H&W DRAFT
12/10/03
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] 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 ss.240.14a-12
ESPEY MFG. & ELECTRONICS CORP.
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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ESPEY MFG. & ELECTRONICS CORP.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY __, 2004
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January __, 2004
To the Shareholders of
ESPEY MFG. & ELECTRONICS CORP.:
You are cordially invited to attend the Special Meeting of Shareholders of
Espey Mfg. & Electronics Corp., which will be held at the Hilton Garden Inn, 125
South Broadway, Saratoga Springs, New York, on January __, 2004, at ____ a.m.,
Eastern Standard Time, for the following purposes:
1. To elect one Class B Director to fill the vacant director position
previously held by Mr. Gerald B.H. Solomon, deceased October 26, 2001,
and to serve the remainder of Mr. Solomon's term as a director of the
Company or until such newly elected director's respective successor is
duly elected and qualified;
2. To elect one Class C Director to fill a vacant director position and
to serve the remainder of such term as a director of the Company or
until his/her respective successor is duly elected and qualified; and
3. To vote on the approval of an Amendment to the Company's Certificate
of Incorporation, as amended, to change the number of members of the
Board of Directors from nine to a number not less than three nor more
than nine.
No other business may be transacted at the meeting.
The Board of Directors has fixed the close of business on December 10, 2003
as the record date for the purpose of determining shareholders entitled to
notice of, and to vote at, said meeting or any adjournment thereof. The books
for transfer of the Company's capital stock will not be closed.
Even if you expect to attend the meeting in person, it is urged by the
Company that you mark, sign, date and return the enclosed proxy. The proxy may
be revoked at any time before it is voted and shareholders who execute proxies
may nevertheless attend the meeting and vote their shares in person. Every
properly signed proxy will be voted as specified unless previously revoked.
By Order of the Board of Directors,
PEGGY A. MURPHY
Corporate Secretary
Please make your specifications and sign and date the enclosed proxy and
mail it promptly in the accompanying pre-addressed, postage-free envelope.
ESPEY MFG. & ELECTRONICS CORP.
233 Ballston Avenue
Saratoga Springs, New York 12866
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Espey Mfg. &
Electronics Corp. (the "Company") for use in voting at the Special Meeting of
the Shareholders of the Company to be held at the Hilton Garden Inn, 125 South
Broadway, Saratoga Springs, New York, on January __, 2004, at ___ a.m., Eastern
Standard Time, and at any postponement or adjournment thereof, for the purposes
set forth in the attached Notice of Meeting. It is anticipated that the Notice
of Special Meeting of Shareholders, this Proxy Statement and the form of proxy
will be mailed on or about January __, 2004.
Voting and Revocability of Proxies
Every properly dated, executed and returned proxy will be voted at the
Special Meeting in accordance with the instructions of the shareholder. If no
specific instructions are given, the shares represented by such proxy will be
voted for the election of the Class B Director and the Class C Director
nominated by the Board of Directors and for the amendment to the Certificate of
Incorporation. Any shareholder giving a proxy has the power to revoke it at any
time prior to the voting thereof by voting in person at the Special Meeting, by
giving written notice to the Secretary prior to the Special Meeting, or by
signing and delivering a new proxy card bearing a later date.
The Company's only class of voting securities is its Common Stock, par
value $.33-1/3 per share (the "Common Stock"). Each share of Common Stock
outstanding on the record date will be entitled to one vote on all matters. In
accordance with the Company's By-Laws and applicable state law, the election of
directors will be determined by a plurality of the votes cast by the holders of
shares of Common Stock present and entitled to vote thereon, in person or by
proxy, at the Special Meeting. Shares present which are properly withheld as to
voting with respect to any one or more nominees, and shares present with respect
to which a broker indicates that it does not have authority to vote ("broker
non-vote") will not be counted. Cumulative voting in connection with the
election of directors is not permitted. In accordance with the Company's By-Laws
and applicable law, the affirmative vote of shares representing a majority of
the votes cast by the holders of shares present and entitled to vote is required
to approve the other matters to be voted on at the Special Meeting. Shares,
which are voted to abstain and broker non-votes, are not counted as votes cast
on any matter to which they relate.
