SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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(section mark)240.14a-12
Exide Electronics
(Name of Registrant as Specified In Its Charter)
Exide Electronics
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
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(Exide Electronics logo appears here)
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
919 872-3020 FAX 919 870-3100
January 26, 1996
Dear Shareholder:
The 1996 Annual Meeting of Shareholders will be held at 9:00 a.m. on
Tuesday, February 27, 1996, at the Corporate Headquarters of Exide Electronics
Group, Inc., 8609 Six Forks Road, Raleigh, North Carolina. The matters on the
meeting agenda are described in the attached Notice of Annual Meeting and Proxy
Statement.
If you are a shareholder of record, we urge that you send in your proxy
promptly for the February 27 Annual Meeting, whether or not you plan to attend.
Giving your proxy will not affect your right to vote in person if you attend. If
you wish to give a proxy to someone other than the persons named on the enclosed
proxy form, you may cross out their names and insert the name of some other
person who will be at the meeting. The signed proxy form then should be given to
that person for his or her use at the meeting. If your shares are held in the
name of a broker and you wish to attend the meeting, you should obtain a letter
of identification from your broker and bring it to the meeting. In order to vote
personally the shares held in the name of your broker you also must obtain from
the broker a proxy issued to you.
A copy of the Company's 1995 Annual Report to Shareholders is enclosed. We
would like to welcome as shareholders those persons who purchased the Company's
stock during the past year.
Sincerely,
/s/ James A. Risher
JAMES A. RISHER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
YOUR PROXY IS IMPORTANT . . . PLEASE VOTE PROMPTLY
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Exide Electronics Group, Inc.:
The Annual Meeting of Shareholders of Exide Electronics Group, Inc. (the
Company) will be held at its Corporate Headquarters, 8609 Six Forks Road,
Raleigh, North Carolina, on Tuesday, February 27, 1996, at 9:00 a.m., Eastern
Standard Time, for the following purposes:
1. To elect two directors for three year terms ending in 1999, and, in each
case, until their successors are elected and qualified (Proposal 1);
2. To appoint independent public accountants (Proposal 2); and
3. To transact such other business as may properly come before the meeting
or any reconvened session thereof.
The Board of Directors has fixed the close of business on January 9, 1996,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and at any reconvened session thereof.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU HOLD
ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT, YOU ARE
REQUESTED TO DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE
THAT IS PROVIDED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME, AND THE GIVING OF
YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
This notice is given pursuant to direction of the Board of Directors.
/s/ Nicholas J. Costanza
NICHOLAS J. COSTANZA
SECRETARY
Raleigh, North Carolina
January 26, 1996
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 27, 1996
The accompanying proxy is solicited by the Board of Directors of Exide
Electronics Group, Inc. (Exide Electronics or the Company), for use at the
Annual Meeting of Shareholders to be held on February 27, 1996, and at any
reconvened session thereof. When such proxy is properly executed and returned,
the shares it represents will be voted at the meeting. If a choice has been
specified by the shareholder as to any matter referred to on the proxy, the
shares will be voted accordingly. A shareholder giving a proxy has the power to
revoke it at any time before it is voted. Presence at the meeting of a
shareholder who has signed a proxy does not alone revoke that proxy; the proxy
may be revoked by a later dated proxy or by notice to the Secretary at the
meeting. At the meeting votes will be counted by written ballot.
At the Annual Meeting shareholders will be asked to:
1. Elect two directors for three year terms ending in 1999, and, in each
case, until their successors are elected and qualified;
2. Appoint independent public accountants; and
3. Transact such other business as may properly come before the meeting or
any reconvened session thereof.
The election of directors will require the affirmative vote of a plurality
of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. Approval of proposal Two requires
approval by the holders of a majority of the shares present in person, or
represented by proxy, and entitled to vote. The transaction of all other
business as may properly come before the meeting, or any reconvened session
thereof, will require the affirmative vote of a majority of the shares present
in person or represented by proxy at the meeting and entitled to vote thereon.
Abstentions will be considered present at the meeting for a particular proposal
and will have the effect of negative votes since they are not affirmative votes
for the proposal. With respect to broker non-votes, shares will not be
considered present at the meeting for the particular proposal for which the
broker withheld authority.
Only shareholders of record as of the close of business on January 9, 1996,
will be entitled to vote at the Annual Meeting. The approximate date on which
this proxy statement and form of proxy were first sent or given to shareholders
is January 26, 1996.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The capital stock of the Company outstanding consists of its Common Stock
with a par value of $0.01 per share. As of the record date, 9,151,231 shares of
Common Stock were outstanding and entitled to one vote. Authorized preferred
stock of the Company consists of 2,000,000 shares of $0.01 par value preferred
stock. On such date there were no preferred shares outstanding.
The following table sets forth, as of the record date, all persons known by
the Company to be the beneficial owners of more than 5% of any class of the
voting securities of the Company. The information set forth below is based on
beneficial ownership information contained in the most recent Schedule 13D or
13G filed on behalf of such holder or on information furnished by the holder to
the Company.
COMMON STOCK
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) COMMON STOCK
Massachusetts Mutual Life Insurance 1,146,789(2) 12.5%
1295 State Street
Springfield, MA 01111
Duquesne Enterprises, Inc 1,043,750 11.4
Grant Building, Suite 240
Pittsburgh, PA 15219
Japan Storage Battery Co., Ltd 645,273 7.1
1 Inobaba-cho
Nishinosho Kisshoin
Minami-ku
Kyoto, Japan
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock of the Company shown as beneficially owned by them.
(2) Massachusetts Mutual Life Insurance Company, MassMutual Corporate Investors,
and MassMutual Participation investors own 802,752, 229,358 and 114,679
shares of Common Stock of the Company, respectively, which were converted on
October 23, 1995 from $10,500,000, $3,000,000 and $1,500,000, respectively,
of Exide Electronics Group, Inc. 8.375% Guaranteed Convertible Subordinated
Notes due June 30, 2000.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the record date, all directors,
director nominees and named executive officers who are the beneficial owners of
the Common Stock of the Company and such beneficial ownership by all executive
officers and directors as a group:
COMMON STOCK
SHARES OF COMMON OPTIONS EXERCISABLE PERCENT OF
NAME OF BENEFICIAL OWNER STOCK (1)(2) WITHIN 60 DAYS(1) COMMON STOCK (3)
Conrad A. Plimpton 353,885 (4) 14,000(8) 4.0%
James A. Risher 273,090 60,000(9) 3.6
Lance L. Knox 186,890 14,000(8) 2.2
Wayne L. Clevenger 10,000 14,000(8) *
Ron E. Doggett 3,000 9,000(8) *
James E. Fowler 1,250 (5) 2,750(5)(8) *
David J. McLaughlin 3,300 11,500(8) *
Chiaki Tanaka -0- (6) 9,000(6)(8) *
Alden R. Schnaidt 30,000 12,500(10) *
Mark A. Ascolese 37,222 13,500(11) *
Marty R. Kittrell 36,814 19,500(11) *
William J. Raddi 115,000 22,000(12) 1.5
All Executive Officers and Directors as a Group
(16 persons) 1,141,832 (4)(7) 1,373,707 15.0%
* Less than 1%.
2
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to the shares
of Common Stock of the Company shown as beneficially owned by them.
(2) Does not include options to purchase shares of Common Stock which are
listed separately under the next column "Options Exercisable Within 60
Days".
(3) Represents the percent of shares of Common Stock held and options
exercisable within 60 days after the record date.
