SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
ARTESYN TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ARTESYN TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Wednesday, May 2, 2001
To the Stockholders:
The Annual Meeting of the Stockholders of Artesyn Technologies, Inc.
(the "Company") will be held on Wednesday, May 2, 2001, at 10:00 A.M., local
time, at Pete's Grand Terrace, 7880 Glades Road, Boca Raton, Florida 33434, for
the following purposes:
1. To elect members of the Company's Board of Directors;
2. To consider and act upon a proposal to approve and adopt an
amendment to the Company's Articles of Incorporation to
provide for the classification of the Board of Directors into
three classes; and
3. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 15,
2001 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Company's Annual Meeting of Stockholders (the
"Meeting"). Only stockholders of record at the close of business on this date
will be entitled to notice of, and to vote at, the Meeting and any
adjournment(s) thereof.
By Order of the Board of Directors
RICHARD J. THOMPSON
Secretary
March 23, 2001
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE WHICH HAS BEEN PROVIDED, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE PROXY MAY BE REVOKED BY YOU AT
ANY TIME PRIOR TO ITS EXERCISE, AND IF YOU ARE PRESENT AT THE MEETING YOU MAY,
IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE YOUR RIGHT TO VOTE YOUR
SHARES IN PERSON.
PROXY STATEMENT
ARTESYN TECHNOLOGIES, INC.
7900 Glades Road, Suite 500
Boca Raton, Florida 33434
Annual Meeting of Stockholders
To Be Held On May 2, 2001
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Artesyn Technologies, Inc., a Florida
corporation (the "Company"), to be voted at the Company's 2001 Annual Meeting of
Stockholders (the "Meeting") and at any adjournment(s) thereof for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. The
Meeting is to be held on Wednesday, May 2, 2001, at Pete's Grand Terrace, 7880
Glades Road, Boca Raton, Florida 33434, at 10:00 A.M., local time.
The principal executive offices of the Company are located at 7900
Glades Road, Suite 500, Boca Raton, Florida 33434 (telephone no.: 561-451-1000).
The enclosed proxy card and this Proxy Statement are being sent to stockholders
of the Company on or about March 23, 2001.
Quorum; Votes Required
Proxies in the form enclosed with this Proxy Statement are being
solicited by, and on behalf of, the Company's Board of Directors. The persons
named in the proxy have been designated as proxies by the Company's Board of
Directors. If a quorum, consisting of a majority of the outstanding shares of
the Company's common stock, $.01 par value per share (the "Common Stock"), is
present at the Meeting, in person or by proxy, (i) the nominees for director
shall be elected by the affirmative vote of a plurality of the shares cast on
such matter at the Meeting; (ii) the amendment to the Company's Articles of
Incorporation to provide for the classification of the Board of Directors shall
be approved by the affirmative vote of holders of a majority of the outstanding
shares of the Company's Common Stock; and (iii) all other matters to come
properly before the Meeting shall, subject to applicable law, be approved if the
number of votes cast in favor of the matter at the Meeting exceeds the number of
votes cast at the Meeting opposing the matter.
Abstentions and shares of record held by a broker or nominee ("Broker
Shares") that are voted on any matter will be included in determining the
existence of a quorum. Broker Shares that are not voted on any matter
("non-voted Broker Shares") will be treated as shares as to which voting power
has been withheld by the beneficial owners of such shares and, therefore, as
shares not entitled to vote on a proposal, and will not be included in
determining the existence of a quorum or the number of votes cast. Abstentions
will be counted as votes cast at the Meeting, but will not be counted as votes
cast for or against any given matter. Because only a plurality of shares is
required for the election of directors, abstentions and non-voted Broker Shares
will not have an effect on the outcome of the election of the nominees for
directors. Because the affirmative vote of holders of a majority of outstanding
shares is required to amend the Company's Articles of Incorporation, abstentions
and non-voted Broker Shares will have the effect of a vote against the proposal
to provide for classification of the Company's Board of Directors. A "withheld"
vote will be treated as equivalent to an abstention.
Shares represented by properly executed proxies received by the Company
will be voted at the Meeting in the manner specified therein or, if no
specification is made, will be voted (i) "FOR" the election of all the nominees
for director named herein; and (ii) "FOR" the proposal to approve and adopt the
amendment to the Articles of Incorporation.
In the event that any other matters are properly presented at the Meeting for
action, the persons named in the proxy will vote the proxies (which confer
authority upon them to vote on any such matters) in accordance with their
judgment.
Revocation and Solicitation
Any proxy given pursuant to this solicitation may be revoked by a
record stockholder at any time before it is exercised by written notification
delivered to the Secretary of the Company, by voting in person at the Meeting or
by executing another proxy bearing a later date. Attendance by a stockholder at
the Meeting does not alone serve to revoke his or her proxy.
The costs of soliciting proxies will be borne by the Company. The
solicitation of proxies will be made primarily by mail, but, in addition, may be
made by directors, officers and employees of the Company, personally or by
telephone, facsimile or other means of communication. Such directors, officers
and employees will not be additionally compensated, but they may be reimbursed
for reasonable out-of-pocket expenses, in connection with such solicitations.
The Company will reimburse brokers, custodians, nominees and fiduciaries for
their out-of-pocket and clerical expenses in transmitting proxies and related
materials to beneficial owners. The Company has retained D.F. King & Co. to
assist it in soliciting proxies for a fee of approximately $6,000 plus
reimbursement of its reasonable out-of-pocket expenses.
Annual Report
The Company's Form 10-K and Annual Report to Stockholders for the
fiscal year ended December 29, 2000 ("fiscal year 2000"), which contain the
Company's audited financial statements for fiscal year 2000, are being mailed
with this Proxy Statement to all persons who were stockholders as of the close
of business on March 15, 2001.
Record Date; Outstanding Shares
The Board of Directors has fixed the close of business on March 15,
2001 as the record date for the determination of stockholders of the Company who
are entitled to receive notice of, and to vote at, the Meeting. At the close of
business on that date, an aggregate of 38,558,522 shares of Common Stock were
issued and outstanding, each of which is entitled to one vote on each matter to
be voted upon at the Meeting. The Company's stockholders do not have cumulative
voting rights. The Company has no other class of voting securities entitled to
vote at the Meeting.
SECURITY OWNERSHIP
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of the close of business on March
15, 2001, certain information as to the stockholders which are known by the
Company beneficially to own more than 5% of its Common Stock (based solely upon
filings by said holders with the Securities and Exchange Commission
("Commission") on Schedule 13D or Schedule 13G pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")):
Name and Address Number of Shares Percent of
of Beneficial Owner Beneficially Owned(1) Common Stock
- ------------------- ------------------ ------------
Kopp Investment Advisers, Inc.(2) 2,351,338 6.1%
Kopp Holding Company(3)
LeRoy C. Kopp(3)
7701 France Avenue South, Suite 500
Edina, MN 55435
2
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
(2) Kopp Investment Advisers, Inc. ("KIA") is a registered investment
adviser which holds 2,351,338 shares of Common Stock in a fiduciary or
representative capacity.
(3) KIA is a wholly-owned subsidiary of Kopp Holding Company which is
wholly-owned by LeRoy C. Kopp. In such capacities each may be deemed
beneficially to own the 2,351,338 shares of Common Stock held by KIA.
Ownership by Management
The following table sets forth, as of the close of business on March
15, 2001, certain information concerning beneficial ownership of the Common
Stock by each nominee for election as a director of the Company (all of whom are
presently directors), each of the Named Executives (as defined below), and all
directors and executive officers as a group (based solely upon information
furnished by such persons):
Number of Shares
Beneficially Percent of
Name Owned (1)(2) Common Stock
- ---- ------------ ------------
Lawrence J. Matthews............................................... 999,606(3) 2.6%
Joseph M. O'Donnell................................................ 739,955 1.9%
Ronald D. Schmidt.................................................. 710,701(4) 1.8%
John M. Steel...................................................... 639,156(5) 1.7%
Bert Sager......................................................... 313,925(6) *
Richard J. Thompson................................................ 299,178 *
Phillip A. O'Reilly................................................ 181,721(7) *
Robert J. Aebli.................................................... 94,186 *
D. Harvey Dewan.................................................... 73,906 *
Stephen A. Ollendorff.............................................. 72,100 *
Dr. Fred C. Lee.................................................... 65,104 *
Norman C. Wussow................................................... 63,412 *
Edward S. Croft, III............................................... 61,881 *
Lewis Solomon...................................................... 60,000 *
A. Eugene Sapp, Jr................................................. 46,500 *
All directors and executive officers as a group (17 persons) ...... 4,446,759 11.1%
* Represents less than 1%.
