SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[X] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Anaren Microwave, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies.
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________________
(3) Filing Party:_______________________________________________________________
(4) Date Filed:_________________________________________________________________
ANAREN MICROWAVE INC.
6635 Kirkville Road
East Syracuse, New York 13057
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on November 7, 2002
----------
To the Holders of the Common Stock
of Anaren Microwave, Inc.:
PLEASE TAKE NOTICE, that the Annual Meeting of Shareholders of Anaren
Microwave, Inc. (the "Company") will be held on November 7, 2002, at 11:00 a.m.
Eastern Standard Time at the Wyndham Hotel, 6302 Carrier Parkway, East Syracuse,
New York 13057, for the following purposes:
(1) To elect two directors to hold office for a term of three years and
until their successors have been duly elected; and
(2) To transact such other business as may be properly brought before
the Meeting.
Enclosed is the annual report for the fiscal year ended June 30, 2002, along
with a proxy statement and proxy. Shareholders of record as of the close of
business on September 16, 2002 will be entitled to notice of and to vote at the
Meeting. Your vote is very important and we hope that you will attend the
Meeting. However, whether or not you plan to attend the Meeting, please vote by
proxy in accordance with the instructions on your proxy card, on your voting
instruction form (from your bank or broker), or that you received through
electronic mail. There are three convenient ways of submitting your vote:
o Voting by telephone - You can vote your shares by telephone by
calling the toll-free telephone number indicated on your proxy card
and following the voice prompt instructions. Telephone voting is
available 24 hours a day.
o Voting by the Internet - You can also vote via the Internet by
visiting the web site noted on your proxy card. Internet voting is
available 24 hours a day. We encourage you to vote via the Internet,
as it is the most cost-effective way to vote.
o Voting by mail - If you choose to vote by mail, simply mark your
proxy, date and sign it, and return it in the postage-paid envelope
provided.
If you vote by telephone or Internet, you do not need to return your proxy
card. Signing and returning the proxy card or submitting your proxy via Internet
or by telephone does not affect your right to vote in person if you attend the
Meeting and your shares are registered in your name. If your shares are held in
the name of a bank, broker, or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
meeting.
By Order of the Board of Directors
David M. Ferrara
Secretary and General Counsel
Dated: September 20, 2002
East Syracuse, New York
ANAREN MICROWAVE, INC.
6635 Kirkville Road
East Syracuse, New York 13057
----------
This Proxy Statement is being mailed on or about September 20, 2002, to
the Shareholders of Anaren Microwave, Inc. ("Anaren" or the "Company") entitled
to receive the accompanying Notice of Annual Meeting of Shareholders and is
provided, by order of its Board of Directors, in connection with the
solicitation of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") of the Company to be held on November 7, 2002 at 11:00 a.m. and at
any adjournment or adjournments thereof, for the purposes set forth in the
Notice.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time prior to its exercise by (i) submitting a
subsequently dated proxy; or (ii) filing written notice of such revocation with
the Secretary of the Meeting. The proposals described in this Proxy Statement
will be presented by the Board of Directors of the Company. Where a choice is
specified with respect to a proposal, the shares represented by the proxy will
be voted in accordance with the specifications made. Where a choice is not so
specified, the shares represented by the proxy will be voted to elect the
nominees for director named herein.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on September 16, 2002, the record date stated in
the accompanying Notice, the Company had outstanding 22,409,820 shares of common
stock, $.01 par value (the "Common Stock"), each of which is entitled to one
vote with respect to each matter to be voted on at the Meeting. A majority of
the issued and outstanding shares of Common Stock present in person or by proxy,
a total of 11,204,911 shares, will be required to constitute a quorum for the
transaction of business at the Meeting. The Company has no class of voting stock
outstanding other than the Common Stock.
Abstentions and broker non-votes (as defined below) are counted as present
for the purpose of determining the presence or absence of a quorum for the
transaction of business. For the purpose of determining the vote required for
approval of matters to be voted on at the Meeting, shares held by Shareholders
who abstain from voting will be treated as being "present" and "entitled to
vote" on the matter and, thus, an abstention has the same legal effect as a vote
against the matter. However, in the case of a broker non-vote or where a
shareholder withholds authority from his proxy to vote the proxy as to a
particular matter, such shares will not be treated as "present" and "entitled to
vote" on the matter. Accordingly, a broker non-vote or the withholding of a
proxy's authority will have no effect on the outcome of the vote on the matter.
A "broker non-vote" refers to shares represented at the Meeting in person or by
proxy by a broker or nominee where such broker or nominee (i) has not received
voting instructions on a particular matter from the beneficial owner or persons
entitled to vote; and (ii) the broker or nominee does not have discretionary
voting power on such matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to persons
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock of the Company, as of September 16, 2002 (except as otherwise
indicated).
Number of Shares
Name and Address of Common Stock
of Beneficial Owner Beneficially Owned(1) Percent of Class
- ------------------- --------------------- ----------------
Kern Capital Management, LLC......... 3,264,400(2) 14.6%
114 West 47th Street
Suite 1926
New York, NY 10036
Firsthand Capital Management, Inc.... 1,552,300(3) 6.9%
125 South Market Street
Suite 1200
San Jose, CA 95113
Franklin Advisors, Inc............... 1,270,400(4) 5.7%
One Franklin Parkway
San Mateo, CA 94403
- ----------
(1) Except as otherwise indicated, as of September 16, 2002 all of such shares
are owned with sole voting and investment power. Share numbers are based
solely on indicated filings.
