote of a plurality of the votes cast by the shares of common
stock present and in person or represented by proxy and entitled to vote.
AbstentionsVotes that are withheld, abstentions and broker non-votes will not affectbe
included in determining the number of votes cast, and will have no effect on
the election of candidates receiving a plurality of the votes.directors. Except as stated specifically and except with
respect to the election of directors, each of the matters being submitted to
stockholder vote pursuant to the Notice of Annual Meeting will be approved if
a quorum is present in person or by proxy and a majority of the votes cast on
a particular matter are cast in favor of that matter. For such purposes,
abstentions and broker non-votes will not be counted as votes cast or as
votes entitled to be cast on the matter and will have no affect on the result
of the vote.
Any proxy given pursuant to this solicitation may be revoked by a
shareholder at any time, before it is exercised, by written notification
delivered to the Secretary of the Company, by voting in person at the Annual
Meeting, or by executing another proxy bearing a later date.
Proxies are being solicited by the Company. Proxies will be solicited
by mail. All expenses of preparing, printing, mailing, and delivering
proxies and all materials used in the solicitation of proxies will be borne
by the Company. They may also be solicited by officers and regular employees
of the Company personally, by telephone or otherwise, but these persons will
not be specifically compensated for such services. Banks, brokers, nominees,
and other custodians and fiduciaries will be reimbursed for their reasonable
out-of-pocket expenses in forwarding solicitation material to their
principals, the beneficial owners of common stock of the Company. It is
estimated that those costs will be nominal.
ELECTION OF DIRECTORS
(Proposal No. 1)
The eight nominees listed below, all of whom currently serve as
directors, have been nominated to serve as directors of the Company until the
next Annual Meeting or until their respective successors are duly elected and
qualified. Although it is not anticipated that any of the nominees will be
unable or unwilling to serve, in the unexpected event that any such nominees
2
should become unable or decline to serve, it is intended that votes will be
cast for substitute nominees designated by the present Board of Directors of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL THE NOMINEES.
Nominees
Set forth below is certainNOMINEES
Certain information, as of February 29, 2000, with respect to each of
the Company's
current directors.eight nominees for election at the Annual Meeting is set forth below,
including their names, ages and a brief description of their recent business
experience, including present occupations and employment, certain
directorships held by each and the year in which each became a director of
the Company. All nominees are currently directors of the Company:
2
DIRECTORSCompany.
Directors
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Dr. C. Wayne Bardin, age 64,65, was elected to the Company's Board of
Directors in December 1994. He is currently President of Thyreos Corp., a
privately held, start-up pharmaceutical company. From 1978 through 1996, Dr.
Bardin was Vice President of The Population Council. His recent professional
appointments have included: Professor of Medicine, Chief of the Division of
Endocrinology, The Milton S. Hershey Medical Center of Pennsylvania State
University; and Senior Investigator, Endocrinology Branch, National Cancer
Institute. Dr. Bardin also serves as a consultant to several pharmaceutical
companies. He has directed basic and clinical research leading to over 500
publications and patents. He has negotiated 15 licensing and manufacturing
agreements. He has directed clinical R&D under 18 investigational new drug
applications filed with the U.S. FDA. Dr. Bardin has been appointed to the
editorial boards of 15 journals. He has also served on national and
international committees and boards for National Institute of Health, World
Health Organization, The Ford Foundation, and numerous scientific societies.
Dr. Bardin received a B.A. from Rice University; an M.S. and M.D. from Baylor
University and a Doctor Honoris Causa from the University of Caen and the
University of Paris.
Dr. Phillip A. Bauman, age 43,44, was elected to the Company's Board of
Directors in February 1998. Dr. Bauman is an orthopedicorthopaedic surgeon who is in practice
in New York City and has heldis an academic appointmentAssistant Professor at Columbia University since 1988.University. He
is a principal andhas been Vice President of OrthopedicOrthopaedic Associates of New York since 1994.1994 and
is the orthopaedic director of the Miller Health Care Institute in New York
City. He holdsreceived a bachelor's anddegree from Harvard University, a master's degrees in
biology from Harvard University in 1977, and ahis medical degree from Columbia
University. Dr. Bauman was electedUniversity in 1981. He is a fellowmember of numerous medical societies including
the American Academy of OrthopedicOrthopaedic Surgeons in 1991, is affiliated withand holds appointments on
several medical advisory boards, including the New York Academy of Medicine and is on the advisory board of a medical research foundation.Medicine.
3
G. Morgan Browne, age 63,65, was elected to the Company's Board of
Directors in June 1992. Since 1985, Mr. Browne has been Administrative
Director of the Cold Spring Harbor Laboratory, a private not-for-profit
institution that conducts research and education programs in the fields of
molecular biology and genetics. In prior years, he was active in the
management of numerous scientifically based companies as an individual
consultant and as an associate of Laurent Oppenheim Associates, Industrial
Management Consultants. He is a director of OSI Pharmaceuticals, Inc.
(principally engaged in drug discovery based on gene transcription), a
founding director of the New York Biotechnology Association, and a founding
director and Treasurer of the Long Island Research Institute. He is a
graduate of Yale University and attended New York University Graduate School
of Business.
3
Harry E. Ekblom, age 70,72, was elected to the Company's Board of
Directors in 1984. Mr. Ekblom is a partner in Ekblom & Ekblom LLC, a law
firm, and President of Harry E. Ekblom & Co., Inc. From 1985 to 1996, he was
Vice Chairman of A.T. Hudson & Co. Inc. Before 1984, he was employed by
European American Bank as the Chairman of its Board of Directors and Chief
Executive Officer. Mr. Ekblom is a director of The Commercial Bank of New
York. He is a graduate of Columbia College and the New York University
School of Law, a member of the New York Bar, and holds honorary degrees from
Hofstra University and Pace University.
