UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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DEL GLOBAL TECHNOLOGIES CORP.
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DEL GLOBAL TECHNOLOGIES CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 14, 2004
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of DEL GLOBAL TECHNOLOGIES CORP., a New York corporation (the
"Company"), will be held at the Hilton Rye Town, located at 699 Westchester
Avenue, Rye Brook, NY 10573, on January 14, 2004 at 10:00 a.m., local time, for
the following purposes:
1. To elect eight (8) members of the board of directors of the
Company (the "Board") to serve until the next annual meeting of
stockholders and until their successors have been duly elected
and qualify;
2. To approve Deloitte & Touche LLP as the Company's independent
auditors for the Company's fiscal year ending July 31, 2004;
and
3. To transact such other business as may properly be brought
before the Meeting or any adjournment or postponement thereof.
These proposals are more fully described in the proxy statement accompanying
this notice. The Company's Board recommends that you vote FOR each of these
proposals. The Meeting may be postponed or canceled by action of the Board upon
public notice given prior to the time previously scheduled for the Meeting or
adjourned by action of the chairman of the Meeting. Only stockholders of record
at the close of business on November 25, 2003 are entitled to vote at the
Meeting.
All stockholders are cordially invited to attend the Meeting in person. However,
to ensure your representation at the Meeting, you are urged to mark, sign, date
and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed. Any stockholder attending the Meeting may
vote in person even if such stockholder has returned a proxy, as long as the
shares are held in the stockholder's name or the brokerage firm, bank or other
holder of record acting as the stockholder's nominee confirms the stockholder's
ownership in writing. A list of stockholders entitled to vote at the Meeting
will be available for inspection at our offices.
If you have any further questions concerning the Meeting or any of the
proposals, please contact Thomas V. Gilboy at (914) 686-3600.
By Order of the Board of Directors
------------------------------
Thomas V. Gilboy
Chief Financial Officer and Secretary
Valhalla, New York
Dated: December 1, 2003
DEL GLOBAL TECHNOLOGIES CORP.
ONE COMMERCE PARK
VALHALLA, NY 10595
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 14, 2004
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INTRODUCTION
This Proxy Statement is being furnished to stockholders by the Board
of Directors of DEL GLOBAL TECHNOLOGIES CORP., a New York corporation (the
"Company"), in connection with the solicitation of the proxies in the
accompanying form for use at the 2004 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on January 14, 2004, at the Hilton Rye Town,
located at 699 Westchester Avenue, Rye Brook, NY 10573, at 10:00 a.m., local
time, or at any adjournment or postponement thereof.
The date of this Proxy Statement is December 1, 2003, the
approximate date on which this Proxy Statement and the accompanying form of
proxy were first sent or given to stockholders.
GENERAL INFORMATION
PLACE AND TIME. The Meeting will be held at the Hilton Rye Town,
located at 699 Westchester Avenue, Rye Brook, NY 10573, on Wednesday, January
14, 2004, at 10:00 a.m. local time.
RECORD DATE AND VOTING. The Board of Directors fixed the close of
business on Tuesday, November 25, 2003, as the record date (the "Record Date")
for the determination of holders of outstanding shares of the Company entitled
to notice of and to vote on all matters presented at the Meeting. Such
stockholders will be entitled to one vote for each share held on each matter
submitted to a vote at the Meeting. On the Record Date, there were 10,332,548
shares of the Company's Common Stock, $.10 par value per share (the "Common
Stock"), issued and outstanding, each of which is entitled to one vote on each
matter to be voted upon. Stockholders may vote in person or by proxy.
PURPOSES OF THE MEETING. The purposes of the Meeting are to vote
upon (i) the election of eight (8) directors for the ensuing year, (ii) the
approval of Deloitte & Touche LLP as the Company's independent auditors for the
fiscal year ending July 31, 2004; and (iii) such other business as may properly
be brought before the Meeting and any adjournment or postponement thereof.
QUORUM. The required quorum for the transaction of business at the
Meeting is a majority of the votes eligible to be cast by holders of shares of
Common Stock issued and outstanding on the Record Date. Shares that are voted
"FOR," "AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
Meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Meeting (the "Votes Cast") with respect to such matter.
ABSTENTIONS AND BROKER NON-VOTES. Broker "non-votes" and the shares
of Common Stock as to which a stockholder abstains are included for purposes of
determining whether a quorum of shares of Common Stock is present at a meeting.
A broker "non-vote" occurs when a nominee holding shares of Common Stock for the
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Neither broker "non-votes" nor
abstentions are included in the tabulation of the voting results on the election
of directors or issues requiring approval of a majority of the Votes Cast, such
as approval of our independent auditors, and, therefore, they do not have the
effect of votes in opposition in such tabulations.
VOTING OF PROXIES. The Board of Directors of the Company is asking
for your proxy. Giving the Board of Directors your proxy means you authorize it
to vote your shares at the Meeting in the manner you direct. You may vote for
all, some or none of the director nominees. You may also vote for or against the
other proposals or abstain from voting. All valid proxies received prior to the
Meeting will be voted. All shares represented by a proxy will be voted, and
where a stockholder specifies by means of the proxy a choice with respect to any
matter to be acted upon, the shares will be voted in accordance with the
specification so made. If no choice is indicated on the proxy, the shares will
be voted FOR the Company's eight (8) director nominees, FOR approval of Deloitte
& Touche LLP as the Company's independent public accountants and as the proxy
holders may determine in their discretion with respect to any other matters that
properly come before the Meeting. A stockholder giving a proxy has the power to
revoke his or her proxy, at any time prior to the time it is voted, by
delivering to the Secretary of the Company a written instrument that revokes the
proxy or a validly executed proxy with a later date, or by attending the Meeting
and voting in person. The directors receiving a plurality of Votes Cast will be
elected to fill the seats of our Board of Directors. For the other proposal to
be approved, we require the favorable vote of a majority of Votes Cast. As of
the Record Date, there were 10,332,548 shares of the Company's Common Stock
issued and outstanding. The form of proxy accompanying this Proxy Statement
confers discretionary authority upon the named proxyholders with respect to
amendments or variations to the matters identified in the accompanying Notice of
Meeting and with respect to any other matters which may properly come before the
Meeting. As of the date of this Proxy Statement, management of the Company knows
of no such amendment or variation or of any matters expected to come before the
Meeting which are not referred to in the accompanying Notice of Annual Meeting.
ATTENDANCE AT THE MEETING. Only holders of Common Stock, their proxy
holders, and the Company's invited guests may attend the Meeting. If you wish to
attend the Meeting in person but you hold your shares through someone else, such
as a stockbroker, you must bring proof of your ownership and identification with
a photo at the Meeting. For example, you could bring an account statement
showing that you beneficially owned shares of Common Stock of the Company as of
the Record Date as acceptable proof of ownership.
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COSTS OF SOLICITATION. The Company will bear the cost of printing
and mailing proxy materials, including the reasonable expenses of brokerage
firms and others for forwarding the proxy materials to beneficial owners of
Common Stock. In addition to solicitation by mail, solicitation may be made by
certain directors, officers and employees of the Company, or firms specializing
in solicitation; and may be made in person or by telephone or telegraph. No
additional compensation will be paid to any director, officer or employee of the
Company for such solicitation.
CERTAIN FINANCIAL INFORMATION. Please take note that the Company's
Annual Report on Form 10-K for the fiscal year ended August 2, 2003 (the "2003
Annual Report") (without exhibits) is enclosed with this Proxy Statement.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF
THE 2003 ANNUAL REPORT, INCLUDING THE COMPANY'S CERTIFIED FINANCIAL STATEMENTS
AND ANY EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), BY WRITING TO THE CORPORATE SECRETARY, DEL GLOBAL TECHNOLOGIES
CORP., ONE COMMERCE PARK, VALHALLA, NY 10595.
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PROPOSAL I--ELECTION OF DIRECTORS
NOMINEES
The Board is presently comprised of eight (8) directors, five (5) of
whom were elected at the Company's Annual Meeting of Stockholders held on May
29, 2003 and three (3) of whom were appointed by the Board of Directors on
November 20, 2003. The Board of Directors increased the size of the Board from
five (5) to eight (8) directors on November 20, 2003 in order to allow for the
appointment of the three (3) additional directors to assist the Company with
respect to its efforts to increase shareholder value. Unless otherwise
specified, all Proxies received will be voted in favor of the election of the
persons named below as directors of the Company. Directors elected at the
Meeting will serve until the next Annual Meeting of Stockholders of the Company
and until their successors shall be duly elected and qualify. Each of the
nominees currently serves as a director of the Company. The terms of office of
the current directors expire at the Meeting and when their successors are duly
elected and qualify. The Company has no reason to believe that any of the
nominees will be unable or unwilling to serve as a director, if elected. Should
any of the nominees not remain a candidate for election at the date of the
Meeting, the Proxies will be voted in favor of those nominees who remain
candidates and may be voted for substitute nominees selected by the Board of
Directors. The Board of Directors has no reason to believe that any nominee
listed below will be unwilling or unable to serve as director of the Company.
INFORMATION WITH RESPECT OF NOMINEES
The names and ages of each nominee for director of the Company, each
of their principal occupations at present and for the past five (5) years and
certain other information about each of the nominees are set forth below:
ALL OFFICES WITH
NAME AGE THE COMPANY(1) DIRECTOR SINCE
---- --- -------------- --------------
David W. Wright 45 Director 2003
Gerald M. Czarnecki 63 Director 2003
Suzanne M. Hopgood 54 Director and 2003
Chairman of Board 2003
Wallace Barnes 77 Director
Edgar J. Smith, Jr. 69 Director 2002
Walter F. Schneider 68 Director, President 2003
and Chief
Executive Officer
James R. Henderson 45 Director 2003
Michael J. Cheshire 54 Director 2003
(1) See also the "Committee Membership" chart included in this Proxy
Statement.
