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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|_| Preliminary Proxy Statement
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DEL GLOBAL TECHNOLOGIES CORP.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
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[LOGO OF DEL GLOBAL TECHNOLOGIES CORP.]
DEL GLOBAL TECHNOLOGIES CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2006
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 Del Medical Imaging, 11550 West King
Street, Franklin Park, Illinois 60131 on Tuesday, June 13, 2006 at 2:00 p.m.,
central time, or at any adjournment or postponement thereof, for the following
purposes:
1. To elect five (5) 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 ratify the appointment of BDO Seidman, LLP as our
independent public accountants for the fiscal year ending July
29, 2006; 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 May 8, 2006 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 12, 2006
DEL GLOBAL TECHNOLOGIES CORP.
ONE COMMERCE PARK
VALHALLA, NY 10595
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2006
----------------
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 2006 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held at the offices of Del Medical Imaging, 11550
West King Street, Franklin Park, Illinois 60131 on Tuesday, June 13, 2006 at
2:00 p.m., central time, or at any adjournment or postponement thereof.
The date of this Proxy Statement is May 12, 2006, 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 Del Medical
Imaging, 11550 West King Street, Franklin Park, Illinois 60131 on Tuesday, June
13, 2006 at 2:00 p.m., central time.
RECORD DATE AND VOTING. The Board of Directors fixed the close of business
on Monday, May 8, 2006, 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 11,635,524 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 five (5) directors for the ensuing year; (ii) the ratification
of the appointment of BDO Seidman, LLP as our independent public accountants for
the fiscal year ending July 29, 2006; 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 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 five (5) director nominees, FOR the ratification of
the appointment of BDO Seidman, LLP as the Company's independent public
accountants for the fiscal year ending July 29, 2006 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 11,635,524 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
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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.
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 July 30, 2005 (the "2005 Annual
Report") (without exhibits) and Amendment No. 1 thereto filed on November 23,
2005 (the "2005 Amendment") (without exhibits) are enclosed with this Proxy
Statement.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE COPIES OF THE
2005 ANNUAL REPORT AND THE 2005 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 five (5) directors, all of whom were
elected at the Company's Annual Meeting of Stockholders held on June 30, 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. 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 TO 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 66 Director 2003
Walter F. Schneider 71 Director, President 2003
and Chief Executive
Officer
James R. Henderson 48 Chairman of the Board 2003
and Director
General Merrill A. McPeak 70 Director 2005
James A. Risher 63 Director 2005
(1) See also the "Committee Membership" chart included in this Proxy
Statement.
GERALD M. CZARNECKI has been a member of the Company's Board of Directors
since 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
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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
InPractice, Inc.; 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, Florida Gateway
Chapter and is Chairman of The National Leadership Institute, a non-profit
organization committed to improving non-profit Leadership and Corporate
Governance.
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 and as Chief Operating
Officer and Director since June 2005. 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. 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. Mr. Henderson earned a B.S. in Accounting from
the University of Scranton.
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GENERAL MERRILL A. MCPEAK has been a member of the Company's Board of
Directors since April 27, 2005. General McPeak has served as President of McPeak
& Associates, a management consulting firm he founded in 1995. He was Chief of
Staff, United States Air Force, from November 1990 to October 1994, when he
retired. He is Chairman of the Board of Ethicspoint, Inc. and a director of
several other private companies. He also serves as a director of Tektronix,
Inc., a manufacturer and marketer of test, measurement and monitoring solutions,
Health Sciences Group, Inc., a provider of preventive healthcare alternatives to
consumers and medical professionals, GigaBeam Corporation, a supplier of high
performance high availability fiber-speed wireless communication, Mathstar, a
designer and marketer of specialized semiconductor integrated circuits, and
CenterSpan Communications, a provider of communications infrastructure enabling
peer-to-peer content exchange. 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 A. RISHER has been a member of the Company's Board of Directors
since April 27, 2005. Mr. 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 30, 2005, the Board of
Directors held 27 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. 5 board members attended the 2005 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. On February 14, 2006, the Board of Directors amended the
Audit Committee Charter to comply with the Marketplace Rules of the National
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Association of Securities Dealers, Inc. ("NASD"). A copy of each charter can be
found under the "Investor Relations" section of our website at
www.delglobal.com. Additionally, the amended charter of the Audit Committee is
attached to this proxy statement as Appendix A.
The members of the committees are identified in the following table.
COMMITTEE MEMBERSHIP
COMPENSATION NOMINATING
AUDIT AND STOCK AND GOVERNANCE
DIRECTOR COMMITTEE OPTION COMMITTEE COMMITTEE
-------- --------- ---------------- ---------
GERARD M. CZARNECKI CHAIR X X
JAMES R. HENDERSON X CHAIR
GENERAL MERRILL A. McPEAK X CHAIR X
JAMES A. RISHER X 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 8 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 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 Option
Plan (as defined herein). This committee held 4 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 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. This committee
held 1 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,
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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.