Dugald A. Fletcher, age 69,70, was elected to the Company's Board of
Directors in June 1996. Mr. Fletcher has been President of Fletcher &
Company, Inc., a management consulting firm, for the past five years. He was
also Chairman of Binnings Building Products Company, Inc. until the end of
1997, and is an Advisor to the Gabelli Growth Fund and a Director of the
Gabelli Convertible Securities Fund. His previous business appointments
include: advisor to the Gabelli/Rosenthal LP, a leveraged buyout fund;
Chairman of Keller Industries (building and consumer products); Director and
investor in Mid-Atlantic Coca-Cola Bottling Company; Senior Vice President of
Booz-Allen & Hamilton and President of Booz-Allen Acquisition Services;
Executive Vice President and a Director of Paine Webber, Inc.; and President
of Baker, Weeks and Co., Inc., a New York Stock Exchange member firm. He is
a graduate of Harvard College and of Harvard Business School.
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*Charles E. Harris, age 56,57, has been a director of the Company and
Chairman of its Board of Directors since April 1984 and Chief Compliance
Officer since February 1997. He has served as Chief Executive Officer of the
Company since July 1984. He has served as a director, trustee, control
person, chairman and/or chief executive officer of various publicly and
privately held corporations and not-for-profit institutions. Prior to 1984,
he was Chairman of Wood, Struthers and Winthrop Management Corp., the
investment advisory subsidiary of Donaldson, Lufkin & Jenrette. He was a
member of the Advisory Panel for the Congressional Office of Technology
Assessment. He is a member of the New York Society of Security Analysts.
Among his eleemosynary activities, he is currently a Trustee of, and a member
of the President's Council of, the Cold Spring Harbor LaboratoryLaboratory; a Trustee
of the Nidus Center, a life sciences business incubator in St. Louis,
Missouri; and a life-sustaining fellow and a member of the President's
Council of the Massachusetts Institute of Technology. He was graduated from
Princeton University (A.B., 1964) and the Columbia University Graduate School
of Business (MBA,(M.B.A., 1967).
Glenn E. Mayer, age 73,74, has been a director of the Company since 1981.
In December 1991, Mr. Mayer joined, as a Senior Vice President, the
Investment Banking division of Reich & Company. Reich & Co. is now a
division of Fahnestock & Company, Inc., a member firm of the New York Stock
Exchange. For 15 years prior to that, he was employed by Jesup & Lamont
Securities Co. and its successor firms, in the Corporate Finance department.
Mr. Mayer is a graduate of Indiana University.
* Charles E. Harris is an "interested person" of the Company, as defined in
the Investment Company Act of 1940, as an owner of more than five percent of
the Company's stock, as a control person and as an officer of the Company.
4
James E. Roberts, age 53,54, was elected to the Company's Board of
Directors in June 1995. Since October 1999, Mr. Roberts has been Chief
Executive Officer of The Insurance Corporation of New York, Dakota Specialty
Insurance Company, and ReCor Insurance Company Inc. and Vice Chairman of
Chartwell Reinsurance Company. Since May 1995, Mr. Roberts has been Vice
Chairman of Trenwick America Reinsurance Corporation. During the nine years
prior to that, Mr. Roberts held the following positions at Re Capital
Corporation: President and Chief Executive Officer, from 1992 to 1995;
President and Chief Operating Officer, 1991 to 1992; Director since 1989 and
Senior Vice President, 1986 to 1991; President and Chief Executive Officer of
the Company's principal operating subsidiary, Re Capital Reinsurance
Corporation, from 1991 to 1995. All of the preceding companies are part of
Trenwick Group, Inc., which is a property and casualty insurance and
reinsurance company. Mr. Roberts served as Senior Vice President and Chief
Underwriting Officer of North Star Reinsurance Corporation, from 1979 to
1986; Vice President of Rollins Burdick Hunter of New York, Inc., 1977 to
1979; Secretary of American Home Assurance/National Union Insurance Group of
American International Group, Inc., 1973 to 1977; and commercial casualty
underwriter at Continental Insurance Company, 1972 to 1973. Mr. Roberts is a
graduate of Cornell University.
Committees* Charles E. Harris is an "interested person" of the Company, as
defined in the Investment Company Act of 1940, as an owner of more than five
percent of the Company's stock, as a control person and as an officer of the
Company.
5
Meetings of the Board of Directors and Committees
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In 1998,1999, there were 10seven meetings of the Board of Directors of the
Company, and the Board acted ninefour times by unanimous written consent. Other than Mr.
James E. Roberts who attended 50 percent of the board meetings, noNo
incumbent director attended fewer than 75 percent of the aggregate of Board
of Directors' and applicable committee meetings held in 19981999 (during the
periods that they so served).
The Company's Board of Directors has five committees comprised of the
following members:
Committees
Executive Audit Compensation
Nominating
Charles E.Harris*E. Harris* Harry E. Ekblom* James E. Roberts*
Charles E. Harris*Dr. C. Wayne Bardin Dr. Phillip A. Bauman Harry E. Ekblom G. Morgan Browne
Glenn E. Mayer Glenn E. Mayer Dugald A. Fletcher
James E. Roberts
Nominating Investment and Valuation
Charles E. Harris* Charles E. Harris*
G. Morgan Browne G. Morgan Browne
Harry E. Ekblom James E. Roberts
Dr. Phillip A. Bauman
Investment and
Valuation
Charles E. Harris*
G. Morgan Browne
James E. Roberts
Dugald A. Fletcher
- ----------
* Chairman of the Committee
The Executive Committee meets from time to time between regular
meetings of the Board of Directors and exercises the authority of the Board
to the extent provided by law. The Executive Committee did not meet as a
separate committee in 1998.1999.