(4) Includes 2,300 shares held by custodian for the Conrad A. Plimpton SERP
Trust.
(5) Does not include shares of Common Stock which may be owned directly by Inco
Battery Holdings Corporation (Inco). Mr. Fowler, as a former officer of
Inco, shared voting and investment power over any such shares acquired or
granted through June 1993 and disclaims beneficial ownership of such
shares. Mr. Fowler claims sole voting and investment power over 1,250
shares, and options to purchase 2,750 shares of Common Stock within 60
days, which were acquired or granted after June 1993.
(6) Does not include 595,273 shares of Common Stock which were acquired July 1,
1995 upon conversion of the 5,100 shares of Series D Preferred Stock and
4,900 shares of Series E Preferred Stock held by JSB. Mr. Tanaka, as an
officer of JSB, has shared voting and investment power over such shares.
Mr. Tanaka disclaims beneficial ownership of such shares.
(7) Does not include shares of Common Stock owned directly or beneficially by
Inco. Mr. Fowler, as a former officer of Inco, shared voting and investment
power over any such shares acquired or granted through June 1993 and
disclaims beneficial ownership of such shares. Does not include 50,000
shares of Common Stock currently owned by JSB or 595,273 shares of Common
Stock which were acquired upon conversion of 5,100 shares of Series D
Preferred Stock and 4,900 shares of Series E Preferred Stock held by JSB.
Mr. Tanaka, as an officer of JSB, has shared voting and investment power
over such shares and disclaims beneficial ownership of such shares.
(8) Does not include an option to purchase 1,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(9) Does not include an option to purchase 30,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(10) Does not include an option to purchase 7,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(11) Does not include an option to purchase 22,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(12) Does not include an option to purchase 15,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors consists of eight directors. The Certificate of
Incorporation of the Company provides that the Board of Directors be divided
into three classes of approximately equal size. Two directors are to be elected
at this Annual Meeting for three year terms ending in 1999, and, in each case,
until their successors are elected and qualified. Three directors were elected
in 1994 for three year terms ending in 1997, and three directors were elected in
1995 for three year terms ending in 1998.
3
The following table provides information as to the nominees of the Company
for terms ending in 1999, and as to directors whose terms in office will
continue:
NOMINEES AGE TERM TO EXPIRE
Lance L. Knox 51 1999
Wayne L. Clevenger 52 1999
DIRECTORS CONTINUING IN OFFICE
Conrad A. Plimpton 52 1998
James E. Fowler 63 1998
David J. McLaughlin 59 1998
James A. Risher 53 1997
Ron E. Doggett 61 1997
Chiaki Tanaka 60 1997
On July 1, 1995, Japan Storage Battery Co., Ltd. (JSB) exercised its option
and converted all of the Series D Preferred Stock and Series E Preferred Stock
into 595,273 shares of the Company's Common Stock. Prior to that, JSB, as holder
of the Series D Preferred Stock and the Series E Preferred Stock had the right,
voting as a class, to elect one director to the Company's Board of Directors.
This right terminated upon the conversion of Series D and E Preferred Stock to
Common Stock. Mr. Tanaka has been JSB's designee on the Board of Directors. Mr.
Tanaka has indicated he will not seek reelection when his current term ends in
1997.
As previously announced, the Company has entered into a definitive
agreement to acquire the worldwide UPS business (Deltec) of Fiskars, OY AB
(Fiskars). If the transaction is consummated, Fiskars would have two
representatives on the Company's Board of Directors. The Company's Board of
Directors would need to be enlarged from 8 to 10 persons to accommodate the two
new members, who would take office after the acquisition becomes effective.
Since the Deltec acquisition has not yet been consummated and since the Fiskars
representatives have not yet been selected pursuant to the agreement, no such
new members are being nominated for election to the Board of Directors at this
time. Accordingly, even if the acquisition of Deltec is consummated prior to the
1996 Annual Meeting of Shareholders, the Company intends to expand the Board of
Directors to 10 persons and fill the new directorships by action of the Board of
Directors, as permitted by the Company's by-laws. However, in such event it
would be the Company's intention to nominate the two Fiskars designees for
election or ratification at the 1997 Annual Meeting of Shareholders. At least
one of the new directorships would have an initial term expiring in 1999
(subject to reelection or ratification in 1997), since the by-laws require the
classes of directors to be of approximately equal size; the initial term of the
other directorship would be specified by the Board of Directors when the new
directorships are created.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
KNOX AND CLEVENGER.
BIOGRAPHICAL INFORMATION -- DIRECTORS
Mr. Clevenger has been a director since 1982. Mr. Clevenger has been
Managing Director of MidMark Management, Inc., a private investment firm, since
January 1990. He was President of Lexington Investment Company from 1985 to
1989. Mr. Clevenger is a director of United Wholesale, Inc., and Lionheart
Industries, Inc.
Mr. Doggett has been a director of the Company since 1991. Mr. Doggett has
been Chief Executive Officer since 1985 and Chairman of the Board since 1987 of
GoodMark Foods, Inc., a producer of snack foods.
Mr. Fowler has been a director since 1985. Mr. Fowler has been a financial
consultant since July 1994. He previously served as Assistant Comptroller of
Inco Limited and as President of Inco Battery Holdings Corporation from 1983
until his retirement in 1994.
Mr. Knox has been Vice Chairman of the Board and a director of the Company
since 1982. Mr. Knox is a principal of The Lethbridge Group, Inc., a private
investment firm, which he founded in 1988.
Mr. McLaughlin has been a director since 1990. Mr. McLaughlin has been
President of McLaughlin and Company Inc., a management consulting firm, since
1984. He has also been Executive Director of the Senior Personnel Executive
Forum, a non profit association, since 1979. Mr. McLaughlin is a director of
Scientific Atlanta, Inc., Smart & Final, Inc., Troy Biosciences, Inc., and
Evolve, Inc.
4
Mr. Plimpton has been Chairman of the Board and a director of the Company
since 1982 and was Secretary from 1982 until 1991. Mr. Plimpton has been a
Managing Director of the private investment firm of Plimpton & Company since
1979.
Mr. Risher has been President, Chief Executive Officer, and a director
since joining the Company in 1986. From 1984 through 1986, Mr. Risher was Senior
Vice President of Distribution Operations of the Computer System Division of
Motorola, Inc. From 1979 to 1984, Mr. Risher was employed by Wang Laboratories
with his last position being Vice President of Marketing for Domestic
Operations. Previously, Mr. Risher spent 12 years with IBM in various sales and
marketing positions.
Mr. Tanaka was elected as a director by the Board of Directors in 1992. Mr.
Tanaka has been Managing Director, Power Supply Systems Division of JSB since
1990. He has been a director of GS-EE Co., Ltd., the Company's joint venture
with JSB, since 1989.
Mr. Knox was an officer of FGH Corp., which was an inoperative shell
company, when that company filed for protection under Chapter 7 of the
Bankruptcy Code in 1992.
During fiscal 1995 the Board of Directors held eighteen meetings. During
that period, all of the directors attended more than 75% of the meetings of the
Board of Directors and meetings of the committees of the Board on which they
served, except Mr. Tanaka. Mr. Tanaka is a resident of Japan and is also the
representative on the Board for JSB, the holder of the Series D Preferred Stock
and Series E Preferred Stock. Because of the time and logistics to travel from
Japan, Mr. Tanaka does not attend all Board Meetings.
BOARD COMMITTEES -- COMPOSITION AND FUNCTIONS
The Company's Board of Directors has an Audit Committee, an Executive
Committee, and a Human Resources Committee. The Executive Committee also
functions as a nominating committee. The Company has Board-approved framework
and governance procedures for the operation of the Board of Directors and its
various committees.