Each member of this 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);
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;
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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; 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 1, 2004 through July 30, 2005, non-employee directors were
paid quarterly retainers, at a rate of $20,000 per annum for serving on the
Board of Directors. Directors who are also Company employees receive no
compensation for serving as directors.
There were no options granted to non-employee directors during the last
fiscal year.
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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, 47, 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 Stock Option and Compensation
Committee and the Nominating and Corporate Governance Committee 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;
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 8, 2006 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
11,635,524 shares of Common Stock issued and outstanding as of May 8, 2006, 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 Amount and nature of
of beneficial owner beneficial ownership(1) Percent of Class
------------------- ----------------------- ----------------
Benson Associates LLC 1,159,163(2) 11.0%
111 SW 5th, Suite 2130
Portland, OR 97204
Royce & Associates LLC 501,810(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 1,494,028(5) 13.9%
420 Montgomery Street
San Francisco, CA 94104
Wellington Management Co. LLP 991,481(6) 9.2%
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
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- ----------
(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.
(3) According to information contained in Amendment No. 4 to a Schedule 13G
dated February 9, 2006 Royce & Associates, LLC ("Royce"), an investment advisor
registered under the Investment Act, is the beneficial owner of 501,810 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. 4 on a Schedule 13G
dated January 26, 2006, 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 1,494,028 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 1,372,228 shares of our Common Stock and sole power to dispose of
1,491,655 shares of our Common Stock and shared power to dispose of 2,373 shares
of our Common Stock.
(6) According to information contained in Amendment No. 5 to a Schedule 13G
dated February 14, 2006, Wellington Management Company, LLP ("Wellington"), an
investment advisor registered under the Investment Act, may be deemed the
beneficial owner of 991,481 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 568,955 of our Common Stock and shared power to dispose of all
991,481 shares of our Common Stock owned by Wellington.
-14-
(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 8, 2006 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 11,635,524 shares of Common Stock issued and outstanding as of May 8, 2006,
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 AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------- ----------------------- ----------------
Walter F. Schneider 133,500(2) 1.1%
Mark A Koch 10,000(2) *
Thomas V. Gilboy(4) -- --
Edward Ferris(5) 37,500(2) *
Gerald M. Czarnecki 28,750(2) *
James Rischer 6,250(2) *
James R. Henderson 18,750(2)(3) *
Merrill McPeak 11,250(2) *
Edgar J. Smith, Jr.(6) 23,050(2) *
All Directors and Named Executive Officers 269,050(2) 2.3%
as a group
(9 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.
(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 8, 2006 as follows: Edward Ferris - 37,500, Walter F.
Schneider - 133,500, Mark A. Koch - 7,500, James A. Risher - 6,250, Edgar J.
Smith, Jr. - 18,750, Gerald M. Czarnecki - 18,750, Merrill A. McPeak - 6,250 and
James R. Henderson - 18,750.
(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. (collectively, the
"Group"), and Mr. Henderson is also the President and Chief Operating Officer of
WebFinancial. Mr. Henderson disclaims beneficial ownership of the 1,838,416
shares of our Common Stock collectively owned by the Group and the 28,646 shares
of our Common Stock owned by WebFinancial.
-16-
(4) Mr. Gilboy has not served as Chief Financial Officer since August 2004.
(5) Mr. Ferris has not served as Senior Vice President of Corporate and
Organizational Development since April 2005.
(6) Mr. Smith, Jr. resigned from the Company's Board of Directors, effective May
3, 2006.
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 30, 2005, 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 July 30, 2005, July
31, 2004 and August 2, 2003.
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 2005 $284,181 $ 96,000 $ 10,200 100,000(7) $ --
President and Chief Executive 2004 269,365 -- 10,200 50,000(4) --
Officer 2003(8) 203,462 22,773 19,140 36,000 --
Mark A Koch 2005 $167,366 $ 26,400 $ -- $ -- $ --
Treasurer and Principal 2004 135,937 -- -- -- --
Accounting Officer 2003 117,763 3,000 -- -- --
Thomas V. Gilboy 2005 $ 17,084 $ -- $ -- $ -- $ 140,000(9)
Former Chief Financial Officer 2004 206,519 -- -- -- --
2003(5) 205,320 19,172 -- -- --
Edward Ferris 2005 $132,998 $ -- $ -- $ -- $ 499,491(10)
Former Senior Vice President, 2004 199,149 -- 53,250(3) -- --
Corporate and 2003(6) 201,156 21,404 54,060 -- --
Organizational Development
- ----------
(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
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 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.