The Audit Committee considers and recommends to the Board of Directors
the selection of the Company's auditors, reviews with the auditors the plan
and results of the annual audit and the adequacy of the Company's systems of
internal accounting controls. The Audit Committee met once in 1998.
51999.
The Compensation Committee has the full power and authority of the
Board with respect to all matters pertaining to the remuneration of the
Company's officers and employees. The Compensation Committee did not meet as
a separate committee in 1998 and acted two times by unanimous written consent.1999.
The Nominating Committee acts as an advisory committee to the Board by
making recommendations to the Board of potential new directors. See
"Submission of Shareholder Proposals." The Nominating Committee did not meet
as a separate committee in 1998 and acted one time by unanimous written
consent.1999.
The Investment and Valuation Committee has the full power and authority
of the Board in reviewing and approving the valuation of the Company's assets
for reporting purposes pursuant to the Company's Asset Valuation Policy
Guidelines that were established and approved by the Board of Directors. The
Investment and Valuation Committee met four times in 1998.1999.
6
Security ownership of Directors and Executive Officers and other principal
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holders of the Company's voting securities
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The following table sets forth certain information with respect to
beneficial ownership (as that term is defined in the rules and regulations of
the Securities and Exchange Commission) of the Company's common stock as of
March 3, 1999February 29, 2000 by (1) each person who is known by the Company to be the
beneficial owner of more than five percent of the outstanding common stock,
(2) each director of the Company, (3) each current executive officer listed
in the Summary Compensation Table and (4) all directors and executive
officers of the Company as a group. Except as otherwise indicated, to the
Company's knowledge, all shares are beneficially owned and investment and
voting power is held as stated by the persons named as owners. At this time,
the Company is unaware of any shareholder owning five percent or more of the
outstanding shares of common stock other than the ones noted below.
Name and Address of Number of Shares of Percent of
Beneficial Owner Common Stock Owned of Class (1)
- ------------------- ------------------- ----------
Charles E. and Susan T. Harris
One Rockefeller Plaza, Suite 1430 1,467,561 (1) 14.06%984,562 (2) 10.65%
New York, NY 10020
American Bankers Insurance Group
11222 Quail Roost Drive 1,075,269 (2) 10.30%
Miami, FL 33157
Jordan American Holdings, Inc.
1875 Ski Time Square, Drive, Suite 1 741,502602,765 (3) 7.10%6.52%
Steamboat Springs, CO 80487
Dr. C. Wayne Bardin 10,28612,036 (4) *
Dr. Phillip A. Bauman 11,06112,586 (5) *
G. Morgan Browne 4,10815,629 *
Harry E. Ekblom 8,68210,357 *
Dugald A. Fletcher 4,1085,408 *
Glenn E. Mayer 75,68279,000 (6) *
Mel P. Melsheimer 5,07210,072 *
James E. Roberts 7,735 *
Rachel M. Pernia 8,000-- *
William R. Polk 74,682 *
James E. Roberts 5,335 *
--------- -----
All Directors and Executive
Officers as a group (11(10 persons) 1,674,577 16.05%
========= =====1,137,385 12.31%
* Less than one percent of issued and outstanding stock.
7
(1) Shares of common stock subject to warrants and options currently
exercisable or exercisable within 60 days are deemed outstanding for
computing the percentage of class of the person or group holding such
warrants but are not deemed outstanding for computing the percentage of
class of any other person.
(2) Includes 1,355,176875,827 shares for which Mrs. Harris has sole power to vote
and dispose of; 8,500 shares for which Mr. Harris has sole power to
vote and dispose of. Includes 103,885100,235 shares owned by the Susan T.
and Charles E. Harris Foundation, in which Charles E. Harris and
Susan T. Harris are designated trustees; voting and dispositive power
are vested with the trustees.
(2) Represents shares owned by subsidiaries of American Bankers Insurance
Group, Inc.
(3) Represents shares owned by Jordan American Holdings, Inc. as ofpursuant to
Schedule 13G, filed on February 24, 1999.14, 2000. Jordan American Holdings,
Inc. is a registered investment advisor that holds these shares for
investment purposes only on behalf of various clients.
(4) Includes 2,840 shares owned by Bardin LLC for the Bardin LLC Profit-SharingProfit-
Sharing Keogh.
(5) Includes 5,637 shares owned by Ms. Milbry C. Polk, Dr. Bauman's wife.
(6) Includes 2,000 shares owned by Mrs. Mayer.
On March 1, 1999, the Directors approved a resolution to allow the
employees of the Company to purchase Company stock in the open market
concurrently with the Company's repurchase program provided that such
purchases are in accordance with Rule 10b(18).
Executive Officers
- ------------------
Set forth below is certain information with respect to the executive
officers of the Company:
Charles E. Harris, Chairman, Chief Executive Officer and Chief
Compliance Officer. For additional information about Mr. Harris, please
see the Directors' biographical information section.
Mel P. Melsheimer, age 59,60, has served as President, Chief Operating
Officer and Chief Financial Officer since February 1997. Previously, Harris
& Harris Group utilized Mr. Melsheimer as a nearly full-time consultant or
officer of an investee company since March 1994. Mr. Melsheimer has had
extensive entrepreneurial experience as well as senior operational and
financial management responsibilities with publicly and privately owned
companies. From November 1992 to February 1994, he served as Executive Vice
President, Chief Operating Officer and Secretary of Dairy Holdings, Inc. From
June 1991 to August 1992, he served as President and Chief Executive Officer
of Land-O-Sun Dairies as well as Executive Vice President of Finevest Foods,
Inc. From March 1989 to May 1991, he served as Vice President, Chief
Financial Officer and Treasurer of Finevest Foods, Inc. From January 1984 to
February 1989, he served as Chairman, Chief Executive Officer and Founder of
PHX Pacific, Inc. and President and Chief Executive Officer of MPM Capital
Corp. From January 1981 to December 1983, he served as Executive Vice
President and Chief Operating Officer of AZL Resources. From November 1975 to
December 1980, he served as Executive Vice President and Chief Financial
Officer of AZL Resources. From January 1968 to November 1975, he served in a
financial capacity before becoming Vice President and Chief Financial Officer
of Pepsi-Cola Company, PepsiCo, Inc. in 1972. He was graduated from the
University of Southern California (MBA)(M.B.A.) and Occidental College (B.A.,
Economics).