The By-Laws of the Company provide that the majority of the shares of the
Common Stock of the Company issued and outstanding and entitled to vote, present
in person or by proxy, shall constitute a quorum at the Special Meeting. Shares,
which are voted to abstain, are considered as present at the Special Meeting for
the purposes of determining a quorum. Broker non-votes are considered as not
present at the Special Meeting for the purposes of determining a quorum.
Record Date and Share Ownership
Only holders of Common Stock of record on the books of the Company at the
close of business on December 10, 2003 will be entitled to vote at the meeting.
There were outstanding and entitled to vote on December 10, 2003, 1,009,818
shares of Common Stock.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that the
Board of Directors shall consist of three classes of directors (Class A, Class B
and Class C) with overlapping three-year terms. One class of directors is to be
elected each year for a term extending to the third succeeding Annual Meeting
after such election or until their respective successors are duly elected and
qualify.
On October 26, 2001, Gerald B.H. Solomon passed away which vacated his
position as a Director of the Company. From October 26, 2001 until November 24,
2003, the Company did not fill the vacancy resulting from Mr. Solomon's death
and no nominees for that vacancy were submitted to the Company's shareholders at
a meeting of the shareholders. On November 24, 2003, the Board of Directors
elected Alan D. Kohn to fill the vacancy created upon the death of Mr. Solomon.
According to applicable state law and the Company's By-Laws, a director elected
by the Board of Directors to fill a vacancy shall hold office until the next
meeting at which the election of directors is in the regular order of business,
and until his or her successor has been elected and qualified. The Board has
nominated Mr. Kohn as a Class B Director to serve the remainder of Mr. Solomon's
term, which will expire at the Company's 2004 Annual Meeting of the Shareholders
and accordingly nominates Mr. Kohn to continue to serve for the remainder of
that term.
During the Company's 2003 Annual Meeting of the Shareholders held on
November 13, 2003, a proposal was made by a shareholder to remove Directors
Michael W. Wool, Paul J. Corr and William P. Greene from the Company's Board of
Directors without cause by separate votes. The Company's shareholders voted in
favor of the removal of Messrs. Michael W. Wool and Paul J. Corr and against the
removal of Mr. William P. Greene from the Company's Board of Directors. In
accordance with applicable state law and the Company's By-Laws, vacancies
occurring in the Board of Directors by reason of removal of directors without
cause must be filled by vote of the Company's shareholders. The Board has
determined that it will only replace one of these vacancies and has nominated
Major General Nolan Sklute (USAF Retired) as a Class C Director to serve the
remainder of the term recently vacated, which will expire at the Company's 2005
Annual Meeting of the Shareholders.
The votes will be cast pursuant to the enclosed proxy for the election of
the Class B and Class C nominees named below unless specification is made
withholding such authority. Of the two nominees for Director positions, only Mr.
Kohn is presently a Director of the Company. Should any of said nominees for
Directors become unavailable, which is not anticipated, the proxies named in the
enclosed proxy will vote for the election of such other persons as the Board of
Directors may recommend. Proxies may not be voted for a greater number of
persons than the nominees named.
Currently, the Company's Certificate of Incorporation, as amended, states
that the Company shall have nine Directors serve on its Board of Directors. In
the event the shareholders elect the two nominees named herein to fill vacancies
on the Board of Directors, the Company will have eight members serving on its
Board of Directors. As is stated in the attached Notice of Meeting, the Company
has included an amendment to the Certificate of Incorporation as an additional
item to be voted upon by the Company shareholders at the Special Meeting. If
approved, the amendment would permit the Company to have no less than three and
no more than nine members serving on the Board of Directors. For further
information regarding the proposed amendment to the Company's Certificate of
Incorporation, please refer to "Proposed Amendment to Certificate of
Incorporation to Change the Required Number of Directors" contained hereinafter.
Set forth below are the names and business experience for the past five
years of the two individuals that have been nominated by the Board of Directors
to stand for election as Class B and Class C Directors at the Special Meeting
and the current directors whose terms are continuing until the 2004, 2005 and
2006 Annual Meetings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING
NOMINEE FOR CLASS B DIRECTOR.