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SUZANNE M. HOPGOOD joined the Board on June 3, 2003 and has served
as Chairman since October 8, 2003. She has served as the President of The
Hopgood Group, LLC, a provider of workout consulting and interim management
services, since founding the company in 1985. From August 2000 to October 2001,
Ms. Hopgood served as President, Chief Executive Officer and as a director of
Houlihan's Restaurant Group, Inc., an operator of full service casual dining
restaurants. Ms. Hopgood was hired by Houlihan's at a time of financial distress
to apply her expertise in crisis and turnaround management. After its operations
were stabilized, control of Houlihan's was transferred to its secured lenders in
October 2001, at which time they installed a new management team. Houlihan's
filed a voluntary petition for Chapter 11 bankruptcy on January 23, 2002, was
successfully reorganized and emerged from bankruptcy on October 1, 2002 with the
equity sponsorship of the new management team and the secured lenders. From May
1998 to May 2000, Ms. Hopgood served as Chairman of the Board of Furr's
Restaurant Group, Inc. ("Furr's"), an operator of family-style cafeteria and
buffet restaurants formerly listed on the New York Stock Exchange ("NYSE"). She
also served as Chief Executive Officer of Furr's from May 1998 to October 1998
and as a director from May 1996 to May 2000. Ms. Hopgood has extensive
experience in corporate workouts, turnarounds and restructuring. She is the
President of the National Association of Corporate Directors, Connecticut
Chapter. The business address of Ms. Hopgood is c/o The Hopgood Group, LLC, 44
Capitol Avenue, Suite 103A, Hartford, CT 06106.
GERALD M. CZARNECKI joined the Board on June 3, 2003. He has served
as the Chairman of The Deltennium Corporation, a privately held holding company
("Deltennium"), since November 1995. Deltennium operates as a holding company
for various operating businesses of which Mr. Czarnecki is the principal
stockholder, including Deltennium Capital, Inc., a venture capital firm. Prior
to forming Deltennium, Mr. Czarnecki had a broad career as a corporate executive
including serving as Chairman & CEO of Honfed Bank, a multi-billion dollar
bank; President of UNC Inc., a manufacturing and services company in the
aviation industry; and Senior Vice President of Human Resources and
Administration of IBM, the world's largest computer company. Mr. Czarnecki is a
frequent speaker and seminar leader on a broad range of corporate governance
issues and serves on a number of corporate boards. He has served as a member of
the Board of Directors and Chairman of the Audit Committee of State Farm
Insurance Companies since 1998; serves as non-executive Chairman of Renaissance,
Inc.; and serves as a member of the Board of Directors and member of the Audit
Committee of ATM National, Inc. He is a member of the Board of Directors of the
National Association of Corporate Directors, National Capital Area Chapter and
is a consultant to Board Governance Services, Inc., a third party provider of
advisory services to boards of directors.
DAVID W. WRIGHT joined the Board on June 3, 2003. He has served
since 1997 as the President of the general partner of Henry Partners, L.P. and
Matthew Partners, L.P., two private investment partnerships that invest in
securities of publicly traded companies. Mr. Wright served on the Board of
Directors of TAB Products Co., a document management company formerly listed on
the American Stock Exchange, from September 2001 until the sale of the company
in October 2002. Mr. Wright also served as a member of TAB Products' Audit
Committee, Employee Benefits Committee and its Special Committee, which was
formed to oversee the company's sale process.
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WALLACE BARNES joined the Board on June 3, 2003. He has served in
various capacities including President, Chief Executive Officer, Chairman of the
Board and Non-Executive Chairman of Barnes Group Inc., a diversified
international manufacturer of precision components and assemblies and
distributor of industrial supplies listed on the NYSE, from 1954 to April 1995.
From 1971 to May 1996, Mr. Barnes served as a director of Aetna Life & Casualty
Company, a predecessor of Aetna Inc., a leading health care provider listed on
the NYSE. From December 1988 to December 1998, he served as a director of Rohr,
Inc., an aerospace supplier listed on the NYSE, prior to its merger with B. F.
Goodrich Company, during which time he also served as Chairman of the Board of
that company beginning in December 1994. From May 1983 to May 1998, he served as
a director of Rogers Corporation, a developer and manufacturer of
high-performance specialty materials for the wireless communications, computers
and networking, imaging, transportation and consumer industries listed on the
NYSE. He has also served as Chairman of the Board of Tradewind Turbines, Inc.,
an aircraft maintenance and overhaul company, since December 1993. Mr. Barnes
currently dedicates a majority of his time serving as Chairman of the
Connecticut Employment and Training Commission which is charged with overseeing
and improving the coordination of all education, employment and training
programs in Connecticut. Governor John Rowland appointed Mr. Barnes to this
position in February 1997.
EDGAR J. SMITH, JR. has been a member of the Company's Board of
Directors since December 2002. He was Vice President, General Counsel and
Secretary of Witco Corporation from 1998 until his retirement in 1999.
Previously Mr. Smith had been Vice President, General Counsel and Secretary of
General Signal Corporation (NYSE). Mr. Smith is also a director of Tannehill
Industries, Inc., a manufacturer of coal feeding equipment as well as two
not-for-profit organizations, the Hudson River Museum of Westchester and Pro
Arte Singers.
WALTER F. SCHNEIDER has been a member of the Company's Board of
Directors since November 20, 2003 and has served as our President and Chief
Executive Officer since October 10, 2003. Prior to his appointment as President
and Chief Executive Officer, Mr. Schneider was appointed President of Del
Medical Systems Group and Villa Sistemi Medicali S.p.A. in April 2002, and prior
to that date, he was the Senior Vice President of Operations of the Del Medical
Systems Group from the time he joined us in 2000 to April 2002. From 1985 to
1999, he was President of the Bennett Division of Thermo Electron Co., a
manufacturer of general purpose radiology equipment.
JAMES R. HENDERSON has been a member of the Company's Board of
Directors since November 20, 2003. Mr. Henderson has served as President and
Chief Operating Officer of WebFinancial Corporation ("WebFinancial"), which,
through its operating subsidiaries, operates in niche banking markets, since
November 2003 and as Vice President of Operations of WebFinancial since
September 2000. He has also served as a director of the WebBank subsidiary of
WebFinancial since March 2002 and a director and Chief Operating Officer of the
WebFinancial Holding Corporation subsidiary of WebFinancial since January 2000.
Mr. Henderson has served as a Vice President of Steel Partners, Ltd. since March
2002. Mr. Henderson served as a Vice President of Steel Partners Services, Ltd.
from August 1999 through March 2002. He has also served as President of Gateway
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Industries, Inc. since December 2001. Mr. Henderson served as a director and
acting Chief Executive Officer of ECC International Corp., a manufacturer and
marketer of computer controlled simulators for training personnel to perform
maintenance and operator procedures on military weapons, from December 1999 and
July 2002, respectively, until September 2003. He has served as a director of SL
Industries, Inc. since January 2002. From January 2001 to August 2001, Mr.
Henderson served as President of MDM Technologies, Inc., a direct mail and
marketing company that was principally controlled by WebFinancial's Chief
Executive Officer and Chairman. From 1996 to July 1999, Mr. Henderson was
employed in various positions with Aydin Corporation which included a tenure as
President and Chief Operating Officer from October 1998 to June 1999. Prior to
his employment with Aydin Corporation. Mr. Henderson was employed as an
executive with UNISYS Corporation, an e-business solutions provider.
MICHAEL J. CHESHIRE has been a member of the Company's Board of
Directors since November 20, 2003. Mr. Cheshire was the Chairman and Chief
Executive Officer of Gerber Scientific, Inc., a leading manufacturer of CAD/CAM
systems and supplies focused on the apparel design and production, sign-making
and specialty graphics and ophthalmic lens productions industries from September
1998 to November 2001 and was its President and COO from February 1997 to August
1998. Prior to joining Gerber Scientific, Inc., Mr. Cheshire spent 21 years with
the General Signal Corporation (NYSE), a $2 billion manufacturer of, among other
products, power supplies, and was most recently President of their electrical
group. Mr. Cheshire is a director and a member of the Executive and Audit
Committees of WESCO International Inc. (NYSE). Mr. Cheshire has a degree in
Applied Physics.
During the Company's fiscal year ended August 2, 2003, the Board of
Directors held 26 regularly scheduled and special meetings. During this period,
all of the directors attended or participated in more than 75% of the aggregate
of the total number of meetings of the Board of Directors and the total number
of meetings held by all committees of the Board of Directors on which each such
director served (during the periods during which such director served on such
committee).
The Company has three standing committees: the Audit Committee (the
"Audit Committee"), the Compensation and Stock Option Committee (the
"Compensation Committee"), and the Nominating and Governance Committee (the
"Nominating Committee"). Each of these committees has a written charter approved
by the Board of Directors. A copy of each charter can be found under the
"Investor Relations" section of our website at www.delglobal.com. Additionally,
a copy of the charter for the Audit Committee is attached as EXHIBIT B to the
Company's Proxy Statement for the 2003 annual meeting of stockholders filed on
April 29, 2003.
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The members of the committees are identified in the following table.
COMMITTEE MEMBERSHIP
NOMINATING
COMPENSATION AND
AND STOCK GOVERNANCE
DIRECTOR AUDIT COMMITTEE OPTION COMMITTEE COMMITTEE
-------- --------------- ---------------- ---------
WALLACE BARNES X X
GERARD M. CZARNECKI CHAIR X
SUZANNE M. HOPGOOD X CHAIR
EDGAR J. SMITH, JR. X X
DAVID W. WRIGHT X CHAIR X
The Audit Committee is responsible for reviewing the financial
information which will be provided to stockholders and others, the systems of
internal controls, which management and the Board of Directors have established,
the performance and selection of independent auditors, and the Company's audit
and financial reporting processes. The Audit Committee held 11 meetings during
the last fiscal year. The Board of Directors has determined that Mr. Czarnecki
is an "audit committee financial expert" as defined in Item 401(h) of Regulation
S-K. Although the Company is currently not listed on any exchange, each of Mr.