(4) Includes nonqualified stock options granted on October 20, 2003. Such stock
options become exercisable immediately with an exercise price of $2.10. They are
exercisable through October 20, 2013.
(5) 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.
-18-
(6) 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 on April 1, 2005.
(7) Includes nonqualified stock options granted on April 27, 2005. Such stock
options become exercisable in increments of 25% per year with an exercise price
of $2.70. They are exercisable through April 27, 2015.
(8) 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.
(9) Includes $140,000 paid pursuant to a separation agreement and release dated
as of September 1, 2004 with Thomas Gilboy, as described in "Separation
Agreements with Certain Former Executive Officers," below.
(10) Includes $499,491 paid pursuant to a separation agreement and release dated
as of April 1, 2005 with Edward Ferris, as described in "Separation Agreements
with Certain Former Executive Officers," below.
The following options were granted in the fiscal year ended July 30, 2005
to the executive officers named in the Summary Compensation Table in this Proxy
Statement:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
% of Potential Realizable Value
Total at Assumed Annual Rates of
Options/ Stock Price Appreciation
Number of SARs for Option Term (3)
Securities Granted to
Underlying Employees in Exercise or Base
Options/SARs Fiscal Price per Share Expiration
Name Granted # Year (1) ( $/Sh) (2) Date 5% ($) 10% ($)
---- --------- -------- ----------- ---- ------ -------
Walter F. Schneider (4) 100,000 100 % $2.10 4/26/2015 $169,802 $430,310
Mark A. Koch --
Thomas V. Gilboy -- --
Edward Ferris --
- ----------
(1) Based on options to purchase an aggregate of 100,000 shares of Common
Stock granted to employees (including employee directors) during the
fiscal year ended July 30, 2005. The foregoing total excludes options
granted to non-employee directors.
(2) The exercise price per share of each option was equal to the quoted fair
market value of the shares of Common Stock on the date of grant.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated
stock price. The 5% and 10% rates represent certain assumed rates of
appreciation only, in accordance with the rules of the Securities and
Exchange Commission, and do not reflect the Company's estimate or
-19-
projection of future stock price performance. Actual gains, if any, are
dependent on the actual further performance of the shares of Common Stock,
and no gain to the optionee is possible unless the stock price increases
over the option term.
(4) 25% of the shares subject to the option granted vested on the grant date
of April 27, 2005 and the remaining shares vest 25% per year on each
anniversary date of the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number Of Securities Value Of Unexercised
Underlying Unexercised In-The-Money Options
Shares Options At Fiscal Year-End At Fiscal Year-End ($)(1)
Acquired Value -------------------------- -------------------------
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
Walter F. Schneider -- -- 121,000 100,000 $89,900 $15,000
Mark A Koch -- -- 7,500 -- -- --
Thomas V. Gilboy -- -- -- -- -- --
Edward Ferris -- -- 37,500 -- 11,500 --
- ----------
(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 30, 2005.
-20-
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of July 30, 2005 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 1,662,494 $ 3.81 538,681
EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS:
Warrants issued in connection with the acquisition of Villa(2) 50,000 $ 7.94 None
Warrants issued in settlement of class action lawsuit(3) 941,994 $ 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 expired in December 2005.
(4) Pursuant to our class action settlement with our shareholders concerning
allegations that the Company had violated federal Securities laws, we
issued 2.5 million shares of our common stock and one million warrants to
purchase our common stock at $2.00 per share. The issuance of these
securities was pursuant to a court order issued in connection with the
settlement of this class action lawsuit in January 2002, and therefore was
exempt from the registration requirements of the Securities Act of 1933
pursuant to Section 3(a) (10) thereof. These warrants were originally set
to expire in March 2008. In a motion filed in February 2004, a plaintiff
class 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.
-21-
EMPLOYMENT AGREEMENTS
EMPLOYMENT CONTRACTS WITH CURRENT EXECUTIVE OFFICERS
WALTER F. SCHNEIDER AND MARK A. KOCH
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 was filed as an exhibit to the Company's
Current Report on Form 8-K filed on May 25, 2005. The following summary of the
Schneider Severance Agreement does not purport to be complete, and is subject to
and qualified in its entirety by reference to the full text of such agreement.
Pursuant to the terms of such 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 "Schneider Severance Payment"). The Schneider 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 the Schneider 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, the Company 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 full 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,
-22-
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, 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-Competition Agreement, he would be liable for
damages and the Company could seek an injunction.