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
(2) Includes the following shares of Common Stock subject to currently
exercisable options and/or that may be acquired upon the exercise of
options within 60 days after March 15, 2001: Mr. Matthews-40,000; Mr.
O'Donnell-619,615; Mr. Schmidt-30,000; Mr. Sager-100,000; Mr.
Thompson-230,062; Mr. O'Reilly-100,000; Mr. Aebli-81,179; Mr.
Dewan-60,000; Mr. Ollendorff-65,000; Dr. Lee-40,000; Mr. Wussow-32,279;
Mr. Croft-40,000; Mr. Solomon-50,000; Mr. Sapp-40,000; and all
directors and executive officers as a group (17 persons) - 1,528,135.
3
(3) Includes 90,000 shares which are owned of record by the Lawrence J. and
Barbara M. Matthews Charitable Remainder Unitrust, of which Mr.
Matthews and his spouse are beneficiaries and retain the right to
appoint and dismiss the trustee.
(4) Includes 17,926 shares which are owned of record by Mr. Schmidt's wife,
with respect to which Mr. Schmidt disclaims beneficial ownership, and
267,000 shares which are owned by the Schmidt Family Limited
Partnership, a limited partnership of which Mr. Schmidt is a general
partner.
(5) Includes 266,000 shares which are owned of record by Mr. Steel's wife,
with respect to which Mr. Steel disclaims beneficial ownership.
(6) Includes 2,080 shares which are beneficially owned by Mr. Sager's wife
as the trustee under a trust for Mrs. Sager's mother, with respect to
which Mr. Sager disclaims beneficial ownership, and 153,860 shares
which are owned by Sager Holdings Limited Partnership, a limited
partnership of which Mr. Sager is both a limited partner and a
principal stockholder of the corporate general partner.
(7) Includes 81,721 shares owned by the O'Reilly Family LLC (of which Mr.
O'Reilly is the manager), which Company is owned by the O'Reilly Family
Trust (a family trust created by Mr. O'Reilly).
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act, directors and executive
officers of the Company and beneficial owners of greater than 10% of the Common
Stock are required to file certain reports with the Securities and Exchange
Commission in respect of their ownership of Company securities. The Company
believes that during fiscal year 2000, other than with respect to one report
required to be filed by Edward S. Croft, III, a Director, one report required to
be filed by Bert Sager, a Director, one report required to be filed by Ronald D.
Schmidt, a Director, and two reports required to be filed by Kenneth E. Blake,
an officer, all such required reports were timely filed. Each of Messrs. Croft
and Sager did not file a Form 4 on a timely basis, Mr. Schmidt did not file a
Form 5 on a timely basis and Mr. Blake did not file a Form 3 and a Form 5 on a
timely basis.
PROPOSAL I: ELECTION OF DIRECTORS
The entire Board of Directors, presently consisting of 11 members, is
to be elected at the Meeting. The Company's By-laws provide that the maximum
number of directors is 12, with the exact number to be fixed by the Board of
Directors. By resolution of the Board of Directors, the number of directors has
been fixed at 11. The 11 persons listed below have consented to being named in
this Proxy Statement and to serving as directors of the Company if elected. In
the unexpected event that any of such nominees should become unable to, or for
good reason will not, serve as a director, it is intended that proxies will be
voted for the election of substitute nominee(s). All of the nominees are
currently directors of the Company and were elected by the stockholders at the
Company's annual meeting of stockholders held in 2000.
Proxies in the accompanying form will be voted at the Meeting in favor
of the election of each of the nominees listed on the accompanying proxy card,
unless authority to do so is withheld as to an individual nominee or nominees or
all nominees as a group. If Proposal II with respect to the classification of
the Board of Directors is adopted, the proxies solicited by the Board of
Directors will be voted for the election of Messrs. Matthews, Sager and Schmidt
to Class I of the Board of Directors for an initial term of one year expiring at
the 2002 Annual Meeting of Stockholders; the election of Messrs. Steele,
O'Reilly, Croft and Lee to Class II of the Board of Directors for an initial
term of two years expiring at the 2003 Annual Meeting of Stockholders; and the
election of Messrs. Solomon, Sapp, Ollendorff and O'Donnell to Class III of the
Board of Directors for an initial term of three years expiring at the 2004
Annual Meeting of Stockholders. See "Proposal II: Amendment to the Company's
Articles of Incorporation to Provide for a Classified Board of Directors". If
Proposal II is not adopted, proxies solicited by the Board of Directors will be
voted for the election of the 11 nominees named above, each to serve until the
next annual meeting of stockholders or until their respective successors are
duly elected.
4
Proxies cannot be voted for a greater number of persons than the number
of nominees named. Directors will be elected by a plurality of the votes cast
therefor by the holders of shares of Common Stock (assuming a quorum exists).
Set forth below is certain information with respect to each nominee for
election as a director of the Company at the Meeting (based solely upon
information furnished by such persons):
Age Year of First Principal Occupations
(as of Election as a during Past Five Years;
Name 3/15/01) Director Other Directorships
- ---- -------- -------- -------------------
Edward S. Croft, III 58 1980 Since August 1996, Managing
(1)(3) Director of Croft & Bender
LLC, a private investment
banking firm; from April 1996
to August 1996, President of
Croft & Co., a financial
advisory firm; for more than
five years prior to April
1996, Managing Director of The
Robinson-Humphrey Company,
Inc., an investment banking
firm.
Dr. Fred C. Lee 54 1997 From February 1986 to December
(1)(3) 29, 1997, a director of Zytec
Corporation ("Zytec"); since
1977, Professor at Virginia
Polytechnic Institute and
State University ("VPI") and
director of the Virginia Power
Electronics Center at VPI.
Lawrence J. Matthews 72 1997 For more than the past five
(1)(3) years, retired executive. From
January 28, 1999 to June 8,
2000, Acting President and
Chief Executive Officer of
Veritec, Inc., a seller of
microprocessor-based encoding
and decoding systems products.
In October 1995, an
involuntary Chapter 7 petition
under the United States
Bankruptcy Code, was filed
against Veritec, Inc. This
filing was subsequently
converted to a Chapter 11
petition. Veritec emerged from
bankruptcy on October 21,
1999. Currently a director of
Veritec, Inc.
Joseph M. O'Donnell 54 1994 Co-Chairman of the Board of
(4) Directors of the Company since
December 29, 1997; from
February 1997 to December 29,
1997, Chairman and since July
1994, Chief Executive Officer
and President of the Company;
director of Inprimis, Inc.
(formerly Boca Research,
Inc.), a manufacturer of data
communications, multimedia and
networking products.
Stephen A. Ollendorff 62 1984 Practicing attorney for more
(3)(4) than the past five years;
since February 1999 Of Counsel
5
Age Year of First Principal Occupations
(as of Election as a during Past Five Years;
Name 3/15/01) Director Other Directorships
- ---- -------- -------- -------------------
to Kirkpatrick & Lockhart LLP;
from December 1990 to January
1999, Of Counsel to Hertzog,
Calamari & Gleason; from 1983
to present, Vice President,
then President, then Chairman
and Chief Executive Officer
and director of Acorn Holding
Corp., a manufacturer of
microcrystalline silicon
wafers; director of
Pharmaceutical Resources,
Inc., a manufacturer of
generic drugs.
Phillip A. O'Reilly 74 1988 For more than the past five
(1)(2) years, retired executive.
Bert Sager 75 1968 Practicing attorney for more
(2)(3) than the past five years;
director of Acorn Holding
Corp., a manufacturer of
microcrystalline silicon
wafers.
A. Eugene Sapp, Jr. 64 1997 For more than the past five
years, President and Chief
Operating Officer, since July
2000, Chairman of the Board
and, since July 1999, Chief
Executive Officer, of SCI
Systems, Inc., an electronics
contract manufacturer.
Director of SCI Systems, Inc.
Ronald D. Schmidt 64 1997 Co-Chairman of the Board of
(1)(4) Directors of the Company since
December 29, 1997; from
January 1984 to December 29,
1997, an executive officer
(including Chairman of the
Board and Chief Executive
Officer) and director of
Zytec.