Czarnecki and the other members of the Audit Committee is an "independent
director" as defined in Rule 4200 of the Marketplace Rules of the National
Association of Securities Dealers, Inc.
The basic responsibility of the Compensation Committee is to review
the performance and development of management in achieving corporate goals and
objectives and to assure that the Company's senior executives are compensated
effectively in a manner consistent with the Company's strategy, competitive
practice, and the requirements of the appropriate regulatory bodies. Toward that
end, the Compensation Committee oversees all of the Company's compensation,
equity and employee benefit plans and payments, including the Company's Option
Plan (as defined herein). This committee held 5 meetings during the last fiscal
year. Although the Company is not listed on any exchange, each of the members of
the Compensation Committee is an "independent director" as defined in Rule 4200
of the Marketplace Rules of the National Association of Securities Dealers,
Inc., and an "outside director" as defined in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code").
The Nominating Committee is responsible for recommending to the full
Board of Directors candidates for election to the Board of Directors. This
committee held one meeting during the last fiscal year. The Nominating Committee
considers nominees proposed by stockholders. To recommend a prospective nominee
for the Nominating Committee's consideration, stockholders should submit the
candidate's name and qualifications to the corporate secretary in writing to the
following address: Del Global Technologies Corp., One Commerce Park, Valhalla NY
10504, Attn: Thomas V. Gilboy with a copy to the Company's General Counsel at
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the following address: Olshan Grundman Frome Rosenzweig & Wolosky LLP, 505 Park
Avenue, New York, New York 10022, Attn: Steven Wolosky, Esq. Each member of this
committee is an "independent director" as defined in Rule 4200 of the
Marketplace Rules of the National Association of Securities Dealers, Inc.
DIRECTOR COMPENSATION
In June 2003, based upon the recommendation of the Compensation
Committee, the Board of Directors adopted changes to the cash and equity
compensation to be paid to non-employee members of the Board of Directors and
committees of the Board of Directors effective as of June 1, 2003. These changes
were adopted in order to bring the compensation packages of the Company's board
members more in line with compensation paid to directors of comparable
companies, to recognize the increased workload and responsibilities of the Board
going forward, and to enable the Company to attract qualified directors when
needed. The new Board compensation consists generally of the following:
o Each non-employee director will receive an annual retainer of
$16,000;
o Each non-employee director will receive an additional fee of
$1,000 per each full length Board meeting attended (with lesser
compensation for telephonic meetings, at the discretion of the
chair of the Board or committee, as applicable);
o Each non-employee member of each standing committee will
receive a fee of $500 per each full-length committee meeting
attended; and $250 for shorter duration committee meetings
attended;
o Chairs of the Board and the various standing committees,
excepting the Audit Committee, will receive double meeting
fees. In lieu of the foregoing, the Chair of the Audit
Committee will receive an additional $1,000 per Audit Committee
meeting;
o In addition to the above meeting fees, the Chairman of the
Board receives $750 per each day other than Board meeting days,
where he or she spends more than half of such day working at
the Company facilities; and
o Each non-employee member of the Board receives a one-time grant
of 25,000 options to purchase the Company's Common Stock, with
an exercise price equal to the fair market value on the date of
grant.
From August 4, 2002 through May 29, 2003, non-employee directors
were paid quarterly retainers, at a rate of $25,000 per annum for serving on the
Board of Directors. There were no options granted to non-employee directors from
August 4, 2002 through May 29, 2003, except for the grant of 25,000 options to
purchase the Company's Common Stock, with an exercise price equal to the fair
market value on the date of grant, to Mr. Edgar J. Smith, Jr.
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RECOMMENDATION
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THESE NOMINEES.
MANAGEMENT
ADDITIONAL EXECUTIVE OFFICERS OF THE COMPANY WHO ARE NOT DIRECTORS OR DIRECTOR
NOMINEES
THOMAS V. GILBOY, 49, has served as our Chief Financial Officer,
Treasurer and Secretary since February 28, 2001. From 2000 to 2001, Mr. Gilboy
was Chief Financial Officer of Microwave Power Devices Inc., a supplier of
signal amplification equipment for military and commercial wireless
infrastructure applications. For the prior 3 years, Mr. Gilboy had provided
certain consulting services (including sometimes acting as Chief Financial
Officer) to troubled public and private companies, including Hanover Direct,
Inc., New Colt Holdings Inc., and DeVlieg-Bullard Corp. From 1996 to 1998, Mr.
Gilboy was Chief Financial Officer of PureTec Corp., an international plastics
company.
EDWARD FERRIS, 46, has served as our Senior Vice President,
Corporate and Organization Development since July 2002. From 1996 until July
2002, he was President of Plus Ultra, Inc., consultants in business and
organizational strategy, and former consultants to us.
DANIEL J. PISANO, Jr., 56, has served as the President of Del Power
Conversion Group since July 2001. Prior to joining us, he was the President of
Dynamic Marketing Corp. a provider of retail marketing services. From 1998 to
2000, he was the President of Roper Scientific, Inc., a division of Roper
Industries Inc. and a manufacturer of digital cameras.
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PROPOSAL 2 - -APPROVAL OF INDEPENDENT AUDITORS
The Audit Committee selects our independent public accountants. At
the Meeting, the stockholders are being asked to approve Deloitte & Touche LLP
as our independent public accountants for the fiscal year ending July 31, 2004.
If the stockholders do not approve Deloitte & Touche LLP as the
Company's independent public accountants for the fiscal year ending July 31,
2004, the Audit Committee will consider the selection of other independent
public accountants whose appointment for any period subsequent to the next
annual meeting will be subject to the stockholders at that meeting for the
fiscal year ended July 31, 2004. Even if the stockholders approve Deloitte &
Touche LLP, the Audit Committee, in its discretion, may direct the appointment
of a different independent accounting firm for such fiscal year if the Audit
Committee feels that such a change would be in our and our stockholders' best
interests.
It is anticipated that a representative of Deloitte & Touche LLP
will be present at the Meeting. Such representative will be afforded an
opportunity to make a statement at the Meeting if he or she so desires and he or
she will be available to respond to appropriate questions from stockholders
during the Meeting.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP, the member firms
of Deloitte Touche Tohmatsu, and their respective affiliates (collectively
"Deloitte & Touche") for professional services rendered for (i) the audit of our
annual financial statements set forth in our 2003 Annual Report and (ii) the
reviews of the interim financial statements included in our Quarterly Reports on
Form 10-Q for that fiscal year were $635,086. The aggregate fees billed by
Deloitte & Touche for professional services rendered for (i) the audit of our
annual financial statements set forth in our Annual Report on Form 10-K for the
fiscal year ended August 3, 2002, and (ii) the reviews of the interim financial
statements included in our Quarterly Reports on Form 10-Q for that fiscal year
were $668,000.
AUDIT-RELATED FEES
The aggregate fees billed by Deloitte & Touche LLP for Audit-Related
services for the fiscal year ended August 2, 2003 were $137,000. These fees
related to reviews of a preliminary registration statement on Form S-1 and a
subsequent amendment on Form S-1/A. The aggregate fees billed by Deloitte &
Touche LLP for Audit-Related services for the fiscal year ended August 3, 2002
were $2,219,500. These fees related to restatements of certain July 28, 2001 and
prior financial information, prepared by previous management, including the
pushback of certain adjustments to the prior periods.
TAX FEES
The aggregate fees billed by Deloitte & Touche LLP for tax services
for the fiscal year ended August 2, 2003 were $60,212. The aggregate fees billed
by Deloitte & Touche LLP for tax services for the fiscal year ended August 3,
2002 were $122,000. These fees relate to tax planning and consulting work.
-11-
ALL OTHER FEES
There were no fees for other professional services rendered during
the fiscal years ended August 2, 2003 or August 3, 2002.
The Audit Committee has advised us that it has determined that the
non-audit services rendered by Deloitte & Touche during our most recent fiscal
year are compatible with maintaining the independence of such auditors.
The affirmative vote of the majority of Votes Cast at the Meeting is
required for the ratification of Deloitte & Touche as our independent public
accountants.
The Audit Committee recommends the approval of Deloitte & Touche LLP
as the Company's independent auditors for the fiscal year ending July 31, 2004.
Deloitte & Touche LLP is a member of the SEC Practice Section of the American
Institute of Certified Public Accountants.
RECOMMENDATION
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE
APPROVAL OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING JULY 31, 2004.
CORPORATE GOVERNANCE
Our business, property and affairs are managed by, or are under the
direction of, the Board of Directors pursuant to the New York Business
Corporation Law and our by-laws and certificate of incorporation. Members of the
Board of Directors are kept informed of our business through discussions with
Walter F. Schneider, our Chief Executive Officer and President, and with key
members of management, by reviewing materials provided to them and by
participating in meetings of the Board of Directors and its committees.
The Company maintains a corporate governance page on its website
which includes key information about its corporate governance initiatives,
including the Company's Corporate Governance Guidelines, Code of Business
Conduct and Ethics and charters for the committees of the Board of Directors.
The corporate governance page can be found at www.delglobal.com, by clicking on
"Investor Relations," and then "Corporate Governance."