NOMINEE FOR A CLASS B DIRECTOR VACANCY -- SERVING FOR THE
REMAINDER OF A TERM EXPIRING AT THE 2004 ANNUAL MEETING
Period to
Offices and Date
Positions Held Principal Occupation or Served as
Name Age with Company Employment Director
======= ====== ================= ========================== ===============
Alan D. Kohn........ 61 ------ Principal of Cherry Hill 2003
Partners, an investment firm
based in New York, NY since
2000. Prior to that position,
he was a Principal in Weiss
Peck & Greer LLP, an investment
firm located in New York, New
York. Mr. Kohn is an MBA
graduate from Indiana
University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING
NOMINEE FOR CLASS C DIRECTOR.
NOMINEE FOR A CLASS C DIRECTOR VACANCY -- SERVING FOR THE
REMAINDER OF A TERM EXPIRING AT THE 2005 ANNUAL MEETING
Period to
Offices and Date
Positions Held Principal Occupation or Served as
Name Age with Company Employment Director
======= ====== ================= ========================== ===============
General Nolan Sklute 62 ------ Attorney engaged in private ------
..................... practice of law limited to
Federal Government contracts in
Bethesda, MD since 1996. In
1996,General Sklute retired
from active duty as a Major
General in the United States
Air Force. During the period of
1993 to 1996, Mr. Sklute served
as Judge Advocate General of
the United States Air Force.
Mr. Sklute received his J.D.
from Cornell University and his
LL.M. in Government Contracts
from George Washington
University.
CLASS A DIRECTORS -- SERVING FOR
A THREE YEAR TERM EXPIRING AT THE 2006 ANNUAL MEETING
Period to
Offices and Date
Positions Held Principal Occupation or Served as
Name Age with Company Employment Director
======= ====== ================= ========================== ===============
Howard Pinsley (1)...... 63 President, Chief Howard Pinsley for more than 1992
Executive Officer the past five years has been
And Chairman of employed by the Company on a
The Board full-time basis as Program
Director prior to being elected
Vice President-Special Power
Supplies on April 3, 1992. On
December 6, 1996, Mr. Pinsley
was elected to the position of
Executive Vice President. On
June 9, 1998 he was elected to
the positions of President and
Chief Operating Officer.
Subsequently he became Chief
Executive Officer and Chairman
of the Board.
Alvin O. Sabo.................60 ------ Attorney engaged in private 1999
practice of law and Senior
Partner of the law firm of
Donohue, Sabo, Varley &
Armstrong, P.C. in Albany, NY
since 1980. Prior to that
position, he was Assistant
Attorney General, State of New
York, Department of Law for
eleven years.
Carl Helmetag.................55 ------ President and CEO of UVEX Inc. 1999
in Providence, RI. From 1996 to
1999, he was President and CEO
of HEAD USA Inc. Prior to that
position, Mr. Helmetag was
Executive Vice President and
then President at Dynastar Inc.
from 1978 to 1996. He is an MBA
graduate from The Wharton
School of Business, University
of Pennsylvania.
CLASS B DIRECTORS -- SERVING FOR
A THREE YEAR TERM EXPIRING AT THE 2004 ANNUAL MEETING
Period to
Offices and Date
Positions Held Principal Occupation or Served as
Name Age with Company Employment Director
======= ====== ================= ========================== ===============
William P. Greene.............73 ------ Mr. Greene was Vice President 1992
of Operations from March 1,
1999, and resigned as an
executive officer effective
December 31, 2000. Prior to
joining the company, he was
Vice President of Finance for
ComCierge, LLC, San Diego, CA,
since August 1997. Prior to
that position, he was Vice
President of Operations for
Bulk Materials International
Co., Newton, CT, from 1993 to
July 1997. From 1991 to 1993,
Dr. Greene was Associate
Professor of Finance and
International Business,
Pennsylvania State University
in Kutztown, PA. From 1985 to
1990, he was Associate Dean of
the School of Business, United
States International
University, San Diego, CA. From
1992 to 1995, he was Chairman
of the Department of Business,
Skidmore College, Saratoga
Springs, NY. Prior to that he
had been employed as an officer
for several financial
institutions.