8
Rachel M. Pernia, age 39,41, has served since January 1992 as a Vice
President and Controller of the Company, as Treasurer since November 1994 and
Secretary since September 1996. From 1988 until Ms. Pernia joined the
Company, she was employed as Assistant Controller for Cellcom Corp. From 1985
through 1988, she was employed as a senior corporate accountant by Bristol-
Myers Squibb Company. She was graduated from Rutgers University (B.A., 1981)1981;
M.B.A., 2000) and is a certified public accountant.
Executive Compensation
Summary Compensation Table
The following table sets forth a summary for each of the last three
years of the cash and non-cash compensation awarded to, earned by, or paid to
the Chief Executive Officer of the Company and the other executive officers of
the Company, whose individual remuneration exceeded $60,000 for the year ended
December 31, 1998.1999.
Long Term
Annual Compensation Compensation
Awards
--------------------------- ----------------------
Name and Securities
All
Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation
- --------- ---- ------ ----- ------------------------- ---------- ------------
($) ($)(1) ($) (1) (#)(2) (3) ($) (3)(4)
Charles E. Harris 1998 200,000 - - 43,748 - - 10,000E.Harris 1999 202,980 785,031 40,674 -- 63,422
Chairman, CEO & 1998 200,000 -- 37,758 -- 15,990
Chief Compliance 1997 574,380 - --- 32,801 - - 9,500
Chief Compliance 1996 557,650 - - 37,595 - --- 9,500
Officer (4)(5)
Mel P. Melsheimer 1998 223,000 - - - - - -1999 229,690 240,974 -- -- 10,000
President, COO 1998 223,000 -- -- -- 10,000
& CFO (6) 1997 209,852 - --- 61,992 300,000 9,500
& CFO (5) 1996 203,248 - - - - - - - -
Rachel M. Pernia 1999 90,092 86,758 -- -- 10,000
Controller, 1998 86,720 - - - - - --- -- -- 10,000
Controller,Treasurer & 1997 83,046 - - - --- -- 50,000 9,500
Treasurer & 1996 73,500 - - - - - - 8,000
Secretary
(1) These amounts represent the approximate amounts earned as a result of
realized gains during the year ended December 31, 1999 under the Harris
& Harris Group Employee Profit-Sharing Plan, effective as of January 1,
1998 (the "1998 Plan") which is described below.
(2) Other than Mr. Melsheimer and Mr. Harris, amounts of "Other Annual
Compensation" earned by the named executive officers for the periods
presented did not meet the threshold reporting requirements.
(2)
(3) The Company's 1988 Stock Option Plan and all outstanding stock options
were canceled as of December 31, 1997. As a substitution for the 1988
Stock Option Plan, the Company adopted the Harris & Harris Group, Inc.
Employee Profit Sharing Plan (the "Plan"), which is described below.
During 1998,Plan.
(4) Except for accounting purposes,Mr. Harris's 1999 "All Other Compensation," the Company accrued bonus expense
of $899,751 bringing the cumulative accrual under the Plan to $1,323,559
at December 31, 1998. This accrual is based on unrealized gains and
such gains may or may not be realized by the Company in the future.
(3) Amountsamounts
reported represent the Company's contributions on behalf of the named
executive to the Harris & Harris Group, Inc. 401(k) Plan described below.
9
(4) The Company has an employment contract with Charles E. Harris that was
amended on June 30, 1992, January 3, 1993, June 30, 1994 and January 1,
1998 (the "Employment Contract"). The term of the Employment Contract
expires on December 31, 1999.
Mr. Harris is to receive compensation under his Employment Contract in
the form of salary and other benefits. Annual base salary is to be
increased annually as of January 1 of each year to reflect inflation and
in addition may be increased by such amounts as the Board deems
appropriate. The amendment on January 1, 1998 reduced Mr. Harris's salary to $200,000"All Other Compensation" consists of: $10,000 401(k) Plan
employer contribution; $41,442 for accrual for his 1999 SERP contribution;
and allowed him to pursue other business opportunities
and investments.
The Employment Contract provides Mr. Harris with$11,980 in life insurance premiums for the benefit of his
designated beneficiaries inbeneficiaries.
Except for Mr. Harris, amounts reported represent the amount of $2,000,000. The
Employment Contract also provides reimbursement for uninsured medical
expenses, not to exceed $5,000 per annum, adjusted for inflation, over
the periodCompany's
contributions on behalf of the contract, and disability insurance in the amount of 100
percent of his base salary.
The Employment Contract provides severance pay in the event of
termination without cause or by constructive discharge and also provides
for certain death benefits payablenamed executive to the surviving spouse, for a period
of two years, equal to the executive's base salary.
In addition,Harris & Harris
Group, Inc. 401(k) Plan described below.
(5) Mr. Harris has an employment agreement which is entitled to receive severance pay pursuant to
the severance compensation agreement that he entered into with the
Company, effective August 15, 1990 which expires December 31, 1999. The
severance compensation agreement provides that if, following a change in
control of the Company, as defined in the agreement, such individual's
employment is terminated by the Company without cause or by the executive
within one year of such change in control, the individual shall be
entitled to receive compensation in a lump sum payment equal to 2.99
times the individual's average annualized compensation and payment of
other welfare benefits. If the executive's termination is without cause
or is a constructive discharge, the amount payablediscussed below under
the Employment
Contract will be reduced by the amounts paid pursuant to the severance
compensation agreement.