The Company's policies and practices are compliant with the
corporate governance requirements of the Sarbanes-Oxley Act of 2002. The
Company's initiatives have included:
o The Board of Directors has adopted clear corporate governance
policies;
o A majority of the board members are independent of the Company
and its management;
o All members of the standing board committees--the Audit
Committee, the Compensation Committee, and the Nominating
Committee--are independent;
-12-
o The independent members of the Board of Directors meet
regularly without the presence of management;
o The charters of the board committees clearly establish their
respective roles and responsibilities;
o The Compensation and Stock Option Committee has established
stock ownership recommendations for all directors, such that
they own a cumulative total of at least $25,000 at cost of
Common Stock by December 31, 2004;
o The Company's employees have received training on, and affirmed
the Company's Code of Business Conduct and Ethics;
o The Chairman of the Company's Audit Committee serves as the
Company's Compliance Officer and monitors a hotline available
to all employees for reporting business abuses, including the
anonymous submission of employee complaints on accounting,
internal controls, or auditing matters;
o The Company has adopted a code of ethics that applies to its
principal executive officer and all members of its finance
department, including the principal financial officer and
principal accounting officer; and
o The Company has an outsourced internal audit control function
that maintains critical oversight over the key areas of its
business and financial processes and controls, and meets
regularly with the Company's Audit Committee without the
presence of management.
-13-
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning beneficial
ownership of Common Stock of the Company outstanding at November 21, 2003 by
each person or entity (including any "Group" as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), known by the Company to be the beneficial owner of more than five
percent of its outstanding Common Stock. The percentage ownership of each
beneficial owner is based upon 10,332,548 shares of Common Stock issued and
outstanding as of the Record Date, plus shares issuable upon exercise of
options, warrants or convertible securities (exercisable within 60 days after
the Record Date) that are held by such person or entity, but not those held by
any other person or entity. The information presented in this table is based
upon the most recent filings with the Commission by such persons or upon
information otherwise provided by such persons to the Company. Unless otherwise
indicated, the address for each beneficial holder is One Commerce Park,
Valhalla, NY 10595.
Name and address Amount and nature of
of beneficial owner beneficial ownership(1) Percent of Class
------------------- ----------------------- ----------------
Benson Associates LLC 1,159,163(2) 11.2%
111 SW 5th, Suite 2130
Portland, OR 97204
Royce & Associates LLC 1,100,110(3) 10.7%
1414 Avenue of the Americas
New York, NY 10019
Warren G. Lichtenstein 1,832,162(4) 17.7%
c/o Steel Partners II, L.P.
590 Madison Avenue, 32nd Floor
New York, NY 10022
Wellington Management Co. LLP 903,024(5) 8.7%
75 State Street
Boston, MA 02109
Samuel P. Sporn 1,166,666(6) 11.3%(6)
c/o Schoengold & Sporn, P.C.
19 Fulton Street, Suite 406
New York, NY 10038
- ----------------------------------
(1) Unless otherwise noted, each beneficial owner has sole voting and
investment power with respect to the shares shown as beneficially owned by
him or it.
(2) According to information contained in a Schedule 13G/A dated March 5,
2003, Benson Associates, LLC ("Benson"), an investment advisor registered
under the Investment Advisors Act of 1940 ("Investment Act"), is the
beneficial owner of 1,159,163 shares of Common Stock. In its role as
investment advisor, Benson has sole power to vote and dispose of the
shares of Common Stock but disclaims beneficial ownership of such shares
owned by it in a fiduciary capacity.
-14-
(3) According to information contained in a Schedule 13G dated February 4,
2003, Royce & Associates, LLC ("Royce"), an investment advisor registered
under the Investment Act, is the beneficial owner of 1,100,110 shares of
Common Stock. In its role as investment advisor, Royce has sole power to
vote the shares of Common Stock owned by Royce.
(4) According to information contained in an amendment to Schedule 13D filed
on a Schedule 13D/A dated October 16, 2003 filed jointly by Steel Partners
II, L.P., a Delaware limited partnership ("Steel Partners"), Warren G.
Lichtenstein, and WebFinancial Corporation, a Delaware corporation
("WebFinancial"), (collectively, the "Group"), the Group collectively is
the beneficial owner of 1,832,162 shares of our Common Stock. Steel
Partners, LLC, a Delaware limited liability company ("Partners LLC") is
the general partner of Steel Partners. Mr. Lichtenstein is the sole
executive officer and managing member of Partners LLC. By virtue of his
positions with Steel Partners and Partners LLC, Mr. Lichtenstein has the
sole power to vote and dispose of the 1,803,516 shares of our Common Stock
owned by Steel Partners. WebFinancial has sole power to vote and dispose
of 28,646 shares of our Common Stock. Mr. Lichtenstein is also the Chief
Executive Officer and director of WebFinancial Corporation. Mr.
Lichtenstein disclaims beneficial ownership of the 28,646 shares owned by
WebFinancial.
(5) According to information contained in a Schedule 13G dated February 14,
2003, Wellington Management Company, LLP ("Wellington"), an investment
advisor registered under the Investment Act, may be deemed the beneficial
owner of 903,024 shares of Common Stock of the Company. Clients of
Wellington are the owners of record of the shares held by Wellington.
Accordingly, in its role as investment advisor, Wellington has shared
power to vote as to 666,151 of our Common Stock and shared power to
dispose of all 903,024 of our Common Stock owned by Wellington.
(6) According to public record, as described below, Mr. Sporn beneficially
owns 1,166,666 shares. However, the Company believes that Mr. Sporn has
sold all or a significant portion of these shares and has not filed a
report of such sale with the Commission. According to information
contained in a Schedule 13D dated January 21, 2003, Schoengold & Sporn,
P.C. ("Schoengold"), a New York professional corporation, engaged in the
practice of law, may be deemed the beneficial owner of 833,333 shares of
Common Stock. Messrs. Samuel P. Sporn, Joel P. Laitman and Christopher
Lometti are attorneys with Schoengold. None of Messrs. Sporn, Laitman or
Lometti beneficially own any shares or have individual power to vote or
dispose or direct the disposition of the shares of our Common Stock owned
by Schoengold. Accordingly, Schoengold has sole power to direct the vote
and sole power to dispose or direct the disposition of the shares of our
Common Stock owned by Schoengold. The beneficial ownership of Schoengold
also includes a warrant to purchase 333,333 shares of our Common Stock,
which warrant is exercisable upon the effectiveness of the Registration
Statement on Form S-1.
-15-
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information concerning beneficial
ownership of Common Stock of the Company outstanding at November 21, 2003 by (i)
each director (and director nominee); (ii) each executive officer of the Company
(as identified in the Summary Compensation table) and (iii) by all directors and
executive officers of the Company as a group. The percentage ownership of each
beneficial owner is based upon 10,332,548 shares of Common Stock issued and
outstanding as of the Record Date, plus shares issuable upon exercise of
options, warrants or convertible securities (exercisable within 60 days after
the Record Date) that are held by such person or entity, but not those held by
any other person or entity. The information presented in this table is based
upon the most recent filings with the Commission by such persons or upon
information otherwise provided by such persons to the Company. Unless otherwise
indicated, the address for each beneficial holder is One Commerce Park,
Valhalla, NY 10595.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2)
------------------- ----------------------- -------------------
Samuel E. Park 250,000(3) 2.36%
Thomas V. Gilboy 52,500(3) *
Edward Ferris 25,000(3) *
Daniel J. Pisano, Jr. 29,000(3) *
Walter F. Schneider 91,000(3) *
David W. Wright 459,250(3)(4) 4.4%
Wallace Barnes 16,250(3) *
Edgar J. Smith, Jr. 6,250(3) *
Gerald M. Czarnecki 16,250(3) *
Suzanne M. Hopgood 10,250(3) *
James R. Henderson 6,250(3)(5) *
Michael J. Cheshire 6,250(3) *
All Directors and Named Executive 968,250(3) 8.95%
Officers as a group
(12 persons)
- ----------------------------------
*Represents less than 1% of the outstanding shares of our Common Stock.
-16-
(1) Unless otherwise noted, each director and executive officer has sole
voting and investment power with respect to the shares shown as
beneficially owned by him.
(2) Excludes the Common Stock issuable upon exercise of warrants issued to
certain stockholders in connection with settlement of a class action
lawsuit, registered pursuant to a registration statement on Form S-1 filed
on February 12, 2003, which was not effective as of the date of this Proxy
Statement.
(3) Includes shares of our Common Stock which may be acquired upon the
exercise of stock options which are presently exercisable or will become
exercisable within 60 days of November 21, 2003 as follows: Samuel E. Park
- 250,000, Thomas V. Gilboy - 52,500, Edward Ferris - 25,000, Daniel J.
Pisano, Jr. - 29,000, Walter F. Schneider - 91,000, David W. Wright -
6,250, Wallace Barnes - 6,250, Edgar J. Smith, Jr. - 6,250, Gerald M.
Czarnecki - 6,250, Suzanne M. Hopgood - 6,250, James R. Henderson - 6,250
and Michael Cheshire - 6,250.
(4) Includes 92,000 shares owned directly by Matthew Partners, L.P. ("Matthew
Partners"), and owned indirectly by Mr. Wright. Mr. Wright is the
President and Managing Member of Canine Partners, L.L.C. ("Canine
Partners"), which is the general partner of Henry Investment Trust, L.P.
("Henry Trust"), which is the general partner of Matthew Partners. Mr.
Wright disclaims beneficial ownership of the securities owned by Matthew
Partners, except to the extent of his pecuniary interest therein. Also
includes 353,000 shares owned directly by Henry Partners, L.P. ("Henry
Partners"), and owned indirectly by Mr. Wright. Mr. Wright is the
President and Managing Member of Canine Partners, which is the general
partner of Henry Trust which is the general partner of Henry Partners. Mr.