(2) Based solely on information contained in a 13F Holdings Report filed with
the Securities and Exchange Commission on August 14, 2002, Kern Capital
Management, LLC has sole voting power with respect to 3,151,200 shares and
sole dispositive power with respect to all shares listed.
(3) Based solely on information contained in a 13F Holdings Report filed with
the Securities and Exchange Commission on April 9, 2002, Firsthand Capital
Management, Inc. has sole voting and dispositive power with respect to all
shares listed.
(4) Based solely on information contained in a 13F Holdings Report filed with
the Securities and Exchange Commission on August 12, 2002, Franklin
Advisors, Inc. has sole voting and dispositive power with respect to all
shares listed.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of September 16,
2002, with respect to the beneficial ownership of the Company's Common Stock by
(i) each director and nominee for director who owned beneficially any shares of
Common Stock, (ii) each executive officer of the Company named in the Summary
Compensation Table under "Executive Compensation" below, and (iii) all directors
and executive officers of the Company as a group.
Number of Shares
Name and Address of Common Stock
of Beneficial Owner(1) Beneficially Owned(2) Percent of Class
- ---------------------- --------------------- ----------------
Lawrence A. Sala....................... 450,100(3) 2.0%
Carl W. Gerst, Jr...................... 622,350(4) 2.8%
Thomas J. Passaro, Jr.................. 80,139(5) *
Raymond Simione........................ 18,270(6) *
Timothy P. Ross........................ 56,600(7) *
Dale F. Eck............................ 60,500(8) *
Herbert I. Corkin...................... 56,000(9) *
Dr. David Wilemon...................... 57,500(10) *
Matthew Robison........................ 30,500(11) *
All Directors, Nominees and Executive
Officers as a Group (9 Persons)...... 1,431,959(12) 6.2%
- ----------
* Indicates less than 1%
(1) The business address for each of the named individuals is 6635 Kirkville
Road, East Syracuse, New York.
(2) Except as otherwise indicated, as of September 16, 2002 all of such shares
are owned with sole voting and investment power.
(3) Includes 10,000 shares owned by Mr. Sala's spouse, 6,468 shares owned by
Mr. Sala's children, 357,000 shares which Mr. Sala has the right to
acquire within 60 days pursuant to outstanding stock options, and 25,500
shares of restricted stock.
(4) Includes 13,500 shares owned by Mr. Gerst's spouse and 60,400 shares which
Mr. Gerst has the right to acquire within 60 days pursuant to outstanding
stock options.
(5) Includes 3,333 shares owned by Mr. Passaro's children, 19,800 shares which
Mr. Passaro has the right to acquire within 60 days pursuant to
outstanding stock options, and 2,400 shares of restricted stock.
(6) Includes 2,000 shares which Mr. Simione has the right to acquire within 60
days pursuant to outstanding stock options.
(7) Includes 49,200 shares which Mr. Ross has the right to acquire within 60
days pursuant to outstanding stock options, and 7,400 shares of restricted
stock.
(8) Includes 30,500 shares which Mr. Eck has the right to acquire within 60
days pursuant to outstanding stock options.
(9) Includes 3,000 shares owned by The Entwistle Company, of which Mr. Corkin
is Chairman, Chief Executive Officer and a majority shareholder, and 8,000
shares which Mr. Corkin has the right to acquire within 60 days pursuant
to outstanding stock options.
(10) Includes 57,500 shares which Dr. Wilemon has the right to acquire within
60 days pursuant to outstanding stock options.
(11) Includes 30,500 shares which Mr. Robison has the right to acquire within
60 days pursuant to outstanding stock options.
(12) Includes 614,900 shares which all directors and officers as a group have
the right to acquire within 60 days pursuant to outstanding stock options.
3
ITEM ONE
ELECTION OF DIRECTORS
The first item to be acted upon at the Meeting is the election of two
directors to hold office for terms of three years and until their respective
successors shall have been duly elected and qualified. The nominees receiving a
plurality of the votes represented in person or by proxy at the Meeting will be
elected directors.
The Board of Directors unanimously recommends election of the two nominees
listed below. The shares represented by all proxies in proper form which are
received by the Board prior to the election of directors at the Meeting will be
voted "FOR" the nominees, unless authority is withheld in the space provided on
the enclosed proxy. In the event any nominee declines or is unable to serve, it
is intended that the shares represented by such proxies will be voted for a
successor nominee designated by the Board (or if no other person is so
designated, for the remaining nominees). All nominees have indicated a
willingness to serve, and the Board knows of no reason to believe that any
nominee will decline or be unable to serve if elected. The six members of the
Board (including the nominees for re-election at the Meeting, if elected) are
expected to continue to serve on the Board until their respective terms expire.
Certain Information Concerning Nominees and Directors Continuing in Office
Set forth below is certain information concerning each nominee for
director to be elected at the Meeting and each director of the Company whose
term of office continues after the Meeting. The information has been furnished
to the Company by such persons.
Name, Age, Nature of Year First
Positions and Offices Became Principal Occupation,
Held with the Company Director Experience and Other Directorships
- --------------------- ---------- ------------------------------------------------------------
Nominees for terms to expire at
Annual Meeting in 2005:
Lawrence A. Sala, 39.................... 1995 Mr. Sala joined the Company in 1984 and worked in various
President, Chief Executive engineering and marketing positions until becoming
Officer and Chairman President and a Director of the Company in May 1995. Mr.
Sala has served as Chief Executive Officer since September
1997, and has served as Chairman of the Board since
November 2001.
