SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Comtech Telecommunications Corp.
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COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
November 1, 2001
To Our Stockholders:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Stockholders of Comtech Telecommunications Corp.
The meeting will be held at 10:00 a.m. on December 11, 2001 at the Marriott
Hotel, 1350 Old Walt Whitman Road, Melville, New York 11747. Copies of the
Notice of Annual Meeting of Stockholders, Proxy Statement and proxy card are
enclosed.
I believe that the annual meeting provides an excellent opportunity for
stockholders to become better acquainted with Comtech and its directors and
officers. I hope that you will be able to attend and I look forward to greeting
as many stockholders as possible.
It is important that your shares are voted at this meeting. Whether or not you
are able to attend in person, the prompt execution and return of your enclosed
proxy card in the envelope provided will both assure that your shares are
represented at the meeting and minimize the cost of proxy solicitations. If you
later decide to attend the annual meeting, you may revoke your proxy and vote in
person.
Sincerely,
FRED KORNBERG
Chairman, Chief
Executive Officer
and President
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 11, 2001
The annual meeting of Stockholders of COMTECH TELECOMMUNICATIONS CORP. (the
"Company") will be held at the Marriott Hotel, 1350 Old Walt Whitman Road,
Melville, New York 11747, on Tuesday, December 11, 2001 at 10:00 a.m., local
time, for the following purposes:
1. To elect three directors;
2. To approve an amendment to the Company's 2000 Stock Incentive Plan
increasing the number of shares of the Company's Common Stock
subject to awards under the Plan or with respect to which awards may
be granted;
3. To ratify the selection of auditors for the current fiscal year; and
4. To transact such other business as may properly come before the
meeting.
The Board of Directors unanimously recommends that the Stockholders vote "for"
Proposals 1, 2 and 3 to be presented to Stockholders at the Annual Meeting.
All stockholders are invited to attend the meeting. Stockholders of record at
the close of business on October 12, 2001, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Gail Segui
Secretary
November 1, 2001
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD IN ORDER THAT WE HAVE A QUORUM, WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING IN PERSON. PLEASE COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE (TO WHICH THE SENDER NEED
AFFIX NO POSTAGE IF MAILED WITHIN THE UNITED STATES). IF YOU RECEIVE MORE THAN
ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES,
YOU SHOULD SIGN AND RETURN EACH SUCH PROXY TO ASSURE THAT YOU VOTE ALL OF YOUR
SHARES. ALL REGISTERED HOLDERS SHOULD SIGN THE PROXY EXACTLY AS THE STOCK IS
REGISTERED.
COMTECH
TELECOMMUNICATIONS CORP.
105 Baylis Road
Melville, New York 11747
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Comtech
Telecommunications Corp. (the "Company") for use at the Annual Meeting of
Stockholders to be held on December 11, 2001, and at any adjournment thereof
(the "Annual Meeting"). It may be revoked at any time before exercise by
delivering a written notice of revocation to the Secretary of the Company, by
executing a subsequent proxy and presenting it to the Secretary of the Company,
or by attending the Annual Meeting and voting in person. All proxies will be
voted in accordance with the stockholders' instructions. If no directions are
specified, the proxies will be voted for the nominees for election as directors
and in favor of the matters set forth in the accompanying Notice of Annual
Meeting. A stockholder may choose to strike the names of the proxy holders named
in the enclosed proxy and may insert other names.
Only stockholders of record of the Company's Common Stock, par value $.10 (the
"Common Stock"), at the close of business on October 12, 2001 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting, or any
adjournment thereof, with each holder having one vote per share. The Annual
Meeting may be adjourned from time to time without notice other than by
announcement at the Annual Meeting. A list of stockholders entitled to vote at
the Annual Meeting will be available for inspection by any stockholder, for any
reason germane to the Annual Meeting, during ordinary business hours during the
ten days prior to the Annual Meeting at the Company's offices, 105 Baylis Road,
Melville, New York 11747. As of the Record Date, approximately 7,436,484 shares
of Common Stock were outstanding. It is anticipated that the mailing to
Stockholders of this Proxy Statement and the enclosed proxy will commence by
November 1, 2001.
The presence, in person or by proxy, of the holders of record at the close of
business on the Record Date of a majority of the outstanding shares of Common
Stock will constitute a quorum at the Annual Meeting. Directors will be elected
by a plurality of the votes cast (i.e., the three nominees receiving the
greatest number of votes will be elected as directors). Stockholder approval of
the amendment to the Company's 2000 Stock Incentive Plan and the ratification of
the selection of auditors will require the affirmative vote of a majority of the
shares present at the Annual Meeting and entitled to vote on such proposal.
Abstentions and broker non-votes with respect to any proposal (which occur when
a nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner) will be counted for purposes of determining the presence or absence of a
quorum. Abstentions also will be counted in determining the number of shares
present and entitled to vote on such proposal, but broker non-votes are not
counted as entitled to vote thereon.
1
PRINCIPAL STOCKHOLDERS OF COMTECH TELECOMMUNICATIONS CORP.
To the Company's knowledge, the following persons individually, or as a group,
beneficially own more than 5% of the Company's outstanding Common Stock (its
only outstanding class of voting securities) as of October 12, 2001. Unless
otherwise indicated, each person has sole voting and investment power with
respect to such person's shares.