Lewis Solomon 67 1995 Since October 1999, Chief
(2)(3)(4) Executive Officer of Broadband
Services, Inc., which provides
logistic and technical
services to the cable
television, DBS, fixed
wireless and telecommunication
industries; from August 1990
to October 1999, Chairman of
G&L of Syosset, Inc., a
financial consulting firm;
from April 1986 to February
1997, Chairman of Cybernetic
Services, Inc., a servicer of
moving message signs, which
filed a petition under Chapter
7 of the United States
Bankruptcy Code in April 1997;
director of Anadigics, Inc., a
6
Age Year of First Principal Occupations
(as of Election as a during Past Five Years;
Name 3/15/01) Director Other Directorships
- ---- -------- -------- -------------------
manufacturer of gallium
arsenide semiconductors;
director of Anacomp, Inc., a
manufacturer of magnetic
products; and director of
Terayon Communications, Inc.,
a manufacturer of cable and
wireless modems.
John M. Steel 56 1997 Since July 2000, retired
executive; from December 29,
1997 until July 2000, Vice
President of the Company; from
January 1984 to December 29,
1997, executive officer and
director of Zytec.
(1) Member of the Audit Committee.
(2) Member of the Compensation and Stock Option Committee.
(3) Member of the Nominating Committee.
(4) Member of the Executive Committee.
The Board of Directors unanimously recommends a vote "FOR" the
re-election of all of the 11 nominees named above as directors of the Company.
Board of Directors; Committees of the Board
The Company's Board of Directors met five times during fiscal year
2000. During fiscal year 2000, no director who was a director attended fewer
than 75% of the total number of meetings of the Board of Directors and of the
committee(s), if any, of the Board on which he served, except Lewis Solomon who
missed four meetings out of a total of fourteen meetings of the Board and
committees on which he served (three of which missed meetings were on the same
day due to his being ill on such day). The Board of Directors has established
four standing committees, consisting of an Audit Committee, a Compensation and
Stock Option Committee, a Nominating Committee and an Executive Committee. The
following describes the current functions of such committees.
The Audit Committee, which held three meetings during fiscal year 2000,
reviews the internal and external audit functions of the Company and makes
recommendations to the Board of Directors with respect thereto. It also has
primary responsibility for the formulation and development of the auditing
policies and procedures of the Company and for making recommendations to the
Board of Directors with respect to the selection of the Company's independent
auditing firm. The Audit Committee is governed by the Company's Audit Committee
Charter, a copy of which is set forth as Appendix A to this Proxy Statement. The
Board of Directors of the Company has determined that the current composition of
the Audit Committee satisfies The NASDAQ Stock Market's requirements regarding
the independence, financial literacy and experience of audit committees. The
Chairman of this committee is Edward S. Croft, III.
The Compensation and Stock Option Committee, which held six meetings
during fiscal year 2000, sets and approves salary levels of all corporate
officers and has primary responsibility for the administration of the Company's
2000 Performance Equity Plan (the "2000 Plan"), including the granting of
options thereunder. This committee also administers the Company's 1990
Performance Equity Plan and 1996 Employee Stock Purchase Plan. The Chairman of
this committee is Phillip A. O'Reilly.
The Nominating Committee, which held one meeting during fiscal year
2000, recommends nominees to fill vacancies on the Board of Directors and
considers responsible recommendations by the Company's stockholders of
7
candidates to be nominated as directors of the Company. The Nominating Committee
met in early 2001 and considered and recommended the 11 nominees named herein to
the Board of Directors. All recommendations of candidates made by Company
stockholders must be in writing and addressed to the Secretary of the Company
and must be received by the Company not less than 50 days nor more than 75 days
prior to that year's annual meeting. By accepting a stockholder recommendation
for consideration, the Nominating Committee does not undertake to adopt or take
any other action concerning the recommendation or to give the proponent thereof
its reasons for any action or failure to act. The Chairman of this committee is
Bert Sager.
The Executive Committee, which held two meetings during fiscal year
2000, was established by the Board of Directors in October 1997. The purpose of
this committee is to exercise all the powers and authority of the full Board of
Directors in the management of the Company except as may be limited by the
Florida Business Corporation Act or other applicable law. The Chairman of this
committee is Joseph M. O'Donnell.
Compensation Committee Interlocks and Insider Participation
The Compensation and Stock Option Committee consists of Phillip A.
O'Reilly, Bert Sager, and Lewis Solomon. None of such committee members are, or
were ever, executive officers or employees of the Company. During the last
fiscal year, none of the executive officers of the Company served on the board
of directors or on the compensation committee of any other entity, any of whose
executive officers served on the Board of Directors of the Company.
Compensation of Directors
Directors who are not employees of the Company ("Outside Directors")
are compensated for their services by payment of an annual fee of $24,000 plus
$1,500 per day for each Board of Directors' meeting attended, $750 for each
telephonic Board of Directors' meeting attended and $1,000 per day for each
committee meeting attended (and an additional $250 per day for each committee
meeting at which such person acted as chairman) with a maximum payment of $3,500
per day for attendance at meetings of the Board of Directors and committees and
acting as chairman at meetings of committees of the Board of Directors.
During fiscal year 2000, options to purchase 10,000 shares of Common
Stock were granted by the Company to each of the Outside Directors of the
Company at an exercise price equal to the fair market value of the Company's
Common Stock on such grant date pursuant to the Company's Outside Directors'
Plan. Under such plan, each Outside Director is granted an option, exercisable
over 10 years, to purchase 10,000 shares of Common Stock each time that such
person is elected or re-elected by the stockholders to serve as a director of
the Company if such Outside Director then owns a prescribed amount of Common
Stock. If Proposal II with respect to the classification of the Board of
Directors is adopted, the Company's Outside Directors' Plan will be amended by
the Board of Directors to clarify that each Outside Director will be granted the
option when initially elected and, thereafter, on an annual basis for as long as
such person is serving on the Board of Directors if such Outside Director then
owns the prescribed amount of Common Stock.
An Outside Director who had served as a director prior to August 15,
1996, and serves as a director for five or more years is entitled to receive
certain annual benefits under the Company's Outside Directors' Retirement Plan.
The annual benefits commence on the later of such Outside Director's retirement
from the Board of Directors or attainment of age 70 and continue for a number of
years equal to the number of years the Outside Director served on the Company's
Board of Directors. Effective January 1, 2000, the base amount of such benefit
is $24,000, adjusted pursuant to a cost of living index to each Outside
Director's particular retirement date. Once a director has begun to receive the
benefits as so adjusted, no further adjustments will be made for the remainder
of the period of time such Outside Director receives the benefit.
8
Certain Transactions
Mr. Ollendorff, a director of the Company, was Of Counsel to the law
firm of Kirkpatrick & Lockhart LLP during fiscal year 2000. Kirkpatrick &
Lockhart LLP acted as counsel for the Company in fiscal year 2000 and received
fees in such fiscal year for various legal services rendered to the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for the fiscal years ended
December 29, 2000, December 31, 1999 ("fiscal year 1999"), and January 1, 1999
("fiscal year 1998"), in respect of compensation earned by the Chief Executive
Officer and by the other four most highly compensated executive officers (whose
salary and bonus earned in fiscal year 2000 exceeded $100,000) of the Company
serving at the end of fiscal year 2000 (the "Named Executives").
- ------------------------ ---------------------------------------- ------------------------------
Name Annual Compensation Long-Term Compensation
- ------------------------ ---------------------------------------- ------------------------------
Other Annual Securities
Fiscal Bonus Compensation Underlying All Other
Name and Position(s) Year Salary ($) ($)(1) ($)(2) Options(#)(3) Compensation ($)
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
Joseph M. O'Donnell 2000 $516,910 $450,270 -0- 137,500 $32,500(4)
Co-Chairman, Chief 1999 495,150 553,217 -0- 70,000 32,300(4)
Executive Officer and 1998 462,535 -0- -0- 75,000 30,800(4)
President
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
Richard J. Thompson 2000 269,794 101,113 -0- 127,500 14,639(5)
Vice 1999 247,188 197,245 -0- 45,000 14,358(5)
President-Finance, 1998 226,423 -0- -0- 45,000 13,068(5)
Chief Financial
Officer and Secretary
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
Robert J. Aebli 2000 216,000 247,428 -0- 15,000 21,754(6)
President-Communication 1999 188,023 97,544 -0- 15,429 18,085(6)
Products 1998 174,693 49,015 -0- 15,000 17,456(6)
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
D. Harvey Dewan 2000 213,693 27,000 -0- 20,000 17,096(7)
President-Global 1999 194,152 49,989 -0- 32,500 18,044(7)
Manufacturing 1998 169,615 -0- -0- 30,000 14,234(7)
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
Norman C. Wussow 2000 201,807 26,520 -0- 50,000 15,353(8)
President-North 1999 175,280 61,339 -0- 16,000 14,213(8)
America Commercial 1998 149,933 -0- -0- 9,279 5,222(8)
- ------------------------ ------ ---------- --------- ------------ ------------- ----------------
(1) Includes annual amounts awarded under the Company's Executive Incentive
Plan to Named Executives.