Seymour Saslow................82 ------ Mr. Saslow was Senior Vice 1992
President since December 6,
1996, and resigned as an
executive officer effective
December 31, 1999. Prior to
being elected to Senior Vice
President, Mr. Saslow served
as Vice President-Engineering
since April 3, 1992.
CLASS C DIRECTORS -- SERVING FOR A
THREE YEAR TERM EXPIRING AT THE 2005 ANNUAL MEETING
Period to
Offices and Date
Positions Held Principal Occupation or Served as
Name Age with Company Employment Director
======= ====== ================= ========================== ===============
Barry Pinsley (1).............61 Non-Executive Accountant who for five years 1994
Officer acted as a consultant to the
Company prior to his election
as a Vice President-Special
Projects on March 25, 1994. On
December 6, 1997, Mr. Pinsley
was elected to the position of
Vice President-Investor
Relations and Human Resources,
from which he resigned on June
9, 1998. Mr. Pinsley had been a
practicing Certified Public
Accountant in Saratoga Springs,
New York since 1975, retiring
from such full-time practice in
2002.
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(1) Barry Pinsley and Howard Pinsley are cousins.
Howard Pinsley serves as a Director of All American Semiconductor, Inc.
None of the other Directors holds a directorship in any other company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or subject to the requirements of Section 15(d) of the Securities
Act of 1933 or any company registered as an Investment Company under the
Investment Company Act of 1940.
The only individuals currently considered executive officers of the Company
not identified above are:
Garry M. Jones, 63, Assistant Treasurer and Principal Accounting Officer of
the Company since August 4, 1988. He was also the Principal Financial Officer
from August 4, 1988 to September 10, 1993. Prior to being elected an officer of
the Company, Mr. Jones was employed by the Company on a full-time basis as a
Senior Accountant.
John J. Pompay, Jr., 68, Vice President of Marketing and Sales since
December 6, 1996. During the past five years and before being elected to his
present position, Mr. Pompay was employed by the Company on a full-time basis as
Director of Marketing and Sales.
Peggy Murphy, 45, Secretary of the Company since December 11, 1998. She has
been employed by the Company as Director of Human Resources since October 1998.
David A. O'Neil, 38, Treasurer and Principal Financial Officer since
January 4, 2000. Mr. O'Neil is a Certified Public Accountant who, prior to
joining the Company, was a Senior Manager at the accounting firm of KPMG LLP.
Timothy A. Polidore, 43, Assistant Treasurer since December 8, 2000. Mr.
Polidore joined the Company on May 17, 1999. Prior to joining the Company, Mr.
Polidore was Accounting Manager for Brinks, Inc.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the Company's fiscal year ended June 30, 2003, the Board of
Directors held a total of 7 meetings, and each director then in office attended
at least 75% of such meetings.
The Board has a standing Audit Committee whose members are Alan D. Kohn,
Chairman, Alvin O. Sabo and Carl Helmetag. All of the members of the Audit
Committee meet the independence criteria for audit committee members set forth
in the listing standards of the American Stock Exchange. The functions of this
Committee include reviewing the engagement of the independent accountants, the
scope and timing of the audit and any non-audit services to be rendered by the
independent accountants, reviewing with the independent accountants and
management the Company's policies and procedures with respect to internal
auditing, accounting and financial controls, and reviewing the report of the
independent accountants upon completion of its audit. During the fiscal year
ended June 30, 2003, the Committee held 5 meetings, and each Committee member
attended at least 75% of such meetings.
The Board has a standing Stock Option Committee whose members are Howard
Pinsley and Barry Pinsley. The functions of this Committee include determining
to whom, and the time or times at which, options will be granted, the number of
shares of common stock that comprise each option and the exercise price and
vesting schedule for options granted pursuant to the Company's 2000 Stock Option
Plan. During the fiscal year ended June 30, 2003, the Stock Option Committee
held 1 meeting, and each Stock Option Committee member attended this meeting.