On May 23, 2005, Mark A. Koch entered into a Severance Benefits Agreement
with the Company dated as of such date (the "Koch Severance Agreement"), a copy
which was filed as an exhibit to the Company's Current Report on Form 8-K filed
on May 25,2005. The following summary of the Koch Severance Agreement does not
purport to be complete, and is subject to and qualified in its entirety by
reference to the full text of such agreement. Pursuant to the terms of the Koch
Severance Agreement, upon the occurrence of the events specified below, Mr. Koch
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 "Koch Severance
Payment"). The Koch Severance Payment is payable to Mr. Koch 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 Koch Severance
Agreement; (ii) without his express written consent, he is transferred or the
Company proposes that he be transferred for any extended period to a location
that is more than forty (40) miles from the Company's location at which he
performs services for the Company as of the date of the Koch Severance
Agreement; or (iii) his annual base salary, as increased from time to time, is
reduced. Additionally, if Mr. Koch is entitled to the Koch 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 Koch
Severance Agreement. The Koch Severance Agreement also requires Mr. Koch to keep
certain information about the Company confidential after the termination of his
employment. The Koch Severance Agreement expires on December 31, 2006.
-23-
SEPARATION AGREEMENTS WITH FORMER EXECUTIVE OFFICERS
CHIRSTOPHER N. JAPP
Christopher N. Japp served as the President of the Company's Del Medical
Systems Group subsidiary until March 2, 2006.
The Company entered into a Separation and Release Agreement dated as of
March 21, 2006 (the "Japp Separation Agreement") with Mr. Japp. The following
summary does not purport to be complete and is subject to and qualified in its
entirety by the full text of such agreement. The Japp Separation Agreement was
filed as an exhibit to the Company's Current Report on Form 8-K filed on March
24, 2006. Pursuant to the Japp Separation Agreement, the Company agreed to pay
Mr. Japp's base salary and car allowance and continue Mr. Japp's health-related
benefits through May 31, 2006. In consideration for these payments, Mr. Japp
agreed to release and discharge the Company.
THOMAS V. GILBOY AND EDWARD FERRIS
Thomas V. Gilboy served as the Company's Chief Financial Officer until
August 23, 2004. Edward Ferris served as the Company's Senior Vice President of
Corporate and Organizational Development until April 1, 2005.
The Company entered into a Separation Agreement and Release dated as of
September 1, 2004 (the "Gilboy Separation Agreement") with Thomas V. Gilboy, the
Company's former Chief Financial Officer. The following summary does not purport
to be complete and is subject to and qualified in its entirety by the full text
of such agreement. The Gilboy Separation Agreement was filed as an exhibit to
the Company's Current Report on Form 8-K filed on September 15, 2004. Pursuant
to the Gilboy Separation Agreement, the Company made severance payments to Mr.
Gilboy aggregating $140,000. In consideration for these payments, the Change in
Control Agreement between the Company and Mr. Gilboy dated October 28, 2002 was
terminated and Mr. Gilboy agreed to release and discharge the Company, as more
fully described in the Gilboy Separation Agreement.
On June 2, 2005, the Company entered into a Separation Agreement and
Release dated as of April 1, 2005 (the "Ferris Separation Agreement") with
Edward Ferris, the Company's former Senior Vice President of Corporate and
Organizational Development. The following summary does not purport to be
complete and is subject to and qualified in its entirety by the full text of
such agreement. The Ferris Separation Agreement was filed as an exhibit to the
Company's Current Report on Form 8-K filed on June 2, 2005. Pursuant to the
Ferris Separation Agreement, the Company made a severance payment of $474,491.23
to Mr. Ferris. Additionally, the Company made a $25,000 payment to Mr. Ferris
representing payment of certain legal fees and expenses Mr. Ferris incurred in
connection with his separation from the Company. In consideration for these
payments, the Change in Control Agreement between the Company and Mr. Ferris
dated October 28, 2002 was terminated and Mr. Ferris agreed to release and
discharge the Company, as more fully described in the Ferris Separation
Agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable.
-24-
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Stock Option and Compensation Committee of our Board of Directors is
currently comprised of General Merrill A. McPeak as Chairman, James A. Risher,
James R. Henderson and Gerald M. Czarnecki. Neither of these individuals was at
any time during the fiscal year ended July 30, 2005 or at any other time one of
our officers or employees.
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 Stock Option and Compensation Committee of the Board of Directors
generally determines our executive compensation policies. Presently, the
Compensation Committee is comprised of General Merrill A. McPeak as Chairman,
James R. Henderson, James A. Risher and Gerald M. Czarnecki. After evaluating
our performance and the performance of our executive officers, the Compensation
Committee recommended, and the Board of Directors subsequently ratified, the
fiscal 2005 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
30, 2005 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
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.
