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.
-----------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
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[GRAPHIC OMITTED]
DEL GLOBAL TECHNOLOGIES CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 30, 2005
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 offices of Olshan Grundman Frome Rosenzweig &
Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, NY 10022 on
Thursday, June 30, 2005 at 10:00 a.m., local time, to consider and vote on the
following matters described in the accompanying proxy statement:
1. To elect six (6) 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; and
2. 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 a vote FOR the election of the
individuals nominated for election as directors. 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 May 25,
2005 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 Walter
F. Schneider at (914) 686-3650.
By Order of the Board of Directors
/s/ Walter F. Schneider
------------------------------
Walter F. Schneider
Chief Executive Officer and President
Valhalla, New York
Dated: May 31, 2005
DEL GLOBAL TECHNOLOGIES CORP.
ONE COMMERCE PARK
VALHALLA, NY 10595
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 2005
----------------
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 2005 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held on Thursday, June 30, 2005, at the offices of
Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th
Street, New York, NY 10022 at 10:00 a.m., local time, or at any adjournment or
postponement thereof.
The date of this Proxy Statement is May 31, 2005, 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 offices of Olshan Grundman
Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New
York, NY 10022 on Thursday, June 30, 2005 at 10:00 a.m. local time.
RECORD DATE AND VOTING. The Board of Directors fixed the close of business
on Wednesday, May 25, 2005, 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 10,605,188 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 purpose of the Meeting is to vote upon (i) the
election of six (6) directors for the ensuing year; and (ii) 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 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 six (6) director nominees 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. As of the Record Date,
there were 10,605,188 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. The Company has retained Innisfree M&A
Incorporated as proxy solicitor, for a fee of $5,000 plus expenses.
CERTAIN FINANCIAL INFORMATION. Please take note that the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 2004 (the "2004 Annual
Report") (without exhibits) and Amendment No. 1 thereto filed on November 29,
2004 (the "2004 Amendment") (without exhibits) are enclosed with this Proxy
Statement.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE COPIES OF THE 2004
ANNUAL REPORT AND THE 2004 AMENDMENT, 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 six (6) directors, four (4) of whom
were elected at the Company's Annual Meeting of Stockholders held on January 14,
2004 and two (2) of whom were appointed by the Board of Directors on April 27,
2005. 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.
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
---- --- -------------- --------------
Gerald M. Czarnecki 65 Director 2003
Edgar J. Smith, Jr. 70 Director 2002
Walter F. Schneider 70 Director, President and 2003
Chief Executive
Officer
James R. Henderson 47 Director 2003
General Merrill A. McPeak 69 Director 2005
James Risher 62 Director 2005
(1) See also the "Committee Membership" chart included in this Proxy Statement.
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
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industry; and Senior Vice President of Human Resources and Administration of
IBM, the world's largest computer company. 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 InPractice, LLC; and
serves as a member of the Board of Directors and member of the Audit Committee
of ATM National, Inc. He is Chairman of the Board of Directors of the National
Association of Corporate Directors ("NACD"), Florida Gateway Chapter, and serves
as a faculty member for the NACD. He is also Chairman of the Board of Directors
of the National Leadership Institute, a non-profit leadership and governance
organization.
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 Pro Arte Singers of
Stamford, CT as well as The University Glee Club of New York City, NY.
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 and Chairman of the Board since May 12, 2005. Mr.
Henderson has served as a Vice President of Steel Partners, Ltd., a management
and advisory company, since March 2002. Mr. Henderson served as a Vice President
of Steel Partners Services, Ltd. from August 1999 through March 2002. 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. He has also served as a
director of the WebBank subsidiary of WebFinancial, an FDIC insured, State of
Utah Industrial Loan Corporation since March 2000, Acting Chief Executive
Officer of WebBank from November 2004 until May 2005 and as Chairman of WebBank
since November 2004. He has also served as President of Gateway Industries,
Inc., a provider of database development and website design and development
services, since December 2001. Mr. Henderson has served as a director of SL
Industries, Inc. ("SLI"), a manufacturer and marketer of power and data quality
systems and equipment for industrial, medical, aerospace and consumer
applications, since January 2002. Mr. Henderson has served as a director of BNS
Corporation since June 2004. Mr. Henderson served as a director of ECC
International Corp., a manufacturer and marketer of computer controlled
simulators for training personnel to perform maintenance and operation
procedures on military weapons, from December 1999 until September 2003, and as
acting Chief Executive Officer from July 2002 until March 2003. 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
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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. Mr. Henderson earned a B.S. in Accounting from the University of
Scranton.