There is no standing nominating or compensation committee of the Board of
Directors, or committees performing similar functions with the exception of the
Stock Option Committee.
COMPENSATION OF DIRECTORS
In accordance with the Company's standard arrangement, each Director of the
Company received an annual fee from the Company in the amount of $12,000 for
being a member of the Board of Directors. Each Director that serves as a member
of the Audit Committee is compensated an additional annual fee of $5,000. Each
Director that serves as a member of the Succession Committee or the Mergers and
Acquisition Committee is compensated an additional $2,500 for each committee.
These fees are paid monthly to the Directors. Executive officers that also serve
on the Company's Board of Directors do not receive fees for their service as
Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the annual compensation for each of the
fiscal years ended June 30, 2003, June 30, 2002 and June 30, 2001 received by
the Company's Chief Executive Officer (or acting in a similar capacity) and the
other highest paid executive officers of the Company that received over $100,000
in total compensation as at June 30, 2003:
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Name and Underlying All Other
Principal Position Fiscal Year Salary Bonus Options Compensation(1)
------------------ ----------- ------ ----- ------- ---------------
Howard Pinsley 2003 $180,404 $12,500 2,000 $19,109
President, Chief 2002 $173,120 $25,000 2,000 $11,841
Executive Officer 2001 $172,600 $25,000 2,000 $ 9,590
and Chairman of the
Board
John J. Pompay, Jr. 2003 $160,554 $25,000 800 $19,244
Vice President of 2002 $154,330 $25,000 800 $12,134
Marketing and Sales 2001 $152,938 $25,000 800 $ 9,737
David A. O'Neil 2003 $105,490 $10,000 800 $10,738
Treasurer and Principal 2002 $ 99,950 $12,500 800 $ 9,899
Financial Officer 2001 $ 91,200 $12,500 800 $ 7,703
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(1) Represents (a) the cash and market value of the shares allocated for the
respective fiscal years under the Company's Employee Stock Ownership Plan
(ESOP) to the extent to which each named executive officer is vested, and
the Company's matching contribution under its 401(k) plan.
OPTION GRANTS IN FISCAL 2003
Potential
Realizable
Value at
Asssumed Annual
Rates of Stock
Price Appreciation
for Option Term
Number of -----------------------
Securities
Underlying
Options Exercise Expiration
Name Granted Employees Price Date 5% ($) 10%($)
---- ------- --------- ----- ---- ------ ------
Howard Pinsley 2,000 13.5% $18.50 2013 60,269 95,968
John J. Pompay Jr. 800 5.4% $18.50 2013 24,107 38,387
David A. O'Neil 800 5.4% $18.50 2013 24,107 38,387
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(1) Amounts reflect certain assumed rates of appreciation set forth in the
Commission's executive compensation disclosure rules. Actual gains, if any,
on stock option exercises will depend on future performance of the Common
Stock. No assurance can be made that the amounts reflected in these columns
will be achieved. The values in these columns assume that the fair market
value on the date of grant of each option was equal to the exercise price
thereof.
In accordance with the 2000 Stock Option Plan the options reflected in the
table above have exercise dates that range from March 1, 2002 through March 1,
2013.
Insurance
The executive officers and directors of the Company can elect to be covered
under the company-sponsored health plans, which do not discriminate in favor of
the officers, or directors of the Company and which are available generally to
all employees. In addition, the executive officers are covered under a group
life plan, which does not discriminate, and is available to all employees.
The Company maintains insurance coverage, as authorized by Section 726 of
the New York Business Corporation Law, providing for (a) reimbursement of the
Company for payments it makes to indemnify officers and directors of the
Company, and (b) payment on behalf of officers and directors of the Company for
losses, costs and expenses incurred by such individuals in any actions.