Wright disclaims beneficial ownership of the securities owned by Henry
Partners, except to the extent of his pecuniary interest therein. Also
includes 8,000 shares of which Mr. Wright has direct beneficial ownership.
(5) Mr. Henderson is a Vice President of Steel Partners, Ltd., an entity of
which Warren G. Lichtenstein is an affiliate by virtue of his ownership of
Steel Partners, Ltd. directly and through Steel Partners II, L.P., and Mr.
Henderson is also the President and Chief Operating Officer of
WebFinancial. Mr. Henderson disclaims beneficial ownership of the
1,832,162 shares of our Common Stock collectively owned by the Group and
the 28,646 shares of our Common Stock owned by WebFinancial.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers
and directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the Commission. Such officers,
directors and 10% stockholders are also required by Commission rules to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons, the Company
believes, during the fiscal year ended August 2, 2003, that there was compliance
with all Section 16(a) filing requirements applicable to its officers, directors
and 10% stockholders.
-17-
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following Summary Compensation Table sets forth the compensation
of Walter Schneider, our Chief Executive Officer, and our other four most highly
compensated executive officers during our fiscal years ended August 2, 2003,
August 3, 2002 and July 28, 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL OTHER
OTHER ANNUAL UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION ($)(2) OPTIONS SATION ($)
- --------------------------- ---- ---------- ------------ ------------------- ------- ----------
Walter F. Schneider 2003 $234,810 $22,773 $19,140 - -
Chief Executive Officer 2002 203,462 88,000 12,253 36,000(5) -
President, Medical Systems
Group 2001(11) 125,000 36,000 - 60,000(12) -
Thomas V. Gilboy 2003 205,320 19,172 - - -
Chief Financial Officer 2002 187,924 80,000 - 15,000(5) -
2001(7) 72,346 15,000 - 50,000(6) -
Edward Ferris 2003 201,156 21,404 54,060(3) - -
Senior Vice President,
Corporate and
Organizational Development 2002(8) 11,638 6,667 4,505 - -
Samuel E. Park 2003 370,092 18,754 81,842(3) - -
Former Chief Executive Officer 2002 353,901 220,500 64,425 50,000(5) -
2001(4) 80,769 $50,000 13,703 250,000(6) -
Daniel J. Pisano, Jr. 2003 228,467 12,000 - - -
President, Power 2002 227,758 88,000 - 54,000(5)(9) -
Conversion Group 2001(10) 7,692 4,000 - - -
-18-
- ----------------------------------
(1) The figures reported in the bonus column represent amounts earned and
accrued for each year.
(2) The amounts in this column represent payments on behalf of Messrs.
Schneider, Park and Ferris related to company apartments for their use.
Other than as disclosed herein, the aggregate amount of any perquisites or
other personal benefits for any individual executive officer was less than
$50,000 or 10% of the total annual salary and bonus for such officer, and
is therefore not included in the above table.
(3) With regard to Messrs. Park and Ferris, fiscal year 2003 amounts include
an apportionment of reimbursements of part of the calendar year 2003 tax
liability related to the use of the company apartments of $32,045 and
$21,328, respectively. Fiscal 2003 amounts for Mr. Park also include
premiums of $4,064 on life insurance the Company paid on his behalf and
payments on a leased vehicle of $10,200.
(4) Mr. Park was hired as Chief Executive Officer on May 1, 2001, with an
annual base salary of $350,000. Effective October 10, 2003 Mr. Park was
replaced by Mr. Schneider as Chief Executive Officer.
(5) Consists of nonqualified stock options granted on October 17, 2001. Such
stock options become exercisable immediately with an exercise price of
$1.80. They are exercisable through October 16, 2011.
(6) Consists of nonqualified stock options granted on April 23, 2001,
exercisable 25% on the date of grant and 25% each year thereafter with an
exercise price of $1.00, which options expire on April 22, 2011 except
with respect to Mr. Park. Mr. Park's options become exercisable 40% on the
date of grant and 20% each year thereafter with an exercise price of
$1.00. They are exercisable through April 22, 2011.
(7) Mr. Gilboy was hired as Chief Financial Officer on February 27, 2001, at
an annual base salary of $180,000.
(8) Mr. Ferris was hired as Senior Vice President, Corporate and
Organizational Development on July 1, 2002 at an annual base salary of
$200,000.
(9) Consists of nonqualified stock options granted on August 3, 2001. Such
stock options become exercisable in increments of 25% per year with an
exercise price of $1.15. They are exercisable through August 2, 2011.
(10) Mr. Pisano was hired as President, Power Conversion Group on July 11, 2001
at an annual base salary of $200,000.
(11) Mr. Schneider was hired on September 18, 2000 and was appointed as
President, Medical Systems Group on April 22, 2002, with an annual base
salary of $220,000. Effective October 10, 2003, Mr. Schneider became Chief
Executive Officer. The compensation for fiscal 2001 includes amounts paid
to Mr. Schneider prior to the time he became an executive officer of the
Company.
(12) Consists of nonqualified stock options granted on September 19, 2000. Such
options become exercisable 25% each year with an exercise price of $8.63.
They are exercisable through September 18, 2015.
There were no option grants in the fiscal year ended August 2, 2003
to any of the executive officers named in the Summary Compensation Table in this
Proxy Statement.
-19-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number Of Securities Value Of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired Value Options At Fiscal Year-End At Fiscal Year-End ($)(1)
Name On Exercise (#) Realized ($) -------------------------- -------------------------
---- --------------- ------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Walter F. Schneider - - 78,500 17,500 $63,075 $15,625
Thomas V. Gilboy - - 52,500 12,500 53,625 15,625
Edward Ferris - - 12,500 37,500 - -
Samuel E. Park - - 250,000 50,000 272,500 62,500
Daniel J. Pisano, Jr. - - 29,000 25,000 29,300 27,500
- ------------------
(1) Difference between the fair market value of the underlying Common Stock
($2.00) and the exercise price for in-the-money options on August 2, 2003.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of August 2, 2003 with
respect to our shares of Common Stock that may be issued under our existing
equity compensation plans:
(a) (c)
Number of (b) Number of
Securities to be Weighted- securities
issued upon average remaining
exercise of exercise price available for
outstanding of outstanding future issuance
options, options, under equity
warrants warrants compensation
Plan Category and rights and rights plans(1)
- ------------- ---------- -------------- --------
EQUITY COMPENSATION PLANS APPROVED BY SECURITY HOLDERS:
Stock Option Plan 2,116,815 $3.12 335,280
EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS:
Warrants issued in connection with the acquisition of Villa(2) 50,000 $7.94 None
Warrants granted for services rendered(3) 15,000 $7.69 None
Warrants issued in settlement of class action lawsuit(4) 1,000,000 $2.00 None
(1) Excludes securities reflected in column (a).
-20-
(2) Warrants granted to the former majority shareholder of Villa Sistemi
Medicali S.p.A. ("Villa") in connection with our acquisition of Villa in
December 1999. These warrants expire in December 2005.
(3) Warrants granted to consultants for services rendered in 1999. These
warrants expire in October 2004.
(4) Pursuant to our past class action settlement with our stockholders, we
issued warrants to purchase shares of our Common Stock at an exercise
price of $2.00 per share. The issuance of these warrants was pursuant to a
court order issued in connection with the settlement of the class action
lawsuit, and, therefore, was exempt from the registration requirements of
the Securities Act of 1933 pursuant to Section 3(a)(10) thereof. The
warrants expire in March 2008.
STOCK OPTION AND STOCK PURCHASE PLANS
OUR STOCK OPTION PLAN
We amended and restated our stock option plan as of December 14,
2000 and we amended it on July 17, 2003 (as amended, the "Option Plan"). The
amendment in December 2000 provided that any options expiring while our shares
are suspended from trading on the NASDAQ Stock Market will be subject to an
extension of six months from the earlier of the date trading resumes on a
nationally recognized exchange or the filing of our Form 10-K for the year ended
July 29, 2000. We have not filed and do not contemplate filing a Form 10-K for
the fiscal year ended 2000. Therefore, for this amendment of the Option Plan,
the relevant extension will be six months from the resumption of a listing or
quoting for our common stock on a nationally recognized stock exchange. The
amendment in July 2003 provided that non-qualified stock options expire no later
than ten (10) years from the date of grant.
The Option Plan will expire on December 31, 2009 unless it is
earlier terminated. The following summary of certain provisions of the Option
Plan does not purport to be complete and is subject to and is qualified in its
entirety by reference to the actual text of the Option Plan, a copy of which is
attached as an exhibit to our Annual Report on Form 10-K for the year ended
August 3, 2002. The Option Plan provides for the grant of incentive stock
options and non-qualified stock options to our executive officers, directors,
employees and consultants.
The Compensation Committee administers the Option Plan. Among other
things, the Compensation Committee: (i) determines participants to whom options
may be granted and the number of shares to be granted pursuant to each option,
based upon the recommendation of our chief executive officer; (ii) determines
the terms and conditions of any option under the Option Plan, including whether
options shall be incentive stock options, within the meaning of Section 422 of
the Internal Revenue Code, or non-qualified stock options; (iii) may vary the
vesting schedule of options; and (iv) may suspend, terminate or modify the
Option Plan. The Company has followed the practice that any Compensation
Committee recommendations of awards, options or compensation levels for senior
executive officers are approved by the entire Board, excluding any management
directors.
Under the Option Plan, incentive stock options have an exercise
price equal to their fair market value as of the grant date and, unless earlier
terminated, are exercisable for a period of ten (10) years from the grant date.
Non-qualified stock options may have an exercise price that is less than, equal
to or more than the fair market value on the grant date and, unless earlier
terminated, are exercisable for a period of up to ten (10) years from their
grant date.