Amount of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ -------------------- ----------------
Fred Kornberg (1) 386,000 5.1
105 Baylis Road
Melville, NY 11747
Lord Abbett & Company (2) 711,930 9.6
767 Fifth Avenue
New York, NY 10153-0203
Royce & Associates (2) 599,750 8.1
1414 Avenue of the Americas
New York, NY 10019
S Squared Technology Corp. (2) 556,848 7.5
515 Madison Avenue
Suite 4200
New York, NY 10022
(1) Includes 120,500 shares that Mr. Kornberg may acquire by the exercise of
vested stock options. Does not include the unvested portion of options
described elsewhere in this proxy statement. Does not include 3,000 shares
held in a Family Limited Partnership for which Mr. Kornberg is a General
Partner, and has a 1% ownership in, and for which he disclaims beneficial
ownership.
(2) The information presented in the table for Lord Abbett & Company, Royce &
Associates Inc. and S Squared Technology Corp. is based upon a Schedule
13F, filed by each of them with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Members of the
Board are elected for three-year terms, with the term of office of one class
expiring at each Annual Meeting of Comtech's stockholders. Mr. Kornberg and Mr.
Weiner are in the class whose term of office expires in 2001, Mr. Nocita is in
the class whose term of office expires in 2002 and Mr. Goldberg and Dr.
Bugliarello are in the class whose term of office expires in 2003. In October,
2001, the Company's Board of Directors expanded the Board and elected Mr. Kantor
to fill the newly-created vacancy, subject to his election to a three-year term
by the Company's stockholders at the 2001 Annual Meeting.
Certain information concerning the directors who are being nominated for
election or reelection at the meeting and the incumbent directors whose terms of
office continue after the Annual Meeting and executive officers of the Company
named in the section "Executive Compensation" and all directors and executive
officers as a group, is set forth below.
While the Board of Directors has no reason to believe that Mr. Kornberg, Mr.
Weiner or Mr. Kantor will not be available as a candidate for election, should
such a situation arise, the enclosed proxy may be voted for the election of
another nominee or nominees in the discretion of the persons acting pursuant to
the proxy.
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Shares
Beneficially
For Term Served As Owned Percent
Principal Expiring Director October 12, of
Name Occupation Age In Since 2001 Class
---- ---------- --- -- ----- ---- -----
Fred Kornberg (1)(2) Chairman, Chief 65 3 years 1971 386,000 5.1
Executive Officer
and President of
the Company
Sol S. Weiner (1)(3)(4) President, Sol S. 82 3 years 1980 51,500 *
Weiner Investments,
Inc.
Edwin Kantor (2)(3) Co-Chief Executive 69 3 years 2001 2,600 *
Officer, TPB
Financial Services
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING AND
CERTAIN EXECUTIVE OFFICERS
Shares
Beneficially
Term Served As Owned Percent
Principal Expires Director October 12, of
Name Occupation Age In Since 2001 Class
---- ---------- --- -- ----- ---- -----
Gerard R. Nocita (1)(3)(4)(5) Private Investor 65 1 year 1993 5,000 *
Richard L. Goldberg (1)(2)(5) Partner, Proskauer 65 2 years 1983 31,677 *
Rose LLP
George Bugliarello (1)(4)(5) Chancellor, Polytechnic 74 2 years 1977 34,100 *
University of NY
Richard L. Burt (1) Senior Vice President; 60 -- -- 126,396 1.7
President of Comtech
Systems, Inc.
Robert L. McCollum (1) Senior Vice President; 52 -- -- 91,500 1.2
President of Comtech
EF Data Corp.
Robert G. Rouse Senior Vice President 37 -- -- -- *
and Chief Financial
Officer of the Company
J. Preston Windus, Jr. (1) Group Vice President; 58 -- -- 100,500 1.3
President of Comtech
PST Corp.
Gail Segui (1) Secretary and Treasurer 55 -- -- 13,850 *
of the Company
All directors and executive
officers as a group (11 persons) 843,123 10.8
---------------------
* Less than one percent (Footnotes on next page)
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(1) Includes the following shares of Common Stock with respect to which such
persons have the right to acquire beneficial ownership within sixty days
from such date: Mr. Kornberg 120,500 shares; Mr. Weiner 5,000 shares; Mr.
Nocita 5,000 shares; Mr. Goldberg 6,500 shares; Dr. Bugliarello 5,000
shares; Mr. Burt 97,488 shares; Mr. McCollum 35,000 shares; Mr. Windus
60,750 shares; Ms. Segui 4,200 shares and all directors and officers as a
group 339,438 shares. These respective shares were deemed to be
outstanding for purposes of calculating the respective percentages owned.
(2) Member of Executive Committee
(3) Member of Audit Committee
(4) Member of Executive Compensation Committee
(5) Member of Nominating Committee
Mr. Kornberg has been Chief Executive Officer and President of the Company
since 1976. Prior to that, he was the Executive Vice President of the Company
from 1971 to 1976 and the General Manager of the telecommunications transmission
segment.
Dr. Bugliarello has been a director of the Company since 1977. He has also
been Chancellor of the Polytechnic University since 1994 and was President of
the University from 1973 to 1994. He is also a director of KeySpan Energy, The
Lord Corporation, and Symbol Technologies Inc.
Mr. Goldberg has been a director of the Company since 1983. He has also
been a partner since 1990 in the law firm of Proskauer Rose LLP, which renders
legal services to the Company. Prior to 1990, Mr. Goldberg was a partner since
1966 of the firm Botein Hays & Sklar.