EMPLOYMENT CONTRACTS
The Company has an employment contract with John J. Pompay, Jr. in
connection with his duties as Vice President-Marketing and Sales. The contract
was effective as of January 1, 2003, and expires on December 31, 2003 unless the
parties mutually agree to extend the agreement. The contract provides for a
minimum base annual salary of $156,000 plus commissions at the rate of 3% on all
payments received by the Company against Mr. Pompay's open orders booked up to
and including December 31, 1996, and 1% on all payments received against orders
booked by the Company between January 1, 1997 and December 31, 1998. The
contract further provides that if Mr. Pompay's employment is terminated by the
Company prior to the expiration date, other than for cause, he will continue to
receive his full salary for 27 months and commissions due on his orders when
payment is received. The contract also provides for a restrictive covenant of
non-competition by Mr. Pompay for a period of two years upon termination for
cause or termination of the contract by Mr. Pompay. At the end of the contract
term Mr. Pompay has the option to accept at the time of his voluntary
resignation as an executive officer, an employment contract as a non-executive
officer in which he would receive full compensation for 13 weeks and then for
the next 143 weeks receive $1,000 per week for services rendered.
The Company entered into an agreement with Howard Pinsley, President and
CEO effective July 1, 2002. The contract allows Mr. Pinsley upon his resignation
or termination to become a non-executive officer of the Company for a period of
36 months. In consideration for services to be provided by Mr. Pinsley for the
equivalent of two days a month after his resignation or termination, and to
perform duties as reasonably requested by the Company, he will receive full
benefits plus $15,000 per month for the first three months, and $4,333 per month
for the next thirty-three consecutive months. This agreement expires on December
31, 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding ownership of the
Company's outstanding Common Stock as of December 10, 2003, by each person or
group who is known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock.
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------
Dimensional Fund Advisors Inc............. 73,100 -Direct(1) 7.06%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Franklin Resources, Inc................... 78,900 -Direct(2) 7.60%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
The Adirondack Trust Company,............. 244,845 -Direct(3) 24.24%
as Trustee of the Company's Employee
Retirement Plan and Trust
473 Broadway
Saratoga Springs, NY 12866
Howard Pinsley,........................... 43,634 -Direct 5.02%
233 Ballston Avenue 9,502 -Indirect(4)
Saratoga Springs, NY 12866
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(1) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Dimensional Fund Advisors Inc.
("Dimensional") is from the Schedule 13G dated December 31, 2002 filed with
the Securities and Exchange Commission (the "SEC"). Dimensional, a
registered investment advisor, is deemed to have beneficial ownership of
73,100 shares of Espey Mfg. & Electronics Corp. stock as of December 31,
2002, all of which shares are held in Dimensional investment companies,
trusts and accounts. Dimensional, in its role as investment advisor and/or
manager, disclaims beneficial ownership of all such shares. Dimensional, in
its role as investment advisor and/or manager, reported sole voting power
with respect to 73,100 shares.
(2) The information as to the number of shares of common stock of the Company
that may be deemed beneficially owned by Franklin Advisory Services, LLC
("Franklin") is from the Schedule 13G, dated January 30, 2003 filed with
the SEC. The Franklin statement indicated that Franklin's "investment
advisory subsidiaries," have sole voting and dispositive power with respect
to all of the shares of common stock shown in the table above for Franklin.
The Franklin statement indicates that the common stock set forth in the
table is beneficially owned by one or more open or closed-end investment
companies or other managed accounts which are advised by direct and
indirect Franklin investment advisory subsidiaries. The statement also
indicated that it filed the Schedule 13G on behalf of itself, and
Franklin's principal shareholders, Charles B. Johnson and Rupert H.
Johnson, Jr. (the "Principal Shareholders"), all of which are deemed
beneficial owners of the shares of common stock shown in the above table
for Franklin. Franklin and the Principal Shareholders disclaim any economic
interest or beneficial ownership in any of the common stock shown in the
table for Franklin.
(3) This information is from the Form 4 dated August 22, 2003 filed with the
SEC by the Trustee on behalf of the Company's ESOP. The ESOP Trustee has
sole voting power with respect to unallocated common shares owned by the
Trust, 21,012 shares as of August 22, 2003, as directed by the ESOP
Committee appointed by the Company's Board of Directors. As to the common
shares allocated to participants, 223,833 shares as of August 22, 2003, the
ESOP Trustee has the power to vote such shares as directed by such ESOP
Committee to the extent the participants do not direct the manner in which
such shares are to be voted.