GENERAL MERRILL A. MCPEAK has served as President of McPeak & Associates, a
management consulting firm, since 1995. General McPeak entered the U.S. Air
Force in 1957 and served in various positions throughout his tenure. From
October 1990 until October 1994, he was Chief of Staff of the U.S. Air Force. He
also served as Commander-in-Chief, Pacific Air Forces, from 1988 until 1990,
Commander, Twelfth Air Force, from 1987 until 1988 and Deputy Chief of Staff,
Programs and Resources, from 1985 until 1987. He serves as a director of
Tektronix, Inc., a manufacturer and marketer of test, measurement and monitoring
solutions, GigaBeam Corporation, a designer and developer of wireless
point-to-point communications equipment, Health Sciences Group Inc., a provider
of nutritional products and food ingredients based on natural sources, and
several private companies. He received a bachelor of arts degree in economics
from San Diego State College and a master of science degree in international
relations from George Washington University.
JAMES RISHER has been the Managing Partner of Lumina Group, LLC, a private
company engaged in the business of consulting and investing in small and
mid-size companies, since 1998. From February 2001 to May 2002, Mr. Risher
served as Chairman and Chief Executive Officer of BlueStar Battery Systems
International, Inc., a Canadian public company that is an e-commerce distributor
of electrical and electronic products to selected automotive aftermarket
segments and targeted industrial markets. From 1986 to 1998, Mr. Risher served
as a director, Chief Executive Officer and President of Exide Electronics Group,
Inc. ("Exide"), a global leader in the uninterruptible power supply industry. He
also served as Chairman of Exide from December 1997 to July 1998. Mr. Risher has
also been a director of SLI since May 2003 and a director of New Century Equity
Holdings Corp., a holding company seeking to acquire a new business, since
October 2004.
During the Company's fiscal year ended July 31, 2004, the Board of
Directors held 21 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).
Each director is expected to make reasonable efforts to attend Board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Stockholders. Seven board members attended the 2004 Annual
Meeting of Stockholders.
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
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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.
The members of the committees are identified in the following table.
COMMITTEE MEMBERSHIP
Compensation Nominating
and Stock and
Audit Option Governance
Director Committee Committee Committee
-------- --------- --------- ---------
GERARD M. CZARNECKI CHAIR X
EDGAR J. SMITH, JR. X X
JAMES R. HENDERSON CHAIR X
GENERAL MERRILL A. McPEAK X X
JAMES RISHER X 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 15 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. ("NASD").
The basic responsibility of the Compensation Committee is to review the
performance and development of management in achieving corporate goals and
objectives and to ensure 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 amended
and restated stock option plan dated as of December 14, 2000, as amended on July
17, 2003. The Compensation Committee held 8 meetings during the last fiscal
year. Although the Company is currently 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 NASD, 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. The Nominating
Committee held no meetings during the last fiscal year. The Nominating Committee
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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: Walter F. Schneider, with a copy to the Company's General Counsel
at the following address: Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park
Avenue Tower, 65 East 55th Street, New York, New York 10022, Attn: Steven
Wolosky, Esq. Although the Company is currently not listed on any exchange, each
of the members of the Nominating Committee is an "independent director" as
defined in Rule 4200 of the Marketplace Rules of the NASD.
In considering Board candidates, the Nominating Committee takes into
consideration the Company's Corporate Governance Guidelines, the Company's
policy regarding stockholder recommended director candidates, as set forth
above, and all other factors that it deems appropriate, including, but not
limited to, the individual's independence, character, education, experience,
knowledge and skills. The Nominating Committee will also consider: the extent of
the individual's experience in business, education or public service; his or her
ability to bring a desired range of skills, diverse perspectives and experience
to the Board; and whether the individual possesses high ethical standards, a
strong sense of professionalism and is capable of serving the interests of
stockholders. In addition to reviewing a candidate's background and
accomplishments, candidates for director nominees are reviewed in the context of
the current composition of the Board and the evolving needs of the Company's
businesses. It is the Board's policy that at all times at least a majority of
its members meet the standards of independence promulgated by the NASD and the
SEC and as set forth in the Company's Corporate Governance Guidelines.
Additionally, the Nominating Committee will consider the number of boards on
which the candidate already serves when assessing whether the candidate has the
appropriate time to devote to Board service.
Except as set forth above, the Nominating Committee does not currently have
a formal policy regarding the handling or consideration of director candidate
recommendations received from a stockholder, or a formal process for identifying
and evaluating nominees for directors (including nominees recommended by
stockholders). These issues will be considered by the Committee, which will then
make a recommendation to the Board.
DIRECTOR COMPENSATION
The Board compensation consists generally of the following:
o Each non-employee director will receive an annual retainer of $20,000;
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);
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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 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.