Mr. Kantor has been a director since October 2001. He is currently
Co-Chief Executive Officer of TPB Financial Services and previously served as
Co-Chairman and Co-Chief Executive Officer of HCFP/Brenner Securities from 1999
to 2001. Previously, he served as Vice Chairman of Barington Capital Group from
1993 to 1999. Prior to joining Barington, Mr. Kantor spent 37 years in the
securities industry with Drexel Burnham Lambert and its predecessor firms, where
he held various positions, including serving as the firm's Chairman. Mr. Kantor
is also a member of the Board of Directors of Digital Transmission Systems, Inc.
Mr. Nocita has been a director of the Company since 1993. He is a private
investor. He was Treasurer of the Incorporated Village of Patchogue from 1993 to
1996. He was affiliated with the Company from our inception in 1967 until 1993.
Mr. Weiner has been a director of the Company since 1980. He is President
of Sol S. Weiner Investments, Inc. Previously he was Managing Director of
Stenhouse, Weiner, Sherman, Ltd., commodity pool managers, from 1982 to 1994. He
is also a director of Universal Automotive Industries, Inc.
Mr. Burt has been President of Comtech Systems since 1989 and Vice
President since its founding in 1984. He became a Senior Vice President of
Comtech Telecommunications in 1998 and had been a Vice President since 1992. Mr.
Burt first joined Comtech in 1979.
Mr. McCollum was appointed Senior Vice President of Comtech
Telecommunications in April 2000 and had been a Vice President since 1996. He
founded Comtech Communications Corp. in 1994 and had been its President since
its formation until July 2000. At that time, the Company acquired the EF Data
business, combined it with Comtech Communications Corp. to form Comtech EF Data
Corp., and appointed Mr. McCollum its President.
Mr. Rouse joined the Company as Senior Vice President and Chief Financial
Officer on July 16, 2001. He was previously employed by KPMG LLP in various
capacities for 15 years, including as a partner in the firm's assurance practice
from July 1998 to July 2001. KPMG LLP are the Company's independent auditors.
4
Mr. Windus has been a Group Vice President since July 2001. He served as
Senior Vice President and Chief Financial Officer of Comtech Telecommunications
from 1993 to July 2001. From 1993 to 1998, he also served as a Vice President of
Comtech Telecommunications. He became President of Comtech PST in 1995. Mr.
Windus was President of Fairchild Data Corp., a satellite modem manufacturer,
from 1989 to 1993.
Ms. Segui has been the Secretary and Treasurer of the Company since 1998
and the Corporate Controller of the Company since 1990. She joined Comtech
Telecommunications in 1987 as Accounting Manager. Prior to joining the Company,
Ms. Segui served as Accounting Manager of Photronics from 1984 to 1987.
During the past fiscal year, the Audit Committee of the Board of Directors held
five meetings. The functions of the Committee include recommending to the Board
the engagement of independent auditors, directing investigations into matters
relating to audit functions, reviewing the plan and results of audits with the
Company's auditors, reviewing the Company's internal accounting controls and
approving services to be performed by the Company's auditors and related fees.
The Board of Directors has determined that all members of the Audit Committee
are "independent" as defined in the applicable standards of the Nasdaq National
Market. The Board of Directors has adopted a written charter for the Audit
Committee.
The Executive Compensation Committee of the Board of Directors considers and
authorizes remuneration arrangements for senior management; the Committee also
constitutes the Stock Option Committee of the Board of Directors, which
administers the Company's stock option plans. The Committee held three meetings
during the past fiscal year.
The Executive Committee of the Board of Directors did not hold any meetings
during the past fiscal year. Except as limited by law, the Executive Committee
has the authority to act upon all matters requiring Board approval.
The Nominating Committee identifies and evaluates candidates for election as
members of the Board of Directors and reports its findings to the full Board.
The Nominating committee held one meeting during the past fiscal year.
The Board of Directors held seven meetings during the past fiscal year.
The Board of Directors recommends a vote FOR the election of Fred Kornberg, Sol
S. Weiner, and Edwin Kantor to the Board of Directors.
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
2000 STOCK INCENTIVE PLAN
The Company's stockholders are being asked to approve the adoption of an
amendment to the Comtech Telecommunications Corp. 2000 Stock Incentive Plan (the
"Plan").
On October 9, 2001, the Company's Board of Directors unanimously approved the
amendment to the Plan, subject to stockholder approval, to provide that the
aggregate number of shares of the Company's Common Stock subject to awards under
the Plan or with respect to which awards may be granted be increased by 250,000
shares. Currently, the aggregate number of shares of Common Stock which may be
issued or used for reference purposes under the Plan or with respect to which
awards may be granted may not exceed 850,000 shares of Common Stock plus 882,935
shares of Common Stock relating to outstanding awards that were previously
granted under the 1982 Incentive Stock Option Plan and the 1993 Incentive Stock
Option Plan, as amended (the "Existing Option Plans") which have been
transferred to the Plan, for a total share limit of 1,732,935 shares of Common
Stock. As of October 12, 2001, options to purchase 1,214,028 shares were
outstanding under the Plan, and only 327,510 shares remain available for future
issuance or for reference purposes under the Plan or with respect to which
awards may be granted (excluding any shares that may become available as a
result of the expiration or termination without exercise of currently
outstanding options).
