SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
SCHEDULE 14A INFORMATION |
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ____) |
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Filed by a Party other than the Registrant | ||
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Preliminary Proxy Statement | ||
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 | ||
ENVIRONMENTAL TECTONICS CORPORATION | ||
(Name of Registrant as Specified In Its Charter) | ||
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) | ||
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ENVIRONMENTAL TECTONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 11, 2003
TO THE SHAREHOLDERS OF ENVIRONMENTAL TECTONICS CORPORATION:
1. | To elect five directors to serve on the board of directors until their successors have been elected and qualified. |
2. | To transact such other business as may properly come before the Annual Meeting. |
By Order of the Board of Directors | |||
/s/ Ann M. Allen | |||
ANN M. ALLEN, Secretary |
ENVIRONMENTAL TECTONICS CORPORATION
125 James Way
County Line Industrial Park
Southampton, Pennsylvania 18966
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
September 11, 2003
Solicitation of Proxies
Voting and Revocation of Proxies
Voting Securities, Record Date and Quorum
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Why am I receiving this proxy statement and proxy card?
What am I voting on?
What vote is required to elect directors?
How do I vote?
• | by completing the accompanying proxy card and returning it in the enclosed envelope; or |
• | by appearing and voting in person at the Annual Meeting. |
May I change my vote?
• | send written notice revoking your proxy to the Company’s Secretary at 125 James Way, County Line Industrial Park, Southampton, Pennsylvania 18966; or |
• | sign and return a proxy with a later date. |
How do I vote in person?
Who can answer my questions about the Annual Meeting?
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Principal Shareholders
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Common Stock | |||||
William F. Mitchell (2) | 1,624,398 | 22.7 | % | ||||
c/o Environmental Tectonics Corporation | |||||||
County Line Industrial Park | |||||||
Southampton, PA 18966 | |||||||
Pete L. Stephens, M.D. (3) | 686,100 | (4) | 9.6 | % | |||
31 Ribaut Drive | |||||||
Hilton Head Island, SC 29926 | |||||||
Howard W. Kelley (3) | 685 | * | |||||
c/o Sally Corporation | |||||||
745 West Forsyth Street | |||||||
Jacksonville, FL 32204 | |||||||
T. Todd Martin, III | 1,117,520 | (5) | 14.7 | % | |||
50 Midtown Park East | |||||||
Mobile, AL 36606 | |||||||
H.F. Lenfest (3) | 2,621,230 | (6) | 26.8 | % | |||
c/o The Lenfest Group | |||||||
1332 Enterprise Drive | |||||||
West Chester, PA 19380 | |||||||
Emerald Advisors, Inc. | 1,413,750 | (7) | 19.8 | % | |||
1703 Oregon Pike | |||||||
Suite 101 | |||||||
Lancaster, PA 17601 | |||||||
George K. Anderson, M.D. (3) | 0 | * | |||||
8034 Kidwell Hill Court | |||||||
Vienna, VA 22182 | |||||||
All directors and executive | |||||||
officers as a group (6 persons) | 4,944,154 | (8) | 50.5 | % | |||
* | less than 1% |
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, based on 7,157,239 shares of common stock outstanding as of July 18, 2003. Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them. |
(2) | Chairman of the Board, President and Director of the Company. Includes 155,200 shares of common stock held by Mr. Mitchell’s wife. |
(3) | Director of the Company. |
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(4) | Includes 292,770 shares of common stock held by or for the benefit of Dr. Stephens’ wife and two of his children. |
(5) | Includes 534,700 shares of common stock and 437,820 shares of common stock underlying presently exercisable warrants to purchase shares of common stock owned by ETC Asset Management, LLC, a limited liability company of which Mr. Martin is manager. Also includes 79,800 shares of common stock owned by Mr. Martin, 26,900 shares owned by Allied Williams Co, Inc., a corporation of which Mr. Martin is an officer and director, 17,000 shares owned by Equity Management, LLC, a limited liability company of which Mr. Martin is manager, 14,300 shares owned by Mr. Martin jointly with his spouse, and 7,000 shares owned by trusts of which Mr. Martin is trustee. |
(6) | These shares consist of 2,621,230 shares of common stock issuable upon conversion of a promissory note in the principal amount of $10,000,000 and exercise of warrants to purchase shares of common stock. |
(7) | As of July 18, 2003, Emerald Advisors, Inc. has sole voting power with respect to 842,160 shares of common stock and sole dispositive power over 1,413,750 shares of common stock. |
(8) | Includes 11,441 shares of common stock which may be acquired by Duane Deaner, our Chief Financial Officer, upon the exercise of options granted under our Incentive Stock Option Plan that are presently exercisable and 2,621,230 shares of common stock which may be acquired by H.F. Lenfest upon conversion of a promissory note in the principal amount of $10,000,000 that is presently convertible and the exercise of warrants to purchase shares of common stock which are presently exercisable. |
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ELECTION OF DIRECTORS
General
Nominees for Election as Director and Executive Officers
Name | Age | Served as Director or Officer Since(1) | Positions and Offices | |||||||
William F. Mitchell (2) | 61 | 1969 | Chairman of the Board, President and Director | |||||||
Pete L. Stephens, M.D. (3) | 65 | 1974 | Director | |||||||
Howard W. Kelley (4) | 61 | 2002 | Director | |||||||
George K. Anderson, M.D. (5) | 57 | 2003 | Director | |||||||
H.F. Lenfest (6) | 73 | 2003 | Director | |||||||