(2) Includes only those perquisites which are, in the aggregate, greater
than or equal to the lesser of $50,000 or 10% of annual salary and
bonus.
(3) Represents options awarded under various Company stock option plans.
9
(4) Includes insurance premiums paid by the Company in the amounts of
$20,000, $20,000, and $20,000 with respect to two life insurance
policies for the benefit of Mr. O'Donnell, including a whole-life
policy and a hybrid policy in fiscal years 2000, 1999 and 1998,
respectively. Also includes $7,500, $7,500, and $6,000 in premiums paid
by the Company with respect to health insurance for the benefit of Mr.
O'Donnell and contributions of $5,000, $4,800, and $4,800 to the
Company's 401(k) plan in fiscal years 2000, 1999 and 1998,
respectively.
(5) Includes contributions in the amounts of $5,000, $4,800, and $4,800 by
the Company to its 401(k) plan for the benefit of Mr. Thompson and
insurance premiums in the amounts of $9,639, $9,558, and $8,268 paid by
the Company with respect to term life insurance and health insurance
for the benefit of Mr. Thompson in fiscal years 2000, 1999 and 1998,
respectively.
(6) Includes contributions in the amounts of $5,000, $4,800, and $4,800 by
the Company to its 401(k) plan for the benefit of Mr. Aebli and
insurance premiums in the amounts of $16,754, $13,285, and $12,656 paid
by the Company with respect to term life insurance and health insurance
for the benefit of Mr. Aebli in fiscal years 2000, 1999 and 1998,
respectively.
(7) Includes contributions in the amounts of $5,000, $4,800, and $3,824 by
the Company to its 401(k) plan for the benefit of Mr. Dewan and
insurance premiums in the amounts of $12,096, $13,244 and $10,410 paid
by the Company with respect to term life insurance and health insurance
for the benefit of Mr. Aebli in fiscal years 2000, 1999 and 1998,
respectively.
(8) Includes contributions in the amounts of $5,000, $4,800, and $4,495 by
the Company to its 401(k) plan for the benefit of Mr. Wussow and
insurance premiums in the amounts of $10,353, $9,413 and $727 paid by
the Company with respect to term life insurance and health insurance
for the benefit of Mr. Wussow in fiscal years 2000, 1999 and 1998,
respectively.
Stock Option Grants In Last Fiscal Year
The following table sets forth certain information concerning stock
options granted to the Named Executives in fiscal year 2000.
- ----------------------- -------------------- ----------------- --------- ---------- -----------
Percentage of
Total Options
Number of Securities Granted to Exercise Grant Date
Underlying Options Employees in Price Per Expiration Present
Name Granted(#) Fiscal Year(%)(1) Share($) Date Value($)(2)
- ----------------------- -------------------- ----------------- --------- ---------- -----------
Joseph M. O'Donnell 66,000 3.73 19.94 3/3/05 883,581
1,500 0.08 20.13 3/9/05 20,270
70,000 3.96 23.56 5/12/05 1,177,253
------ ---- ---------
137,500 7.77 2,081,105
- ----------------------- -------------------- ----------------- --------- ---------- -----------
Richard J. Thompson 22,500 1.27 16.81 1/26/05 254,008
30,000 1.70 20.25 3/1/05 407,922
45,000 2.54 23.56 5/12/05 756,806
30,000 1.70 24.94 6/9/05 534,521
------ ---- -------
127,500 7.21 1,953,256
- ----------------------- -------------------- ----------------- --------- ---------- -----------
Robert J. Aebli 15,000 0.85 23.56 5/12/05 252,269
- ----------------------- -------------------- ----------------- --------- ---------- -----------
D. Harvey Dewan 20,000 1.13 23.56 5/12/05 336,358
- ----------------------- -------------------- ----------------- --------- ---------- -----------
Norman C. Wussow 30,000 1.70 16.81 1/26/05 338,678
20,000 1.13 23.56 5/12/05 336,358
------ ---- -------
50,000 2.83 675,035
- ----------------------- -------------------- ----------------- --------- ---------- -----------
10
(1) Represents the percentage of options granted to all employees of the
Company in fiscal year 2000.
(2) Based upon the Black-Scholes option pricing model adopted for use in
valuing executive stock options. The actual value, if any, a Named
Executive may realize will depend upon the excess of the market price
of the Common Stock over the exercise price on the date the option is
exercised. There is, therefore, no assurance that the value realized by
a Named Executive will be at or near the value estimated by the
Black-Scholes model. The estimated values under the model are based
upon certain assumptions which the Company believes are reasonable,
such as a risk-free rate of return of 6.4%, stock price volatility of
98%, future dividend yield of 0% and expected life of 4.5 years. The
values do not take into account certain features of the stock plans
which may affect such values, such as conditions to exercisability and
nontransferability.
Options Exercised in Last Fiscal Year and Fiscal Year-End Option Values Table
The following table sets forth certain information with respect to
stock options exercised by the Named Executives in fiscal year 2000 and certain
information with respect to exercisable and non-exercisable stock options held
on December 29, 2000 by the Named Executives. The table also includes the value
of "in-the-money" stock options which represents the spread between the exercise
price of the existing stock options and the year-end trading price of the Common
Stock.
------------------------ ------------------------
Number of Securities
Underlying Unexercised Value of In-The-Money
Options Held on December 29, Options Held on December 29,
2000 (#) 2000 (1)($)
- ------------------------- ----------- ------------ ------------------------ ------------------------
Shares
Acquired on Value Not Not
Name Exercise(#) Realized ($) Exercisable Exercisable Exercisable Exercisable
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
Joseph M. O'Donnell 100,000 1,517,500 585,865 172,500 3,592,920 -0-
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
Richard J. Thompson 99,000 2,235,188 203,812 150,000 386,076 -0-
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
Robert J. Aebli -0- -0- 80,215 22,714 240,706 -0-
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
D. Harvey Dewan -0- -0- 53,750 36,250 -0- -0-
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
Norman C. Wussow -0- -0- 17,279 58,000 -0- -0-
- ------------------------- ----------- ------------ ----------- ----------- ----------- -----------
(1) Based upon the closing price of the Common Stock on December 29, 2000
of $15.875.
Employment Arrangements
The Compensation and Stock Option Committee approved an employment
agreement, dated as of January 1, 2000, between the Company and Mr. O'Donnell
(the "O'Donnell Agreement"). The O'Donnell Agreement provides that effective
February 1, 2000 Mr. O'Donnell is to receive a base salary at the rate of
$522,000 per year, which amount is subject to adjustment. The Company has
increased Mr. O'Donnell's salary for fiscal year 2001. In addition, the
O'Donnell Agreement provides that Mr. O'Donnell is eligible to receive an
incentive payment each year of employment in an amount equal to up to 170% of
his base salary for such year. Mr. O'Donnell is also eligible for additional
payments in the discretion of the Compensation and Stock Option Committee
awarded in accordance with the terms of the Company's Executive Incentive Plan.
Mr. O'Donnell is also entitled to reimbursement of certain health, disability
and life insurance benefits. The Company also has agreed to cause Mr. O'Donnell
to be nominated as a director throughout the term of his employment. The
O'Donnell Agreement's initial term expired on December 31, 2000, but is
renewable each successive year thereafter for an additional one-year term unless
either party provides written notice of termination. No such notice of
termination was provided by either party. Mr. O'Donnell is currently being paid
pursuant to the terms of the O'Donnell Agreement.