The Board of Directors believes the amendment to the Plan is in the best
interests of the Company and its stockholders and is intended to enhance the
profitability and value of the Company for the benefit of its stockholders. The
Board of Directors believes that in an increasingly competitive environment for
qualified technical, sales, marketing and other personnel, the ability of the
Company to make equity-based awards will continue to be a key factor in the
recruitment and retention of such personnel.
On October 9, 2001, the Company's Board of Directors also adopted an amendment
to the Plan, for which
5
stockholder approval is not required or being sought at the Annual Meeting, to
(i) increase the number of shares of Common Stock subject to a stock option
granted to a non-employee director each August 1 from 3,500 shares to 5,000
shares, commencing August 1, 2002, and (ii) authorize the grant, on November 1,
2001, to each non-employee director of a stock option to purchase 1,500 shares
of Common Stock.
The Board of Directors recommends approval of the amendment to the Plan
increasing the number of shares thereunder. The following description of the
Plan is a summary and is qualified in its entirety by reference to the Plan and
the amendment. A copy of the Plan is available from Investor Relations at the
Corporate Offices, 105 Baylis Road, Melville, NY 11747.
Administration
The Plan is administered and interpreted by a committee or subcommittee of the
Board appointed from time to time by the Board (the "Committee"), consisting of
two or more non-employee directors, each of whom is intended to be a
non-employee director as defined in Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, and an outside director as defined under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Currently, the Stock
Option Committee serves as the Committee for the Plan. With respect to awards to
non-employee directors, the Plan is administered by the Board of Directors and
all references to the Committee are deemed to refer to the Board of Directors
for this purpose.
The Committee has the full authority to administer and interpret the Plan to
grant discretionary awards under the Plan, to determine the persons to whom
awards will be granted, to determine the types of awards to be granted, to
determine the terms and conditions of each award, to determine the number of
shares of Common Stock to be covered by each award and to make all other
determinations in connection with the Plan and the awards thereunder as the
Committee, in its sole discretion, deems necessary or desirable.
The terms and conditions of individual awards are set forth in written
agreements which are consistent with the terms of the Plan. Awards under the
Plan may not be made on or after October 19, 2009, the tenth anniversary of the
adoption of the Plan, but awards granted prior to such date may extend beyond
that date.
Eligibility and Types of Awards
All employees and consultants of the Company and its affiliates (including
prospective employees and consultants) are eligible to be granted nonqualified
stock options, stock appreciation rights, restricted stock, performance shares,
performance units, other stock-based awards and awards providing benefits
similar to those listed above which are designed to meet the requirements of non
U.S. jurisdictions under the Plan. In addition, employees of the Company and its
affiliates that qualify as subsidiaries or parent corporations (within the
meaning of Section 424 of the Code) are eligible to be granted incentive stock
options ("ISOs") under the Plan. Non-employee directors of the Company are
eligible to receive nondiscretionary grants of nonqualified stock options.
Available Shares
Under the Plan, as amended, the aggregate number of shares of Common Stock which
may be issued or used for reference purposes under the Plan or with respect to
which awards may be granted may not exceed 1,100,000 shares of Common Stock plus
shares of Common Stock relating to outstanding awards that were previously
granted under the 1982 Incentive Stock Option Plan and the 1993 Incentive Stock
Option Plan, as amended (the "Existing Option Plans") which have been
transferred to the Plan, for a total share limit of 1,982,935 shares of Common
Stock. The terms applicable to these awards in effect prior to the Plan's
assumption of these awards continue to apply.
The maximum number of shares of Common Stock with respect to which any option,
stock appreciation right or award of performance shares or award of restricted
stock for which the grant of such award or lapse of the relevant restriction
period is subject to attainment of pre-established performance goals (in
accordance with Code Section 162 (m)) which may be granted under the Plan during
any fiscal year of the Company to any individual is 100,000 shares per type of
award, provided that the maximum number of shares of Common Stock for all types
of awards does not exceed 100,000 during any fiscal year. The maximum value at
grant of performance units which may be granted under the Plan during any fiscal
year of the Company to any individual is $100,000. To the extent that shares of
Common Stock for which awards are permitted to be granted to an individual
during a fiscal year are not covered by an award in a fiscal year, the number of
shares of Common Stock available for awards to such individual will
automatically increase in subsequent fiscal years until used.
6
The aggregate number of shares of Common Stock available under the Plan as well
as the maximum number of shares that may be granted are subject to appropriate
adjustment by the Committee in the event of changes in the Company's capital
structure or business by reason of certain corporate transactions or events.
Awards Under the Plan
Stock Options. The Committee may grant nonqualified stock options and ISOs to
purchase shares of Common Stock. The Committee determines the number of shares
of Common Stock subject to each option, the term of each option (which may not
exceed 10 years (or five years in the case of an ISO granted to a 10%
shareholder)), the exercise price, the vesting schedule (if any), and the other
material terms of each option. No ISO or nonqualified stock option which is
intended to be performance based for purposes of Code Section 162(m) may have an
exercise price less than the fair market value of the Common Stock at the time
of grant (or, in the case of an ISO granted to a 10% shareholder, 110% of fair
market value).
Options are exercisable at such time or times and subject to such terms and
conditions as determined by the Committee at grant and the exercisability of
such options may be accelerated by the Committee in its sole discretion. Payment
of an option's exercise price may be made: (i) in cash or by check, bank draft
or money order, (ii) through a "cashless exercise" procedure whereby the
recipient delivers irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price, or (iii) on such other terms
and conditions as may be acceptable to the Committee.