Dr. David Wilemon, 65................... 1997 Dr. Wilemon has been a Professor of Marketing and Innovation
Director Management at the Syracuse University School of Management
since 1966. He has also served as Director of the Synder
Innovation Management Program at the University since 1980
and as Co-Director of the Entrepreneurship and Emerging
Enterprises Program there, since 1993.
4
Name, Age, Nature of Year First
Positions and Offices Became Principal Occupation,
Held with the Company Director Experience and Other Directorships
- --------------------- ---------- ------------------------------------------------------------
Directors Continuing in Office:
Term Expiring at Annual Meeting in 2004:
Herbert I. Corkin, 80................... 1989 Mr. Corkin has been Chairman of the Board of The Entwistle
Director Company, a defense contractor, since 1959. Mr. Corkin also
served as the President of The Entwistle Company from 1959
through December 1993 and has served as its Chief
Executive Officer since December 1993.
Matthew Robison, 41..................... 1999 Mr. Robison has been Senior Vice President of Ferris, Baker
Director Watts Incorporated since January 1999. Mr. Robison
previously served as a General Partner and Analyst of
Botti Brown Asset Management from January 1997 until
January 1999, and as Vice President and Analyst for
Montgomery Securities from October 1994 until January
1997.
Terms Expiring at Annual Meeting in 2003:
Dale F. Eck, 59......................... 1995 Mr. Eck was Vice President of Finance and Treasurer of The
Director Entwistle Company, a defense contractor, from 1978 until
his retirement in February 1997. Mr. Eck has also served
as a Director of The Entwistle Company since 1978 and
continues to serve that company in such capacity. Mr. Eck
provided consulting services to the Company from March
1997 through March 2002.
Carl W. Gerst, Jr., 65.................. 1968 Mr. Gerst has been actively engaged in the Company's
Chief Technical Officer, business since its founding in 1967. Mr. Gerst served as
Vice Chairman Executive Vice President from the Company's founding until
May 1995 when he became Chief Technical Officer and Vice
Chairman of the Board. Mr. Gerst served as Treasurer from
May 1992 through November 2001.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain information with respect to
compensation, received in all capacities in which they served for the fiscal
years ended June 30, 2000, June 30, 2001 and June 30, 2002, for the Company's
Chief Executive Officer and each of the four other most highly compensated
officers during the most recent fiscal year.
Summary Compensation Table
Annual Long Term
Compensation Compensation
--------------------- ------------------------------
Securities
Restricted Underlying All Other
Name and Salary Stock Award (6) Options (7) Compensation(8)
Principal Position Year ($) Bonus ($) (#) ($)
------------------ ---- -------- -------- --------------- ----------- ---------------
Lawrence A. Sala ....................... 2002 $300,000 $ 90,000 $ 0 95,000 $35,655
President, Chief Executive Officer 2001 291,346 76,500 318,000 150,000 33,155
and Chairman(1) 2000 270,192 130,625 242,125 150,000 17,590
Carl W. Gerst, Jr. ..................... 2002 225,000 25,000 0 32,000 44,061
Chief Technical Officer 2001 225,000 25,000 0 40,000 46,340
and Vice Chairman(2) 2000 233,654 25,000 0 60,000 32,131
Thomas J. Passaro, Jr. ................. 2002 160,193 15,300 0 19,000 14,875
Vice President; President of 2001 163,002 17,425 127,200 30,000 13,458
RF Power Components, Inc.(3)
Raymond Simione ........................ 2002 147,221 25,490 0 10,000 4,168
Vice President; President of
Amitron, Inc.(4)
Timothy P. Ross ........................ 2002 133,848 37,500 0 21,000 12,100
Vice President, Business 2001 122,385 29,970 74,200 20,000 9,417
Development(5) 2000 105,978 13,675 74,500 30,000 2,991
- ----------
(1) Mr. Sala was elected President of the Company in May 1995 and was named
Chief Executive Officer in September 1997. He was elected Chairman of the
Board in November 2001.
(2) Mr. Gerst served as the Company's Executive Vice President until May 1995
when he was elected to the position which he currently holds, Vice
Chairman and Chief Technical Officer.
(3) Mr. Passaro became Vice President of the Company upon the Company's
acquisition of all of the issued and outstanding stock of RF Power
Components, Inc. in February 2000.
(4) Mr. Simione became Vice President of the Company upon the Company's
acquisition of all of the issued and outstanding stock of Amitron, Inc. in
August 2001.
(5) Mr. Ross served as General Manager - Space and Defense Group prior to
November 1999, served as Vice President and General Manager - Space and
Defense Group from November 1999 to September 2000, and has served as Vice
President - Business Development since September 2000.
(6) Indicates dollar value of restricted stock awards based upon the market
value of the Common Stock on the date of grant. As of June 30, 2002, Mr.
Sala held 25,500 shares of restricted stock with a then current market
value of $220,320; Mr. Passaro held 1,200 shares of restricted stock with
a then current market value of $10,368; and Mr. Ross held 7,400 shares of
restricted stock with a then current market value of $63,936. While the
Company does not currently pay cash dividends on its Common Stock, the
named executive officers are entitled to receive any dividends payable (in
cash or otherwise) on their restricted stock holdings.
6
(7) The table reflects the number of shares which are subject to incentive
stock options granted pursuant to the Company's Incentive Stock Option
Plan. All of the fiscal year 2001 options were cancelled, effective May
2002, with the consent of the named officers. No new options were issued
to replace the cancelled options.