There were no options granted to non-employee directors during the last
fiscal year, 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 each of Michael J. Cheshire and James R. Henderson. On April 27,
2005, James Risher and General Merrill A. McPeak were each granted options to
purchase 25,000 shares of Common Stock at an exercise price of $2.70 per share,
and Walter F. Schneider was granted options to purchase 100,000 shares of Common
Stock at an exercise price of $2.70 per share.
On June 16, 2004, the Board of Directors approved payment to Ms. Hopgood of
$350.00 per hour for her time spent at Company facilities on Company matters, in
lieu of the per diem fee described above.
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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
MARK A. KOCH, 46, was appointed Treasurer and Principal Accounting Officer
on August 24, 2004 and was appointed Secretary on September 17, 2004. Prior to
his appointment as Treasurer and Principal Accounting Officer, Mr. Koch served
as our Corporate Controller and Assistant Secretary since February 2003,
responsible for internal and external financial reporting, domestic working
capital management, and treasury functions. From 1998 through 2003, Mr. Koch was
Corporate Controller, Secretary and Treasurer of SEMX Corporation, a NASDAQ
listed corporation, providing specialty materials and thermal management
solutions to the wireless, internet infrastructure and electronics industries.
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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 Audit Committee, the Compensation Committee and the
Nominating Committee of the Board of Directors. The corporate governance page
can be found at WWW.DELGLOBAL.COM, by clicking on "Investor Relations," and then
on "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;
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 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
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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.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning beneficial ownership
of Common Stock of the Company outstanding at May 25, 2005 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
10,605,188 shares of Common Stock issued and outstanding as of May 25, 2005,
plus shares issuable upon exercise of options, warrants or convertible
securities (exercisable within 60 days after said 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 of Amount and Nature of
Beneficial Owner Beneficial Ownership(1) Percent of Class
---------------- ----------------------- ----------------
Benson Associates LLC 1,159,163(2) 10.9%
111 SW 5th, Suite 2130
Portland, OR 97204
Royce & Associates LLC 656,410(3) 6.2%
1414 Avenue of the Americas
New York, NY 10019
Warren G. Lichtenstein 1,867,062(4) 17.6%
c/o Steel Partners II, L.P.
590 Madison Avenue
32nd Floor
New York, NY 10022
Wells Fargo & Company 1,415,272(5) 13.3%
420 Montgomery Street
San Francisco, CA 94104
Wellington Management Co. LLP 1,020,235(6) 9.6%
75 State Street
Boston, MA 02109
Samuel P. Sporn 1,166,666(7) 11.0%(7)
c/o Schoengold & Sporn, P.C.
19 Fulton Street, Suite 406
New York, NY 10038
13
- ----------------------
(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 these shares of Common Stock but disclaims
beneficial ownership of such shares owned by it in a fiduciary capacity.
(3) According to information contained in Amendment No. 3 to a Schedule 13G
dated December 31, 2004, Royce & Associates, LLC ("Royce"), an investment
advisor registered under the Investment Act, is the beneficial owner of 656,410
shares of Common Stock. In its role as investment advisor, Royce has sole power
to vote and dispose of the shares of Common Stock owned by Royce.
(4) According to information contained in a Form 4 dated April 22, 2005, Steel
Partners II, L.P., a Delaware limited partnership ("Steel Partners"), Warren G.
Lichtenstein, and Steel Partners, LLC, a Delaware limited liability corporation
("Partners LLC") collectively is the beneficial owner of 1,838,416 shares of our
Common Stock. 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 1,838,416 shares of
our Common Stock owned by Steel Partners and Partners LLC. 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, Mr. Lichtenstein and
WebFinancial Corporation, a Delaware corporation ("WebFinancial"),
(collectively, the "Group"), 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 Amendment No. 3 on a Schedule 13G
dated February 11, 2004, Wells Fargo & Company ("Wells Fargo"), the parent
company of Wells Capital Management Incorporated ("Wells Capital"), an
investment adviser registered under the Investment Act, may be deemed the
beneficial owner of 1,415,272 shares of Common Stock of the Company. Clients of
Wells Capital are the owners of record of the shares held by Wells Capital.
Accordingly, in its role as investment advisor, Wells Capital has sole power to
vote as to 1,371,345 shares of our Common Stock and sole power to dispose of
1,415,272 shares of our Common Stock.
(6) According to information contained in Amendment No. 4 to a Schedule 13G
dated December 31, 2004, Wellington Management Company, LLP ("Wellington"), an
investment advisor registered under the Investment Act, may be deemed the
beneficial owner of 1,020,235 shares of Common Stock of the Company. Clients of
14
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 597,709 of our Common Stock and shared power to dispose of all
1,020,235 shares of our Common Stock owned by Wellington.
(7) 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.