Stock Appreciation Rights. The Committee may grant stock appreciation rights
("SARs") either with a stock option which may be exercised only at such times
and to the extent the related option is exercisable ("Tandem SAR") or
independent of a stock option ("Non-Tandem SARs"). An SAR is a right to receive
a payment either in cash or common stock, as the Committee may determine, equal
in value to the excess of the fair market value of one share of Common Stock on
the date of exercise over the exercise price per share established in connection
with the grant of the SAR. The exercise price per share covered by a SAR is the
exercise price per share of the related option in the case of a Tandem SAR and
is the fair market value of the Common Stock on the date of grant in the case of
a Non-Tandem SAR.
Restricted Stock. The Committee may award "restricted" shares of Common Stock.
Upon the award of restricted stock, the recipient has all rights of a
stockholder with respect to the shares, including the right to receive
dividends, the right to vote the shares of restricted stock and, conditioned
upon full vesting of shares of restricted stock, the right to tender such
shares, subject to the conditions and restrictions generally applicable to
restricted stock or specifically set forth in the recipient's restricted stock
agreement. The Committee may, in its sole discretion, determine at grant, that
the payment of dividends, if any, shall be deferred until the expiration of the
applicable restriction period. Recipients of restricted stock are required to
enter into a restricted stock agreement with the Company which states the
restrictions to which the shares are subject and the criteria or date or dates
on which such restrictions will lapse.
If the grant of restricted stock or the lapse of the relevant restriction is
based on the attainment of objective performance goals, the Committee shall
establish the performance goals, formulae or standards and the applicable
vesting percentage for the restricted stock award applicable to each recipient
while the outcome of the performance goals are substantially uncertain. Such
performance goals may incorporate provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar events or
circumstances. Section 162(m) of the Code requires that performance awards be
based upon objective performance measures. The performance goals will be based
on one or more of the following criteria ("Performance Criteria"): (i) revenues,
income before income taxes and extraordinary income, net income, earnings before
income tax, earnings before interest, taxes, depreciation and amortization or a
combination of any or all of the foregoing; (ii) after-tax or pre-tax profits;
(iii) operational cash flow; (iv) level of, reduction of, or other specified
objectives with regard to the Company's bank debt or other long-term or
short-term public or private debt or other similar financial obligations; (v)
earnings per share or earnings per share from continuing operations; (vi) return
on capital employed or return on invested capital; (vii) after-tax or pre-tax
return on stockholders' equity; (viii) economic value added targets; (ix) fair
market value of the shares of Common Stock; and (x) the growth in the value of
an investment in Common Stock assuming the reinvestment of dividends. In
addition, such performance goals may be based upon the attainment of specified
levels of Company (or a subsidiary, division or other operational unit of the
Company) performance under one or more of the measures described relative to the
performance of other corporations. To the extent permitted under the Code, the
Committee may: (i) designate additional business criteria on which the
performance goals may be based; or (ii) adjust, modify or amend the
aforementioned business criteria.
7
Performance Units and Performance Shares. The Committee may grant performance
shares entitling recipients to receive a fixed number of shares of Common Stock
or the cash equivalent thereof, as determined by the Committee in its sole
discretion, upon the attainment of performance goals established by the
Committee (based on the Performance Criteria), based on a specified performance
period. The Committee may also grant performance units entitling recipients to
receive a value payable in cash or shares of Common Stock, as determined by the
Committee, upon the attainment of performance goals established by the Committee
(based on the Performance Criteria), for a specified performance cycle. The
Committee may subject such grants of performance shares and performance units to
such vesting and forfeiture conditions as it deems appropriate.
Other Stock-Based Awards. The Committee may grant awards of Common Stock and
other awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock and may be granted either alone or in
addition to or in tandem with stock options, stock appreciation rights,
restricted stock, performance shares or performance units.
The Committee also determines the purchase price to be paid, if any, by a
recipient to purchase other stock-based awards (including, without limitation,
shares of Common Stock). The purchase of shares of Common Stock or other
stock-based awards may be made on either an after-tax or pre-tax basis, as
determined by the Committee; provided, however, that if the purchase is made on
a pre-tax basis, such purchase will be made pursuant to a deferred compensation
program established by the Committee, which will be deemed to be part of the
Plan.
Change in Control
Unless determined otherwise by the Committee at the time of grant, and except to
the extent provided in the applicable award agreement, the recipient's
employment agreement or other agreement approved by the Committee, accelerated
vesting or lapsing of restrictions of awards will occur upon a change in control
of the Company (as defined in the Plan). Upon a change in control of the
Company, options granted to non-employee directors will be subject to the rules
described below.
Non-Employee Director Stock Option Grants
The Plan authorizes the automatic grant of nonqualified stock options to each
non-employee director, without further action by the Board or the stockholders,
as follows: (i) options to purchase 3,000 shares of Common Stock will be granted
to each non-employee director as of the date he or she begins service as a
non-employee director on the Board, provided that such service begins after the
Plan's effective date; and (ii) options to purchase 5,000 shares of Common Stock
commencing on August 1, 2002 will be granted to each non-employee director as of
each August 1, provided that the non-employee director has served as a director
for at least 6 months; and (iii) options to purchase 1,500 shares of Common
Stock will be granted to each non-employee director serving on the Board as of
November 1, 2001. The exercise price per share of such options will be the fair
market value of the Common Stock at the time of grant. The term of each such
option will be 10 years. Options granted to non-employee directors will vest and
become exercisable one year after the date of grant, provided that the option
may be vested only during the continuance of his or her service as a director of
the Company. All options granted to non-employee directors and not previously
exercisable will become fully exercisable upon death and immediately upon a
change in control of the Company (as defined in the Plan).