-25-
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
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 30, 2005 was $300,000. The
Compensation Committee believes that Mr. Schneider's salary was reasonable and
consistent with competitive salary levels. Pursuant to the Company's Fiscal 2005
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.
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.
On December 19, 2005, the Board of Directors of the Company adopted the
Fiscal 2006 Senior Management Incentive Plan (the "2006 Plan") formally to
provide incentives to senior management of the Company and its subsidiaries,
including certain of the Company's executive officers, in the form of incentive
payments for achieving certain performance goals established for them.
Participants in the 2006 Plan who are executive officers of the Company include
Walter F. Schneider, President and Chief Executive Officer of the Company and
Mark A. Koch, Principal Accounting Officer, Treasurer and Secretary of the
Company. No other executive officers of the Company participate in the 2006
Plan.
-26-
Under the 2006 Plan, a specific pre-defined revenue goal (the "Incentive
Plan Goal") and individual performance standards must be attained in order for
participants to qualify for incentive payments. The amount of a participant's
payout under the 2006 Plan is determined as a percentage of the participant's
annual base salary (the "Incentive Percentage"), with the Incentive Percentage
being different depending upon the participant's level within the organization.
Incentive Percentages for participants under the 2006 Plan range from 10% to 40%
of the participant's annual base salary. The amount of a participant's payment
under the 2006 Plan is subject to proportional adjustment in the event actual
results are at least 90% of the Incentive Plan Goal, and in the event that
actual results exceed the Incentive Plan Goal (with a maximum payment of 1.5
times an employee's Incentive Percentage). If the actual results are less than
90% of the Incentive Plan Goal, then no payments will be made under the 2006
Plan.
The maximum Incentive Percentage that may be earned by Mr. Schneider under
the 2006 Plan is 40%, and the corresponding maximum incentive payment under the
2006 Plan for Mr. Schneider is $120,000. The maximum Incentive Percentage that
may be earned by Mr. Koch under the 2006 Plan is 30%, and the corresponding
maximum incentive payment under the 2006 Plan for Mr. Koch is $49,500.
On December 19, 2005, the Board of Directors of the Company approved an
Incremental Executive Incentive Plan (the "Incremental Plan") for Mr. Schneider
for the 2006 fiscal year. Under the Incremental Plan, Mr. Schneider will be paid
$20,000 for each $2 million of gross revenue that the Company recognizes in the
2006 fiscal year over a certain revenue budget goal set for the year. The
maximum payment to Mr. Schneider under the Incremental Plan is $120,000.
Eligibility to receive such payments is contingent upon the Company maintaining
or exceeding a certain consolidated gross margin target throughout the 2006
fiscal year.
On December 19, 2005, the Board of Directors of the Company approved
fiscal 2005 awards to be paid to the executive officers of the Company under the
Company's Fiscal 2005 Senior Management Incentive Plan (the "2005 Plan").
The Company's 2005 Plan is intended to provide incentives to members of
senior management, including the Company's executive officers, in the form of
annual incentive payments for achieving certain performance goals established
for them. Participants in the 2005 Plan who are executive officers of the
Company include Messrs. Schneider and Koch. No other executive officers of the
Company participated in the 2005 Plan.
Under the 2005 Plan, a specific pre-defined revenue goal (the "Incentive
Plan Goal") and individual performance standards must be attained in order for
participants to qualify for incentive payments. The amount of a participant's
payout under the 2005 Plan is determined as a percentage of the participant's
annual base salary (the "Incentive Percentage"), with the Incentive Percentage
being different depending upon the participant's level within the organization.
-27-
Incentive Percentages for participants under the 2005 Plan range from 10% to 40%
of the participant's annual base salary. The amount of a participant's payment
under the 2005 Plan is subject to proportional adjustment in the event actual
results are less than the Incentive Plan Goal, and in the event that actual
results exceed the Incentive Plan Goal (with a maximum payment of 1.5 times an
employee's Incentive Percentage). The Incentive Percentage for Mr. Schneider
under the 2005 Plan is 40% and was proportionally adjusted to 32% based on the
Company's actual results in comparison to the Incentive Plan Goal. Mr. Koch's
Incentive Percentage under the 2005 Plan is 20% and was proportionally adjusted
to 16% based on the Company's actual results in comparison to the Incentive Plan
Goal.
Incentive payments awarded to the executive officers of the Company under
the 2005 Plan are as follows:
NAME TITLE INCENTIVE AMOUNT
- --------------------------------------------------------------------------------
Walter F. Schneider President and Chief Executive $ 96,000
Officer
Mark A. Koch Principal Accounting Officer, $ 26,400
Treasurer and Secretary
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.
-28-
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.