-21-
Subject to amendment by the Compensation Committee, options granted
under the Option Plan vest up to 25% on an annual basis, beginning on the first
anniversary of the grant date, and may vest up to 100% on the fourth anniversary
of the grant date.
The Option Plan authorizes the issuance of options to purchase an
aggregate of 3,874,293 shares of our Common Stock, as adjusted by the
Compensation Committee, in its discretion, to reflect certain changes in our
capitalization. As of August 2, 2003, an aggregate of 335,280 shares were
available for issuance on options to be granted under the Option Plan. As of
August 2, 2003, options to purchase an aggregate of 2,116,815 shares were
outstanding at an average exercise price of $3.12 per share, having a range of
expiration dates through January 2017. During the fiscal year ended August 2,
2003, we granted options to purchase 275,000 shares of Common Stock at an
average exercise price of $2.81 per share. During the fiscal year ended August
2, 2003, no options were exercised and 148,246 options expired or were
cancelled. To date, options to purchase 1,631,078 shares of Common Stock granted
under the Option Plan have been exercised.
As of November 18, 2003, we had granted options to purchase 300,000
shares of Common Stock to Samuel E. Park, 65,000 shares of Common Stock to
Thomas V. Gilboy, 50,000 shares to Edward Ferris, 54,000 shares of Common Stock
to Daniel J. Pisano, Jr. and 96,000 shares of Common Stock to Walter F.
Schneider, all at an average exercise price of $1.42 per share.
The exercise price of options granted under the Option Plan may, at
the discretion of the Compensation Committee, be paid by the optionee in (i)
cash, (ii) check, (iii) shares of Common Stock owned for at least one year and
valued at their fair market value as of the date of exercise of the option, (iv)
an executed exercise notice together with irrevocable broker instructions to
sell the shares subject to the option and deliver promptly to us the proceeds
required to pay the option price, (v) a combination thereof or (vi) such other
consideration (other than a promissory note from the optionee) as the
Compensation Committee may deem appropriate. Shares underlying options that
expire or terminate for any reason without having been exercised in full shall
become available for future grants.
In the event we terminate the employment of an optionee for cause,
the optionee's unexercised options will terminate as of such termination date.
In the event an optionee retires, all unexercised options granted to such
optionee shall immediately vest in full and remain exercisable in accordance
with their terms, or for five (5) years after the date such optionee retires,
whichever period is shorter. If a retiring optionee remains on our Board of
Directors after retirement, then vested non-qualified stock options may be
exercised as long as the retired optionee remains a director and for a period of
six (6) months thereafter, or for five (5) years after retirement, whichever is
longer. Incentive stock options may only be exercised within their respective
terms or for three (3) months after retirement, whichever is shorter.
In the event of a termination of employment by reason of disability
or death, then all unexercised options held by the optionee shall immediately
vest and remain exercisable in accordance with their respective terms or for
three (3) years following such termination, whichever is shorter.
-22-
In the event of termination of employment for any other reason, all
unexercised options shall be deemed cancelled, except that any vested options
shall be exercisable for the balance of their respective terms or for nine (9)
months of such termination, whichever is shorter. The Compensation Committee
may, in its sole discretion, establish different terms and conditions regarding
the effect of a termination of employment under the Option Plan, to the extent
permitted by applicable law.
Upon the occurrence of a `change of control' (as defined below), any
time periods relating to the exercise of options shall be accelerated so that
the options immediately vest and become exercisable in full. At such time, the
Compensation Committee may offer an optionee the option to have us purchase the
options from such optionee for an amount equal to the cash that could be
realized upon the exercise of the options. A change of control shall have such
meaning as determined from time to time by the Compensation Committee and
included in any option agreement, provided that a change of control shall be
deemed to have occurred if: (i) there is a change in beneficial ownership of
twenty (20%) percent or more of the voting power of our outstanding capital
stock, (ii) during any two consecutive years, individuals who at the beginning
of such period were directors cease to constitute a majority of our Board of
Directors, unless the election, or nomination for election by our stockholders,
of the new directors was approved by at least two-thirds of the directors then
in office who were directors at the beginning of such period or (iii) our
stockholders have approved (x) a consolidation or merger in which we are not the
surviving corporation or pursuant to which our shares of Common Stock are
converted into cash, stock or other property, other than a merger in which our
stockholders have the same ownership percentage in the surviving corporation
after the merger, (y) the sale, lease or exchange or other transfer (in one or a
series of transactions) of all or substantially all of our assets or (z) any
plan or proposal for our liquidation or dissolution.
Our Board of Directors or the Compensation Committee may at any time
suspend, terminate, modify or amend the Option Plan, subject to any stockholder
approval required by applicable law. No suspension, termination, modification or
amendment of the Option Plan may adversely affect the rights of an optionee
without the optionee's consent. The Compensation Committee may, in its
discretion, amend the terms of any option as it deems advisable or to cancel or
annul any option grant, provided that no such amendment, modification,
cancellation or annulment may, without consent of the optionee, adversely affect
such optionee's rights under the option. The Compensation Committee may also
convert any outstanding incentive stock options to non-qualified stock options,
require an optionee to forfeit any unexercised options, any shares purchased
pursuant to an option or any gains realized by virtue of receiving an option, in
the event an optionee competes with us.
-23-
EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLAN
We have a defined benefit pension plan which provides retirement
benefits for some employees. The executive officers named in the Summary
Compensation Table do not participate in the plan.
Subsequent to the fiscal year ended July 29, 2000, our management
concluded that violations of the Employee Retirement Income Security Act, or
ERISA, existed relating to this defined benefit plan. The violations related to
excess concentrations of our Common Stock in the plan assets. In July 2001, our
management decided to terminate this plan, subject to having available funds to
finance the plan in accordance with rules and regulations related to terminating
pension plans. This plan has not yet been terminated, but we expect to terminate
this plan in calendar 2004.
EMPLOYMENT AGREEMENTS
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS WITH CURRENT
EXECUTIVE OFFICERS
On October 28, 2002 we replaced existing agreements with Thomas V.
Gilboy, Walter F. Schneider, Daniel J. Pisano, Jr. and Edward Ferris. We
executed change of control agreements with each of them in the form of change of
control agreement attached as an exhibit to our Annual Report on Form 10-K for
the fiscal year ended August 3, 2002. The following summary of certain
provisions of the change of control agreements does not purport to be complete
and is subject to and qualified in its entirety by reference to the actual text
of such agreements. The terms of the change of control agreements provide that,
in the event of a change in control that results in the termination of the
executive's employment, we are obligated to pay to the executive two (2) times
the sum of (i) the executive's base salary, plus (ii) any bonus payable for the
year immediately preceding the termination (or if no bonus was declared, the
target bonus for the year of the termination), plus (iii) any amount credited to
the executive as deferred compensation for the year immediately preceding the
termination. In addition, in the event of a termination following a change of
control, we are obligated to pay to the executive an amount equal to the
executive's unvested balances in our profit sharing plan and 401(k) plan. These
change of control payments are conditioned upon the execution of a mutual
release of claims, and must be made as soon as practicable (but no more than
five (5) days) following the executive's termination.
Upon a change of control termination, we are obligated to pay to the
executive an amount equal to the executive's unused vacation days and a pro-rata
portion of the executive's accrued but unpaid target bonus for the year in which
the termination occurs. In addition, upon a change of control termination, the
executive may participate in our hospitalization, group health benefit and
disability plans for eighteen (18) months from the date of the termination. If
our plans do not allow such participation, we are obligated to reimburse the
executive for the cost of equivalent coverage.
-24-
If the payments to be received by an executive under a change of
control agreement, together with any other perquisites or payments, are subject
to excise taxes, we are obligated to make a gross-up payment equal to the total
amount of all taxes imposed on the change of control payments, including income
and excise taxes imposed on the gross-up payment.
The termination of an executive's employment shall be deemed a
change of control termination if such employment is terminated by us within
twenty-four (24) months after a change of control, or the executive voluntarily
terminates his employment, within twenty-four (24) months of a change of
control, due to a decrease in the executive's salary, bonus or benefits, or if
we have substantially changed the executive's duties, moved his work location by
more than forty (40) miles or our principal business has substantially changed.
The Company amended the change of control agreement with Walter
Schneider on October 10, 2003. This amendment provided that the appointment of
Mr. Schneider as President and Chief Executive Officer of the Company shall not
be deemed a substantial change in Mr. Schneider's duties, functions,
responsibilities or authorities for purposes of his change of control agreement.
In the event the change of control provisions under these various
agreements were all triggered (including Mr. Park's, as described below), the
total payments required could be in excess of $3.9 million. We believe these
agreements are important to ensure the continued dedication of our key
employees.
EMPLOYMENT AGREEMENT AND CHANGE-IN-CONTROL ARRANGEMENTS WITH FORMER
CHIEF EXECUTIVE OFFICER
Mr. Park served as the Company's Chief Executive Officer and
President through October 10, 2003. During the fiscal year ended August 2, 2003,
Mr. Park was employed under an employment agreement effective as of May 1, 2001
(the "Park Agreement"), which agreement expires on April 30, 2004, unless
earlier terminated by Mr. Park or the Company. Pursuant to the Park Agreement,
Mr. Park served as our President and Chief Executive Officer at an annual base
salary of $350,000, with certain yearly increases based on increases in the cost
of living. In addition, Mr. Park was entitled to receive an annual performance
bonus based upon target goals set by the Board of Directors.
Mr. Park was also entitled to reimbursement of reasonable expenses
and the use of a corporate apartment through the employment term. In addition,
the Company had maintained a life insurance policy, in an amount equal to three
(3) times Mr. Park's salary, payable, less any amounts paid by our group
insurance plan, to Mr. Park's estate or his designated beneficiaries upon his
death. The Park Agreement also contains confidentiality and non-competition
provisions with a restrictive period of one (1) year following termination of
his employment agreement.