15
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information concerning beneficial ownership
of Common Stock of the Company outstanding at May 25, 2005 by (i) each director;
(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 10,605,188 shares of Common Stock issued and outstanding as of May 25,
2005, plus shares issuable upon exercise of options, warrants or convertible
securities (exercisable within 60 days after said date) that are held by such
person, 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 of Amount and Nature of
Beneficial Owner Beneficial Ownership(1) Percent of Class
---------------- ----------------------- ----------------
Samuel E. Park 0 *
Thomas V. Gilboy 0 *
Edward Ferris 37,500(2) *
Daniel J. Pisano, Jr. 0 *
Walter F. Schneider 171,000(2) 1.6%
Edgar J. Smith, Jr. 23,050(2) *
Gerald M. Czarnecki 28,750(2) *
James R. Henderson 12,500(2)(3) *
General Merrill A. McPeak 11,250(2) *
James Risher 6,250(2) *
All Directors and Named 290,300(2) 2.7%
Executive Officers as a
group(12 persons)
- ----------------------------------
*Represents less than 1% of the outstanding shares of our Common Stock.
(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.
16
(2) 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 May 25, 2005 as follows: Edward Ferris - 37,500, Walter F.
Schneider - 171,000, Edgar J. Smith, Jr. - 18,750, Gerald M. Czarnecki - 18,750,
James R. Henderson - 12,500, General Merrill A. McPeak - 6,250 and James Risher
- - 6,250.
(3) 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 1,867,062 shares of our Common Stock
collectively owned by the Group and the 28,646 shares of our Common Stock owned
by WebFinancial.
17
PROCEDURES FOR CONTACTING DIRECTORS
The Company has adopted a procedure by which shareholders may send
communications as defined within Item 7(h) of Schedule 14A under the Exchange
Act to one or more directors by writing to such director(s) or to the whole
Board care of the Corporate Secretary, Del Global Technologies Corp., One
Commerce Park, Valhalla, New York 10595. Any such communications will be
promptly distributed by the Secretary to such individual director(s) or to all
directors if addressed to the whole Board.
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 July 31, 2004, that there was compliance with all
Section 16(a) filing requirements applicable to its officers, directors and 10%
stockholders.
18
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, Samuel E. Park, our former Chief
Executive Officer and our other four most highly compensated executive officers
during our fiscal years ended July 31, 2004, August 2, 2003 and August 3, 2002.
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 2004 $269,365 $ -- $ 10,200 50,000(11) --
Chief Executive Officer 2003 234,810 22,773 19,140 -- --
President, Medical Systems Group 2002(10) 203,462 88,000 12,253 36,000(5) --
Thomas V. Gilboy 2004 206,519 -- -- -- --
Chief Financial Officer 2003 205,320 19,172 -- -- --
2002(6) 187,924 80,000 -- -- --
Edward Ferris 2004 199,149 -- 53,250(3) -- --
Senior Vice President, 2003 201,156 21,404 54,060 -- --
Corporate and 2002(7) 11,638 6,667 4,505 -- --
Organizational Development
Samuel E. Park 2004(4) 285,297 -- 8,120(2) -- 3,386(12)
Former Chief Executive Officer 2003 370,092 18,754 81,842 -- --
2002 353,901 220,500 64,425 50,000(5) --
Daniel J. Pisano, Jr 2004(9) -- -- -- -- --
President, Power 2003 228,467 12,000 -- -- --
Conversion Group 2002 227,758 88,000 -- 54,000(5)(8) --
- ---------------------------
(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 and
use of a car for Mr. Park. 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 Mr. Ferris, fiscal year 2004 amounts include an
apportionment of reimbursements of part of the calendar year 2004 tax
liability related to the use of the company apartments of $21,300.
19
(4) Effective October 10, 2003, Mr. Park was replaced by Mr. Schneider as
Chief Executive Officer. Mr. Park was paid through the end of his
employment contract on April 28, 2004.
(5) Includes nonqualified stock options granted on October 17, 2001. Such
stock options became exercisable immediately with an exercise price of
$1.80, but such options were terminated on October 10, 2003.
(6) Mr. Gilboy was hired as Chief Financial Officer on February 27, 2001, at
an annual base salary of $180,000. Mr. Gilboy resigned from the Company on
August 23, 2004.
(7) Mr. Ferris was hired as Senior Vice President, Corporate and
Organizational Development on July 1, 2002 at an annual base salary of
$200,000. Mr. Ferris resigned from the Company, effective April 1, 2005.
(8) Includes 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.
(9) Mr. Pisano resigned from the Company on January 29, 2004.
(10) 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
President and Chief Executive Officer.
(11) Consists of nonqualified stock options granted on November 20, 2003. Such
options become exercisable 25% each year with an exercise price of $2.10.
They are exercisable through November 20, 2013.
(12) Consists of premiums on life insurance the Company paid on behalf of Mr.