The Board of Directors as a whole is responsible for the governance of the
Company. It has Board-approved corporate governance framework and operating
procedures which define responsibilities of the Chairman, the full Board, and
the Committees, as well as the nature and scope, composition, and performance of
Board members individually and collectively. The framework prescribes that there
shall be a sufficient number of committees to conform to regulatory
requirements, common corporate practice and company needs. The governance
procedures also define the expectations for performance by each committee and
the requirements for full Board review.
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Fowler (the
Chairman), Clevenger, and Doggett. During fiscal 1995, the Committee held two
meetings. The Audit Committee of the Board is the independent overseer of the
Company's financial reporting process and provides an independent assessment of
the Company's internal accounting controls. The Audit Committee is appointed
annually by the Board of Directors and is composed of not less than two
directors, none of whom may be an employee of the Company. As overseer of the
financial reporting process, the Audit Committee is primarily concerned with the
appropriateness of the Company's accounting policies, and the reliability and
timeliness of information reported to all of the Company's constituencies. When
assessing the Company's internal accounting controls, the Audit Committee is
primarily concerned with the adequacy of the controls and procedures in
preventing errors and irregularities, and in detecting errors and irregularities
on a timely basis if they do occur.
In the performance of its functions, the Audit Committee meets at least two
times a year with members of the Company's management who have responsibility
for the financial reporting process and the development, implementation, and
maintenance of adequate internal controls; with the internal audit department,
which has the responsibility to evaluate and test internal control systems; and
with the independent external auditors, who have the responsibility to
objectively assess the effectiveness of the financial reporting process and the
adequacy of the internal controls and procedures for purposes of determining the
nature, timing, and extent of their audit procedures.
The Audit Committee reviews the annual financial statements of the Company
prior to their submission to the Board of Directors. The Audit Committee also
has authority to consider such other matters in relation to the Company's
accounting principles and internal accounting controls as the Committee may
determine to be desirable,
5
and has authority to review transactions between the Company and its affiliates
to determine if conflicts of interest exist. The Audit Committee reviewed and
approved the nature, effectiveness and extent of the services provided by Arthur
Andersen LLP, including services rendered in fiscal 1995, the costs and fees for
such services and the effect of such fee arrangements on the independence of the
auditors.
EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Knox (the
Chairman), Plimpton and Risher. During fiscal 1995, the Committee held four
meetings. The Executive Committee of the Board reviews overall strategic plans
and insures the existence of appropriate operating plans and budgets. The
committee also deals with overall strategic and tactical issues relating to
corporate development activities and makes recommendations to the Board. In
addition, the committee functions as a nominating committee for the purposes of
recruiting and selecting candidates for election to the Board of Directors. The
Executive Committee maintains a file for director candidates and will consider
candidates for director recommended by shareholders, when the recommendations
are submitted in writing to the Secretary of the Company.
HUMAN RESOURCES COMMITTEE. The Human Resources Committee consists of
Messrs. McLaughlin (the Chairman), Knox, and Doggett. During fiscal 1995, the
Committee held six meetings. The Human Resources Committee of the Board provides
Board level counsel and independent review of executive compensation, management
development plans, and the overall organization and executive resources of the
Company. It is charged with the broad responsibility of assuring itself and the
Board that (i) the Company has attracted and retained outstanding executive
talent, provided for their development, and planned for succession to senior
management positions, (ii) the compensation program reinforces the Company's
general strategy and properly recognizes performance, and (iii) compensation
levels are internally equitable and externally competitive. The Committee's
primary focus is on corporate executives and other key general management
positions.
The principal functions of the Human Resources Committee are to consider
and approve issues with respect to (i) compensation of officers of the Company,
(ii) grants of options under the Company's option plans, (iii) awards under the
Company's Management Incentive Compensation Plan, and (iv) the Company's benefit
plans. The Committee also considers and makes recommendations to the Board with
respect to matters relating to the compensation of the chief executive officer,
management organization, and succession.
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company, and their respective ages, as of the
record date are as follows:
NAME AGE POSITION
James A. Risher 53 President and Chief Executive Officer
Conrad A. Plimpton 52 Chairman of the Board
Lance L. Knox 51 Vice Chairman of the Board
Mark A. Ascolese 45 Senior Vice President and General Manager, the Americas Group
Nicholas J. Costanza 40 Vice President, Chief Administrative Officer, General Counsel and Secretary
Warren J. Johnson 47 Vice President and General Manager, International Power Machines and Emerging
Technologies Group
Marty R. Kittrell 39 Vice President, Chief Financial Officer, Treasurer, and Assistant Secretary
Thomas J. Marrelli 48 Vice President, Federal Systems Division(1)
Hermann G. P. Metzler 54 Vice President, International Operations
William J. Raddi 56 Senior Vice President, Chief Technology Officer and General Manager, Small Systems
Group
Alden R. Schnaidt 47 Vice President and General Manager, Large Systems Group
(1) Mr. Marrelli resigned from the Company December, 1995.
6
BIOGRAPHICAL INFORMATION -- EXECUTIVE OFFICERS
Certain information concerning the Company's executive officers is set
forth below, except that information concerning Messrs. Risher, Plimpton and
Knox is set forth above under the caption "Biographical Information --
Directors."
Mr. Ascolese joined the Company in 1985 and assumed his current position as
Senior Vice President and General Manager, the Americas Group in October 1995.
Mr. Ascolese has served in various customer service, sales management and
General Manager capacities since becoming a Vice President in 1987. He was Vice
President and General Manager, Worldwide Services Group from 1992 to January
1995, and Senior Vice President and General Manager, North American Field
Operations from January to October 1995.
Mr. Costanza joined the Company's predecessor in 1980 and assumed his
current position as Vice President, Chief Administrative Officer, General
Counsel and Secretary in November 1995. As Chief Administrative Officer, Mr.
Costanza has assumed worldwide responsibility for Human Resources. Mr. Costanza
held various legal positions prior to being promoted to Vice President and Chief
Legal Counsel in 1986. He was elected Secretary in 1991.
Mr. Johnson joined the Company's predecessor in 1978 serving in various
financial and managerial capacities until he assumed his current position as
Vice President and General Manager, International Power Machine and Emerging
Technologies Group in September 1995. From 1989 to 1992, Mr. Johnson was Vice
President and General Manager, Office Systems Group. From 1992 to 1995, he was
Vice President, Corporate Development, and from February to September 1995, he
was Vice President and General Manager, International Power Machines.
Mr. Kittrell joined the Company in 1989 as Vice President and Chief
Financial Officer and Treasurer. He was elected Assistant Secretary in 1991.
Mr. Marrelli joined the Company in 1989 as Vice President, Federal Systems
Division. Mr. Marrelli resigned from the Company in December 1995.
Mr. Metzler joined the Company in 1984 as Manager of International Sales
and Service. From 1985 until 1989, he served as Director of International
Marketing and Sales, at which time he assumed his current position of Vice
President, International Operations.
Mr. Raddi has been with the Company and its predecessors since 1962 and has
served in various engineering, development, and manufacturing capacities. In
1990, he assumed the title of Senior Vice President and Chief Technology
Officer. In 1992, he assumed the additional position of Senior Vice President
and General Manager, Small Systems Group.
Mr. Schnaidt joined the Company in 1986 as Director of Manufacturing, was
promoted to Vice President, Manufacturing Operations in 1988, and assumed his
current position in 1992.