(8) All Other Compensation consists of contributions to the Company's 401(k)
Salary Savings Plan in the amount of $6,375 for Mr. Sala, $6,375 for Mr.
Gerst, $6,375 for Mr. Passaro, $4,168 for Mr. Simione and $5,600 for Mr.
Ross in 2001; contributions to a supplemental executive retirement plan
covering the named executives in the amount of $15,000 for Mr. Sala,
$11,250 for Mr. Gerst, $8,500 for Mr. Passaro, and $6,500 for Mr. Ross in
2001; and reimbursement for premiums on life insurance policies owned by
Messrs. Sala and Gerst in the amount of $14,280 and $16,391, respectively,
in 2001.
Fiscal Year Option Grants
The following table sets forth certain information regarding options
granted by the Company during the last fiscal year to the individuals named in
the above compensation table, including information as to potential realizable
value of such options at assumed annual rates of stock price appreciation for
the ten-year terms of the options.
Percent
of Total Potential Realizable Value
Number of Options at Assumed Annual Rates
Securities Granted to of Stock Price Appreciation
Underlying Employees Exercise or for Option Term(1)
Options in Fiscal Base Price Expiration ---------------------------
Name Granted Year ($/sh) Date 5%($) 10%($)
---- ---------- ---------- ----------------- ---------- ----- ------
Lawrence A. Sala ............. 45,000 7.44% $15.00 7/16/11 543,648 1,377,711
Lawrence A. Sala ............. 50,000 8.26% 19.21 11/2/11 471,671 1,195,307
Carl W. Gerst, Jr. ........... 12,000 1.98% 15.00 7/16/11 144,973 367,390
Carl W. Gerst, Jr. ........... 20,000 3.30% 19.21 11/2/11 188,668 478,123
Thomas J. Passaro, Jr. ....... 9,000 1.49% 15.00 7/16/11 108,730 275,542
Thomas J. Passaro, Jr. ....... 10,000 1.65% 19.21 11/2/11 94,334 239,061
Raymond Simione .............. 10,000 1.65% 18.70 8/31/11 117,603 298,030
Timothy P. Ross .............. 6,000 0.99% 15.00 7/16/11 72,486 141,501
Timothy P. Ross .............. 15,000 2.48% 19.21 11/2/11 183,695 358,592
- ----------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date.
Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values
The following table sets forth certain information for the named executive
officers with respect to (i) stock options exercised in fiscal year 2002, (ii)
the number of stock options held at the end of fiscal year 2002, and (iii) the
value of in-the-money stock options at the end of fiscal year 2002.
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Options at June 30, 2002(#) Options at June 30, 2002(1)($)
Acquired on Value --------------------------- ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Lawrence A. Sala ............ 8,000 $87,560 308,000 225,000 $1,007,409 $236,449
Carl W. Gerst, Jr. .......... 0 0 44,400 77,600 52,395 34,930
Thomas J. Passaro, Jr. ...... 0 0 17,800 41,200 0 0
Raymond Simione ............. 0 0 0 10,000 0 0
Timothy P. Ross ............. 0 0 41,700 45,300 144,920 20,488
- ----------
(1) Amount represents the difference between the aggregate exercise price of
the options and a $8.64 market price of the underlying Common Stock on
June 30, 2002.
7
Pension Plan
The Company maintains a non-contributory Pension Plan for the benefit of
all employees over the age of 21 who have completed one year of service and who
are not covered by any other retirement plan. The Company pays all amounts
required to provide retirement income benefits. The Pension Plan provides fixed
benefits to be paid upon retirement at a specific age. Pension expense,
including amortization of prior service cost over 30 years, was $177,675 for
fiscal 2002. Effective August 15, 2000, the Company amended the Pension Plan,
and as a result, employees hired or rehired by the Company after August 15, 2000
are not eligible to participate in or to accrue benefits under the Pension Plan.
The table below illustrates the estimated aggregate annual benefit that
would be payable to executive officers of the Company who are at least 65 years
of age at retirement, based on the formula in effect after June 30, 1992 and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") limits on
compensation and benefits after 15, 20, 25, 30 and 35 credited years of service;
for illustration purposes, the table assumes all years of service under the
current Pension Plan formula.
PENSION PLAN TABLE
Final
Average Annual Estimated Annual Pension Payable
Compensation Based on Years of Service Indicated
- -------------- ------------------------------------------------------------
15 Years 20 Years 25 Years 30 Years 35 Years
-------- -------- -------- -------- --------
$100,000 $11,250 $15,000 $18,750 $22,600 $26,250
125,000 14,063 18,750 23,438 28,125 32,813
150,000 16,875 22,500 28,125 33,750 39,375
160,000 18,000 24,000 30,000 36,000 42,000
170,000 19,125 25,500 31,875 38,250 44,625
175,000 19,688 26,250 32,813 39,375 45,938
200,000 22,500 30,000 32,500 45,000 52,500
225,000 22,500 30,000 32,500 45,000 52,500
250,000 22,500 30,000 32,500 45,000 52,500
275,000 22,500 30,000 32,500 45,000 52,500
Under the terms of the Pension Plan, each member who is at least 65 years
of age at his retirement and was employed on or before August 15, 2000 is
entitled to a Normal Retirement Benefit (as defined under the Pension Plan). The
compensation used in determining the Pension Plan benefit for executive officers
is based upon their annual salary as shown on the Summary Compensation Table
above. The Normal Retirement Benefit is the aggregate of:
A. 0.60% of average of highest five consecutive years compensation from
date of employment to June 30, 1992 multiplied by Benefit Service
(as defined under the Pension Plan) to June 30, 1992; plus
B. 0.75% of compensation for each year of Benefit Service thereafter;
but not less than the accrued benefit under the prior plan at June 30, 1992.