General Merrill A. McPeak (Chair)
James A. Risher
Gerald M. Czarnecki
James R. Henderson
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 July 2, 2000 and ending July 30, 2005. 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 July 29, 2000 in
the Common Stock and in each of the other indices and assumes monthly
reinvestment of all dividends.
-29-
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG DEL GLOBAL TECHNOLOGIES CORP.,
NASDAQ U.S. INDEX AND SIC CODE INDEX
[GRAPHIC OF A LINE CHART WITH THE FOLLOWING INFORMATION:]
7/29/00 7/28/01 8/03/02 8/02/03 7/31/04 7/30/05
------- ------- ------- ------- ------- -------
DEL GLOBAL TECHNOLOGIES CORP 100.00 13.87 33.60 24.00 27.73 28.90
SIC CODE INDEX 100.00 100.58 268.50 233.50 303.58 436.18
NASDAQ U.S. INDEX 100.00 54.47 36.89 47.73 53.19 61.27
ASSUMES $100 INVESTED ON JULY 29, 2000
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JULY 30, 2005
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.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee selects our independent public accountants. Deloitte &
Touche LLP and BDO Seidman, LLP served as the Company's independent public
accountants for the fiscal year ended July 30, 2005.
It is anticipated that a representative of BDO Seidman, 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.
-30-
AUDIT FEES
The aggregate fees billed by BDO Seidman, LLP for professional services
rendered for the audit of our annual financial statements set forth in our
Annual Report on Form 10-K for the fiscal year ended July 30, 2005 and (ii) the
reviews of the interim financial statements included in our Quarterly Reports on
Form 10-Q for that fiscal year were $250,000. On June 30, 2005, the Company
engaged BDO Seidman, LLP as its principal accountants. The Company filed a
Current Report on Form 8-K on July 7, 2005 describing this change. The aggregate
fees billed by Deloitte & Touche LLP for professional services rendered for the
reviews of the interim financial statements included in our Quarterly Reports on
Form 10-Q for the fiscal year ended July 30, 2005 were $103,000.
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 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.
AUDIT-RELATED FEES
There were no fees billed by BDO Seidman, LLP for Audit-Related services
for the fiscal year ended July 30, 2005. There were no fees billed by Deloitte &
Touche for Audit-Related services for the fiscal year ended July 31, 2004.
TAX FEES
The aggregate fees billed by BDO Seidman, LLP for tax services for the
fiscal year ended July 30, 2005 were $78,445. The aggregate fees billed by
Deloitte & Touche for tax services for the fiscal year ended July 31, 2004 were
$53,141. 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 30, 2005 or July 31, 2004.
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,
the Audit Committee will consider on a case-by-case basis and, if appropriate,
approve specific engagements that are not otherwise pre-approved.
-31-
The Audit Committee has approved all fees and advised us that it has
determined that the non-audit services rendered by BDO Seidman, LLP 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 is attached to this proxy statement as APPENDIX A.
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 BDO Seidman, LLP, the Company's independent auditors for
the fiscal year ended July 30, 2005. The Audit Committee has received the
written disclosures and the letter from BDO Seidman, LLP, as required by the
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as modified or supplemented, and has discussed with BDO Seidman, LLP
the independence of BDO Seidman, LLP. The Audit Committee also considered
whether BDO Seidman, LLP's non-audit services, including tax planning and
consulting, are compatible with maintaining BDO Seidman, 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 July 30, 2005, 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)
James A. Risher
General Merrill A. McPeak
-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 2005 Annual Report
(without exhibits) and the 2005 Amendment (without exhibits) which contains
certified financial statements of the Company for the fiscal year ended July 30,
2005.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S 2005 ANNUAL REPORT AND THE 2005 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
2007 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 12, 2007 in order to be included in the proxy
statement for that meeting. Stockholders wishing to nominate directors or bring
a proposal before the 2007 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 February 11,
2007.
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 2007 annual meeting
is March 28, 2007. 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
Walter F. Schneider
Chief Executive Officer and President
May 12, 2006
-34-
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DEL GLOBAL TECHNOLOGIES CORP.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2006
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 2006 Annual Meeting of Stockholders of the Company to
be held at the offices of Del Medical Imaging, 11550 West King Street, Franklin
Park, Illinois 60131 on June 13, 2006 at 2:00 p.m., central 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 12, 2006, and a copy of the Company's Annual Report on
Form 10-K for the fiscal year ended July 30, 2005.