7
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board's Human Resources Committee (the Committee), composed of Messrs.
McLaughlin, Knox, and Doggett, independently reviews executive compensation and
provides Board-level counsel on matters relating to such compensation. In
exercising its responsibilities, the Committee has solicited the advice and
counsel of independent accountants, benefits consultants, and outside legal
counsel in connection with issues relating to the design of executive
compensation plans, and attendant accounting and legal considerations.
The principal functions of the Committee are to consider and approve issues
with respect to (i) compensation of officers of the Company, (ii) grants of
options under the Company's option plans, (iii) awards under the Company's
Management Incentive Compensation Plan, and (iv) the Company's benefit plans.
The Committee also considers and makes recommendations to the Board with respect
to matters relating to the compensation of the chief executive officer,
management organization, and succession.
The Committee has prepared the following report, which addresses the
compensation policies applicable to the Company's executive officers and
discusses the specific relationship of corporate performance to executive
compensation for fiscal 1995.
NATURE OF COMPANY BUSINESS
Exide Electronics designs, manufactures, markets and services a broad line
of uninterruptible power systems (UPS), related equipment, and power management
and facilities monitoring software. UPS products protect computers and other
sensitive electronic equipment against electrical power distortions and
interruptions by providing temporary backup power from batteries in the event of
an outage. The Company's broad range of UPS products include small systems for
use with personal computers, workstations, client/server platforms, local and
wide area networks (LANS and WANS), and large standard or customized systems for
use with mainframe computers, data centers and similar applications. The
Company's power management software products monitor, track and communicate
electrical power data and other related environmental events in an enterprise's
power, network and computer systems infrastructure. The power management
software products thereby give enterprises the ability to control information
technology and power systems more effectively.
Although there are many competitors in the UPS industry, Exide Electronics
is one of three companies competing on a worldwide basis with a full line of UPS
products and believes that it is one of the largest worldwide independent
suppliers of UPS products.
In this highly fragmented industry, the Company must compete against
subsidiaries of large industrial companies, rapidly growing independent
companies, and non-U.S. companies for qualified personnel. Its compensation
program needs to be competitive against a broad universe of different sizes and
types of companies.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
COMPENSATION PHILOSOPHY. The Committee establishes the compensation paid to
each executive officer and the relationship of compensation paid to Company
performance. The executive compensation program is based on the strong belief
that a performance-based program which encourages ownership in the Company will
align both annual and long-term interests of the Company and its stockholders
with those of management. Exide Electronics is dedicated to achieving global
leadership in a highly competitive industry and to delivering superior
shareholder value. The mission of the Company is to be a profitable,
customer-driven company providing innovative, high quality products and services
for protected electrical power requirements used in supporting mission-critical
applications. With this in mind, the executive compensation program objectives
are as follows:
* To provide a competitive compensation program in order to attract, and
motivate qualified personnel for positions of substantial responsibility
in order to promote the success of the Company's business.
* To serve as a management tool in focusing and directing the energies and
efforts of key executives toward achieving individual, Company, strategic
business unit, and distribution organization goals.
* To provide a long-term incentive for the executive to continue providing
service to the Company by linking the success and prosperity of the
individual to the success and prosperity of Exide Electronics.
CASH AND TOTAL COMPENSATION. Total cash compensation consists of base
salary and annual cash incentives. A total cash compensation target is
established for each position using benchmark survey comparisons. The actual
8
payment of the annual cash incentive portion of the total cash compensation is
based on the financial performance of the Company.
To determine the competitive level of total compensation (including
short-term and long-term incentives), the Committee sets the total pay target in
a competitive compensation range as benchmarked against published survey data
and data derived through special studies of comparable industries. Most factors
of the compensation program are positioned around the 50th percentile of the
competitive range, with the ability to earn proportionately higher or lower
total compensation based upon achievement of established business performance
objectives.
The competitive range is compiled from data obtained from the American
Electronics Association, Radford Associates and Executive Compensation Service,
Inc. The American Electronics Association compiled survey data from 444 member
firms. Radford Associates, a subsidiary of Alexander and Alexander Consulting
Group, compiled survey data from 375 similar high technology companies.
Executive Compensation Service, Inc., a subsidiary of the management consulting
firm of Wyatt Data Services, Inc., compiled survey data from 243 durable goods
manufacturing firms. Given the Company's particular market, there are few direct
competitors for which there is publicly available data. For compensation
comparison purposes, the surveys mentioned comprise data from manufacturing
companies with international scope that are market driven, technology based,
cost oriented, and experiencing growth and sales volume similar to the Company.
BASE SALARY. The Committee reviews executive base salaries on a regular
basis and provides, in keeping with its executive compensation philosophy, for
base salaries in the middle range of competitive salary levels, with adjustments
made to reflect individual performance, experience and contributions. A
discussion of chief executive officer compensation is set forth below under the
caption "CEO Compensation."
MANAGEMENT INCENTIVE COMPENSATION PLAN. Exide Electronics maintains a
formalized annual incentive opportunity for key executives supportive of the
business planning process, which generates 50th percentile awards in comparison
to the survey groups described above based upon the achievement of targeted
Company results. Proportionately higher or lower awards are achieved if results
are above or below target. The program objective is to retain and motivate key
executives and managers by providing primarily cash awards for goal achievement.
Under the plan, bonuses are payable based on the Company achieving predetermined
goals established annually by the Board of Directors. The relative importance of
each target is determined each year by the Committee, and may vary depending
upon the Company's financial objectives for that year. Bonus amounts vary
depending upon the extent to which the Company meets, does not meet, or
surpasses its performance goals. In fiscal 1995, the Company goals included
targets for revenues, income before income taxes and return on net assets as set
by the Board of Directors. In addition, annual individual performance goals are
set by the Board for bonus purposes. The bonus payable to a particular
individual for fiscal 1995 is computed based upon actual performance in relation
to a combination of the aforementioned Company goals. Company targets and
individual objectives are weighted 70% and 30%, respectively. A discussion of
chief executive officer compensation is set forth below under the caption "CEO
Compensation."
In fiscal 1995, business unit executive officers were measured 60% on the
financial performance of their business units (revenue, income before tax and
cash flow), 10% on the Company's financial performance as measured by income
before tax and 30% on individual factors. The relative weighting of each factor
for each business unit varies based on the maturity of the business unit's
market and the potential for growth. Corporate staff executive officers are
measured 30% on income before tax, 25% on return on net assets, 15% on operating
margin and 30% on individual factors. A discussion of chief executive officer
compensation is set forth below under the caption "CEO Compensation."
Each eligible grade level is assigned a fixed percentage of annual salary
as the target, on-plan annual incentive opportunity. For executive officers,
this ranges from 30 percent to 45 percent of annual salary. A discussion of
chief executive officer compensation is set forth below under the caption "CEO
Compensation."
In fiscal 1995, the Company achieved record revenues of $391 million, an
increase of 7.4% over the prior year. Income before income tax, excluding
nonrecurring charges for costs related to a merger accounted for as a
pooling-of-interests, for litigation, and for expenses related to a potential
acquisition, increased by 7.2% to $19.8 million. Based on the plan, six
executive officers and twelve key managers were awarded bonuses, receiving a
total payout of $658,500.