Employees who have attained at least twelve years of service and are at
least 55 years of age can retire and receive a proportionately reduced benefit.
8
Under the Internal Revenue Code, the maximum annual benefit payable at age
65 is $160,000 for 2002. The maximum compensation that could be considered for
all participants, including Messrs. Sala, Gerst, Passaro, Simione and Ross, is
$200,000 for 2002. These benefit and compensation limits are indexed to
increases in the Consumer Price Index.
The credited years of service as of June 30, 2002 under the Pension Plan
for each of Messrs. Sala, Gerst, Passaro, Simione and Ross are 17, 29, 0, 0 and
19, respectively.
Management Incentive Plan
The Company has a Management Incentive Plan ("Incentive Plan") that is
designed to provide a meaningful annual financial incentive to management
employees to reward them for their contribution toward the Company's growth,
profitability and business development. Eligibility in the plan is limited to
key members of management who, because of their position, have the ability to
substantially impact the profitability and overall success of the Company.
Individual participants in the Incentive Plan are selected by the President and
CEO on an annual basis, subject to approval of the Board of Directors.
Under the Incentive Plan, each participant has a "target" bonus
opportunity in an amount equal to a specified percentage of his or her base
salary. Awards under the Incentive Plan are based on corporate, functional and
individual performance measured against pre-established targeted goals.
Corporate performance goals, which are set by the President and CEO and are
subject to Board approval, are based on factors including but not limited to
earnings, revenue, appreciation in stock value and order targets. Functional and
individual performance goals are based on each participant's functional
responsibilities, and are jointly established by the Company and the participant
prior to the beginning of the fiscal year. Fulfillment of corporate performance
goals must carry a weighting of at least 50% of the total incentive opportunity
for each employee, and participants who are officers of the Company may not
receive any bonus payment unless certain corporate performance goals are
attained.
Bonus payments under the Incentive Plan are made on or about August 1st
following the end of the fiscal year for which the bonus is earned. Bonus
amounts reflected in the Summary Compensation Table on page 6 for Messrs. Sala,
Passaro, Simione and Ross represent amounts awarded pursuant to the Incentive
Plan.
Compensation of Directors
The Company currently pays each director who is not an employee of the
Company $10,000 per year plus $1,000 for each meeting attended, and reimburses
each such director for the reasonable expenses incurred in attending meetings of
the Board of Directors. In addition, non-employee directors are eligible to
receive stock options pursuant to the Company's Non Statutory Stock Option Plan.
Certain Agreements with Directors and Executive Officers
Lawrence A. Sala. The Company has an employment agreement dated July 1,
2001 with Lawrence A. Sala, President and Chief Executive Officer of the
Company, providing for Mr. Sala's employment as President and CEO of the Company
until June 30, 2006 or such earlier date as may result pursuant to the terms of
the agreement. The agreement provides for a base annual salary of $300,000 or
such greater amount as the Board of Directors may determine, plus annual
incentive bonus opportunity pursuant to the Incentive Plan and participation in
certain insurance plans.
9
The agreement terminates automatically in the event of Mr. Sala's death
and the Company may terminate the agreement upon Mr. Sala's disability or for
specified cause as defined in the agreement. In the event the agreement is
terminated due to Mr. Sala's death, the Company will continue payment of his
base salary to a designated beneficiary for a period of 90 days, and if
termination is due to death or disability the Company must treat as immediately
exercisable and disposable, respectively, all unexpired stock options and shares
of restricted stock previously granted to him by the Company. In the event Mr.
Sala's employment with the Company is terminated by the Company other than for
cause, death or disability, or by Mr. Sala for "good reason" (as defined in the
agreement), the Company will be obligated to pay severance to Mr. Sala in an
amount equal to the greater of (i) three years' base salary at such date, plus
$450,000 in lieu of incentive bonus payments, or (ii) Mr. Sala's base salary for
the balance of the term of the agreement. The Company must also defray certain
costs associated with obtaining new employment and relocation in connection with
such termination, and must treat as immediately exercisable and disposable,
respectively, all unexpired stock options and shares of restricted stock
previously granted to him by the Company. In addition, if the termination occurs
as a result of a "Change in Control" (as defined in the agreement), the Company
must offer to retain Mr. Sala as an independent contractor consultant for a
period of 12 months at an annual consulting fee equivalent to his base salary as
in effect on the date of termination, and to provide fringe benefits during the
12 month consulting period.
In the event that Mr. Sala's employment continues for the entire term of
the agreement and the Company and Mr. Sala are unable to negotiate a new
employment agreement, the Company will be obligated to pay severance to Mr. Sala
in an amount equal to three years' base salary at such date, plus $150,000 for
each of the three ensuing fiscal years in lieu of incentive bonus payments.
Thomas J. Passaro, Jr. The Company also has an employment agreement dated
February 29, 2000 with Thomas J. Passaro, Jr., Vice President of the Company and
President of RF Power Components, Inc. (a wholly-owned subsidiary of the
Company), providing for his employment in this capacity until November 1, 2003
or such earlier date as may result pursuant to the terms of the agreement. The
agreement provides for a base annual salary at the rate of $150,000 until
November 1, 2000, with the base salary to be set by the Board of Directors for
subsequent periods in an amount not less than $150,000 plus an increase of 4%
annually. Mr. Passaro is also eligible to receive annual incentive bonuses
pursuant to the Incentive Plan (subject to certain adjustments provided for in
the agreement) and to participate in certain insurance plans.