Park.
The following options were granted in the fiscal year ended July 31, 2004
to the executive officers named in the Summary Compensation Table in this Proxy
Statement:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(3)
----------------- --------------
Number of Securities Percent of
Underlying Options Total Options
Granted Granted to Exercise
Employees in Price Expiration
Name (#) Fiscal Year (1) ($/Sh) (2) Date 5%($) 10%($)
- ---- --- --------------- ---------- ---- ----- ------
Walter Schneider (4) 50,000 83.3% $ 2.10 11/20/2013 $ 66,034 $167,343
Thomas V. Gilboy -- -- -- -- -- --
Edward Ferris -- -- -- -- -- --
Samuel E. Park -- -- -- -- -- --
Daniel J. Pisano, Jr -- -- -- -- -- --
(1) Based on options to purchase an aggregate of 60,000 shares of Common Stock
granted to employees (including employee directors) during the fiscal year
ended July 31, 2004. The foregoing total excludes options granted to
non-employee directors.
(2) The exercise price per share of each option was equal to the quoted fair
market value of the shares of Common Stock on the date of grant.
20
(3) The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated
stock price. The 5% and 10% rates represent certain assumed rates of
appreciation only, in accordance with the rules of the Securities and
Exchange Commission, and do not reflect the Company's estimate or
projection of future stock price performance. Actual gains, if any, are
dependent on the actual further performance of the shares of Common Stock,
and no gain to the optionee is possible unless the stock price increases
over the option term.
(4) 25% of the shares subject to the option granted vested on the grant date
of November 20, 2003 and the remaining shares vest 25% per year on each
anniversary date of the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-The-Money Options
Name On Exercise (#) Realized ($) Options At Fiscal Year-End At Fiscal Year-End ($)(1)
---- --------------- ------------ -------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Walter F. Schneider - - 106,000 40,000 144,600 30,000
Thomas V. Gilboy - - 65,000 - 111,500 -
Edward Ferris - - 25,000 25,000 12,500 12,500
Samuel E. Park - - - - - -
Daniel J. Pisano, Jr. - - 41,500 - 70,025 -
- ------------------
(1) Difference between the fair market value of the underlying Common Stock,
$2.90, and the exercise price for in-the-money options on July 31, 2004.
21
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of July 31, 2004 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 2,133,415 $3.15 316,180
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 $1.50 Not applicable
(1) Excludes securities reflected in column (a).
(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 expired 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.
In a motion filed in February 2004, a plaintiff claimed damages due to Del
Global's failure to timely complete a registration statement for the
shares of common stock issuable upon exercise of these warrants. In
settlement of this matter, Del Global modified the exercise, or "strike,"
price of the warrants issued in 2002 from $2.00 to $1.50 per share, and
extended the expiration date of such warrants by one year to March 28,
2009.
EMPLOYMENT AGREEMENTS
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS WITH CURRENT
NAMED EXECUTIVE OFFICERS
On May 23, 2005, Walter F. Schneider entered into that certain
Severance Benefits Agreement with the Company dated as of such date (the
"Schneider Severance Agreement"), a copy of which is attached to the Company's
Current Report on Form 8-K dated as of May 24, 2005. The following summary does
22
not purport to be complete, and is qualified in its entirety by reference to the
full text of the Schneider Severance Agreement. Pursuant to the terms of the
Schneider Severance Agreement, upon the occurrence of the events specified
below, Mr. Schneider is entitled to receive a severance payment equal to (a) the
payment of his full base salary through the date of the termination of his
employment at the rate in effect immediately prior to such termination; PLUS (b)
in lieu of any further payments, a payment equal to one times his annual base
salary in effect prior to the date of termination (such payments collectively,
the "Severance Payment"). The Severance Payment is payable to Mr. Schneider upon
the occurrence of the following events: (a) his employment is involuntarily
terminated by the Company other than for cause or due to his death or
disability; or (b) he voluntarily terminates his employment because (i) without
his express written consent, he is placed in any position of substantially
lesser stature than the position he holds with the Company as of the date of the
Schneider Severance Agreement (except if another person that is mutually
acceptable to Mr. Schneider and the Company is appointed to the office of
President of the Company); (ii) his annual base salary, as increased from time
to time, is reduced; or (iii) the Company hires a person for the position of
President of the Company that is not acceptable to Mr. Schneider. Additionally,
if Mr. Schneider is entitled to a Severance Payment, he will also be entitled to
receive health insurance coverage for one year on the same terms as such
coverage is available to him on the date of the Schneider Severance Agreement.
The Schneider Severance Agreement also requires Mr. Schneider to keep certain
information about the Company confidential after the termination of his
employment. The Schneider Severance Agreement expires on December 31, 2007.