9
SUPPLEMENTARY MANAGEMENT INCENTIVE PLAN. In November 1994, the Company
adopted a supplementary plan to motivate executives with matching cash awards
designed to extinguish individual notes associated with 1988 and 1989 stock
purchase agreements (described below under the caption "Certain
Agreements -- Stock Purchase Agreements") in a way that retained and enhanced
each of nine key executive officers' equity positions in the Company, including
the chief executive officer. Under this plan, executives in good standing who
have paid for the purchase of Common Stock by promissory notes prior to the
Company's 1989 initial public offering are eligible to receive matching
contributions up to individually set annual limits during calendar years 1995
through 1999 of 50% of the executives' voluntary prepayments of the balances
outstanding under their notes. The match amounts are grossed up and tax
assisted. The maximum annual contribution by the Company is limited to $200,000
per calendar year, allocated among eligible executives based on performance and
their outstanding note balance. If the maximum contribution of $200,000 is not
reached by the end of each year of the plan, the Committee has the ability to
let executives contribute over their individual maximums. Any portion of the
maximum annual contribution remaining unused at the end of the calendar year
will be retired and will not increase the maximum for future calendar years. In
calendar 1995, all eligible executive officers participated. Voluntary
prepayments totaled $240,000. Company contributions, including match and
gross-up, totaled the maximum $200,000.
1989 STOCK OPTION PLAN. Exide Electronics provides long-term incentive
through the 1989 Stock Option Plan (1989 Option Plan) which was adopted in 1989.
The 1989 Option Plan is intended to foster management team cohesion and
positively align and reinforce management and shareholder interests. The 1989
Option Plan is structured to allow the Committee discretion in creating employee
equity incentives which assist the Company in motivating and retaining the
appropriate talent needed to conduct its business successfully. Key managers as
well as executive officers are eligible for grants under the plan, which seeks
to implement the Company's long-term incentive approach primarily through the
utilization of nonstatutory options. Awards are at the 50th percentile of the
compensation range of the survey groups previously described reflecting a total
compensation philosophy that factors in long-term corporate performance as
captured by stock price and increased shareholder value. The Company believes
that the 1989 Option Plan encourages superior performance that can result in
significantly enhanced shareholder value which would result in compensation at a
higher percentile of the competitive range.
The 1989 Option Plan provides for the grant of nonstatutory options,
incentive stock options (as defined in the Internal Revenue Code of 1986)(ISOs),
stock appreciation rights (SARs), restricted shares and restricted stock units
(RSUs), not to exceed 550,000 shares of the Company's Common Stock in the
aggregate, subject to adjustments in the event of a stock split, merger or
similar occurrence. No more than 200,000 of the shares may be covered by
restricted shares or RSUs. Awards of restricted shares are made to recognize and
reward unusual or extraordinary contributions or for recruitment of senior
executives.
The Company generally limits the grant of options under the Stock Option
Plan so that at no time will there be outstanding options, whether granted under
the Stock Option plan or otherwise, that in the aggregate would cover shares
numbering in excess of 10% of the number of shares of Common Stock issued and
outstanding at the time of grant, subject to discretionary adjustment by the
Board of Directors for unusual circumstances. The purchase price for each share
of common stock subject to an option is the fair market value of the common
stock as reported by the NASDAQ National Market on the date the option is
granted as determined by the Committee. If any option granted under the plan
expires or terminates without having been exercised in full, or any restricted
shares or RSUs are forfeited, the shares covered by the unexercised portion of
the option or by the forfeited restricted shares or RSUs may be used again for
new grants under the plan. There have been no issuances of ISOs, SARs or RSUs to
named executive officers during fiscal 1995.
1995 EMPLOYEE STOCK OPTION AND RESTRICTED STOCK PLAN. In order to ensure
that there was a sufficient number of stock options and restricted stock
available to meet the intent and purpose of stock incentive programs determined
in the long term interests of the Company, the 1995 Employee Stock Option and
Restricted Stock Plan (the 1995 Option Plan) was adopted in 1995. The board
believes that stock options are important to increase the incentive and
encourage the continued service and employment of officers and employees by
facilitating their purchase of a stock interest in the Company.
Under the terms of the 1995 Option Plan, 750,000 shares of the Company's
Common Stock are reserved for issuance. The 1995 Option Plan provides for the
grant of options that are intended to qualify as ISOs as defined under Section
422 of the Code, nonqualified options, and restricted stock. Unlike the 1989
Option Plan, it does not
10
provide for SARs. It is administered by the Committee, which selects the
officers and employees of the Company and its subsidiaries to whom options may
be granted.
With respect to the grant of options, the Committee is charged with
determining the option exercise price, the vesting schedule and expiration of
options, all in accordance with the Plan. The maximum number of shares subject
to options that can be granted under the 1995 Option Plan to any executive
officer or other employee of the Company or any subsidiary is 300,000 shares
during the first ten years of the 1995 Option Plan and 50,000 shares per year
thereafter.
With respect specifically to ISOs, no person may receive any ISO if, at the
time of grant, such person owns directly or indirectly more than 10% of the
total combined voting power of the Company. There is also a $100,000 limit on
the value of stock (determined at the time of grant) covered by incentive stock
options that first become exercisable by an optionee in any calendar year. No
incentive stock option may be granted more than 10 years after the effective
date of the 1995 Option Plan.
The Committee determines the service requirements and performance goals to
which awards of restricted stock are subject. The maximum number of shares of
restricted stock that can be granted under the 1995 Option Plan to any executive
officer or other employee of the Company or any subsidiary is 300,000 shares
during the first ten years of the 1995 Option Plan and 50,000 shares per year
thereafter. At its discretion, the Committee may grant restricted stock subject
to objective performance goals established prior to April 15 of the year in
which the grant is made and while the outcome is substantially uncertain.
Performance goals must be in accordance with the terms of the 1995 Option Plan.
FISCAL 1995 OPTION GRANTS. Currently, there are eight executive officers
and one hundred three key managers who have been granted options under the 1989
Option Plan and 1995 Option Plan since inception. Awards, generally of
nonstatutory options, are made from time to time to recognize current and
potential contributions, the number and value of options currently held relative
to other executive officers, and with the objective of providing competitive
long-term compensation opportunities. During fiscal 1995, Messrs. Risher,
Schnaidt, Ascolese, Kittrell and Raddi were awarded an option to purchase
40,000, 10,000, 30,000, 15,000, and 20,000 shares, respectively, to recognize
their ongoing contributions enhancing the market and financial position of the
company. The award's were based on the value and number of options they held
relative to other executive officers and to their peers at other large companies
with which we compete for resources.
401(K) RETIREMENT BENEFIT PLAN. The Company maintains a savings plan
qualified under Section 401(k) of the Internal Revenue Code of 1986 for the
benefit of all active U.S. employees. Employees may elect to defer from Federal
income tax up to 15% of their total compensation up to the annual statutory
maximum, which is $9,240 for calendar year 1995. The Company contributes to the
employee's account an amount equal to 2% of an employee's total annual
compensation up to $150,000 for calendar year 1995 and, in addition, matches up
to 4% of an employee's contributions at a rate of 50 cents on the dollar. In
addition, the Committee may recommend that the Board of Directors make
additional discretionary contributions each year based on the Company meeting
certain profit objectives. In fiscal 1995, the Company made no additional
discretionary contributions.