The Compensation and Stock Option Committee also approved an employment
agreement between the Company and Richard J. Thompson, Vice President and Chief
Financial Officer of the Company, dated as of January 1,
11
2000 (the "Thompson Agreement"). The Thompson Agreement provides that effective
February 1, 2000 Mr. Thompson is to receive a base salary at the rate of
$275,000 per year, which amount is subject to adjustment. The Company has
increased Mr. Thompson's salary for fiscal year 2001. In addition, the Thompson
Agreement provides that Mr. Thompson is eligible to receive an incentive payment
each year of employment in an amount equal to up to 104% of his base salary for
such year. Mr. Thompson is also eligible for additional payments in the
discretion of the Compensation and Stock Option Committee awarded in accordance
with the terms of the Company's Executive Incentive Plan. Under the terms of the
Thompson Agreement, Mr. Thompson is also entitled to reimbursement of health,
disability and life insurance benefits. The Thompson Agreement's initial term
expired on December 31, 2000, but is renewable each successive year thereafter
for an additional one-year term unless either party provides written notice of
termination. No such notice of termination was provided by either party. Mr.
Thompson is currently being paid pursuant to the terms of the Thompson
Agreement.
Upon any event of earlier termination of either of the O'Donnell
Agreement or the Thompson Agreement, each of Mr. O'Donnell and/or Mr. Thompson,
as the case may be, is entitled to receive his respective base salary through
the date of termination. In the event of either of Mr. O'Donnell's and/or Mr.
Thompson's death or "disability" (as defined in the respective employment
Agreement), each of Mr. O'Donnell and/or Mr. Thompson, as the case may be, is
entitled to receive his respective base salary for an additional year from the
date of termination plus the full incentive payment under the Company's
Executive Incentive Plan to which he would have been entitled if the termination
had occurred at the end of the calendar year during which such termination
occurred (the "Full Incentive Payment"), except that payments of base salary for
the additional year will be offset by certain Company-sponsored insurance
benefits payable during such period. In the event that either of Mr. O'Donnell's
or Mr. Thompson's employment is terminated by the Company without "cause" (as
defined in the respective employment Agreement) or by either of Mr. O'Donnell or
Mr. Thompson due to the Company's "substantial breach" (as defined in the
respective employment Agreement), each of Mr. O'Donnell and/or Mr. Thompson, as
the case may be, is entitled to receive his respective base salary plus the Full
Incentive Payment through the date of termination plus an amount equal to the
product of his respective base salary and the Full Incentive Payment multiplied
by two, payable over a 24 month period provided that the last 12 monthly
payments shall not be made if either of Mr. O'Donnell or Mr. Thompson, as the
case may be, is found to be in breach of certain non-disclosure, non-compete or
non-solicitation agreements. Messrs. O'Donnell and Thompson are each also
entitled to receive reimbursement of expenses of outplacement-related services
up to $45,000. In the event of the Company's termination of either of Mr.
O'Donnell's and/or Mr. Thompson's, as the case may be, Agreement without
"cause", or termination of either Agreement by Mr. O'Donnell or Mr. Thompson due
to the Company's "substantial breach" following a "change of control" (as
defined in the respective employment Agreement), each of Mr. O'Donnell and/or
Mr. Thompson, as the case may be, is entitled to receive within 10 days from the
date of termination (a) a lump-sum payment equal to the product of the sum of
his respective base salary and the Full Incentive Payment multiplied by three
and (b) an amount to cover certain excise taxes that may be incurred by Mr.
O'Donnell and/or Mr. Thompson as a result of payment received by either of them
following such "change of control". In the event the Company does not renew
either Agreement, each of Mr. O'Donnell and/or Mr. Thompson, as the case may be,
shall generally be entitled to receive his respective base salary and Full
Incentive Pay for an additional two years from the date of termination.
Certain options granted to the Named Executives become immediately
exercisable in the event of a "change of control" and certain other options
become immediately exercisable if a Named Executive's employment is terminated
within six months after a "change of control" of the Company pursuant to the
terms of the stock option plan under which the options were granted.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") of the
Company's Board of Directors is comprised of three individuals, each of whom is
an Outside Director. The Committee is responsible for establishing the overall
philosophy and strategy of the Company's executive compensation program and
overseeing the executive compensation plans developed to execute the Company's
compensation strategy.
12
The Company's Executive Compensation Strategy
The Company's executive compensation program has been designed to
promote stockholder interests and to:
o Link key executives' compensation to the Company's business
objectives;
o Promote human resource goals to attract, hire and retain
quality talent;
o Reward teamwork and individual performance for achieving
annual business results;
o Balance short and long-term considerations through
compensation for achievement of annual goals that are
consistent with long-term objectives; and
o Provide motivation to key executives to excel by offering
competitive incentive and total compensation.
It is the Company's intention to ensure that all compensation paid to
its executives is tax deductible under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). Although Section 162(m) of the Code
imposes limits on deductibility for certain non-approved compensation to certain
executives exceeding $1 million per year, the Company, as a result of the
structure of the compensation paid to its executives does not currently
anticipate any limitations of this deduction.
Compensation of Other Executive Officers
The Company's executive compensation program includes two principal
elements: annual cash compensation and long-term awards. The Company uses survey
data of comparable companies in its industry with comparable revenue levels in
assessing cash compensation and long-term awards. This evaluation also considers
competitive data of the Company's Selected Peer Group included in the Stock
Performance Graph set forth below.
Annual cash compensation includes both base salaries and annual
incentive awards pursuant to the Company's Executive Incentive Plan ("EIP").
Executives' base salaries are evaluated each year based upon an assessment of
market data of comparable companies. Subject to the applicable terms of any
employment agreement, executives are eligible for adjustments in base salary
based upon an assessment of individual performance and changes in principal job
duties and responsibilities. In fiscal year 2000, based upon assessments of the
individual performances, the Company awarded an increase in base salary to
Messrs. O'Donnell, Thompson, Dewan, Aebli and Wussow.
Executives are eligible to receive annual incentive awards under the
EIP. Each executive participating in the plan has a targeted annual incentive
award based upon competitive practice which represents a stated percentage of
the executive's base salary. The performance of executives with corporate-wide
responsibilities is evaluated based upon the achievement of corporate financial
targets measured by the Company's net income and revenue growth. The performance
of executives with divisional and/or subsidiary responsibility is evaluated
based upon the achievement of divisional or subsidiary financial targets
measured by divisional net income, revenue growth and cash flow. The financial
targets for fiscal year 2000 were developed from the Company's annual planning
process. The Committee reviews and approves the targets each year based upon
fairness, degree of difficulty and reasonableness. Further, the Company must
achieve a minimum net income performance threshold before corporate executives
are entitled to receive a financial target payout under the EIP. There may be no
incentive payout if the Company is not profitable on a company-wide basis.
Aggregate annual incentive awards are limited to no more than 10% of
the Company's net income, excluding extraordinary items, before total after-tax
cost of the aggregate executive annual incentive payout, unless otherwise
approved by the Committee and Board of Directors.
Long-term incentive compensation includes payments under the 2000 Plan.
The 2000 Plan permits the Company to grant non-qualified stock options to
selected executives at an exercise price no less than the fair market value of
the Common Stock on the date of grant.
13
Each year the Committee reviews and approves annual salaries, annual
incentive awards, grants of long-term incentives and the performance targets and
criteria established for both the annual and long-term incentive plans. In
addition, the Committee reviews the performance of the Company and its divisions
and subsidiaries and exercises the final authority in approving the payout of
executive incentive awards. During fiscal year 2000, the Committee engaged
executive compensation consultants and used compensation data for comparable
companies to support its decisions.
In the beginning of fiscal year 2000, the Committee reviewed and
approved the financial targets to be included in the fiscal year 2000 EIP for
the Chief Executive Officer and the Company's other executive officers. Based
upon the Committee's review of the Company's performance and the Chief Executive
Officer and the Company's other executive officers following conclusion of the
2000 fiscal year, the Company granted an award to the Chief Executive Officer
and all the Company's other executive officers who had been with the Company for
the entire fiscal year 2000 under the 2000 EIP as a result of the attainment of
Company, divisional and subsidiary objectives.
Determination of Compensation for the Chief Executive Officer
Mr. O'Donnell's base salary during fiscal year 2000 was increased to
$522,000. The increased base salary of Mr. O'Donnell was based largely upon an
assessment of market data of comparable companies, as described above. Mr.