(5)"Employment Agreement."
(6) Mr. Melsheimer joined the Company as President, Chief Operating Officer
and Chief Financial Officer in February 1997. From 1994 to February 1997,
Mr. Melsheimer was utilized by the Company as a independent consultant.
Included in Mr. Melsheimer'sMelsheimer=s 1997 Other Annual Compensation is $61,992 in
relocation reimbursements.
Employee Benefits
The Company's 1988 Stock Option Plan and all outstanding stock options
were canceled as of December 31, 1997. As a substitution for the 1988 Stock
Option Plan, the Company adopted an employee profit sharing plan.
Employee Profit-Sharing Plan
- ----------------------------
As of January 1, 1998, the Company began implementing the Harris & Harris
Group, Inc. Employee Profit Sharing Plan (the "Plan""1998 Plan") that provides for
profit sharing equal to 20 percent of the net realized income of the Company
as reflected on the consolidated statement of operations of the Company for
such year, less the nonqualifying gain, if any. The distribution percentages
for each officer and employee for 1999 were as follows: Charles E. Harris,
13.790 percent; Mel P. Melsheimer, 4.233 percent; Rachel M. Pernia, 1.524
percent; and Jacqueline M. Matthews, 0.453 percent. Under the 1998 Plan,
net realized income of the Company includes investment income, realized
gains and losses, and operating expenses (including taxes paid or payable
by the Company), but it will beis calculated without regard to dividends paid or
distributions made to shareholders, payments under the 1998 Plan, unrealized
gains and losses, and loss carry-overs from other years ("Qualifying
Income"). The portion of net after-tax realized gains attributable to asset
values as of September 30, 1997 will beis considered nonqualifying gain, which
will reducereduces "Qualifying Income."
10
As soon as practicable following each year end, the Board of Directors
will
determinedetermines whether, and if so how much, "Qualifying Income" exists for a
plan year, and 90 percent of the Qualifying Income will beis paid out to 1998 Plan
participants pursuant to the distribution percentages set forth in the 1998
Plan. The remaining 10 percent will beis paid out after the Company has filed its
federal tax return for that year in which "Qualifying Income" exists. The
distribution amounts for each officer and employee is as follows: Charles E.
Harris, 13.790%; Mel P. Melsheimer, 4.233%; Rachel M. Pernia, 1.524%; and
Jacqueline M. Matthews, 0.453%. If a
participant leaves the Company for other than cause, the amount earned will beas of
10
that date is accrued and paid to such participant, and the remaining amount
allocable under the 1998 Plan will beis redistributed by the Compensation Committee
and paid to the other participants.
Notwithstanding any provisions of the 1998 Plan, in no event may the
aggregate amount of all awards payable for any 1998 Plan year during which
the Company remains a "business development company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), be greater
than 20 percent of the Company's "net income after taxes" within the meaning
of Section 57(n)(1)(B) of the 1940 Act. In the event the awards exceed such
amount, the awards will beare reduced pro rata.
The 1998 Plan may be modified, amended or terminated by the Board of
Directors at any time; provided however, no such modification, amendment or
termination may adversely affect any participant that has not consented to
such modification or amendment.
During 1998, for accounting purposes,1999, the Company accrued bonusprofit-sharing expense of $899,751$8,110,908,
bringing the cumulative accrual under the 1998 Plan to $1,323,559$9,434,467 at December
31, 1998.1999. Approximately $8,295,916 represents a profit-sharing accrual on
unrealized gains and will not be paid out until the gains are realized. In
March 2000, the Company paid out 90 percent of the profit sharing on the 1999
realized gains of approximately $1,024,696; the remaining 10 percent or
approximately $113,855 will be paid out on completion and filing of the
Company's 1999 federal tax return.
The 1998 Plan was terminated as of December 31, 1999, subject to the
payment of amounts owed on realized 1999 gains under the 1998 Plan. The Harris
& Harris Group Employee Profit-Sharing Plan was adopted as of January 1, 2000,
with substantially the same terms as the 1998 Plan. (See Proposal 2 "Approval
of Performance Goals Under the Harris & Harris Group, Inc. Employee Profit-
Sharing Plan, effective as of January 1, 2000.")
401(k) Plan
- -----------
As of January 1, 1989, the Company adopted an employee benefits program
covering substantially all employees of the Company under a 401(k) Plan and
Trust Agreement. As of January 1, 1999, the Company adopted the Harris &
Harris Pension Plan and Trust, a money purchase plan that would allow the
11
Company to stay compliant with the 401(k) top-heavy regulations and
deduction limitation regulations. Contributions to the plan are at the
discretion of the Company. During 1998,1999, contributions to the planboth plans
charged to operations totaled approximately $37,000.
Medical Benefits
- ----------------
On June 30, 1994, the Company adopted a plan to provide medical and
health insurance for retirees, their spouses and dependents who, at the time
of their retirement, have ten10 years of service with the Company and have
attained 50 years of age or have attained 45 years of age and have 15 years
of service with the Company. On February 10, 1997, the Company amended this
plan to include employees who "have seven full years of service and have
attained 58 years of age." The coverage is secondary to any government
provided or subsequent employer provided health insurance plans. Based
upon actuarial estimates, the Company provided an original reserve of
$176,520 that was charged to operations for the period ending June 30, 1994.
As of December 31, 19981999 the Company had a reserve of $283,305$317,600 for the plan.
11Employment Agreement
- --------------------
On October 19, 1999, Charles E. Harris signed an Employment Agreement
with the Company ("the Employment Agreement"), which superseded an employment
agreement that was about to expire on December 31, 1999. The Employment
Agreement expires on December 31, 2004 ("Term"); provided, on January 1, 2000
and on each day thereafter, the Term extends automatically by one day unless at
any time the Company or Mr. Harris, by written notice, decides not to extend
the Term, in which case the Term will expire five years from the date of the
written notice.