Amendment and Termination
The Board or Committee may at any time, amend any or all of the provisions of
the Plan, or suspend or terminate it entirely, retroactively or otherwise.
However, no amendment may be made without the approval of the Company's
stockholders in accordance with the laws of the State of Delaware, to the extent
required under Section 162(m) of the Code, or to the extent applicable to ISOs,
Section 422 of the Code, which would: (i) increase the aggregate number of
shares of Common Stock that may be issued; (ii) increase the maximum individual
participant share limitations for a fiscal year; (iii) change the classification
of employees or consultants eligible to receive awards; (iv) decrease the
minimum exercise price of any stock option or SAR; (v) extend the maximum option
term; (vi) materially alter the Performance Criteria; or (vii) require
stockholder approval in order for the Plan to continue to comply with the
applicable provisions of Section 162(m) of the Code or, to the extent applicable
to ISOs, Section 422 of the Code.
8
Miscellaneous
Awards granted under the Plan are generally nontransferable, except that the
Committee may provide for the transferability of nonqualified stock options to a
recipient's family member (as defined in the Plan) at the time of grant or
thereafter. The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan is not,
nor is it intended to be, qualified under Section 401(a) of the Code.
The following outstanding options have been granted under the Plan during the
fiscal year ended July 31, 2001 to each of the following executive officers of
the Company named in the Summary Compensation Table below, all current executive
officers as a group, all current directors who are not executive officers as a
group, each nominee for election as a director, and all other employees.
Number of
---------
Group or Individual Shares
------------------- ------
Fred Kornberg 70,000
Robert G. Rouse 50,000
Robert L. McCollum 25,000
Richard L. Burt 22,500
J. Preston Windus, Jr 30,000
Gail Segui 10,000
All executive officers, as a group (6 persons) 207,500
All directors who are not executive officers, as a group (4 persons) 14,000
All other employees 213,200
Nominee for election as a director (1 person) -0-
Certain Federal Income Tax Consequences Relating to the Plan
The following discussion of the principal U.S. federal income tax consequences
with respect to options under the Plan is based on statutory authority and
judicial and administrative interpretations as of the date of this proxy
statement, which are subject to change at any time (possibly with retroactive
effect) and may vary in individual circumstances. Therefore, the following is
designed to provide only a general understanding of the material federal income
tax consequences (state, local, estate and social security tax consequences are
not addressed below). This discussion is limited to the U.S. federal income tax
consequences to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a foreign country.
Incentive Stock Options. In general, an employee will not realize taxable income
upon either the grant or the exercise of an ISO and the Company will not realize
an income tax deduction at either time. If the employee does not sell the Common
Stock received pursuant to the exercise of an ISO within either (1) two years
after the date of the grant of the ISO or (2) one year after the date of
exercise, a subsequent sale of the Common Stock will result in long-term capital
gain or loss to the employee and will not result in a tax deduction to the
Company.
If the employee disposes of the Common Stock acquired upon exercise of the ISO
within either of the above-mentioned time periods, the employee will generally
realize as ordinary income an amount equal to the lesser of: (1) the fair market
value of the Common Stock on the date of exercise over the option's exercise
price, or (2) the amount realized upon disposition over the exercise price. In
this event, the Company generally will be entitled to an income tax deduction
equal to the amount recognized as ordinary income. Any gain in excess of the
amount realized by the employee as ordinary income will be taxed at the rates
applicable to short-term or long-term capital gains, depending on the holding
period.
Nonqualified Stock Options. A recipient (i.e., an employee, consultant or
director) will not realize any taxable income upon the grant of a nonqualified
stock option and the Company will not receive a deduction at the time of grant
unless the option has a readily ascertainable fair market value (as determined
under applicable tax law) at the time of grant. Upon the exercise of a
nonqualified stock option, the recipient generally will realize ordinary income
in an amount equal to the excess of the fair market value of the Common Stock on
the date of exercise over the option's exercise price. Upon a subsequent sale of
the Common Stock by the recipient, the recipient will recognize short-term
9
or long-term capital gain or loss depending upon his or her holding period for
the Common Stock. The Company will generally be allowed a deduction equal to the
amount recognized by the recipient as ordinary income.
Other Tax Consequences. In addition, (i) any officers and directors of the
Company subject to Section 16(b) of the Exchange Act may also be subject to
special tax rules regarding the income tax consequences concerning their
options, (ii) any entitlement to a tax deduction on the part of the Company is
subject to the applicable tax rules (including, without limitation, Section
162(m) of the Code regarding a $1,000,000 limitation on deductible
compensation), (iii) the exercise of an ISO may have implications in the
computation of alternative minimum taxable income, and (iv) in the event that
the exercisability or vesting of any option is accelerated because of a change
of control, payments relating to the option, either alone or together with
certain other payments, may constitute parachute payments under Section 280G of
the Code, which excess amounts may be subject to excise taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any recipient during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a Committee comprised of outside directors.