On September 8, 2004, we executed a Non-Competition Agreement with Mr.
Schneider in the form attached as an exhibit to the Company's Current Report on
Form 8-K filed on September 10, 2004. The following summary of Mr. Schneider's
Non-Competition Agreement does not purport to be complete and is subject to and
qualified in its entirety by reference to the actual text of such agreement. The
terms of Mr. Schneider's non-competition agreement provide for a payment of
$225,000 by the Company to Mr. Schneider upon the consummation of the sale by
the Company of the businesses of both Del Medical Imaging Corp. and Villa
Sistemi Medicali, S.p.A. ("Villa"), provided that Mr. Schneider is employed by
the Company at such time. In consideration for this payment, Mr. Schneider has
agreed (i) not to compete directly or indirectly with the businesses in which
the Company or an affiliate is engaged, other than the business of Del Medical
Imaging Corp., by owning, managing, operating, joining, controlling, financing
or participating in the ownership, management, operation, control or financing
of, or being connected as an officer, director, employee, member, partner,
principal, agent, representative, consultant or otherwise with, or use or permit
his name to be used in connection with such a competing business; and (ii) not
to directly or indirectly, either for himself or any other person (A) solicit or
induce any employee, sales agent, independent sales organization or other
independent contractor of the Company or any of its affiliates to leave the
employ of or to cease to provide services, in whole or in part to, the Company
or its affiliates, or to terminate or fail or refuse to renew or renegotiate,
any contract for services with the Company or its affiliates, whether such
contract is written or oral, (B) in any way interfere with the relationship
between the Company or its affiliates and an employee of or sales agent,
independent sales organization or independent contractor of the Company or its
affiliates, (C) employ, or otherwise engage as an employee, sales agent,
23
independent sales organization or independent contractor, consultant or
otherwise, any employee, sales agent, independent sales organization or
independent contractor of the Company or its affiliates, or (D) induce or
attempt to induce any customer, supplier, licensee, or business relation of the
Company or its affiliates, to cease doing business with the Company or such
affiliate, or in any way interfere with the relationship between any customer,
supplier, licensee, or business relation of the Company or its affiliates. If
Mr. Schneider breaches the Non-Compete Agreement, he would be liable for damages
and the Company could seek an injunction.
We believe Mr. Schneider's agreements are important to ensure his continued
dedication.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS WITH FORMER
EXECUTIVE OFFICERS
THOMAS V. GILBOY, DANIEL J. PISANO, JR. AND EDWARD FERRIS
Thomas V. Gilboy served as the Company's Chief Financial Officer until
August 23, 2004. Daniel J. Pisano, Jr. served as the President of the Company's
Power Conversion Group until January 29, 2004. Edward Ferris served as the
Company's Senior Vice President of Corporate and Organizational Development
until April 1, 2005.
On October 28, 2002 we replaced existing agreements with Messrs. Gilboy,
Pisano, and 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 such 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 provided that, in the event
of a change in control that resulted in the termination of the executive's
employment, we would have been 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 would have been 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 were conditioned upon the execution of a mutual
release of claims, and were to 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 would have been 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 occured. In addition, upon a change of control
termination, the executive would have been eligible to participate in our
hospitalization, group health benefit and disability plans for eighteen (18)
24
months from the date of the termination. If our plans did not allow such
participation, we would have been obligated to reimburse the executive for the
cost of equivalent coverage.
If the payments to be received by an executive under a change of control
agreement, together with any other perquisites or payments, would have been
subject to excise taxes, we would have been 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 was to be deemed a change of
control termination if such employment were terminated by us within twenty-four
(24) months after a change of control, or the executive voluntarily terminated
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 had
substantially changed the executive's duties, moved his work location by more
than forty (40) miles or our principal business had substantially changed.
SAMUEL E. PARK
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 expired on April 30, 2004. 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 contained 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 had terminated Mr. Park's
employment for cause, as defined in the Park Agreement, or Mr. Park had left his
employment, the Company was to have paid Mr. Park's salary through the end of
the month in which such termination occurs. If the Company had terminated Mr.
Park's employment other than for cause, Mr. Park would have been entitled to
receive his salary and bonus for the remainder of his employment term. In all
events of termination, except by the Company other than for cause, Mr. Park
would have been 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 would have been
obligated to pay Mr. Park all amounts in his deferred compensation account, plus
accrued interest, dividends and gains.