CEO COMPENSATION
As indicated previously, the Company's executive compensation program is
reviewed annually and in fiscal 1995 was based upon business performance and the
achievement of individual objectives. This pay for performance is most clearly
exemplified in the compensation of Mr. Risher, the Company's chief executive
officer. The chief executive officer's base salary and total compensation are
positioned around the 50th percentile of the competitive compensation range as
described above. Proportionately higher or lower awards are achieved if results
are above or below target. Mr. Risher's goals for fiscal 1995 were weighted 75%
for Exide Electronics' financial performance, (30% on the Company's income
before tax, 30% on return on net assets, 15% on operating margins); and 25% on
individual factors. The two primary financial performance goals were tied to
income before taxes and return on net taxes. Strategic positioning goals
generally consisted of achieving specific revenue and growth targets for each
strategic business unit, the completion of several business acquisitions, the
continued focus on cost effective manufacturing, the increase in productivity
and total quality management, and the enhancement of market position. The
organizational goals included a multiyear focus on improving managerial
capabilities and increasing the number of experienced executives to meet the
human resource needs of the Company. A primary focus is to improve the overall
effectiveness of the organization through establishing an appropriate structure
to
11
meet business objectives. Another key focus is on succession planning and
management training and development.
In its annual review of Mr. Risher's performance, the Committee considered
the Company's financial improvements in fiscal year 1995. The Company had record
revenues of $391 million and income before tax, excluding nonrecurring charges
for costs related to a merger accounted for as a pooling-of-interests, for
litigation, and for expenses related to a potential acquisition, of $19.8
million. This fiscal year saw a continuation of the Company's most successful
product launch, the Powerware Prestige Family, successful distribution growth
and development, and integration of the Company's 1994 and 1995 acquisitions.
The Company's strengthened financial position, together with Mr. Risher's
achievement of individual objectives described above, resulted in a total cash
compensation to Mr. Risher at approximately the 50th percentile.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS:
David J. McLaughlin, Lance L. Knox, Ron E. Doggett
HUMAN RESOURCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee performs the functions of a compensation
committee for the Board of Directors. The current members of the Human Resources
Committee are Messrs. McLaughlin, Knox, and Doggett. Mr. Knox currently serves
as Vice Chairman of the Board and has served in that position since 1982. Mr.
Knox was paid $50,000, plus an expense allowance of $25,000, for his service in
that role in 1995 for the Company as described below under the caption
"Compensation of Directors."
12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Summary Compensation Table indicates the cash compensation paid by the
Company and its subsidiaries as well as certain other compensation paid or
accrued to the Chief Executive Officer and the four other highest paid executive
officers (named executive officers), for services rendered in all capacities
during the fiscal years ended September 30, 1995, 1994, and 1993, respectively.
The Company does not have any long term incentive, defined benefit or actuarial
plans.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) SARS(#)
James A. Risher President and Chief 1995 374,999 160,000 126,159(1) 0 40,000
Executive Officer 1994 349,992 200,000 123,597(1) 0 0
1993 349,992 250,000 105,100(1) 0 0
Alden R. Schnaidt 1995 175,000 104,000 (2) 0 10,000
Vice President & General Manager, Large 1994 136,000 31,300 (2) 0 0
Systems Group 1993 133,000 63,000 (2) 0 0
Mark A. Ascolese 1995 189,000 68,000 (2) 0 30,000
Senior Vice President & General 1994 184,500 65,100 (2) 0 0
Manager, the Americas Group 1993 126,166 64,100 (2) 0 0
Marty R. Kittrell 1995 200,000 55,000 (2) 0 15,000
Vice President, CFO, Treasurer, and 1994 170,833 63,900 (2) 0 15,000
Assistant Secretary 1993 160,000 90,000 32,771(1) 0 0
William J. Raddi 1995 200,000 45,000 (2) 0 20,000
Senior Vice President, Chief Technology 1994 180,000 47,300 24,568(1) 0 0
Officer, General Manager, Small Systems 1993 180,000 55,000 27,098(1) 0 0
Group
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION(3)($)
James A. Risher President and Chief 51,675
Executive Officer 55,006
48,302
Alden R. Schnaidt 14,533
Vice President & General Manager, Large 16,252
Systems Group 13,673
Mark A. Ascolese 13,204
Senior Vice President & General 14,348
Manager, the Americas Group 11,132
Marty R. Kittrell 11,384
Vice President, CFO, Treasurer, and 14,750
Assistant Secretary 13,064
William J. Raddi 45,463
Senior Vice President, Chief Technology 48,013
Officer, General Manager, Small Systems 42,299
Group
(1) Includes the following reported amounts for particular perquisites which
exceed 25% of the total amount of perquisites for the named executive
officers.
REIMBURSEMENT
REIMBURSEMENT AUTOMOBILE FOR PAYMENT
YEAR OF LOAN INTEREST ($) ALLOWANCE ($) OF TAXES ($)
James A. Risher 1995 -- 35,597 41,624
1994 -- 38,376 32,687
1993 -- 36,868 25,188
William J. Raddi 1994 10,306 9,000 --
1993 9,898 9,000 6,900
Marty R. Kittrell 1993 12,902 9,000 6,947
(2) Total perquisites were less than 10% of total fiscal salary and bonus.
(3) The totals in this column reflect the aggregate value of the Company
contributions under the 401(k) Retirement Benefit Plan and the portion of
the premiums paid by the Company in the covered fiscal year under a "split-
dollar" insurance arrangement. Company contributions under the 401(k)
Retirement Benefit Plan and the premiums paid by the Company net of payments
made by each named executive under the insurance arrangement for the named
executives for fiscal 1995 are as follows:
401(K) INSURANCE
James A. Risher $ 5,000 $46,675
Alden R. Schnaidt 7,170 7,363
Mark A. Ascolese 7,725 5,479
Marty R. Kittrell 6,817 4,567
William J. Raddi 6,600 38,863
13
STOCK OPTIONS AND SARS
The following table sets forth all material terms with regard to grants of
stock options to each of the named executive officers during the fiscal year
ended September 30, 1995. All such grants were made under the 1995 Option Plan.
No SARs have been granted under the 1989 Option Plan or the 1995 Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% OF
TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE
SECURITIES GRANTED VALUE AT ASSUMED
UNDERLYING TO EXERCISE ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES OR BASE PRICE APPRECIATION
GRANTED IN FISCAL PRICE EXPIRATION FOR OPTION TERM
NAME (#)(1) YEAR (2) ($/SH) DATE 5%($)(3) 10%($)(4)
James A. Risher 40,000 14.9% 16.375 02/27/2005 411,926 1,043,901
Alden R. Schnaidt 10,000 3.7% 16.375 02/27/2005 102,982 260,975
Mark A. Ascolese 30,000 11.2% 16.375 02/27/2005 308,944 782,926
Marty R. Kittrell 15,000 5.6% 16.375 02/27/2005 154,472 391,463
William J. Raddi 20,000 7.4% 16.375 02/27/2005 205,963 521,951
(1) Stock options may be exercised with respect to (i) one-fourth of the shares
one year from grant date, (ii) two-fourths of the shares two years from
grant date, (iii) three-fourths of the shares three years from grant date
and (iv) for all of the shares four years from grant date.
(2) In fiscal 1995, 291,987 stock options were granted to all employees as a
group.
(3) Represents gain before income taxes; assumes an appreciated stock price of
$26.67 at February 27, 2005.
(4) Represents gain before income taxes; assumes an appreciated stock price of
$42.47 at February 27, 2005.
The following table sets forth information with regard to exercises of
stock options during the fiscal year ended September 30, 1995, by each of the
named executive officers and the fiscal year-end value of all unexercised
options held by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NO. OF SHARES FY-END FY-END
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED ($) UNEXERCISABLE (#) UNEXERCISABLE (1)
James A. Risher -0- -0- 50,000/40,000 $ 112,500/$95,000
Alden R. Schnaidt -0- -0- 10,000/10,000 37,500/23,750
Mark A. Ascolese -0- -0- 6,000/30,000 22,500/71,250
Marty R. Kittrell -0- -0- 15,750/26,250 45,000/35,625
William J. Raddi -0- -0- 17,000/20,000 63,750/47,500
(1) Closing price of the Common Stock of the Company at September 30, 1995, was
$18.75.