The Plan is intended to satisfy these requirements with respect to options.
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present in person or represented by proxy at the Annual Meeting of
Stockholders and entitled to vote on the Plan will be required for approval of
the Plan.
The Board of Directors recommends that the stockholders vote FOR approval of the
Amendment to the Company's 2000 Stock Incentive Plan.
SELECTION OF AUDITORS
The Board of Directors has selected KPMG LLP as the Company's auditors for the
2002 fiscal year, subject to ratification by the stockholders. If the
stockholders do not ratify such selection, it will be reconsidered by the Board.
Representatives of KPMG LLP are expected to be present at the Annual Meeting of
Stockholders, with the opportunity to make a statement, should they so desire,
and to be available to respond to appropriate questions.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon will be
required to ratify the selection of KPMG LLP as the Company's auditors for the
current fiscal year.
Audit Fees
The aggregate fees billed for professional services rendered by KPMG LLP for the
audit of the Company's annual consolidated financial statements for the fiscal
year ended July 31, 2001, and the reviews of the consolidated financial
statements included in the Company's quarterly reports on Form 10-Q during the
fiscal year ended July 31, 2001, were $145,000.
Financial Information Systems Design and Implementation Fees
No financial information systems design and implementation services were
provided by KPMG LLP during the fiscal year ended July 31, 2001.
All Other Fees
The aggregate fees billed for all other services rendered by KPMG LLP, exclusive
of the audit fees disclosed above, during the fiscal year ended July 31, 2001
were $363,000. Such fees relate primarily to tax and acquisition services.
10
Consideration of Non-Audit Services Provided by the Independent Accountant
The Audit Committee has considered whether the non-audit services provided by
KPMG LLP are compatible with maintaining the auditors' independence.
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG LLP as the Company's auditors.
EXECUTIVE COMPENSATION
Summary Compensation Table for the Fiscal Years
Ended July 31, 2001, 2000 and 1999
Annual Long Term
Compensation Compensation
------------ ------------
Fiscal Options Restricted
Name and Principal Position Year Salary Bonus Other No. Of Stock
--------------------------- ---- ------ ----- ----- Shares Awards
------ ------
Fred Kornberg (1) 2001 $332,000 370,000 * 70,000 --
Chairman, Chief Executive 2000 302,000 250,000 * -- --
Officer and President 1999 265,000 95,445 * 30,000 --
Richard L. Burt (3) 2001 210,000 103,000 * 22,500 --
Senior Vice President; 2000 195,000 211,500 * -- --
President of Comtech Systems, Inc. 1999 160,000 69,600 * 15,000 --
Robert L. McCollum (3) 2001 210,000 110,000 * 25,000 --
Senior Vice President; President 2000 145,000 20,800 * -- $856,800(5)
Comtech EF Data Corp. 1999 135,000 -- * -- --
Robert G. Rouse (2) 2001 9,615 5,000 * 50,000 --
Senior Vice President &
Chief Financial Officer
J. Preston Windus, Jr. (3) 2001 210,000 20,000 * 30,000 --
Group Vice President; 2000 195,000 50,000 * -- --
President of Comtech PST Corp. 1999 170,000 29,200 * 15,000 --
Gail Segui (4) 2001 109,500 10,000 * 10,000 --
Secretary and Treasurer 2000 102,000 25,000 * -- --
1999 80,000 6,300 * -- --
-------------------
* Less than 10% of the total salary and bonus reported for such officer.
(1) Mr. Kornberg is employed pursuant to an agreement which was amended and
restated in October 2001 and which provides, among other things, for his
employment until 2003; provided, however, that the employment period shall
be automatically extended for successive two year periods unless either
party gives notice of non-extension to the other at least six months in
advance of the then scheduled termination date; at a current basic
compensation of $385,000 per annum plus such additional amounts, if any,
as the Board of Directors may from time to time determine and incentive
compensation, not to exceed his basic compensation, equal to 3.5% of the
Company's pre-tax income plus such additional amounts as the Board of
Directors may from time to time determine. If Mr. Kornberg voluntarily
terminates his employment with the Company other than after a Change in
Control (as defined in his employment agreement), or if the Company
terminates his employment due to disability or for cause, he will forfeit
his right to receive accrued but unpaid incentive compensation. If a
Change in Control of the Company occurs, Mr. Kornberg is entitled to
terminate his employment and receive a lump sum payment (subject to
possible adjustments to avoid the characterization of the payment as
excess parachute payments and the consequent imposition of taxes under
Section 280G of the Code) equal to the sum of (i) his then basic
compensation for the balance of the
11
employment period or three times his basic compensation, whichever is
greater, (ii) accrued but unpaid incentive compensation with respect to
prior fiscal years and (iii) if he so elects, the market value less the
applicable exercise price, of any stock option then held by him. The
aggregate of (i), (ii) and (iii), as of October 12, 2001, would have been
$3,537,500. Mr. Kornberg would also be entitled to receive benefits under
the Company's benefit plans, or substantially equal benefits, for the
remainder of the employment period.
(2) Mr. Rouse is employed pursuant to an agreement dated July 16, 2001, which
provides, among other things, for his employment through October 17, 2003.