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 FIVE
(5) NOMINEES FOR DIRECTOR, AND TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, 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 2007 Annual Meeting of Stockholders and until their respective successors
are elected and shall qualify:
GERALD M. CZARNECKI
JAMES R. HENDERSON
GENERAL MERRILL A. McPEAK
JAMES A. RISHER
WALTER F. SCHNEIDER
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 RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING JULY 29, 2006:
______ 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 FIVE
(5) NOMINEES AS DIRECTORS AND TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, 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:
APPENDIX A
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board of Directors to assist in
monitoring:
1. The integrity of the Company's financial reporting;
2. The Company's compliance with legal and regulatory
requirements regarding financial reporting practices; and
3. The independence and performance of the Company's independent
accountants, the performance of the Company's internal audit
function, and the performance of the Company's financial
management.
COMPOSITION AND QUALIFICATIONS
The Audit Committee shall be appointed by the Board of Directors and shall
be comprised of three or more Directors (as determined from time to time by the
Board of Directors), each of whom shall meet the independence requirements of
the applicable nationally traded stock exchange. At least one member of the
Audit Committee shall have accounting or related financial management expertise
and each member of the Audit Committee shall be financially literate, as such
qualifications are interpreted by the Board of Directors in its business
judgment. No member of the Audit Committee shall receive any compensation from
the Company other than director's fees and fees for attending Committee
meetings. No member of the Audit Committee shall serve on more than three public
company audit committees without the prior approval of the Board of Directors.
AUTHORITY
The Audit Committee can retain special legal, accounting or other
consultants to advise it. The Audit Committee may request any officer or
employee of the Company or the Company's outside counsel or independent
accountants to attend a meeting of the Audit Committee or to meet with any
members of, or consultants to, the Audit Committee. The Audit Committee can
authorize payments (1) to the independent accounting firm for performance of the
audit and (2) of any charges of advisers employed by the Audit Committee.
RESPONSIBILITIES
The Audit Committee is directly responsible for oversight of the Company's
independent accountants in connection with the preparation or issuing of an
audit report or related work. In this capacity, the Audit Committee is directly
responsible for the following:
1. Oversight of all work of the independent accountants including
resolution of any disagreements between the public accountants and
management.
2. The appointment or removal of the independent accountants. The
appointment may be by way of designation of the independent
accountant to be proposed for shareholder ratification at a meeting
of shareholders.
3. The compensation of the independent accountants including
authorization and approval of their fees and the terms and
conditions of their engagement letter.
4. The independent accountants will report directly to the Audit
Committee.
THE INDEPENDENT ACCOUNTANTS
The Audit Committee shall obtain confirmation and assurance as to the
independent accountants' independence and compliance with Section 10A of the
Securities Exchange Act of 1934. In this connection, the Audit Committee shall
pre-approve all audit and non-audit services performed by the independent
accountants for the Company provided, however, that no service in the following
categories shall be pre-approved:
1. Bookkeeping or other services related to the accounting records or
financial statements of the Company;
2. Financial information systems design and implementation;
3. Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
4. Actuarial services;
5. Internal audit outsourcing services;
6. Management functions or human resources;
7. Broker or dealer, investment adviser, or investment banking
services;
8. Legal services and expert services unrelated to the audit; and
9. Any other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible for an accounting firm
that audits the Company's financial statements.
The prohibition on pre-approval shall not apply to a service specifically
exempted by the Public Company Accounting Oversight Board.
The pre-approval requirement may be waived with respect to the provision
of a non-audit service if: (i) the service is not in a category ineligible for
pre-approval; (ii) the aggregate amount of all such services is less than 5% of
the total payments by the Company to the independent accountant during the
fiscal year in which the non-audit service is provided; (iii) such service is
not recognized by the Company at the time of engagement to be a non-audit
service and such service is promptly brought to the attention of the Audit
Committee and approved prior to the completion of the audit.
Any approval by the Audit Committee of a non-audit service shall be
communicated promptly to the Chief Executive Officer or Chief Financial Officer
so that it may be disclosed to investors in the next periodic report filed
pursuant to Section 13 of the Exchange Act.
The Audit Committee may delegate to one or more of its designated members
the authority to grant pre-approvals of non-audit services. Decisions of any
member to whom authority is delegated shall be presented to the full Audit
Committee at each of its scheduled meetings.
The Audit Committee shall receive attestations and reports from the
independent accountants on the assessment made by the management of the Company
of the effectiveness of the internal control structures and procedures of the
Company for financial reporting. Such attestations shall not be the subject of a
separate engagement. The Audit Committee shall periodically review with the
independent accountants and the Company's internal auditor the adequacy of the
Company's internal controls, and any significant findings and recommendations
with respect to such controls.
The independent accountants shall report periodically to the Audit
Committee (1) all critical accounting policies and practices to be used by the
Company; (2) all alternative treatments of financial information within
generally accepted accounting principles that have been discussed with
management of the Company, the ramifications of the use of such alternative
treatments and the treatment preferred by the independent accountant; and (3)
all other material, written communications between the independent accountants
and management of the
Company, such as any management letter or schedule of unadjusted
differences. These matters shall be reported to the Audit Committee in a timely
manner to facilitate its review of the Company's annual and quarterly
statements.