Pursuant to the Park Agreement, if the Company terminates Mr. Park's
employment for cause, as defined in the Park Agreement, or Mr. Park leaves his
employment, the Company is to pay Mr. Park's salary through the end of the month
in which such termination occurs. If the Company terminates Mr. Park's
employment other than for cause, Mr. Park is entitled to receive his salary and
-25-
bonus for the remainder of his employment term. In all events of termination,
except by the Company other than for cause, Mr. Park is entitled to receive his
bonus for such year pro-rated for those months during which the Company employed
him. In all events of termination, except by the Company other than for cause,
the Company is obligated to pay Mr. Park all amounts in his deferred
compensation account, plus accrued interest, dividends and gains.
Upon a change of control, as defined in the Park Agreement, (i) all
outstanding unexercised options held by Mr. Park shall immediately vest and
become exercisable and (ii) the Company is obligated to pay Mr. Park an amount
equal to three (3) times his then current salary plus the annual bonus declared
for the immediately preceding year (inclusive of any amounts of deferred
compensation), but in no event shall such payment be in an aggregate amount
greater than the maximum allowed pursuant to Section 280G of the Internal
Revenue Code.
The Board of Directors elected at the Company's annual meeting of
stockholders held on May 29, 2003 has reviewed the "change of control"
provisions regarding payments totaling up to approximately $1,800,000 under the
employment agreement between the Company and Mr. Park. As a result of this
review and based upon, among other things, the advice of special counsel, the
Company's Board of Directors has determined that no obligation to pay these
amounts has been triggered. Prior to his departure from the Company on October
10, 2003, Mr. Park orally informed the Company that, after reviewing the matter
with his counsel, he believes that the obligation to pay these amounts has been
triggered. On October 27, 2003, the Company received a letter from Mr. Park's
counsel demanding payment of certain sums and other consideration pursuant to
the Company's employment agreement with Mr. Park, including these change of
control payments. On November 17, 2003, the Company filed a complaint against
Mr. Park seeking a declaratory judgment that no change of control payment was or
is due to Mr. Park and that an amendment to the Park Agreement regarding
reimbursement of legal fees is invalid and unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Damien Park, the son of Samuel E. Park, a former Chief Executive
Officer of the Company, is the President of the Hibernian Consulting Group
("Hibernian"). Damien Park acted in a consulting capacity to the Company in the
area of business planning at the rate of $16,800 per month from July 2002 until
January 31, 2003, during which period the Company paid Hibernian a total of
$130,200 for Damien Park's consulting services. Effective February 3, 2003,
Damien Park accepted a full-time position with the Company as the Director of
Corporate Development and Planning. Damien Park reported to Edward Ferris, and
had an annual base salary of $125,000. On September 30, 2003, Damien Park's
employment relationship with the Company was terminated and he has no continuing
consulting relationship with the Company.
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
At the commencement of the fiscal year ended August 2, 2003, the
Compensation Committee of our Board of Directors was comprised of James Tiernan
and Roger Winston. Mr. Winston resigned in November 2002, and Edgar J. Smith,
Jr. was appointed to the Compensation Committee in December 2002. Mr. Tiernan
-26-
resigned in April 2003, and Steven N. Wertheimer and Glenda Burkhardt were
appointed to the Compensation Committee on April 9, 2003. In June 2003, the
Board reconstituted the Compensation Committee to consist of David W. Wright as
Chairman, Wallace Barnes and Suzanne M. Hopgood. Presently, the Compensation
Committee consists of Messrs. Wright and Barnes and Ms. Hopgood. Except as noted
below, none of these individuals was at any time during the fiscal year ended
August 2, 2003 or at any other time one of our officers or employees. Prior to
the resignation of Mr. Winston, he also served as Chairman of our Board of
Directors.
Ms. Hopgood also serves as the Chairman of the Board of the Company.
None of our executive officers serves as a member of the Board of
Directors or the compensation committee of any other entity, which has one or
more executive officers serving as a member of our Board of Directors or
Compensation Committee.
REPORT OF THE STOCK OPTION AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors generally determines our
executive compensation policies. At the commencement of the fiscal year ended
August 3, 2002, the Compensation Committee was comprised of James Tiernan and
Roger Winston. Mr. Winston resigned in November 2002, and Edgar J. Smith, Jr.
was appointed to the Compensation Committee in December 2002. Mr. Tiernan
resigned in April 2003, and Steven N. Wertheimer and Glenda K. Burkhardt were
appointed to the Compensation Committee on April 9, 2003. In June 2003, the
Board reconstituted the Compensation Committee to consist of Mr. Wright as
Chairman, Mr. Barnes and Ms. Hopgood. Presently, the Compensation Committee is
comprised of Messrs. Barnes and Wright and Ms. Hopgood. After evaluating our
performance and the performance of our executive officers, the Compensation
Committee recommended, and the Board of Directors subsequently ratified, the
fiscal 2003 year end bonus levels for the executive officers of the Company. The
Compensation Committee, as reconstituted in June 2003, is bound by the
employment terms entered into by the Company with employees prior to the
appointment of such reconstituted Compensation Committee. Set forth below is a
report submitted by the Compensation Committee of the Board of Directors
addressing our compensation policies for the fiscal year ended August 2, 2003 as
they affected our executive officers.
COMPENSATION PHILOSOPHY
The goals of the executive compensation program are to attract,
retain and award executive officers that contribute to our success. Compensation
opportunities are aligned with our business objectives. The compensation
programs are designed to motivate executive officers to meet annual corporate
objectives and performance goals and enhance long-term shareholder value.
-27-
Working with the Company in designing and administering the
executive compensation program, the Compensation Committee strives to balance
short and long-term incentive objectives and use prudent judgment in
establishing objectives and performance criteria, evaluating performance and
determining actual incentive awards. The Compensation Committee believes that
stock ownership by executive officers is beneficial in aligning the common
interests of management and stockholders to enhance shareholder value.
COMPONENTS OF EXECUTIVE COMPENSATION
The three components of our executive compensation program are base
salary, annual bonus and stock option grants. These three elements are
structured by the Compensation Committee to cumulatively provide our executive
officers with levels of total compensation consistent with our executive
compensation philosophy described above.
Our executive salary levels are intended to be consistent with
competitive salary levels and job responsibilities of each executive. Salary
increases reflect competitive and economic trends, our overall financial
performance and the performance of the individual executive.
RELATIONSHIP OF COMPANY PERFORMANCE TO EXECUTIVE COMPENSATION
The Compensation Committee takes into account the executives'
performance in special projects undertaken during the past fiscal year,
contribution to improvements in our financial situation, development of new
products, marketing strategies, manufacturing efficiencies and other factors.
During the last year, the Compensation Committee focused particularly on
progress with respect to improvement in the Company's working capital
management, progress with respect to returning the Company to profitability and
the development of a long-term strategic plan for the Company that provides a
platform for growth and a return to stockholders.
Satisfaction of certain performance criteria (including initiative,
contribution to overall corporate performance and managerial ability) is
evaluated after informal discussions with other members of the Board and, for
all of the executives other than the Chief Executive Officer, after discussions
with the Chief Executive Officer.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
During the fiscal year ended August 2, 2003, Mr. Park was employed
under an employment agreement which set forth the level of salary and bonus to
which Mr. Park was entitled for the fiscal year ended August 2, 2003. Pursuant
to the 2003 Senior Management Incentive Plan discussed below, the amount of Mr.
Park's annual bonus was based primarily on the Company's achievement of
financial targets in its operating plan and, secondarily, on Mr. Park's
management abilities in directing the Company's progress with respect to its
previously announced legal, regulatory and financial reporting matters as well
as continuing to develop the Company's business. Pursuant to his employment
agreement, his bonus was based on performance targets set by the Board of
Directors.
Mr. Park's annual base salary for the fiscal year ended August 2,
2003 was $370,092. The Compensation Committee believes that Mr. Park's salary
-28-
was reasonable. The Compensation Committee believes that Mr. Park's compensation
level was consistent with competitive salary levels.
Walter Schneider was appointed Chief Executive Officer of the
Company on October 10, 2003 at an annual base salary of $275,000.
COMPENSATION OF EXECUTIVE OFFICERS
In addition to the factors mentioned above, the Compensation
Committee's general approach in setting executive officer compensation is to
seek to be competitive with other companies in our industry and to get the best
talent for the management position. In determining bonuses, the Compensation
Committee reviews the Company's performance as a whole as well as each executive
officer's achievement.
The Company adopted a 2003 Senior Management Incentive Plan which
included the Company's Chief Executive Officer. The amount of bonus was based
upon achieving certain EBITDA targets with 70% of the bonus based on achieving
target financial performance goals set by the Board and 30% being determined at
the discretion of the Board. The target performance goals were not met for the
fiscal year 2003 and bonuses were paid based solely upon the achievement of, or
the failure to achieve, performance goals determined at the discretion of the
Board. For fiscal year 2004, the bonus will be based entirely on achieving
certain operating income targets in the Company's fiscal year 2004 business plan
less interest expense for such year.
Stock options are awarded to the executives by the Compensation
Committee. In determining the size of option awards for a particular executive
officer, the Compensation Committee considers the amount of stock options
previously awarded to other executive officers in a like position, the amount of
unexercised stock options held by such executive in addition to the other
compensation considerations discussed above.
The Compensation Committee feels that actions taken regarding
executive compensation are appropriate in view of the individual and corporate
performance.