O'Donnell received an annual incentive award of $450,270 in fiscal year 2000
under the EIP. On May 12, 2000, the Company, pursuant to the 2000 Plan, granted
Mr. O'Donnell non-qualified stock options to purchase 70,000 shares of Common
Stock at an exercise price of $23.56 per share. The terms of these options are
for 58 months from the date of grant and are exercisable as follows: (i) 50%
vesting any time after May 12, 2002 if the closing price of a share of Common
Stock equals or exceeds $27.09745 for any 20 of 30 consecutive trading days
after the date of such grant, (ii) 100% vesting any time after May 2, 2003 if
the closing price of a share of Common Stock equals or exceeds $30.6319 per
share for any 20 of 30 consecutive trading days after the date of such grant,
and (iii) to the extent not previously exercisable, 100% on March 12, 2005. In
addition, Mr. O'Donnell received non-qualified stock options to purchase (i)
66,000 shares of Common Stock on March 3, 2000 at an exercise price of $19.94,
and (ii) 1,500 shares of Common Stock on March 9, 2000 at an exercise price of
$20.13, each pursuant to the Company's Executive Ownership Program pursuant to
which participants are eligible to receive stock option grants based on certain
stock ownership positions in the Company's Common Stock. The terms of these
options are for five years from the date of issue and are exercisable as
follows: (i) 50% vesting any time after the first anniversary of the date of
issue, and (ii) the remaining 50% vesting any time after second anniversary of
the date of issue.
Members of the Compensation and Stock Option Committee:
Phillip A. O'Reilly, Chairman
Bert Sager
Lewis Solomon
AUDIT COMMITTEE REPORT
Management is responsible for the Company's internal controls and the
financial reporting process. Arthur Andersen LLP, the Company's independent
auditor, is responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards. The Audit Committee's responsibility is to monitor and oversee these
processes.
In this context, the Audit Committee reviewed and discussed the audited
financial statements with both Company management and Arthur Andersen LLP.
Specifically, the Audit Committee has discussed with Arthur Andersen LLP matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU Section 380).
The Audit Committee received from Arthur Andersen LLP the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and has discussed with
Arthur Andersen LLP the issue of its independence from the Company.
14
Based on the Audit Committee's review of the audited financial
statements and its discussions with both management and Arthur Andersen LLP
noted above, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 29, 2000.
The Company paid Arthur Andersen LLP $581,000 in aggregate fees for
professional services rendered for the audit of the Company's fiscal year 2000
annual financial statements and review of financial statements included in the
Company's quarterly reports on Form 10-Q.
Financial Information Systems Design and Implementation Fees
The Company paid Arthur Andersen LLP $886,000 for financial information
systems design and implementation services provided to the Company in fiscal
year 2000.
All Other Fees
The Company paid Arthur Andersen LLP an additional $190,000 for other
services, including tax compliance, tax consultation and the audit of the
Company's benefit plan, provided to the Company in fiscal year 2000.
The Audit Committee has considered whether the provision of non-audit
services by Arthur Anderson LLP was compatible with maintaining its independence
and has determined that the nature and substance of the non-audit services did
not impair the status of Arthur Andersen LLP as the Company's independent
auditors.
AUDIT COMMITTEE:
Edward S. Croft, III, Chairman
Dr. Fred C. Lee
Lawrence J. Matthews
Phillip A. O'Reilly
Ronald D. Schmidt
STOCK PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder return
(assuming reinvestment of dividends) on the Company's Common Stock, over the
most recent five-year period up to and including December 31, 2000 with the
cumulative total return of companies on the Russell 2000(R) Index and the S&P
SmallCap Electrical Equipment Index (the "Electrical Equipment Index"), a
published line-of-business index. In light of the Company's continuing focus on
its power conversion business, the Electrical Equipment Index was selected by
the Company because the Company believes the Electrical Equipment Index provides
a meaningful comparison to the Company's performance.
CUMULATIVE TOTAL RETURN
Based on an investment of $100 and reinvestment of dividends beginning on
December 31, 1995
[GRAPHIC OMITTED]
Dec. 31-95 Dec. 31-96 Dec. 31-97 Dec. 31-98 Dec. 31-99 Dec. 31-00
Artesyn $341 $578 $670 $415 $622 $421
Technologies, Inc.
Russell 2000 $128 $150 $183 $178 $216 $221
S&P SmallCap $126 $143 $176 $177 $274 $256
Electrical
Equipment Index
15
PROPOSAL II: AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS
The Company's Board of Directors has unanimously approved and
recommended that the stockholders of the Company approve an amendment to Article
Seventh of the Company's Articles of Incorporation to provide for the
classification of the Board of Directors into three classes of directors with
staggered terms of office.
The Company's By-Laws now provide that all directors are to be elected
annually for a term of one year. Florida law permits provisions in a company's
articles of incorporation or by-laws approved by stockholders that provide for a
classified board of directors. The proposed classified board amendment to the
Articles of Incorporation and conforming amendments to the By-Laws, set forth in
Appendix B to this Proxy Statement, would provide that directors will be
classified into three classes, as nearly equal in number as possible. One class
(Class I) would hold office initially for a term expiring at the 2002 Annual
Meeting; another class (Class II) would hold office initially for a term
expiring at the 2003 Annual Meeting; and another class (Class III) would hold
office initially for a term expiring at the 2004 Annual Meeting. At each
successive Annual Meeting, commencing in 2002, the successors to the class of
directors whose terms expire at that Meeting would be elected for a term of
office to expire on the third succeeding Annual Meeting after their election and
until their successors have been duly elected and qualified. See "Proposal I:
Election of Directors" as to the composition of each class of directors if this
proposal is adopted.
The proposed classified board amendment may, and depending upon the
percentage of the outstanding shares of the Common Stock that approve the
amendment may significantly, extend the time required to effect a change in
control of the Board of Directors and may discourage hostile takeover bids for
the Company. Currently, a change in control of the Board of Directors can be
made by stockholders holding a plurality of the votes cast at a single annual
meeting. Unless the Company's Articles of Incorporation are otherwise further
amended, if the Company implements a classified board of directors, it could
take at least two annual meetings for even a majority of stockholders to make a
change in control of the Board of Directors because only a minority of the
directors is scheduled to be elected at each meeting.
Under Florida law, directors chosen to fill vacancies on a classified
board shall hold office until the next election of the class for which such
directors shall have been chosen, and until their successors are elected and
qualified. Presently, all directors of the Company are elected annually and all
of the directors may be removed, with or without cause, by the affirmative vote
of holders of a majority of the outstanding shares of the Common Stock. Part of
the amendment to the Company's Articles of Incorporation implementing the
classified board will be to provide that directors of the Company may be removed
only for cause. In addition, part of the amendment to the Company's Articles of
Incorporation implementing the classified board will provide that Article
Seventh and the Company's By-Laws, as amended by the amendment appearing as
Appendix B to this Proxy Statement, will be able to be further amended or
repealed only upon approval of at least the same percentage of outstanding
shares of Common Stock as approve the amendment at this Meeting.
The classified board proposal is designed to assure continuity and
stability in the Board of Directors' leadership and policies. While management
has not experienced any problems with such continuity in the past, it wishes to
ensure that this experience will continue. The Board of Directors also believes
that the classified board proposal will assist the Board of Directors in
protecting the interests of the Company's stockholders in the event of an
unsolicited and/or coercive two-tier offer for the Company.
16
Because of the additional time and/or percentage of outstanding Common
Stock required to effect a change of control of the Board of Directors, the
classified board proposal may perpetuate present management. Without the ability
to easily obtain immediate control of the Board of Directors, a takeover bidder
may not be able to take action to remove other impediments to its acquisition of
the Company. Because the classified board proposal may increase the amount of
time required for a takeover bidder to obtain control of the Company without the
cooperation of the Board of Directors, it may discourage certain tender offers.
The classified board proposal will also make it more difficult for the
stockholders to change the composition of the Board of Directors even if the
stockholders believe such a change would be desirable.
If the classified board proposal is not approved, the 11 nominees named
above will be nominated for a one year term ending at the 2002 Annual Meeting
and until their respective successors have been duly elected and qualified.