During the period of employment, Mr. Harris shall serve as the Chairman
and Chief Executive Officer of the Company; be responsible for the general
management of the affairs of the Company and all its subsidiaries, reporting
directly to the Board of Directors of the Company; serve as a member of the
Board for the period of which he is and shall from time to time be elected or
reelected; and serve, if elected, as President of the Company and as an officer
and director of any subsidiary or affiliate of the Company.
Mr. Harris is to receive compensation under his Employment Agreement in
the form of base salary of $202,980, with automatic yearly adjustments to
reflect inflation. In addition, the Board may increase such salary, and
consequently decrease it, but not below the level provided for by the automatic
adjustments described above. Mr. Harris is also entitled to participate in the
Company's Profit-Sharing Plan as well as in all compensation or employee
benefit plans or programs, and to receive all benefits, perquisites, and
emoluments for which salaried employees are eligible. Under the Employment
Agreement, the Company is to furnish Mr. Harris with certain perquisites which
include a company car, membership in certain clubs and up to a $5,000 annual
reimbursement for personal, financial or tax advice.
12
The Employment Agreement provides Mr. Harris with life insurance for the
benefit of his designated beneficiaries in the amount of $2,000,000; provides
reimbursement for uninsured medical expenses, not to exceed $10,000 per annum,
adjusted for inflation, over the period of the contract; provides Mr. Harris
and spouse with long-term care insurance; and disability insurance in the
amount of 100 percent of his base salary. These benefits are for the term of
the contract.
The Employment Agreement provides severance pay in the event of
termination without cause or by constructive discharge as discussed below and
also provides for certain death benefits payable to the surviving spouse equal
to the executive's base salary for a period of two years.
In addition, Mr. Harris is entitled to receive severance pay pursuant
to the severance compensation agreement that he entered into with the
Company, effective August 15, 1990. The severance compensation agreement
provides that if, following a change in control of the Company, as defined in
the agreement, such individual's employment is terminated by the Company
without cause or by the executive within one year of such change in control,
the individual shall be entitled to receive compensation in a lump sum
payment equal to 2.99 times the individual's average annualized compensation
and payment of other welfare benefits. If Mr. Harris's termination is
without cause or is a constructive discharge, the amount payable under the
Employment Agreement will be reduced by the amounts paid pursuant to the
severance compensation agreement.
SERP
- ----
The Employment Agreement provides for the Company to adopt a
supplemental executive retirement plan (the "SERP") for the benefit of Mr.
Harris. Under the SERP, the Company will cause an amount equal to one-
twelfth of the Mr. Harris's current base salary to be credited each month (a
"Monthly Credit") to a special account maintained for this purpose on the
books of the Company for the benefit of Mr. Harris (the "SERP Account"). The
amounts credited to the SERP Account will be deemed invested or reinvested in
such mutual funds or U.S. Government securities as determined by Mr. Harris.
The SERP Account will be credited and debited to reflect the deemed
investment returns, losses and expenses attributed to such deemed investments
and reinvestments. Mr. Harris's benefit under the SERP will equal the
balance in the SERP Account and such benefit will always be 100 percent
vested (i.e., not forfeitable). Mr. Harris will determine the form and
timing of the distribution of the balance in the SERP Account; provided,
however, in the event of the termination, the balance in the SERP Account
will be distributed to Mr. Harris or his beneficiary, as the case may be, in
a lump-sum payment within 30 days of such termination. The Company
established a rabbi trust for the purpose of accumulating funds to satisfy
the obligations incurred by the Company under the SERP. During 1999, the
Company accrued $41,442 in accordance with this provision of the SERP. Mr.
Harris's rights to benefits pursuant to this SERP will be no greater than
those of a general creditor of the Company.
13
Compensation of Directors
- -------------------------
Pension Or
Retirement
Benefits Estimated
Accrued As Annual Total
Part ofOf Benefits Compensation
Name of Aggregate Company's Upon Paid toTo
Director Compensation Expenses Retirement Directors
- -------- ------------ --------- ---------- ------------
C. Wayne Bardin $12,250$13,000 - - - - $12,250$13,000
Phillip A. Bauman $ 8,250$13,000 - - - - $ 8,250$13,000
G. Morgan Browne $15,493$17,212 (1) - - - - $15,493$17,212
Harry E. Ekblom $15,277$14,637 (2) - - - - $15,277$14,637
Dugald A. Fletcher $15,250$17,000 - - - - $15,250
Charles F. Hays (3) $ 1,000$17,000
Glenn E. Mayer $14,000 - - - - $ 1,000
Jon J. Masters (4) $ 8,750$14,000
William R. Polk $14,479 (3) - - - - $ 8,750
Glenn$14,479
James E. Mayer $13,750Roberts $17,000 - - - - $13,750
William R. Polk $27,983 (5) - - - - $27,983
James E. Roberts $11,250 - - - - $11,250$17,000
1.(1) Includes $243$212 paid to Mr. Browne to reimburse him for travel expenses
to attend Board meetings.
2.(2) Includes $1,527$637 paid to Mr. Ekblom to reimburse him for travel expenses
to attend Board meetings.
3.(3) Mr. Hays resigned as a Director on February 3, 1998.
4. Mr. MastersPolk did not stand for reelection to the Board of Directors at the
19981999 Annual Meeting.
5. Includes $14,233$9,479 paid to Mr. Polk to reimburse him
for travel expenses to attend Board meetings.