(4) This information is from the Form 4 dated July 28, 2003. Indirect shares
represent stock being held in the Company ESOP.
SECURITY OWNERSHIP OF MANAGEMENT
The following information is furnished as of December 10, 2003 (unless
otherwise indicated), as to each class of equity securities of the Company
beneficially owned by all Directors and Executive Officers and by Directors and
Executive Officers of the Company as a Group:
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership of Class
---------------- ----------------------- --------
William P. Greene............................. 100 - Direct *
Carl Helmetag................................. 3,000 - Direct *
500 - Indirect(3)
Garry M. Jones................................ 4,533 - Indirect(2) *
Alan D. Kohn.................................. 0 - N/A N/A
Peggy Murphy.................................. 3,210 - Indirect(2) *
David A. O'Neil............................... 1,600 - Direct *
1,801 - Indirect(2)
Barry Pinsley................................. 33,830 - Direct 3.66%
3,161 -Indirect(1,2)
Howard Pinsley................................ 42,634 - Direct 5.16%
9,502 - Indirect(2)
Timothy A. Polidore........................... 834 - Indirect(2) *
John J. Pompay, Jr............................ 600 - Direct 1.05%
9,984 - Indirect(2)
Alvin O. Sabo................................. 200 - Direct *
Seymour Saslow................................ 7,559 - Direct *
General Nolan Sklute.......................... 0 - N/A N/A
Officers and Directors as a Group (13 persons) 92,923 - Direct 12.39%
33,525 - Indirect
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* Less than one percent.
(1) Excludes 2,000 shares owned by the spouse of Barry Pinsley. Beneficial
ownership of the shares is disclaimed by Mr. Pinsley
(2) Includes shares allocated to the named director or executive officer as of
June 30, 2003 as a participant in the Company's ESOP. Each such person has
the right to direct the manner in which such shares allocated to him or her
are to be voted by the ESOP Trustee.
(3) Includes 500 shares owned by the trust of Molly K. Helmetag. As trustee of
the trust, Mr. Helmetag is deemed beneficial owner, as defined in Rule
13d-3, of the shares held by the trust. Excludes 806 shares owned by the
spouse of Mr. Helmetag. Beneficial ownership is disclaimed by Mr. Helmetag,
with respect to the shares owned by Mr. Helmetag's spouse.
There are no arrangements known to the Company, the operation of which may
at a subsequent date, result in change of control of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As previously reported, the Company established and sold to the ESOP Trust
on June 5, 1989, 331,224 shares of the Company's treasury stock at a price of
$26.50 per share, which purchase price was funded by the Company making a cash
contribution and loan. Each year, the Company makes contributions to the ESOP,
which are used to make loan interest and principal payments to the Company. With
each such payment, a portion of the common stock held by the ESOP is allocated
to participating employees. As of June 30, 2003, there were 230,562 shares
allocated to participants. The loan from the Company to the ESOP is repayable in
annual installments of $1,039,605, including interest, through June 30, 2004.
Officers of the Company, including Howard Pinsley who is also a director, are
eligible to participate in the ESOP and to have shares and cash allocated to
their accounts and distributed to them in accordance with the terms of the ESOP.
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
TO CHANGE THE REQUIRED NUMBER OF DIRECTORS
The Board of Directors has determined that it is in the best interests of
the Company and its shareholders to approve an amendment to Article SEVENTH of
the Company's Certificate of Incorporation to change the number of directors
that are required to serve on the Board of Directors at any given time.
Currently, the Company's Certificate of Incorporation requires that the Board of
Directors maintain nine directors serving on the Board of Directors. The
amendment, if approved by the Company's shareholders at the Special Meeting,
would require that the Company have no fewer than three directors and no more
than nine directors serving on the Board of Directors at any given time. The
proposed amendment to the Certificate of Incorporation is, in part, an effort to
address the existing vacancies on the Board of Directors and would provide the
Board of Directors with a degree of flexibility in determining the number of
Company directors on a going-forward basis.