25
Upon a change of control, as defined in the Park Agreement, (i) all
outstanding unexercised options held by Mr. Park were to have immediately vested
and become exercisable and (ii) the Company would have been 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 was such payment to 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 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 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. Mr. Park answered the complaint and asserted
counterclaims seeking payment from the Company based on his position that a
"change in control" occurred in June 2003. Mr. Park is also seeking other
consideration he believes he is owed under his employment agreement. The Company
filed a reply to Mr. Park's counterclaims denying that he is entitled to any of
these payments. The Company and Mr. Park have filed motions for summary judgment
on the issues related to the change in control and the amendment to the
employment agreement, which motions have been fully submitted to the court for
consideration. If Mr. Park prevails on his claims and the payments he seeks are
required to be paid in a lump sum, these payments may have a material adverse
effect on the Company's liquidity. It is not possible to predict the outcome of
these claims; however, the Company's Board of Directors does not believe that
such a claim is reasonably likely to result in a material decrease in the
Company's liquidity in the foreseeable future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective February 3, 2003, Damien Park, the son of Samuel E. Park, the
former Chief Executive Officer of the Company, 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.
26
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
At the commencement of the fiscal year ended July 31, 2004, the
Compensation Committee of our Board of Directors was comprised of David W.
Wright as Chairman, Wallace Barnes and Suzanne M. Hopgood. Mr. Wright resigned
from the Board in March 2005, Mr. Barnes resigned from the Board in April 2005
and Ms. Hopgood resigned from the Board in May 2005. Presently, the Compensation
Committee consists of James R. Henderson as Chairman and General Merrill A.
McPeak. Except as noted below, neither of these individuals was at any time
during the fiscal year ended July 31, 2004 or at any other time one of our
officers or employees.
Ms. Hopgood also served as the Chairman of the Board of Directors of the
Company until May 2005.
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 July 31, 2004, the Compensation Committee was comprised of David W. Wright
as Chairman, Wallace Barnes and Suzanne M. Hopgood. Mr. Wright resigned from the
Board in March 2005, Mr. Barnes resigned from the Board in April 2005 and Ms.
Hopgood resigned from the Board in May 2005. Presently, the Compensation
Committee is comprised of James R. Henderson as Chairman and General Merrill A.
McPeak. After evaluating our performance and the performance of our executive
officers, the Compensation Committee recommended, and the Board of Directors
subsequently ratified, the fiscal 2004 year end bonus levels for the executive
officers of the Company. 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 July 31, 2004 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.
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
27
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
Mr. Park was employed until October 10, 2003 as the Company's Chief
Executive Officer under an employment agreement that set forth the level of
salary and bonus to which Mr. Park was entitled for the fiscal year ended July
31, 2004. Pursuant to the 2004 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 July 31, 2004 was
$385,875; by October 10, 2003 he had been paid $285,287 for the portion of the
year that he had been with the Company. In determining such amount, the Board
considered the responsibilities performed by Mr. Park as Chief Executive Officer
of the Company, the performance of Mr. Park in managing and directing the
Company's operations, the efforts by Mr. Park in assisting the Company to
28
improve its capital base and financial condition and a competitive assessment of
survey data of other competitive companies as it relates to the Company's
performance versus such competitive companies. The Compensation Committee
believes that Mr. Park's salary was reasonable and 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. Mr. Schneider's annual
base salary for the fiscal year ended July 31, 2004 was $275,000. On January 21,
2005, the Board raised Mr. Schneider's salary to $290,000 per year. On April 27,
2005, the Board raised Mr. Schneider's salary to $300,000 per year. In
determining such amounts, the Board considered the responsibilities performed by
Mr. Schneider as Chief Executive Officer of the Company, the performance of Mr.
Schneider in managing and directing the Company's operations, the efforts by Mr.
Schneider in assisting the Company to improve its capital base and financial
condition and a competitive assessment of survey data of other competitive
companies as it relates to the Company's performance versus such competitive
companies. The Compensation Committee believes that Mr. Schneider's' salary was
reasonable and consistent with competitive salary levels. Pursuant to the 2004
Senior Management Incentive Plan discussed below, the amount of Mr. Schneider's
annual bonus was based primarily on the Company's achievement of financial
targets in its operating plan and, secondarily, on Mr. Schneider'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. Mr. Schneider did not receive a
bonus for the fiscal year ended July 31, 2004.
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 2004 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 2004 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 2005, the bonus will be based entirely on achieving
certain operating income targets in the Company's fiscal year 2005 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.
29
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.
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.
James R. Henderson (Chair)
General Merrill A. McPeak
30
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
shareholder return on the Common Stock with The Nasdaq U.S. Index and the peer
group index for the Standard Industrial Classification Code ("SIC Code") 3844
for the period commencing July 31, 1999 and ending July 31, 2004. The peer group
for SIC Code 3844 (X-Ray Apparatus and Tubes) consists of 6 companies and
includes: American Science & Engineering Inc., CTI Molecular Imaging Inc.,
Hologic Inc., GE Invision, Inc., Neoprobe Corp. and Schick Technologies Inc. The
graph assumes that $100 was invested on July 31, 1999 in the Common Stock and in
each of the other indices and assumes monthly reinvestment of all dividends.