ADVANTAGES AND DISADVANTAGES OF PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
The proposed amendment to the Company's Articles of Incorporation and
By-Laws set forth in Proposal II (the "Proposed Amendment") does not prevent a
purchase of all or a majority of the equity securities of the Company, whether
pursuant to open-market purchases, negotiated purchases from large stockholders
or an unsolicited bid for all or part of the outstanding securities of the
Company. Rather, the Board believes that the Proposed Amendment would discourage
disruptive tactics and encourage persons who may seek to acquire control of the
Company to initiate such an acquisition through non-coercive negotiations with
the Board where the Board believes that it would be in a better position to
protect the interests of all of the Company's stockholders. Furthermore, the
stockholders would have a more meaningful opportunity to evaluate any such
action. Although the Proposed Amendment is intended to encourage persons seeking
to acquire control of the Company to initiate such an acquisition through arm's
length negotiations with the Board, the overall effect of the Proposed Amendment
may be to discourage a third party from making a tender offer for a portion or
all of the Company's Common Stock, or otherwise attempting to obtain a
substantial position in the equity securities of the Company, by hindering such
third party from immediately removing and replacing the incumbent directors.
To the extent any potential acquirors are deterred by the Proposed
Amendment, the Proposed Amendment may have the effect of preserving the
Company's incumbent directors and management. The Proposed Amendment may also
serve to benefit incumbent directors and management by making it more difficult
to remove directors because they could be removed only for cause.
Takeover or changes in the Board of Directors that are effected without
prior consultation and negotiation with the Company would not necessarily be
detrimental to the Company and its stockholders. However, the Board feels that
the benefits of seeking to protect the ability of the Company to negotiate
effectively, through directors who have previously been elected by the
stockholders, outweigh any disadvantage of discouraging such unsolicited
proposals.
The Proposed Amendment is not in response to any specific efforts of
any person or entity to accumulate shares of Common Stock or obtain control of
the Company. The Board is recommending the adoption of the Proposed Amendment in
order to further continuity and stability in the leadership and policies of the
Company and to discourage certain types of tactics that could involve actual or
threatened changes of control that are not in the best interests of its
stockholders. Because of the time associated with obtaining stockholder
approval, the Company believes it is inadvisable to defer consideration of the
Proposed Amendment until a takeover threat is pending. Once a specific threat
exists, the time required to adopt the Proposed Amendment may render its
adoption impractical prior to the completion of the takeover. Further, the
absence of a specific threat permits stockholders to consider the merits of the
Proposed Amendment outside the pressured atmosphere of a takeover threat. For
these reasons, the Company believes it is prudent to consider the Proposed
Amendment at this time.
17
The Board of Directors unanimously recommends a vote "FOR" the approval
and adoption of Proposal II.
INDEPENDENT AUDITORS
Pursuant to a recommendation of the Audit Committee, the Board of
Directors has selected and retained the firm of Arthur Andersen LLP to act as
independent certified public accountants for the Company for the fiscal year
ending December 28, 2001. Representatives of Arthur Andersen LLP are expected to
be present at the Meeting, to have the opportunity to make a statement, if they
so desire, and to be available to respond to appropriate questions. Arthur
Andersen LLP was retained as the Company's independent certified public
accountants beginning in March 1991.
SUBMISSION OF STOCKHOLDER PROPOSALS
At the date of this Proxy Statement, the Board of Directors has no
knowledge of any business which will be presented for consideration at the
Meeting, other than as described above. In accordance with the Company's By-laws
and Rules 14a-4(c) and 14a-5(e) promulgated under the Exchange Act, the Company
hereby notifies its stockholders that since it did not receive notice by
February 6, 2001 of any other proposed matter to be submitted for stockholder
vote at the Meeting, all proxies received in respect of the Meeting will be
voted in the discretion of the Company's management on any other matters which
may properly come before the Meeting.
Any proposal which is intended to be presented by any stockholder for
action at the 2002 Annual Meeting of Stockholders must be received in writing by
the Secretary of the Company, at 7900 Glades Road, Suite 500, Boca Raton,
Florida 33434, not later than November 23, 2001 in order for such proposal to be
considered for inclusion in the proxy statement and form of proxy relating to
the 2002 Annual Meeting of Stockholders.
The Company hereby further notifies its stockholders that if the
Company does not receive notice by February 6, 2002 of a proposed matter to be
submitted for stockholders vote at the 2002 Annual Meeting of Stockholders, then
any proxies held by members of the Company's management in respect of such
meeting may be voted at the discretion of such management members on such matter
if it shall properly come before such meeting, without any discussion of such
proposed matter in the proxy statement to be distributed in respect of such
meeting.
By Order of the Board of Directors
RICHARD J. THOMPSON
Secretary
Dated: March 23, 2001
18
Appendix A
ARTESYN TECHNOLOGIES, INC.
AUDIT COMMITTEE
Committee Charter
- --------------------------------------------------------------------------------
Organization
The audit committee of the board of directors shall be comprised of at least
three independent directors. Independence shall be defined using the NASDAQ
definition of independence (Rue 4200(a)(15) that states, among other things,
that directors are free from any relationship that would interfere with the
exercise of independent judgment as a Committee member.
Committee members will be financially literate, meaning each is able to read and
understand fundamental financial statement, including a company's balance sheet,
income statement, and cash flow statement. At least one director must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience, including a current
or past position as a corporate officer with financial oversight
responsibilities.
The determination of the independence and qualifications to serve as a member of
the audit committee shall be determined by the board of directors in its
discretion.
Statement of Policy
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the company,
and the quality and integrity of financial reports of the company. In so doing,
it is the responsibility of the audit committee to maintain free and open
communication between the directors, the independent auditors, the internal
auditors and the financial management of the company.
Authority
o The independent auditors are directly accountable to the board of
directors and the audit committee, as the shareholders'
representatives, who have the ultimate authority in deciding to engage,
evaluate, and if appropriate, terminate their services.
o Review and concur with management's appointment, termination, or
replacement of the director of internal audit.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the company are in accordance with all
requirements and are of the highest quality.
o Review preliminary results of the annual audit with management and the
independent auditors.
A-1
ARTESYN TECHNOLOGIES, INC.
AUDIT COMMITTEE
Committee Charter
- --------------------------------------------------------------------------------
o Provide sufficient opportunity for the internal and independent
auditors to each meet separately with the member of the audit committee
without members of management present. Among the items to be discussed
in these meetings are the independent auditors' evaluation of the
company's financial, accounting and auditing personnel, and the
cooperation that the independent auditors received during the course of
audit.
o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.
A-2
ARTESYN TECHNOLOGIES, INC.
AUDIT COMMITTEE
Meeting Procedures
- --------------------------------------------------------------------------------
This document will serve as a supplement to the Audit Committee Charter,
organizing Committee activities by specific authority and meeting topics. The
Authority and Responsibilities enumerated here are consistent with those
outlined in the Audit Committee Charter.
Organization
The audit committee of the board of directors shall be comprised of at least
three independent directors. Independence shall be defined using the NASDAQ
definition of independence (Rue 4200(a)(15) that states, among other things,
that directors are free from any relationship that would interfere with the
exercise of independent judgment as a Committee member.
Committee members will be financially literate, meaning each is able to read and
understand fundamental financial statement, including a company's balance sheet,
income statement, and cash flow statement. At least one director must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience, including a current
or past position as a corporate officer with financial oversight
responsibilities.
The determination of the independence and qualifications to serve as a member of
the audit committee shall be determined by the board of directors in its
discretion.
Statement of Policy
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders, and investment
community relating to corporate accounting, reporting practices of the company,
and the quality and integrity of financial reports of the company. In so doing,
it is the responsibility of the audit committee to maintain free and open
communication between the directors, the independent auditors, the internal
auditors and the financial management of the company.
Authority
o The independent auditors are directly accountable to the board of
directors and the audit committee, as the shareholders'
representatives, who have the ultimate authority in deciding to engage,
evaluate, and if appropriate, terminate their services.
o Review and concur with management's appointment, termination, or
replacement of the director of internal audit.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the company are in accordance with all
requirements and are of the highest quality.
A-3
ARTESYN TECHNOLOGIES, INC.
AUDIT COMMITTEE
Meeting Procedures
- --------------------------------------------------------------------------------
All Meetings
o Review the results of any internal audit reports issued since the last
Committee meeting.
o Inquire of management, the internal auditor and the independent
auditors about significant risks or exposures and assess the steps
management has taken to minimize such risks to the Company.
o Review with financial management and the independent auditors the
significant financial reporting issues and practices, including changes
in, or adoptions of, accounting principles and disclosure practices.
o Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related company compliance policies.
o Provide sufficient opportunity for the internal and independent
auditors to each meet separately with the members of the audit
committee without members of management present. Among the items to be
discussed in these meetings are the independent auditors' evaluation of
the company's financial, accounting and auditing personnel, and the
cooperation that the independent auditors received during the course of
audit.
o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the board
of directors.