Effective June 18, 1998, directors who were not officers of the
Company received $1,000 for each meeting of the Board of Directors and
$1,000 for each committee meeting they attended in addition to a monthly
retainer of $500. Prior to June 18, 1998, the directors were paid $500 for
Committee meetings and no monthly retainer. The Company also reimburses
its directors for travel, lodging and related expenses they incur in
attending Board and committee meetings. The total compensation and
reimbursement for expenses paid to all directors in 19981999 was $129,253.$120,328.
In 1998, the Board of Directors approved that effective January 1,
1998, 50 percent of all Director fees be used to purchase Company common
stock from the Company. However, effective on March 1, 1999, the Directors
may purchasebegan purchasing the Company's common stock in the open market, rather than
from the Company. During 1998,1999, the Directors bought a total of 24,491 shares.
125,816
shares directly from the Company and 23,489 shares in the open market.
14
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
10 percent of the Company's common stock to file reports (including a year-endyear-
end report) of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC") and to furnish the Company with copies of all
reports filed.
Based solely on a review of the forms furnished to the Company, or
written representations from certain reporting persons, the Company believes
that all persons who were subject to Section 16(a) in 19981999 complied with the
filing requirements.
APPROVAL OF PERFORMANCE GOALS UNDER THE HARRIS & HARRIS GROUP, INC.
EMPLOYEE PROFIT-SHARING PLAN, EFFECTIVE AS OF JANUARY 1, 2000
(Proposal No. 2)
The Company has adopted the Harris & Harris Group, Inc. Employee
Profit- Sharing Plan (the "Plan") to provide a special incentive for
designated key employees of the Company ("Participants") to increase the
future profits of the Company, by allowing the Participants to share in the
historical after-tax profits of the Company. The Plan became effective as of
January 1, 2000. (A prior version of the Plan, effective as of January 1,
1998 (the "1998 Plan"), was terminated by the Company as of December 31,
1999, subject to the payment of any amounts owed on the 1999 realized gains
under the 1998 Plan.) Set forth below is a brief description of the
principle features of the Plan. Such description is qualified in its
entirety by the full text of the Plan, a copy of which is attached as
Appendix A to this proxy statement. Reference to such exhibit should be made
for a complete description of the Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally provides that a public company such as the Company may not
deduct compensation paid to its chief executive officer or to any of its four
most highly compensated officers (collectively, "Covered Employees") to the
extent that the compensation paid to any such Covered Employee exceeds $1
million in any tax year, unless the payment is made based upon the attainment
of objective performance goals that are approved by the Company's
shareholders. Pursuant to the requirements of Section 162(m) of the Code,
the Company is seeking the approval of its shareholders of the performance
goals under the Plan. (The Company is not seeking the approval of its
shareholders to the other provisions of the Plan.) The performance goals of
the Plan are summarized under "Performance Terms of the Plan."
15
Performance Terms of the Plan
- -----------------------------
Under the Plan, awards will be made utilizing objective criteria for
determining the maximum bonus awards for Covered Employees and other
designated key employees. All employees of the Company are eligible for
participation under the Plan. The Compensation Committee of the Company's
Board of Directors (the "Committee") administers the Plan and designates
employees for participation in the Plan. The Committee is comprised entirely
of "outside directors" within the meaning of Section 162(m) of the Code.
The Plan generally provides for profit sharing equal to a maximum of 20
percent of the net realized income of the Company for each Plan Year, as
reflected on the Consolidated Statement of Operations of the Company for such
year, less the non-qualifying gain, if any.
Under the Plan, the net realized income of the Company includes
investment income, realized gains and losses, and operating expenses
(including taxes paid or payable by the Company), calculated without regard
to dividends paid or distributions made to shareholders, payments under the
Plan, unrealized gains and losses, and loss carryovers from other years
("Qualifying Income"). The portion of net after-tax realized gains
attributable to asset values as of September 30, 1997 is considered non-
qualifying gain, which reduces Qualifying Income.
As soon as practicable following each year-end audit, the Committee
will determine whether, and if so, how much, Qualifying Income exists for a
tax year, and 90 percent of each Participant's applicable percentage of the
Qualifying Income will be paid out to the Participant pursuant to the Plan.
The remaining 10 percent of the Participant's applicable percentage will be
paid out after the Company has filed its federal tax return for the relevant
tax year. The Committee establishes the applicable percentage for each
Participant at the beginning of the tax year.
The following are the current Participants in the Plan and the current
percentages for each such Participant:
OFFICER/EMPLOYEE PERCENTAGE
Charles E. Harris 13.790%
Mel P. Melsheimer 4.233%
Rachel M. Pernia 1.524%
Jacqueline M. Matthews 0.453%
16
If, during a tax year, a Participant's employment with the Company is
terminated for any reason other than Cause (as defined in the Plan), the
Participant will share in the Qualifying Income for that year and subsequent
tax years (based on the Participant's applicable percentage in the
termination year), but not to the extent of post-termination gains.
Similarly, if a new employee becomes a Participant in a tax year, he or she
will share in the Qualifying Income for that year and subsequent tax years
(based on the Participant's applicable percentage in each such year), but not
to the extent of pre-participation gains.
Notwithstanding any provisions of the Plan, in no event may the
aggregate amount of all awards payable for any tax year during which the
Company remains a business development company ("BDC") within the meaning of
the Investment Company Act of 1940, as amended ("1940 Act") be greater than
the maximum percentage of the Company's "net income after taxes" (within the
meaning of Section 57(n)(1)(B) of the 1940 Act) permitted to be paid as
profit sharing under the 1940 Act or other applicable law. In the event the
awards exceed such amount, the awards will be reduced on a pro-rata basis.
Other Aspects of the Plan
- -------------------------
The Plan may be modified, amended or terminated by the Committee at any
time; provided, however, no such modification, amendment or termination may
adversely affect any Participant who has not consented to such modification,
amendment or termination.