[Graphic Omitted]
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
------------------------------------ FISCAL YEAR ENDING ----------------------------------
COMPANY INDEX/MARKET 7/31/1999 7/29/2000 7/28/2001 8/03/2002 8/02/2003 7/31/2004
DEL GLOBAL TECH CORP. 100.00 115.38 16.00 38.77 27.69 32.00
X-Ray Apparatus & Tubes 100.00 136.23 137.02 365.78 318.09 413.57
NASDAQ US Only 100.00 151.92 82.76 56.04 72.51 80.82
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.
31
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee selects our independent public accountants. The Audit
Committee is currently working on selecting our independent public accountants
for the Company's 2005 fiscal year. Deloitte & Touche LLP ("Deloitte") served as
the Company's independent public accountants for the fiscal year ended July 31,
2004.
It is anticipated that a representative of Deloitte 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, 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 Annual Report on Form 10-K for the fiscal year ended
July 31, 2004 and (ii) the reviews of the interim financial statements included
in our Quarterly Reports on Form 10-Q for that fiscal year were $626,603. 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 2, 2003, 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.
AUDIT-RELATED FEES
There were no fees billed by Deloitte & Touche for Audit-Related services
for the fiscal year ended July 31, 2004. The aggregate fees billed by Deloitte &
Touche 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.
TAX FEES
The aggregate fees billed by Deloitte & Touche for tax services for the
fiscal year ended July 31, 2004 were $53,141. The aggregate fees billed by
Deloitte & Touche for tax services for the fiscal year ended August 2, 2003 were
$60,212. In both fiscal years, these fees related to tax planning and consulting
work.
ALL OTHER FEES
There were no fees for other professional services rendered during the
fiscal years ended July 31, 2004 or August 2, 2003.
The Audit Committee's policy is to pre-approve services to be performed by
the Company's independent public accountants in the categories of audit
services, audit-related services, tax services and other services. Additionally,
32
the Audit Committee will consider on a case-by-case basis and, if appropriate,
approve specific engagements that are not otherwise pre-approved. The Audit
Committee has approved the services described under Audit Related Fees, Tax Fees
and All Other Fees herein.
The Audit Committee has approved all fees and 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.
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.
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, the Company's independent auditors for the
fiscal year ended July 31, 2004. The Audit Committee has received the written
disclosures and the letter from Deloitte, as required by the Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as modified or supplemented, and has discussed with Deloitte the independence of
Deloitte. The Audit Committee also considered whether Deloitte's non-audit
services, including tax planning and consulting, are compatible with maintaining
Deloitte'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 July 31, 2004, as amended by Amendment No. 1
thereto, filed with the Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Gerald M. Czarnecki (Chair)
Edgar J. Smith, Jr.
James Risher
33
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 2004 Annual Report
(without exhibits) and the 2004 Amendment (without exhibits) which contains
certified financial statements of the Company for the fiscal year ended July 31,
2004.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S 2004 ANNUAL REPORT AND THE 2004 AMENDMENT, 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
2006 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 January 31, 2006 in order to be included in the proxy
statement for that meeting. Stockholders wishing to nominate directors or bring
a proposal before the 2006 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 April 16,
2006.
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 2006 annual meeting is April 16, 2006.
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.
34
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
/s/ Walter F. Schneider
- ---------------------------
Walter F. Schneider
Chief Executive Officer and President
May 31, 2005
35
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DEL GLOBAL TECHNOLOGIES CORP.
PROXY--ANNUAL MEETING OF STOCKHOLDERS
The undersigned, a stockholder of Del Global Technologies Corp., a
New York corporation (the "Company"), does hereby appoint Walter F. Schneider
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 2005 Annual Meeting of Stockholders of the Company to
be held at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park
Avenue Tower, 65 East 55th Street, New York, New York 10022 on June 30, 2005 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 May 31, 2005, and a copy of the Company's Annual Report on
Form 10-K and Amendment No. 1 thereto for the fiscal year ended July 31, 2004.
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 SIX (6) NOMINEES FOR DIRECTOR.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSAL 1.
1. ELECTION OF DIRECTORS:
The election of the following nominees to the Board of Directors, to serve until
the 2006 Annual Meeting of Stockholders and until their respective successors
are elected and shall qualify:
GERALD M. CZARNECKI
JAMES R. HENDERSON
WALTER F. SCHNEIDER
EDGAR J. SMITH, JR.
GENERAL MERRILL A. McPEAK
JAMES RISHER
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. 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 SIX (6)
NOMINEES AS DIRECTORS.
Dated _______________________, 2005
_____________________________ (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: 31 May 05, 12:00am