A-4
Appendix B
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ARTESYN TECHNOLOGIES, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes,
ARTESYN TECHNOLOGIES, INC. (the "Corporation") does hereby amend its
Articles of Incorporation
------------------------------------------------
1. The name of the Corporation is
ARTESYN TECHNOLOGIES, INC.
2. The articles of incorporation of the Corporation were filed by the
Department of State on March 18, 1968.
3. The articles of incorporation, as heretofore amended, are hereby
further amended as follows:
A. The existing Article VII (SEVENTH) of the articles of incorporation
of the Company relating to the directors is hereby amended to delete such
existing Article in its entirety and replace it with the following:
"ARTICLE VII. DIRECTORS: A. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors consisting of
such number of directors as is determined from time to time by resolution
adopted by a vote of the Board of Directors as provided for in the By-Laws of
the Corporation; provided, however, that in no event shall the number of
directors be less than three (3). The directors shall be divided into three (3)
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third (1/3) of the total number of
directors constituting the entire board of directors. Class I directors shall
serve for a term ending upon the annual meeting of shareholders held in the
Corporation's fiscal 2002 year, Class II directors shall serve for a term ending
upon the annual meeting of shareholders held in the Corporation's fiscal 2003
year and Class III directors shall serve for a term ending upon the annual
meeting of shareholders held in the Corporation's fiscal 2004 year. At each
succeeding annual meeting of shareholders beginning with the annual meeting of
shareholders held in the Corporation's fiscal 2005 year, successors to the class
of directors whose term expires at such annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in
B-1
such class shall hold office for a term that shall coincide with the remaining
term of that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, incapacitation or removal from office, and except as
otherwise required by law. In the event such election is not held at an annual
meeting of shareholders, it shall be held at any adjournment thereof or a
special meeting.
B. Except as otherwise required by applicable law, any vacancy on the
Board of Directors or any additional directorship(s) that results from an
increase in the authorized number of directors of the Corporation may be filled
only by a majority vote of the members of the Board of Directors then in office
immediately prior to such increase in number; provided, that a quorum is
present, and any other vacancy occurring in the Board of Directors (including by
death, resignation or removal) shall be filled by a majority of the directors
then in office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors shall have the same remaining term as that of his or her
predecessor.
C. Directors of the Corporation may only be removed for cause by a vote
of the Corporation's stockholders."
D. This Article Seventh of these Articles of Incorporation may not be
amended or repealed except by the affirmative vote of holders of shares of
outstanding voting stock at least equal to the percentage of shares of voting
stock that initially approved the adoption of this amended Article Seventh, but
in any event not less than a majority of such outstanding voting stock. These
Articles of Incorporation may be restated to modify this Paragraph D of Article
Seventh and include the actual percentage of shares of voting stock that
initially approved the adoption of this amended Article Seventh.
4. The amendments were approved by the Board of Directors, proposed by
them to the stockholders, and approved by the stockholders, on May , 2001, by a
vote sufficient for such approval.
IN WITNESS WHEREOF, I have hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury.
Dated: May __, 2001
---------------------------------------
Joseph M. O'Donnell,
President and Chief Executive Officer
B-2
ARTICLES OF AMENDMENT
TO
BY-LAWS
OF
ARTESYN TECHNOLOGIES, INC.
Pursuant to the provisions of section 607.1020, Florida Statutes,
ARTESYN TECHNOLOGIES, INC. (the "Corporation") does hereby amend its
By-Laws
------------------------------------------------
1. The name of the Corporation is
ARTESYN TECHNOLOGIES, INC.
2. The By-Laws of the Corporation, as heretofore amended, are hereby
further amended as follows:
A. The existing Article IV (FOURTH) Section 4.2 of the By-Laws of the
Company relating to the number, election and term of office of directors is
hereby amended to delete such Section in its entirety and replace it with the
following:
"4.2. Number, Election and Term of Office. Until changed as hereinafter
provided, the number of directors shall be not less than three (3) nor more than
twelve (12) as may be from time to tine fixed by resolution of the Board of
Directors, but no decrease in the number of directors shall have the effect of
shortening the term of an incumbent director. The directors shall be divided
into three (3) classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third (1/3) of the total
number of directors constituting the entire board of directors. Class I
directors shall serve for a term ending upon the annual meeting of shareholders
held in the Corporation's fiscal 2002 year, Class II directors shall serve for a
term ending upon the annual meeting of shareholders held in the Corporation's
fiscal 2003 year and Class III directors shall serve for a term ending upon the
annual meeting of shareholders held in the Corporation's fiscal 2004 year. At
each succeeding annual meeting of shareholders beginning with the annual meeting
of shareholders held in the Corporation's fiscal 2005 year, successors to the
class of directors whose term expires at such annual meeting shall be elected
for a three-year term. Directors shall be elected by a plurality of the votes
cast at a meeting of shareholders by the holders of shares entitled to vote at
such meeting. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until the annual
meeting for the year in which his or her term expires and until his or
B-3
her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, incapacitation or removal from office, and except as
otherwise required by law. In the event such election is not held at an annual
meeting of shareholders, it shall be held at any adjournment thereof or a
special meeting."
B. The existing Article IV (FOURTH) Section 4.4.2 of the By-Laws of the
Company relating to vacancies on the board of directors is hereby amended to
delete such Section in its entirety and replace it with the following:
"4.4.2. Vacancies. Except as otherwise required by applicable law, any
vacancy on the Board of Directors or any additional directorship(s) that results
from an increase in the authorized number of directors of the Corporation may be
filled only by a majority vote of the members of the Board of Directors then in
office immediately prior to such increase in number; provided, that a quorum is
present, and any other vacancy occurring in the Board of Directors (including by
death, resignation or removal) shall be filled by a majority of the directors
then in office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors shall have the same remaining term as that of his or her
predecessor."
C. The existing Article IV (FOURTH) of the By-Laws of the Company
relating to the board of directors is hereby amended to add the following new
provision:
"4.10. Removal. Directors of the Corporation may only be removed for
cause by a vote of the Corporation's stockholders."
3. The amendments were approved by the Board of Directors, proposed by
them to the stockholders, and approved by the stockholders by a vote sufficient
for such approval.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that the
statements made herein are true under the penalties of perjury.
Dated: May __, 2001
---------------------------------------
Joseph M. O'Donnell,
President and Chief Executive Officer
B-4
ARTESYN TECHNOLOGIES, INC.
Proxy For Annual Meeting To Be Held on May 2, 2001
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of ARTESYN TECHNOLOGIES, INC., a Florida
corporation (the "Company"), hereby constitute(s) and appoint(s) PHILLIP A.
O'REILLY and BERT SAGER, and each of them, with full power of substitution in
each, as the agent, attorneys and proxies of the undersigned, for and in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of the Company to be held at Pete's Grand Terrace, 7880 Glades
Road, Boca Raton, Florida, on May 2, 2001 at 10:00 A.M. (local time), and any
adjournment(s) thereof, all of the shares of common stock which the undersigned
would be entitled to vote if then personally present at such meeting in the
manner specified and on any other business as may properly come before the
Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON
THE REVERSE SIDE. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR
ITEMS 1 AND 2 AND IN THE PROXIES' DISCRETION, UPON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT(S) THEREOF.
(Continued and to be signed and dated on the reverse side.)
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
listed below to vote for all nominees
listed below
Nominees: Edward S. Croft, III, Fred C. Lee, Lawrence J. Matthews,
Joseph M. O'Donnell, Stephen A. Ollendorff, Phillip A.
O'Reilly, Bert Sager, A. Eugene Sapp, Jr., Ronald D. Schmidt,
Lewis Solomon, John M. Steel
* EXCEPTIONS
--------------------------------------------------------------------
2. To consider and act upon a proposal to approve an amendment to the
Company's Articles of Incorporation to provide for the classification
of the Company's Board of Directors into three classes of directors
with staggered terms of office.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s)
thereof and as provided by Rule 14a-4(c) of the Securities Exchange Act
of 1934, as amended.
Please sign exactly as name appears to the
left. When shares are held by joint tenants,
both should sign. When signed as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated , 2001
---------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
Votes MUST be indicated (x) in Black or Blue Ink. [ ]