At least annually, the Audit Committee shall obtain and review a report by
the independent accountants describing: the independent accountant's internal
quality control procedure; any material issues raised by the most recent quality
control review or review by the Public Company Accounting Oversight Board of the
independent accountant or any inquiry or investigation by governmental or
professional authorities, within the past five years, respecting one or more
independent audits carried out by the firm, any steps taken to deal with such
issues and any rotation of the lead audit partner as required by law.
ANNUAL AUDITED FINANCIAL STATEMENTS
The Audit Committee shall review the Company's annual audited financial
statements with management and the independent accountants. In connection with
such review, the Audit Committee shall:
1. Discuss with the independent accountants prior to the annual audit
to discuss planning and staffing of the audit.
2. Discuss with the independent accountants the matters relating to the
conduct of the audit that are required to be discussed by Statement
on Auditing Standards ("SAS") No. 61, as amended by SAS No. 90, and
as may be further modified or supplemented, including the following:
a. The level of responsibility assumed by the independent
accountants under Generally Accepted Accounting Principles
regarding the Company's internal control structure and whether
the financial statements are free from material misstatement.
b. The quality of the accounting principles used in financial
reporting.
c. Changes in accounting or auditing policies or their
application, including resolution of any significant reporting
or operational issues affecting the financial statements.
d. The existence and substance of any significant accounting
accruals, reserves or estimates made by management that had or
may have a material impact on the financial statements.
e. Any adjustments arising from and any problems encountered in
the course of the independent accountant's audit, including
any change in the scope of the planned audit work and any
restrictions placed on the scope of such work, any internal
control recommendation letter provided by the independent
accountants, and management's response to such letter.
f. The independent accountant's responsibility for information
prepared by management of the Company that accompanies the
Company's financial statements and information in documents
containing audited financial statements of the Company, any
procedures performed with respect thereto and the results.
g. The independent accountant's views about significant auditing
and accounting matters that were the subject of the Company's
consultation with other accountants.
h. Any major issues that were discussed between the Company's
management and the independent accountants in connection with
the initial or recurring retention of such accountants,
including, among other matters, any discussions regarding
accounting principles and auditing standards.
3. Recommend to the Board that the audited financial statements be
included in the Company's annual report on Form 10-K.
QUARTERLY FINANCIAL STATEMENTS
The Audit Committee shall review with management and the independent
accountants the Company's quarterly financial statements in advance of quarterly
earnings releases, including those matters described in SAS 61 identified during
the interim financial review, if applicable, and the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in periodic reports filed with the SEC. The Audit
Committee shall discuss with management earnings press releases and earnings
guidance provided to analysts, if any.
MISCELLANEOUS
In furtherance of the foregoing responsibilities, the Audit Committee
shall:
1. Review, evaluate and report to the Board at least annually on the
performance of the independent accountants and the internal auditor.
2. Meet at least quarterly in separate executive session with each of
the chief financial officer, the internal auditor and the
independent accountants.
3. Establish procedures for (1) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and (2) the confidential,
anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
4. Review with management and the independent accountants any
correspondence with regulatory or governmental agencies and any
employee complaints or published reports which raise material issues
regarding the Company's financial statements or accounting policies.
5. Review periodically with the Company's Chief Executive Officer or
Chief Financial Officer (i) legal and regulatory matters which may
have a material affect on the financial statements, and (ii)
corporate compliance policies or codes of conduct.
6. Discuss with the Company's management policies with respect to risk
assessment and risk management.
7. Set hiring policies for employees or former employees of the
independent accountant.
8. Report regularly to the Board of Directors with respect to Audit
Committee activities.
9. Prepare the report of the Audit Committee required by the rules of
the Securities and Exchange Commission to be included in the proxy
statement for each annual meeting.
10. Review and reassess, at least annually the performance of the Audit
Committee, the adequacy of this Charter and recommend any proposed
changes to the Board of Directors for approval.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles. It
is management's responsibility to prepare the Company's financial statements and
to determine that such financial statements are complete, accurate and in
accordance with generally accepted accounting principles. It is the
responsibility of the independent auditors to plan and conduct audits and to
assist management in determining that the financial statements are complete,
accurate and in accordance with generally accepted accounting principles. Nor,
except as expressly set forth herein, is it the duty of the Audit Committee to
conduct investigations, to resolve disagreements, if any, between management and
the independent accountants or to assure compliance with laws and regulations
and the Company's corporate policies.
DGT (DGTC) Inactive
Filed: 12 May 06, 12:00am