14
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder return for
the Company with a performance indicator of the overall stock market, the S&P
500 Stock Index, and a nationally recognized industry group, the Dow Jones
Electrical Components and Equipment Industry Group, since the Company went
public in December 1989.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG EXIDE ELECTRONICS GROUP, INC.
DOW JONES ELECTRICAL COMPONENTS and EQUIPMENT INDUSTRY GROUP, and S&P 500
FISCAL YEARS ENDING SEPTEMBER 30
Chart appears here with the following points:
1991(1) 1992(1) 1993(1) 1994(1) 1995(1)
XUPS 77 178 263 272 234
(Exide Electronics)
ELQ 130 144 167 184 228
(Dow Jones Electrical Components
and Equipment Industry Group (ELQ)
S&P 500 131 146 165 171 222
S&P 500 Index (S&P 500)
ASSUMES $100 INVESTED ON OCTOBER 1, 1990
ASSUMES DIVIDENDS REINVESTED
(1) Closing price of the Common Stock on September 30, 1991, 1992, 1993 and
1994, and September 29, 1995 was $6.125, $14.25, $21.00, $21.75, and $18.75,
respectively.
COMPENSATION OF DIRECTORS
Mr. Risher is not compensated separately for his services as a director. In
fiscal 1995 Mr. Plimpton was paid $55,000 per year and Mr. Knox was paid $50,000
per year for their service in the roles of Chairman and Vice Chairman,
respectively. Each was paid an expense allowance of $25,000 per year. Each of
the directors was paid an annual retainer of $16,000 and each committee chairman
received an additional annual retainer of $3,000. Effective July 1, 1995, the
annual retainer to each of the directors was increased to $20,000 and the
additional annual retainer to each committee chairman was increased to $5,000.
Each of the directors was also paid a fee of $1,000 for each Board meeting and
Board committee meeting attended and $500 for each telephone Board meeting, plus
expenses. Messrs. Plimpton and Knox receive the retainers and Board meeting fees
that the other Board members receive. Mr. Tanaka transfers his compensation to
JSB.
In addition to the amounts received above, in connection with an agreement
with the Company whereby Mr. Clevenger consults with the Company on corporate
development opportunities, Mr. Clevenger received $2,000 per month during fiscal
1995. This agreement was not renewed for fiscal 1996. The Company paid group
insurance premiums on behalf of Mr. Plimpton in the amount of $3,990.
15
1989 DIRECTOR PLAN. In October 1989, the Board adopted the Non-Employee
Directors Stock Option Plan (1989 Directors Plan) under which (i) each new
director who is not also an employee of the Company is entitled to receive on
the date he or she commences service as a director an option to purchase 2,500
shares of Common Stock, and (ii) each director of the Company who is not also an
employee of the Company is entitled to receive annually on February 28,
beginning in 1990, an option to purchase 2,500 shares of Common Stock, in both
cases subject to adjustments for stock splits, mergers or similar occurrences.
The purchase price of each share of Common Stock subject to an option granted
pursuant to the 1989 Directors Plan will be the fair market value of the Common
Stock on the date the option is granted.
Each option granted under the 1989 Directors Plan generally will expire 10
years from the date of grant. Except in the event an optionee ceases to be a
member of the Board, each option granted under the 1989 Directors Plan will
become exercisable for 1,250 shares of Common Stock one year following the date
of grant and exercisable for the remaining 1,250 shares two years following the
date of grant. In general, when an optionee ceases to be a member of the Board
upon retirement or with the consent of the Board, all his options will become
fully exercisable. The Board may terminate the plan at any time. Under the 1989
Directors Plan, options for 23,750 shares of Common Stock have been exercised as
of September 30, 1995. Of this total, options to purchase 10,000 shares of
Common Stock have been exercised by Inco, which owned beneficially the options
granted to Mr. Fowler, and options to purchase 7,500 shares of Common Stock have
been exercised by former directors.
1995 DIRECTORS STOCK OPTION PLAN. In 1995 the 1995 Directors Stock Option
Plan (1995 Directors Plan) was adopted for participation by the seven
non-employee directors of the Company. At December 31, 1994, there were no
further options available for grant to directors under the Company's 1989
Directors Plan. The board believes that stock options are important to increase
the incentive and encourage the continued service of directors by facilitating
their purchase of a stock interest in the Company. For fiscal 1995, the Board
increased the annual option to purchase shares of Common Stock from 2,500 to
3,000.
Under the terms of the 1995 Directors Plan, 150,000 shares of the Company's
Common Stock are reserved for issuance. The 1995 Directors Plan provides that
each non-employee director of the Company is granted an option to purchase 3,000
shares of stock as of the date of the director's commencement of service as a
director. Thereafter, a non-employee director is granted an additional option to
purchase 3,000 shares of stock immediately following the annual election of
directors if he or she continues to be a non-employee director on the board. The
per-share option exercise price of each of these options is the fair market
value of a share of common stock on the grant date as determined in accordance
with the 1995 Directors Plan.
Each option granted to a non-employee director of the Company will be
exercisable in two equal annual installments commencing on the anniversary of
date of grant and ending upon the expiration or termination of the option.
Options granted to non-employee directors of the Company terminate upon the
expiration of one year following the date on which the non-employee director
dies or on the date on which the non-employee director ceases to be a member of
the board for any other reason unless such termination of service is due to (a)
retirement from the board, (b) failure to stand for election with the board's
consent, (c) resignation from the board with the board's consent, but not more
than ten years after the date of grant.
During fiscal 1995, options to purchase 21,000 shares of Common Stock at a
price of $16.75 per share were granted under the 1995 Directors Plan. As of
September 30, 1995, no options were vested under this plan.
CERTAIN AGREEMENTS
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
In fiscal 1986, the Company entered into an employment agreement with Mr.
Risher at the time he was hired. Upon the expiration of that employment
agreement, in fiscal 1990 the Company entered into a new employment agreement
with Mr. Risher. The agreement provides that in the event of termination of Mr.
Risher's employment by the Company, other than for cause, Mr. Risher would be
entitled to severance payments equal to three years total compensation,
including base salary and bonus. The agreement also includes provisions
prohibiting Mr. Risher from competing with the Company for a period of time
after termination of his employment under certain circumstances. The Company
also entered into an employment agreement with Mr. Raddi, which provides for
severance payments equal to two years total compensation, and otherwise contains
terms similar to those described above for Mr. Risher. Under these circumstances
Mr. Risher and Mr. Raddi would currently receive $1,734,997 and
16
$498,200, respectively. In addition, the Company has a severance plan for the
Company's vice presidents providing for severance payments if their employment
is terminated (including constructive termination) for reasons other than cause
during the five-year period following a "change in control" of the Company. The
plan defines a "change in control" as occurring when a person acquires 30% or
more of the Company's voting securities or when there is a business combination
(as defined in the plan) which has been approved by the Company's stockholders,
a change in a majority of the members of the Board of Directors over a three
year period (other than due to death, disability or resignation), or a change in
control for purposes of specified federal securities laws. Under this plan, the
affected officer would receive a payment equal to six months compensation plus
an additional two months compensation for each year of service, up to an
aggregate maximum severance payment equal to 30 months compensation.