In the event total compensation for any named executive officer
exceeds the $1 million threshold at which tax deductions are limited under
Internal Revenue Code Section 162(m), the Compensation Committee intends to
balance tax deductibility of executive compensation with its responsibility to
retain and motivate executives with competitive compensation programs. As a
result, the Compensation Committee may take such actions as it deems to be in
the best interests of the stockholders, including: (i) provide non-deductible
compensation above the $1 million threshold; (ii) require deferral of a portion
of the bonus or other compensation to a time when payment may be deductible by
the Company; and/or (iii) modify existing programs to qualify bonuses and other
performance-based compensation to be exempt from the deduction limit.
-29-
The information contained in this report by the Compensation
Committee shall not be deemed to be "soliciting material" or "filed" or
incorporated by reference in future filings with the Commission, or subject to
the liabilities of Section 18 of the Exchange Act, except to the extent that the
Company specifically incorporates it by reference into a document filed under
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act.
David W. Wright (Chair)
Suzanne M. Hopgood
Wallace Barnes
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative shareholder return on the Common Stock with The Nasdaq Market Index
and the peer group index for the Standard Industrial Classification Code ("SIC
Code") 3844 for the period commencing August 1, 1998 and ending August 2, 2003.
The peer group for SIC Code 3844 (X-Ray Apparatus and Tubes) consists of 10
companies and includes: American Science Engineering Inc., American Shared
Hospital Services, Fischer Imaging Corp., Hologic Inc., Invision Technologies
Inc., Novoste Corp., Photoelectron Corp., Schick Technologies Inc. and Swissray
International Inc. The graph assumes that $100 was invested on August 1, 1998 in
the Common Stock and in each of the other indices and assumes monthly
reinvestment of all dividends.
[GRAPHIC OMITTED]
-30-
ANNUAL RETURN PERCENTAGE
YEARS ENDING
COMPANY NAME / INDEX 31JUL99 29JUL00 28JUL01 3AUG02 2AUG03
- ---------------------------------------------------------------------------------------------------------------
DEL GLOBAL TECHNOLOGIES CORP -17.71 12.30 -83.46 108.64 -28.58
NASDAQ U.S. INDEX 48.00 51.93 -45.53 -32.28 29.38
PEER GROUP -65.63 36.22 0.58 166.98 -13.04
BASE INDEXED RETURNS
PERIOD YEARS ENDING
COMPANY NAME / INDEX 1AUG98 31JUL99 29JUL00 28JUL01 3AUG02 2AUG03
- -------------------------------------------------------------------------------------------------------------------------------
DEL GLOBAL TECHNOLOGIES CORP 100 82.29 92.41 15.28 31.88 22.77
NASDAQ U.S. INDEX 100 148.00 224.85 122.48 82.94 107.31
PEER GROUP 100 34.37 46.82 47.09 125.72 109.33
This stock price performance graph shall not be deemed to be "soliciting
material" or "filed" or incorporated by reference in future filings with the
Commission, or subject to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into a document filed under the Securities Act or the Exchange Act.
AUDIT COMMITTEE REPORT
The Audit Committee operates pursuant to a written charter adopted by the Board
of Directors, which has been filed as EXHIBIT B to our Proxy Statement for our
2003 annual meeting of stockholders filed on April 29, 2003 (the "Charter").
The role of the Audit Committee is to assist the Board of Directors in its
oversight of our financial reporting process, as more fully described in this
proxy statement. As set forth in the Charter, our management is responsible for
the preparation, presentation and integrity of our financial statements, our
accounting and financial reporting principles and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Our independent auditors are responsible for
auditing our financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles.
-31-
In the performance of its oversight function, the Audit Committee has reviewed
and discussed the audited financial statements with the management of the
Company and has discussed matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380), as modified
or supplemented, with Deloitte & Touche LLP, the Company's independent
auditors for the fiscal year ended August 2, 2003. The Audit Committee has
received the written disclosures and the letter from Deloitte & Touche LLP,
as required by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as modified or supplemented, and has
discussed with Deloitte & Touche LLP the independence of Deloitte &
Touche LLP. The Audit Committee also considered whether Deloitte & Touche
LLP's non-audit services, including tax planning and consulting are compatible
with maintaining Deloitte & Touche LLP's independence.
Based upon the reports and discussions described in this report, and subject to
the limitations on the role and responsibilities of the Audit Committee referred
to above and in the Charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in our Annual Report
on Form 10-K for the year ended August 2, 2003 filed with the Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Gerald M. Czarnecki (Chair)
Edgar J. Smith, Jr.
David W. Wright
-32-
ANNUAL REPORT
All stockholders of record as of the Record Date have been sent, or
are concurrently herewith being sent, a copy of the Company's 2003 Annual Report
(without exhibits) which contains certified financial statements of the Company
for the fiscal year ended August 2, 2003.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF
THE COMPANY'S 2003 ANNUAL REPORT, INCLUDING THE COMPANY'S CERTIFIED FINANCIAL
STATEMENTS AND ANY EXHIBITS, UPON REQUEST, BY WRITING TO THE CORPORATE
SECRETARY, DEL GLOBAL TECHNOLOGIES CORP., ONE COMMERCE PARK, VALHALLA, NY 10595.
STOCKHOLDER PROPOSALS
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented at the
Company's 2005 annual meeting of stockholders must be received by the Company at
the Company's principal executive office located at One Commerce Park, Valhalla,
NY 10595 no later than August 3, 2004 in order to be included in the proxy
statement for that meeting. Stockholders wishing to nominate directors or bring
a proposal before the 2005 annual meeting of stockholders (but not include it in
the Company's proxy material) must provide written notice of such nomination or
proposal to the attention of the corporate secretary, no later than October 17,
2004.
DISCRETIONARY VOTING AUTHORITY
On May 21, 1998, the SEC adopted an amendment to Rule 14a-4, as
promulgated under the Exchange Act. The amendment to Rule 14a-4(c)(1) governs
the Company's use of its discretionary proxy voting authority with respect to a
stockholder proposal that is not addressed in the Company's proxy statement.
This amendment provides that if the Company does not receive notice of a
proposal at least 45 days prior to the first anniversary of the date of mailing
of the prior year's proxy statement, then the Company will be permitted to use
its discretionary voting authority when the proposal is raised at the annual
meeting, without any discussion of the matter in the proxy statement. The date
by which such notice must be received by the Company for the 2005 annual meeting
is October 17, 2004. If during the prior year the Company did not hold an annual
meeting, or if the date of the annual meeting has changed more than 30 days from
the prior year, then notice must not have been received a reasonable time before
the Company mails its proxy materials in order for the Company to be allowed to
use its discretionary voting authority when the proposal is raised.
-33-
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
As of the date of this Proxy Statement, management knows of no
matters other than those set forth herein which will be presented for
consideration at the Meeting. If any other matters properly come before the
Meeting, or any continuation of the Meeting pursuant to adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of proxy to vote the shares they represent as the Board may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas V. Gilboy
Chief Financial Officer and Secretary
December 1, 2003
-34-
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DEL GLOBAL TECHNOLOGIES CORP.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
JANUARY 14, 2004
The undersigned, a stockholder of Del Global Technologies Corp., a
New York corporation (the "Company"), does hereby appoint Walter F. Schneider,
Thomas V. Gilboy and Mark A. Koch and each of them (with full power to act
alone), the true and lawful attorneys and proxies with full power of
substitution, for and in the name, place and stead of the undersigned, to vote
all of the shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at the 2004 Annual Meeting of
Stockholders of the Company to be held at the Hilton Rye Town, located at 699
Westchester Avenue, Rye Brook, NY 10573 on January 14, 2004 at 10:00 a.m., local
time, or at any adjournment or postponement thereof.
The undersigned hereby revokes any proxy or proxies heretofore given
and acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated December 1, 2003, and a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended August 2, 2003.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREIN
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
COMPANY'S EIGHT (8) NOMINEES FOR DIRECTOR, AND TO APPROVE OF DELOITTE & TOUCHE
LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 1 AND 2
1. ELECTION OF DIRECTORS:
The election of the following nominees to the Board of Directors, to
serve until the 2005 Annual Meeting of Stockholders and until their respective
successors are elected and shall qualify:
WALLACE BARNES
MICHAEL J. CHESHIRE
GERALD M. CZARNECKI
JAMES R. HENDERSON
SUZANNE M. HOPGOOD
WALTER F. SCHNEIDER
EDWARD J. SMITH, JR.
DAVID W. WRIGHT
WITHHOLD AUTHORITY
FOR ALL TO VOTE FOR ALL
NOMINEES ___ NOMINEES ___ ____________________________
____________________________
____________________________
TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL
NOMINEE(S), PRINT NAME(S)
ABOVE.
2. TO APPROVE OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING JULY 31, 2004:
______ FOR _____ AGAINST _____ ABSTAIN
3. DISCRETIONARY AUTHORITY:
In their discretion, the proxies are authorized to vote upon such
other and further business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS
HEREINBEFORE GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO
ELECT THE EIGHT (8) NOMINEES AS DIRECTORS AND TO APPROVE OF DELOITTE &
TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
The undersigned hereby revokes any proxy or proxies heretofore
given, and ratifies and confirms all action the herein named attorneys and
proxies, or any of them, or their substitutes, may lawfully take or cause to be
taken by virtue hereof.
Dated _______________________, 200_
_____________________________ (L.S.)
_____________________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES
APPEAR HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
INDICATE THE CAPACITY IN WHICH SIGNING. WHEN
SIGNING AS JOINT TENANTS, ALL PARTIES IN THE JOINT
TENANCY MUST SIGN. WHEN A PROXY IS GIVEN BY A
CORPORATION, IT SHOULD BE SIGNED WITH FULL
CORPORATE NAME BY A DULY AUTHORIZED OFFICER WITH
THE CORPORATE SEAL AFFIXED.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY
IN THE ENVELOPE PROVIDED FOR THIS PURPOSE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW:
DGT (DGTC) Inactive
Filed: 1 Dec 03, 12:00am