The agreement terminates automatically in the event of Mr. Passaro's death
and the Company may terminate the agreement upon Mr. Passaro's disability or for
specified cause as defined in the agreement. In the event the agreement is
terminated due to Mr. Passaro's death, the Company will continue payment of his
base salary to a designated beneficiary for a period of 90 days, and if
termination is due to death or disability the Company must treat as immediately
exercisable and disposable, respectively, all unexpired stock options and shares
of restricted stock previously granted to him by the Company. In the event Mr.
Passaro's employment is terminated by the Company other than for cause, death or
disability, or by Mr. Passaro for "good reason" (as defined in the agreement),
the Company will be obligated to pay severance to Mr. Passaro in an amount equal
to the greater of (i) one year's base salary at such date plus $50,000 in lieu
of incentive bonus payments, or (ii) Mr. Passaro's base salary plus $22,000 per
year for the balance of the term of the agreement. The Company must also defray
certain costs associated with obtaining new employment and relocation in
connection with such termination, and must treat as immediately exercisable and
disposable, respectively, all unexpired stock options and shares of restricted
stock previously granted to him by the Company.
10
In the event that Mr. Passaro's employment continues for the entire term
of the agreement and the Company and Mr. Passaro are unable to negotiate a new
employment agreement, the Company will be obligated to pay severance to Mr.
Passaro in an amount equal to one year's base salary at such date, plus $50,000
in lieu of incentive bonus payments, and to permit him to continue to
participate in applicable Company insurance programs for a period of one year.
Raymond Simione. The Company also has an employment agreement dated August
31, 2001 with Raymond Simione, Vice President of the Company and President of
Amitron, Inc. (a wholly-owned subsidiary of the Company), providing for his
employment in this capacity until June 30, 2006 or such earlier date as may
result pursuant to the terms of the agreement. The agreement provides for a base
annual salary at the rate of $183,000 until November 1, 2002, with the base
salary to be set by the Company's Vice President and General Manager and
approved by the Board of Directors for subsequent periods in an amount not less
than $183,000 annually. Mr. Simione is also eligible to receive annual incentive
bonuses pursuant to the Incentive Plan and to participate in certain insurance
plans.
The agreement terminates automatically in the event of Mr. Simione's death
and the Company may terminate the agreement upon Mr. Simione's disability or for
specified cause as defined in the agreement. In the event the agreement is
terminated due to Mr. Simione's death, the Company will continue payment of his
base salary to a designated beneficiary for a period of 90 days, and if
termination is due to death or disability the Company must treat as immediately
exercisable all unexpired stock options previously granted to him by the
Company. In the event Mr. Simione's employment is terminated by the Company
other than for cause, death or disability, the Company will be obligated to pay
severance to Mr. Simione in an amount equal to the greater of (i) six months'
base salary at such date, or (ii) Mr. Simione's base salary for the balance of
the term of the agreement. The Company must also treat as immediately
exercisable all unexpired stock options previously granted to him by the
Company, and must permit him to continue to participate in applicable Company
benefit plans for the period during which he is receiving severance payments.
Upon the termination of Mr. Simione's employment at any time following the
end of the term of the agreement, the Company will be obligated to pay severance
to Mr. Simione in an amount equal to six months' base salary at such date, and
to permit him to continue to participate in applicable Company benefit plans for
a period of six months.
Timothy P. Ross. The Company also has a change of control agreement dated
March 15, 2002 with Mr. Ross. The agreement provides that in the event Mr.
Ross's employment with the Company ceases for reasons other than voluntary
resignation or for "cause" within one year following a "change of control" (as
the foregoing terms are defined in the agreement), the Company must pay him a
severance benefit equal to his base annual salary, plus the incentive bonus paid
to him in the year previous to the year in which the change of control occurs.
In addition, the Company must treat as immediately exercisable and disposable,
respectively, all unexpired stock options and shares of restricted stock
previously granted to him by the Company, and must permit him to continue to
participate in applicable Company benefit plans for the period during which he
is receiving severance payments.
Dale F. Eck. The Company has a consulting arrangement with Dale F. Eck,
pursuant to which Mr. Eck provides financial and management consulting services
to the Company. The agreement provides that Mr. Eck shall devote up to two days
per month to the Company and shall receive a monthly fee of $1,666.66 plus
reimbursement of reasonable business expenses incurred in activities undertaken
on behalf of the Company.
11
Board Compensation Committee Report on Executive Compensation
The Compensation Committee ("Committee") recommends to the Board of
Directors the compensation to be paid to the Company's executive officers on an
annual basis. The Committee has implemented an executive compensation philosophy
that seeks to relate executive compensation to corporate performance, individual
performance and creation of shareholder value. Historically, this has been
achieved through compensation programs which focus on both short and long-term
results.
In accordance with the Committee's executive compensation philosophy, the
major components of executive compensation have been base salary, stock option
grants and occasionally restricted stock awards. Option grants have been made
pursuant to the Company's incentive stock option plans, and executive officers
are also eligible to receive bonuses pursuant to the Company's performance based
Incentive Plan. Restricted stock awards are made pursuant to the Company's
Guidelines for Grants of Restricted Stock Awards.