The text of the current provision in the Company's Certificate of
Incorporation is attached to this proxy statement as Exhibit A. The text of the
proposed amendment to that provision of the Company's Certificate of
Incorporation will be substantially in the form attached to this proxy statement
as Exhibit B.
In the event the amendment to the Certificate of Incorporation is not
approved by the Company shareholders, the Board of Directors will seek another
candidate to serve on the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSED
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, generally
requires the Company's directors, executive officers, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of beneficial ownership and changes in beneficial ownership with
the Securities and Exchange Commission. Based solely upon its review of copies
of such reports received by it, or upon written representations obtained from
certain reporting persons, the Company believes that its officers, directors,
and stockholders who own more than ten percent of the Company's equity
securities have complied with all Section 16(a) filing requirements.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Any shareholder proposal which may be a proper subject for inclusion in the
proxy statement and for consideration at the 2004 Annual Meeting must be
received by the Company at its principal executive office no later than June 20,
2004, if it is to be included in the Company's 2004 proxy statement and proxy
form.
OTHER MATTERS
Proxy Solicitation
The solicitation of the enclosed proxy is being made on behalf of the Board
of Directors and the cost of preparing and mailing the Notice of Meeting, Proxy
Statement and form of proxy to shareholders is to be borne by the Company.
By Order of the Board of Directors,
HOWARD PINSLEY
President, Chief Executive Officer
and Chairman of the Board
January __, 2004
Saratoga Springs, New York
EXHIBIT A
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Current Provision in Certificate of Incorporation
SEVENTH: The entire Board of Directors shall consist of nine persons. The
directors shall be divided into three classes, each class to consist of three
directors. The term of office of the first class (Class A) shall expire at the
first annual meeting of the Company after their election, the term of office of
the second class (Class B) shall expire at the second succeeding annual meeting,
and the third class (Class C) at the third succeeding annual meeting. At each
annual meeting after the election of the first classified Board, directors shall
be elected for a term of three years to replace those whose terms shall expire.
EXHIBIT B
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Proposed Amended Provision for Certificate of Incorporation
SEVENTH: The entire Board of Directors shall consist of not fewer than
three persons and not more than nine persons. The directors shall be divided
into three classes and all classes shall be as nearly equal in number as
possible. The term of office of the first class (Class A) shall expire at the
first annual meeting of the Company after their election, the term of office of
the second class (Class B) shall expire at the second succeeding annual meeting,
and the third class (Class C) at the third succeeding annual meeting. At each
annual meeting after the election of the first classified Board, directors shall
be elected for a term of three years to replace those directors whose terms
shall expire.
This proxy is solicited on behalf of the Board of Directors
ESPEY MFG. & ELECTRONICS CORP.
Proxy for THE
Special Meeting of SHAREHOLDERS
January , 2004
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The undersigned hereby appoints Howard Pinsley and David O' Neil as Proxies,each
with the power to appoint his substitute, and hereby authorizes them or either
one of them to represent and to vote, as designated below, all the shares of
common stock of ESPEY MFG.& ELECTRONICS CORP. which the undersigned would be
entitled to vote if personally present at the Special Meeting of shareholders to
be held on January , 2004 or any adjournment thereof.
--
C
O
M
M
O
N
1. ELECTION OF A CLASS B DIRECTOR
[_] FOR
the nominee listed below
[_] WITHHOLD AUTHORITY
to vote for the nominee listed below
ALAN D. KOHN
Management recommends a vote FOR the
nominee.
2. ELECTION OF A CLASS C DIRECTOR
[ ] FOR THE NOMINEE LISTED BELOW
[ ] WITHHOLD AUTHORITY
to vote for the nominee listed below
GENERAL
NOLAN SKLUTE
Management recommends a vote FOR the nominee.
3. PROPOSAL TO APPROVE THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION.
[ ] For [ ] Against [ ] Abstain
Management recommends a vote FOR this proposal.
Please be sure to sign and date this Proxy in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
..
Detach here, sign, date and mail in postage paid envelope provided.
ESPEY MFG. & ELECTRONICS CORP.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE ABOVE SIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, AND 3.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporation name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
If your address has changed, please correct the address in the space provided
below and return this portion with the proxy in the envelope provided.
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