Duane D. Deaner (7) | 55 | 1996 | Chief Financial Officer | |||||||
(1) | Directors are elected for one-year terms. |
(2) | Mr. Mitchell has been our Chairman of the Board, President and Chief Executive Officer since 1969, except for the period from January 24, 1986 through January 24, 1987, when he was engaged principally in soliciting sales for our products in the overseas markets. Mr. Mitchell received a Bachelor of Science degree in physics from Drexel University and has completed graduate work in mechanical and electrical |
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engineering. He is a member of the ASME and Drexel University engineering advisory boards. Additionally, he is a member of the Society of Automotive/Aerospace Engineering, the International Society of Pharmaceutical Engineering, the Undersea and Hyperbaric Medical Society, the Aerospace Medical Association, the American Society of Mechanical Engineering and the Institute of Environmental Sciences. |
(3) | Recently retired from the practice of medicine, Dr. Stephens had been a physician engaged in private practice for 30 years. Dr. Stephens graduated from Bethany College and the Medical College of Virginia. He presently serves as Chairman of the Board of Directors of Lowcountry Block and Paver, a manufacturing company located in South Carolina. |
(4) | Mr. Kelley is President of Sally Corporation, Jacksonville, Florida, which is one of the oldest and largest designers and fabricators of animation robotics and dark ride attractions used worldwide in theme parks, museums and entertainment attractions. He previously spent over 25 years in the broadcasting industry, including ten years in television management as a news director and later as Vice President and General Manager of Channel 12 WTLV (NBC) in Jacksonville, Florida. He is the former Chairman of the Board of Tempus Software, a medical software development firm located in Jacksonville, Florida. He has also previously served as broadcast strategic planner for a major U.S. communications company and as director of several U.S. technology firms with international business activities. In the academic arena, Mr. Kelley serves as an executive professor at the University of North Florida College of Business Administration, and is a college adjunct instructor on Internet technology and E-commerce on the internet. He is a graduate of the University of Florida and Harvard Business School PMD. |
(5) | Dr. Anderson is an experienced physician executive and preventive medicine leader. He began his professional career as an Air Force flight surgeon, serving overseas medical duty in Korea and Germany as well as aerospace medicine leadership positions in the United States. Following 30 years of military service, he transitioned to physician executive positions in the private sector. Subsequent to his retirement from the military, he served as Chief Executive Officer of the Koop Foundation from 1997 to 1998 and as President and Chief Executive Officer at Oceania, Inc., a medical software company, from 1999 to 2001. Dr. Anderson’s positions in the Air Force include serving as Deputy Assistant Director of Defense (Health Services Operations and Readiness), Commander of the Human Systems Center, Air Force Material command, which included the Armstrong Laboratory, the School of Aerospace Medicine and the Human Systems Program Office. He retired from active duty in the grade of Major General. |
(6) | Mr. Lenfest practiced law with Davis Polk & Wardwell before joining Triangle Publications, Inc., in Philadelphia as Associate Counsel in 1965. In 1970, Mr. Lenfest was placed in charge of Triangle’s Communications Division, serving as Editorial Director and Publisher of Seventeen Magazine and President of the CATV Operations. In 1974, Mr. Lenfest, with the support of two investors, formed Lenfest Communications, Inc., which purchased Suburban Cable TV Company and Lebanon Valley Cable TV Company from Triangle with a total of 7,600 subscribers. In January 2000, Mr. Lenfest sold his cable television operations, which by then served 1.2 million subscribers, to Comcast Corporation but still retains interests in companies principally involved in national satellite promotion of cable programming and software for marketing cable advertising and marketing promotions. Additionally, Mr. Lenfest is the owner of various other businesses in Pennsylvania and Maryland and is active in many philanthropic activities including as Chairman of the Board of the Philadelphia Museum of Art and the Lenfest Foundation. Mr. Lenfest is a graduate of Washington and Lee University and Columbia Law School. |
(7) | Mr. Deaner has served as our Chief Financial Officer since January 1996. Mr. Deaner served as Vice President of Finance for Pennfield Precision Incorporated from September 1988 to December 1995. Mr. Deaner received an MBA in Finance from Temple University and a B.A. in Mathematics from Millersville University in Pennsylvania. |
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Meetings and Committees of Board of Directors
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REPORT OF THE AUDIT COMMITTEE
THE AUDIT COMMITTEE | ||||||||||
George K. Anderson, M.D., MPH | ||||||||||
Peter L. Stephens, M.D. | ||||||||||
Howard W. Kelley |
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Philosophy
Short-Term Incentive Compensation
Long-Term Incentive Compensation
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Company. The amount of the award to any employee is based on the employee’s base salary and the total award for any employee is limited to one percent (1%) of total outstanding shares on award date. Mr. Mitchell did not receive any options during the past three fiscal years.