Salaries and incentive bonuses for executive officers are based on current
individual and organizational performance, affordability and competitive market
trends. For purposes of informing the Committee of competitive trends, the
Committee reviews compensation data from other comparable public companies in
the wireless and satellite communications markets. The salary trend data used
represents companies whose size and performance with respect to revenue,
earnings per share and stock price are similar to those of the Company. The
Company's executive officer salary ranges are positioned consistent with
industry averages.
Section 162(m) ("Section 162") of the Internal Revenue Code of 1986, as
amended (the "Code"), generally limits federal income tax deductions for
compensation paid after 1993 to the chief executive officer and the four other
most highly compensated officers of a company to $1 million per year, but
contains an exception for performance-based compensation that satisfies certain
conditions. The Company has not adopted an absolute policy regarding Section 162
as it does not anticipate its executive compensation to reach such levels in the
foreseeable future. The Company recognizes that deductibility of compensation
payments must be one among a number of factors used in ascertaining appropriate
levels or modes of compensation, and that the Company will make its compensation
decisions based upon an overall determination of what it believes to be in the
best interests of its Shareholders.
The members of the Compensation Committee are Herbert I. Corkin, Dale F.
Eck, and Dr. David Wilemon. David M. Ferrara, the Company's Secretary and
General Counsel, serves as a non-voting ex officio member of the Committee.
12
Performance Graph
The following performance graph compares the total shareholder return of
the Company's Common Stock to The Nasdaq Stock Market (US) Index and the Nasdaq
Electronics Components Index. The graph assumes that $100 was invested in the
Company's Common Stock and each Index on June 30, 1997 and that all dividends
were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ANAREN, THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ ELECTRONICS COMPONENTS INDEX
[GRAPHIC PRESENTATION OF PERFORMANCE GRAPH]
Cumulative Total Return
6/30/97 6/30/98 6/30/99 6/30/00 6/30/01 6/30/02
Anaren Microwave, Inc. 100.00 113.21 157.55 1485.59 452.81 195.61
Nasdaq Stock Market (U.S.) 100.00 131.62 189.31 279.93 151.75 103.40
Nasdaq Electronic Components 100.00 99.04 176.00 438.90 161.55 97.80
- ----------
* $100 INVESTED ON 6/30/97 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
Notwithstanding anything set forth in any of the Company's previous
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
which might incorporate future filings, including this Proxy Statement, in whole
or in part, the preceding performance graph and the report of the Compensation
Committee shall not be deemed incorporated by reference into any such filings.
13
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors,
the Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the Company. The Audit Committee's responsibilities are
more fully described in its charter. The Audit Committee is composed of three
directors, each of whom is independent as defined by the National Association of
Securities Dealers' listing standards.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the Company's independent auditors, KPMG LLP, a
formal written statement describing all relationships between the auditors and
the Company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," discussed with the auditors any relationships that may impact
their objectivity and independence and satisfied itself as to the auditors'
independence. The Audit Committee also discussed with management and the
independent auditors the quality and adequacy of the Company's internal
controls. The Audit Committee reviewed with the independent auditors their audit
plans, audit scope, and identification of audit risks.
The Audit Committee discussed and reviewed with the independent auditors
all communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees," and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee also reviewed with management and the independent
auditors the audited financial statements of the Company as of and for the
fiscal year ended June 30, 2002.
Based on the above-mentioned reviews and discussions with management and
the independent auditors, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be included in its
Annual Report on Form 10-K for the fiscal year ended June 30, 2002.
Dale F. Eck (Chair)
Herbert I. Corkin
Matthew Robison
AUDIT FEES
The following table sets forth fees billed or expected to be billed to the
Company by KPMG LLP for: (i) services rendered for the audit of the Company's
annual financial statements for fiscal year 2002 and review of quarterly
financial statements, (ii) services rendered during fiscal year 2002 for
provision of any financial information systems design and implementation, and
(iii) all other fees for services rendered during fiscal year 2002. The Audit
Committee has considered whether the provision of non-audit services is
compatible with KPMG LLP's independence.
Audit Fees...............................$225,156
Financial Information Systems Design
and Implementation Fees................$ 0
All Other Fees*..........................$481,849
- ----------
* Includes audits of employee benefit plans, due diligence related to
acquisitions by the Company and tax services.
14
CERTAIN RELATED TRANSACTIONS
David M. Ferrara, Secretary and General Counsel of the Company, is a
partner in the law firm of Bond, Schoeneck & King, PLLC, which has rendered and
continues to render legal services to the Company. During the fiscal year ended
June 30, 2002, the Company paid Bond, Schoeneck & King, PLLC $455,127 for
services rendered and for related disbursements.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock (collectively, "Reporting Persons") to file with the SEC
initial reports of ownership and reports of changes in ownership of the Common
Stock. Such persons are required by regulations of the SEC to furnish the
Company with copies of all such filings. Based on its review of the copies of
such filings received by it and written representations of Reporting Persons
with respect to the fiscal year ended June 30, 2002, the Company believes that
all Reporting Persons complied with all Section 16(a) filing requirements in the
fiscal year ended June 30, 2002 except as follows: Hugh A. Hair, a founder and
director of the Company and its former Chairman and Chief Executive Officer,
passed away on January 26, 2002. Following Mr. Hair's death, the Company learned
that Mr. Hair had not filed Form 4 Reports with respect to certain open market
transactions in the Company's Common Stock that occurred prior to his death. Due
to Mr. Hair's passing the Company is not in a position to conclusively determine
the number of transactions that were not reported. In addition, Mr. Simione, who
became an officer of the Company in August 2001, filed a late Form 3 Report. A
portion of the delay was occasioned by disruption of logistical support for
EDGAR filing as a result of the events of September 11, 2001.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
During the fiscal year ended June 30, 2002, KPMG LLP, the Company's
independent accountant, was retained by the Board of Directors to perform the
annual examination of the consolidated financial statements of the Company and
its subsidiaries. The Board also retained KPMG LLP to advise the Company and
perform appropriate financial due diligence in connection with acquisitions made
and considered by the Company and to provide assistance in the preparation of
federal income and state franchise tax returns.