The Company calculates the Plan accrual at the end of each calendar
quarter, based on the Company's realized and unrealized gains at that date,
net of operating expenses for the year. Any adjustments to the Plan accrual
are then reflected in the Consolidated Statements of Operations for the
quarter. The Plan accrual is not paid out until gains are realized.
During 1999, the Company accrued profit-sharing expense of $8,110,908,
bringing the cumulative accrual under the 1998 Plan to $9,434,467 at December
31, 1999. Approximately $8,295,916 represents a profit-sharing accrual on
unrealized gains and will not be paid out until the gains are realized. In
March 2000, the Company paid out 90 percent of the profit sharing on the 1999
realized gains of approximately $1,024,696; the remaining 10 percent or
approximately $113,855 will be paid out on completion and filing of the
Company's 1999 federal tax return. The amounts to be paid out under the 1998
Plan for the 1999 year are shown in the "Summary Compensation Table."
17
Federal Income Tax Consequences
- -------------------------------
A Participant will realize income at the time an award is paid to the
Participant under the Plan. The Company will be entitled to a deduction for
the amount of the award at the same time, provided that, with respect to the
deduction to be taken for any award paid to a Covered Employee that exceeds,
when combined with other compensation paid to that individual, $1 million for
the applicable tax year, shareholder approval of the Plan's performance goals
is obtained and the Award qualifies for deduction under Section 162(m) of the
Code.
Vote Required
- -------------
Approval of the performance goals described above must receive the
affirmative vote of the holders of a majority of votes cast at the meeting,
in person or by proxy on this proposal. If the Shareholders do not approve
the performance goals, the Company could implement the 2000 Plan or modify or
terminate the 2000 Plan. At present, the Company has no plans to take any
particular action in the event of a negative Shareholder vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PERFORMANCE
GOALS UNDER THE HARRIS & HARRIS GROUP, INC. EMPLOYEE PROFIT-SHARING PLAN
INCLUDED IN PROPOSAL 2.
PROPOSAL TO RATIFY, CONFIRM AND APPROVE THE BOARD OF DIRECTORS' SELECTION OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANT FOR ITS
FISCAL YEAR ENDING DECEMBER 31, 19992000
(Proposal No. 2)3)
Arthur Andersen LLP has been selected as the independent accountant to
audit the accounts of the Company for and during the fiscal year ending
December 31, 19992000 by a majority of the Company's Board of Directors,
including a majority of the Directors who are not interested persons of the
Company, by vote cast in person andperson. This selection is subject to ratification
or rejection by the shareholders.stockholders of the Company. The Company knows of no
direct or indirect financial interest of Arthur Andersen LLP in the Company.
A representative of Arthur Andersen LLP is not expected to be present
at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO
RATIFY, CONFIRM AND APPROVE THE BOARD OF DIRECTORS' SELECTION OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANT FOR ITS FISCAL
YEAR ENDING DECEMBER 31, 1999.2000.
18
OTHER BUSINESS
The Board of Directors does not intend to bring any other matters
before the Annual Meeting and, at the date of mailing of this proxy
statement, has not been informed of any matter that others may bring before
the Annual Meeting. However, if any other matters properly come before the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote such proxy in accordance with their judgment on such matters.
1319
SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented for inclusion in the
Company's proxy statement and form of proxy for the next annual meeting of
shareholders to be held in 2000 must be received in writing by the Secretary
of the Company at Harris & Harris Group, Inc., One Rockefeller Plaza,
Rockefeller Center, New York, New York 10020 no later than November 25, 199929, 2000,
in order for such proposals to be considered for inclusion in the proxy
statement and proxy relating to the 20002001 annual meeting of shareholders.
Submission of a proposal does not guarantee inclusion in the proxy statement,
as the requirements of certain federal laws and regulations must be met by
such proposals.
Under the Company's Bylaws, nominations for Director may be made only
by the Board or the Nominating Committee, or by a stockholder entitled to
vote who has delivered written notice to the Secretary of the Company
(containing certain information specified in the Bylaws) not less than 90
days nor more than 120 days prior to the anniversary of the date of the
immediately preceding annual meeting of shareholders. The Bylaws also
provide that no business may be brought before an annual meeting of the
stockholders except as specified in the notice of the meeting or as otherwise
properly brought before the meeting by or at the direction of the Board or by
a stockholder entitled to vote who has delivered written notice to the
Secretary of the Company (containing certain information specified in the
Bylaws) not less than 90 days nor more than 120 days prior to the anniversary
of the date of the immediately preceding annual meeting of shareholders.
Rule 14a-4 of the Securities and Exchange Commission's proxy rules
allows the Company to use discretionary voting authority to vote on matters
coming before an annual meeting of stockholders, if the Company does not have
notice of the matter at least 45 days before the anniversary of the date on
which the Company first mailed its proxy materials for the prior year's
annual meeting of stockholders or the date specified by the advance notice
provision in the Company's Bylaws. The Company's Bylaws contain such an
advance notice provision as described above. For the Company's Annual
Meeting of Stockholders expected to be held on April 28, 2000,26, 2001, stockholders
must submit such written notice to the Secretary of the Company on or before
December 24,
1999.29, 2000.
A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Secretary of the Company.
------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) FOR
THE YEAR ENDED DECEMBER 31, 1998,1999, WHICH IS REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE MADE AVAILABLE TO STOCKHOLDERS TO
WHOM THIS PROXY STATEMENT IS MAILED, WITHOUT CHARGE, UPON WRITTEN REQUEST TO
THE OFFICE OF THE TREASURER OF HARRIS & HARRIS GROUP, INC., ONE ROCKEFELLER
PLAZA, SUITE 1430, NEW YORK, NY 10020.
By Order of the Board of Directors
New York, New York Rachel M. Pernia
March 24, 199929, 2000 Secretary
1420