STOCK PURCHASE AGREEMENTS
In fiscal years 1986 and 1988, Mr. Risher purchased an aggregate of 200,000
shares of Common Stock from the Company at $4.00 per share in exchange for
10-year promissory notes secured by the Common Stock. The promissory notes
delivered by Mr. Risher bear interest at the applicable Federal rate, as
determined under Section 1274(d) of the Internal Revenue Code (the "Federal
Rate"), and are payable immediately upon the sale of the shares purchased with
the promissory notes. As of September 30, 1995, the aggregate principal and
interest amount outstanding on these promissory notes was $700,000 and $535,062,
respectively. This was also the largest aggregate amount of indebtedness
outstanding during fiscal 1995 on these promissory notes.
During fiscal 1989, all of the Company's current executive officers who
were at that time employees of the Company, except for Messrs. Plimpton and
Knox, purchased Common Stock from the Company pursuant to stock purchase
agreements for $8.00 per share in exchange for 10-year promissory notes. The
promissory notes delivered by the executive officers are secured by the shares
of Common Stock, bear simple interest at the prime rate and are payable
immediately upon the sale of the underlying shares and, following termination of
an executive officer's employment, upon the first to occur of (i) the original
maturity date of the promissory note, (ii) three years after the date of
termination of employment or (iii) 90 days after the Company has filed the
second registration statement under the Securities Act of 1933, as amended, for
its Common Stock, following such termination of employment, pursuant to which
such person could have registered such shares. The following information sets
forth the name of each current executive officer who purchased shares during
fiscal 1989 in exchange for notes, the number of shares purchased and the
principal amount outstanding on the notes as of September 30, 1995, which in all
but two cases, was the largest amount outstanding at any time during fiscal
1995: Mr. Risher, 136,090 shares, $1,008,720; Mr. Ascolese, 35,000 shares,
$280,000; Mr. Costanza, 28,250 shares, $226,000; Mr. Johnson, 18,250 shares,
$146,000; Mr. Kittrell, 50,000 shares, $280,000; Mr. Marrelli, 2,500 shares,
$20,000; Mr. Metzler, 12,250 shares, $85,272; Mr. Raddi, 68,000 shares,
$544,000; Mr. Schnaidt, 30,000 shares, $240,000. The interest accrued on these
notes exchanged for stock for each of the executive officers as of September 30,
1995 is as follows: Mr. Risher, $473,571, Mr. Ascolese, $148,575, Mr. Costanza,
$117,022, Mr. Johnson, $71,992, Mr. Kittrell, $151,610, Mr. Marrelli, $9,614,
Mr. Metzler, $48,078, Mr. Raddi, $272,660, Mr. Schnaidt, $126,550. In the case
of Messrs. Kittrell and Metzler, the largest principal amount outstanding during
1995 was $320,000 in November 1994, and $98,000 in December 1994, respectively.
The largest amount of interest accrued on these notes for Mr. Marrelli during
fiscal 1995 was $9,467 in August 1995. All shares were vested as of September
30, 1995, and are registered for resale through a currently effective
registration statement on Form S-3.
In November 1994, the Company adopted a supplementary plan to encourage
early payment of some or all of the principal and interest balance outstanding
under the stock purchase notes. Under this plan, executives in good standing who
have paid for the purchase of Common Stock by promissory notes are eligible to
receive matching contributions up to individually set annual limits during
calendar years 1995 through 1999 of 50% of the executives' voluntary prepayments
of the balances outstanding under their notes. The match amounts will be grossed
up and tax assisted. The maximum annual contribution by the Company is limited
to $200,000 per calendar year, allocated among eligible executives based on
performance and their outstanding note balance. If the maximum contribution of
$200,000 is not reached by the end of June of each calendar year, the Committee
has the ability to let executives contribute over their individual maximums. Any
portion of the maximum annual contribution remaining unused at the end of the
calendar year will be retired and will not increase the maximum for future
years. In calendar 1995, all eligible executive officers participated. Voluntary
prepayments totaled $240,000. Company contributions, including match and
gross-up totaled the maximum $200,000.
17
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 2)
It is intended that shares represented by proxies in the accompanying form
will be voted at the Annual Meeting in favor of the appointment of the firm of
Arthur Andersen LLP (unless otherwise indicated on any proxy) as independent
public accountants to audit the consolidated financial statements of the Company
for the fiscal year ending September 30, 1996. The Board of Directors has
recommended the appointment of that firm. It is expected that representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will be available
to respond to appropriate questions. They will be given an opportunity to make a
statement if they desire to do so. THE DIRECTORS RECOMMEND A VOTE FOR THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY
A CONTRARY CHOICE IN THEIR PROXIES.The submission of this matter to shareholders
at the Annual Meeting is not required by law or by the By-Laws of the Company.
Nevertheless, the Board of Directors of the Company is submitting it to the
shareholders to ascertain their views. If this appointment is not ratified by
the holders of at least a majority of the shares of Common Stock of the Company
at the Annual Meeting, the Board of Directors intends to reconsider its
appointment of Arthur Andersen LLP as independent accountants of the Company.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
The cost of preparing, assembling, and mailing this proxy statement, the
notice and form of proxy will be borne by the Company. The Company's management
has made no arrangement to solicit proxies for the meeting other than by use of
the mails, except that some solicitation may be made by facsimile, telephone or
personal interview by directors, officers or regular employees of the Company,
without compensation other than their regular compensation. The Company will
reimburse brokers and other persons holding shares in their names, or in the
names of nominees, for their customary expenses in sending proxy materials to
beneficial owners of such shares.
The Board of Directors knows of no other matters to be brought before this
Annual Meeting. However, if other matters should come before the meeting, each
person named in the proxy intends to vote the proxy in accordance with his
judgment on such matters.
Any proposal intended to be presented at the 1997 Annual Meeting of
Shareholders of the Company (the 1997 Annual Meeting) by any shareholder of the
Company must be received by the Secretary of the Company at 8609 Six Forks Road,
Raleigh, North Carolina 27615, not later than September 30, 1996, in order for
such proposal to be included in the Company's proxy statement and proxy relating
to the 1997 Annual Meeting. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to the 1997
Annual Meeting any shareholder proposal that does not meet all of the
requirements for such inclusion in effect at that time.
The Federal Securities Laws require that the Company's directors, officers
and persons who beneficially own more than ten percent of the Company's Common
Stock file with the Securities and Exchange Commission reports indicating
initial beneficial ownership and any changes in ownership of any equity
securities of the Company. For the fiscal year ended September 30, 1995, all
required persons filed in a timely manner.
18
THE COMPANY WILL SEND A COPY OF ITS ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION FOR 1995 ON FORM 10-K, WITHOUT CHARGE, TO ANY SHAREHOLDER OF
RECORD OR BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK, UPON RECEIPT
OF A WRITTEN REQUEST ADDRESSED TO: MARTY R. KITTRELL, VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, EXIDE ELECTRONICS GROUP, INC., 8609 SIX FORKS ROAD, RALEIGH,
NORTH CAROLINA 27615. UPON REQUEST, THE COMPANY WILL PROVIDE A LIST OF EXHIBITS
TO THE REPORT AND THE COST OF EACH. ANY OF THE EXHIBITS TO THE REPORT WILL BE
PROVIDED UPON PAYMENT OF THE COST NOTED ON THE LIST.
This proxy statement is provided by direction of the Board of Directors.
/s/ Nicholas J. Costanza
NICHOLAS J. COSTANZA
SECRETARY
January 26, 1996
19
(Exide Electronics logo appears here)
1996
ANNUAL MEETING
OF SHAREHOLDERS
NOTICE AND PROXY STATEMENT