KPMG LLP was also selected by management to audit the Company's books and
records for the current fiscal year. KPMG LLP has been the Company's principal
accountant for over 25 years. It is anticipated that a representative of KPMG
LLP will be present at the Annual Meeting of Shareholders and will have an
opportunity to make a statement and to answer questions of Shareholders.
BOARD MEETINGS AND COMMITTEES
During the Company's last fiscal year, the Board of Directors of the
Company held 11 meetings. No current director attended fewer than 75% of the
aggregate number of meetings of the Board and of any Committees on which he
served during such period.
The Company's Compensation Committee consists of Herbert I. Corkin, Dale
F. Eck, and Dr. David Wilemon. David M. Ferrara, the Company's Secretary and
General Counsel, serves as a non-voting ex officio member of the Committee. The
function of the Compensation Committee is to recommend to the Board of Directors
competitive compensation plans for officers and key employees. During the fiscal
year ended June 30, 2002, the Compensation Committee held three meetings.
15
The Company's Audit Committee consists of Herbert I. Corkin, Dale F. Eck
and Matthew Robison. The function of the Audit Committee is to monitor the
quality and integrity of the Company's accounting, auditing and financial
reporting practices, and to review the Company's annual audit with the Company's
independent accountant. During the fiscal year ended June 30, 2002, the Audit
Committee held four meetings.
The Company's Nominating Committee consists of Dr. David Wilemon and
Matthew Robison. David M. Ferrara, the Company's Secretary and General Counsel,
serves as a non-voting ex officio member of the Committee. The function of the
Nominating Committee is to make recommendations to the Board for nominees to
serve as directors. The Nominating Committee will consider written
recommendations from Shareholders for nominees to serve on the Board that are
sent to the Secretary of the Company at the Company's main office. During the
fiscal year ended June 30, 2002, the Nominating Committee held two meetings.
MISCELLANEOUS
Other Matters
As of the date of this Proxy Statement, management has no knowledge of any
business which will be presented for consideration at the Meeting other than
that described herein. Should any other matter properly come before the Meeting,
it is the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their best judgment.
Solicitation of Proxies
The entire expense of preparing, assembling and mailing the Proxy
Statement, form of proxy and other material used in the solicitation of proxies
will be paid by the Company. In addition to the solicitation of proxies by mail,
arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxy material to their principals, and the Company will
reimburse them for expenses in so doing. To the extent necessary to ensure
sufficient representation, officers and regular employees of the Company may
request, without additional compensation therefor, the return of proxies
personally by telephone or telegram. The extent to which this will be necessary
depends entirely on how promptly proxies are received, and Shareholders are
urged to send their proxies without delay.
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in
the Company's Proxy Statement relating to the 2003 Annual Meeting of
Shareholders, such proposal must be received by the Company by May 23, 2003.
David M. Ferrara
Secretary and General Counsel
Date: September 20, 2002
East Syracuse, New York
16
PROXY ANAREN MICROWAVE, INC. PROXY
6635 Kirkville Road
East Syracuse, New York 13057
THIS IS YOUR PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ANAREN MICROWAVE,
INC.
The undersigned hereby (1) acknowledges receipt of the notice of the
Annual Meeting of Shareholders of Anaren Microwave, Inc. (the "Company") to be
held at the Wyndham Hotel, 6302 Carrier Parkway, East Syracuse, New York on
Thursday, November 7, 2002 at 11:00 A.M., local time and of the Proxy Statement
in connection therewith and (2) appoints Lawrence A. Sala and Carl W. Gerst, Jr.
and each of them as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of common stock, $.01 par value, of Anaren Microwave, Inc. held of record
by the undersigned on September 16, 2002 at the Annual Meeting of Shareholders,
or any adjournment thereof. If any nominee for director should be unavailable to
serve, it is intended that all of the shares will be voted for such substitute
nominee as may be determined by the Board of Directors. The undersigned directs
that this Proxy be voted as follows:
(Continued and to be dated and signed on the reverse)
ITEM 1: ELECTION OF DIRECTORS
FOR all nominees listed at right WITHHOLD AUTHORITY to vote for
(except as marked to the contrary). all nominees listed at right.
--- ---
Nominees: Lawrence A. Sala, Dr. David Wilemon
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list at right.)
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED.
----------------------------------------
----------------------------------------
Signature
----------------------------------------
Please Print Name Here
----------------------------------------
Signature
----------------------------------------
Please Print Name Here
Dated: __________________________, 20___
IMPORTANT. Please sign exactly as name
appears on this card. Each joint owner
should sign. Executors, administrators,
trustees, etc. should give full title.
ANNUAL MEETING OF SHAREHOLDERS OF
ANAREN MICROWAVE, INC.
November 7, 2002
Co. # ________________ Acct. #_____________________
-------------------------
PROXY VOTING INSTRUCTIONS
-------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the on-screen
instructions. Have your control number available when you access the web page.
-------------------------
YOUR CONTROL NUMBER IS ==> | |
-------------------------