THE COMPENSATION COMMITTEE | ||||
George K. Anderson, M.D., MPH Peter L. Stephens, M.D. Howard W. Kelley |
SUMMARY COMPENSATION TABLE
Annual Compensation | ||||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Other Annual Compensation (2) | All Other Compensation ($)(3) | |||||||||||
William F. Mitchell, | 2003 | 225,000 | 10,051 | — | 4,493 | |||||||||||
President and Chief | 2002 | 225,000 | 10,969 | — | 4,413 | |||||||||||
Executive Officer | 2001 | 225,000 | 12,023 | — | 4,000 |
(1) | These amounts represent a portion of a deferred bonus from fiscal 1999 due 75% in 1999 and 5% in each of the five following fiscal years. No bonus awards for fiscal 2001, 2002 or 2003 were paid. |
(2) | Our executive officers receive certain perquisites. For fiscal years 2001, 2002 and 2003, the perquisites received by Mr. Mitchell did not exceed the lesser of $50,000 or 10% of his salary and bonus. |
(3) | These amounts represent our contribution to ETC’s Retirement Savings Plan on behalf of Mr. Mitchell. |
COMPENSATION OF DIRECTORS
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
Item 13. Certain Relationships and Related Transactions
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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PERFORMANCE GRAPH
ASSUMES $100 INVESTED FEBRUARY 27, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING FEBRUARY 28, 2003
FISCAL YEAR ENDED | ||||||||||||||||||||
COMPANY/INDEX/MARKET | 2/27/1998 | 2/26/1999 | 2/25/2000 | 2/23/2001 | 2/22/2002 | 2/28/2003 | ||||||||||||||
The Company | $ | 100 | $ | 184.29 | $ | 325.71 | $ | 193.14 | $ | 147.43 | $ | 137.14 | ||||||||
Peer Group Index (1) | $ | 100 | $ | 98.89 | $ | 133.62 | $ | 126.90 | $ | 121.27 | $ | 117.63 | ||||||||
AMEX Market Index | $ | 100 | $ | 62.35 | $ | 56.72 | $ | 46.85 | $ | 57.03 | $ | 47.74 | ||||||||
(1) | The Peer Group Index is comprised of companies that have the same Standard Industrial Classification Code as the Company. The composition of the Peer Group Index is as follows: BVR Systems LTD., Datakey, Inc., ECC International Corp., Evans & Sutherland Co., Firearms Training Systems, Isomet Corp., Quad Systems Corp., Relm Wireless Corp., Rofin-Sinar Tech, Inc., Standard Motor Products and United Industrial Corp. |
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INFORMATION REGARDING
THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS
Audit Fees
FY 2002 | FY 2003 | ||||||
Audit fees | $ | 77,500 | $ | 81,980 | |||
Audit related fees (1) | 33,152 | 40,455 | |||||
Audit and audit related fees | $ | 110,652 | $ | 122,435 | |||
Tax fees (2) | $ | 131,990 | $ | 34,868 | |||
All other fees (3) | 9,540 | 21,268 | |||||
Total fees | $ | 252,182 | $ | 178,571 | |||
(1) | Audit related fees consist primarily of audits of the Company’s financial statements, employee benefit plan audits, and assistance with foreign statutory financial statements. |
(2) | Tax fees consist of tax compliance services and other consultations on miscellaneous tax matters. |
(3) | All other fees consist of compliance issues and fees associated with the Company’s refinancing in fiscal year 2003. |
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SHAREHOLDER PROPOSALS FOR THE NEXT
ANNUAL MEETING
OTHER MATTERS
By Order of the Board of Directors | ||||||||||
ANN M. ALLEN, Secretary | ||||||||||
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ENVIRONMENTAL TECTONICS CORPORATION
ANNUAL MEETING TO BE HELD ON SEPTEMBER 11, 2003
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR all nominees listed at right (except as marked to the contrary) | WITHHOLD the vote for all nominees | To withhold authority to vote for any individual nominee, strike a line through the nominee’s name listed below: | |||||
1. Election of Directors: | George K. Anderson, M.D., MPH Howard W. Kelley H.F. Lenfest William F. Mitchell Pete L. Stephens, M.D. |
(SEAL) | ||||
Shareholder’s Signature |
(SEAL) | ||||
Shareholder’s Signature |
Dated: | , 2003 |
NOTE: | Please sign exactly as name appears herein. When signing as attorney, executor, administrator, trustee, guardian, etc. please give full title as such. |
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