The agreement provides for a minimum base compensation of $250,000 per
annum, subject to increase at the discretion of the Board of Directors,
and incentive compensation based on the attainment of certain corporate
goals and personal performance targets, as approved by the Board of
Directors. If Mr. Rouse's employment is terminated prior to October 17,
2003, other than for cause, death or disability, Mr. Rouse is entitled to
receive his base compensation, as well as benefits under the Company's
benefit plans, for the remainder of the employment period.
(3) Mr. Windus, Mr. Burt, and Mr. McCollum are eligible to receive, in
addition to their respective base compensation amounts, a percentage of
the relevant subsidiary's pre-tax profits based principally upon the
attainment of various goals plus such additional amounts, if any, as the
Board of Directors may from time to time determine. These goals, which may
include target levels of sales, pre-tax profits, customer orders or cash
flow, are developed by senior management and submitted to the Executive
Compensation Committee for annual approval.
(4) Ms. Segui is eligible to receive incentive compensation based upon the
attainment of certain corporate goals and personal performance targets
plus such additional amounts, if any, as the Board of Directors may from
time to time determine. These goals and targets are developed by senior
management and submitted to the Executive Compensation Committee for
annual approval.
(5) Comprises the value of restricted stock granted to Mr. McCollum in 1994
that was subject to performance-based vesting and the lapse of time, each
of which conditions was waived by the Company in fiscal 2000 in connection
with the EF Data acquisition, as a result of which EF Data's operations
were combined with those of Comtech Communications Corp.
OPTION GRANTS IN THE FISCAL YEAR ENDED JULY 31, 2001
Potential Realizable
Value at Assumed Annual
Number of % of Total Rates of Stock
Securites Options Price Appreciation for
Underlying Granted to Option Term (3)
Options Employees in Exercise Price Expiration ---------------
Name Granted (1) Fiscal Year Per Share (2) Date 5% 10%
---- ----------- ----------- ------------- ---- -- ---
Fred Kornberg 20,000 16.10% $ 15.00 10/19/10 $ 188,668 $ 478,123
50,000 11.38 12/12/10 357,841 906,839
Richard L. Burt 22,500 5.18% 11.38 12/12/10 161,028 408,078
Robert L. McCollum 25,000 5.75% 11.38 12/12/10 178,921 453,420
Robert G. Rouse 50,000 11.50% 14.00 07/16/11 440,226 1,115,620
J. Preston 10,000 6.90% 15.00 10/19/10 94,334 239,061
Windus, Jr. 20,000 11.38 12/12/10 143,136 362,736
Gail Segui 5,000 2.30% 15.00 10/19/10 47,167 119,531
5,000 11.38 12/12/10 35,784 90,684
12
(1) The options have ten-year terms and become exercisable in five equal
annual installments beginning on the first anniversary of the date of
grant.
(2) The exercise price is the market price on the date the options were
granted.
(3) In accordance with SEC rules, these columns show gains that might exist
for the respective options, assuming the market price of Comtech's Common
Stock appreciates from the date of grant over a period of ten years at the
annualized rates of five and ten percent, respectively. If the stock price
does not increase above the exercise price at the time of exercise,
realized value to the named executives from these options will be zero.
AGGREGATE OPTION EXERCISES IN
FISCAL YEAR ENDED JULY 31, 2001
AND OPTION VALUES AS OF JULY 31, 2001
Value of Unexercised
Number of Unexercised In-the-Money Options at
Shares Options at July 31, 2001 July 31, 2001(2)
Acquired Value ------------------------ ----------------
Name on Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
Fred Kornberg 15,000 $158,450 106,500 125,500 $1,176,075 $718,525
Richard L. Burt 3,000 31,260 92,988 31,500 1,038,109 134,775
Robert L. McCollum -- -- 30,000 55,000 346,500 425,750
Robert G. Rouse -- -- -- 50,000 -- 27,500
J. Preston Windus, Jr. -- -- 54,750 63,000 595,238 404,050
Gail Segui 5,900 64,289 2,200 12,700 25,712 47,337
(1) "Value Realized" is calculated by determining the difference between the
fair market value of the Common Stock on the date the options are
exercised and the exercise price of the options.
(2) "In-the-Money Options" would be options outstanding at the end of July 31,
2001 for which the fair market value of the Common Stock on such date
($14.55) exceeded the exercise price of the options.
The Executive Compensation Committee has furnished the following report, which
describes the Committee's compensation policies applicable to the Company's
executive officers and provides specific information regarding the compensation
of the Company's Chief Executive Officer. (The information contained in the
"Executive Compensation Committee Report" is not to be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor is
such information to be incorporated by reference into any future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates it
by reference into such filing.)
Executive Compensation Committee Report
Compensation Policies. The principal goal of the Company's compensation program
as administered by the Executive Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
Base Salary. Base salaries paid to the Company's executive officers are intended
to be competitive with those paid to executives holding comparable positions in
the marketplace. Individual performance and the performance of the Company or
the applicable operating subsidiary are considered when setting salaries within
the range for each position. Annual reviews are held and adjustments are made
based on attainment of individual goals in a manner consistent with operating
and financial performance.
Bonuses. Annual cash bonuses are intended to motivate performance by creating
the potential to earn annual incentive awards that are contingent upon personal
and business performance. Excluding the Chief Executive Officer, bonuses are
paid to the Company's executive officers pursuant to the Company's Incentive
Compensation Plan for Subsidiary Presidents and Key Employees (the "Incentive
Compensation Plan"). Each of the Company's executive officers other than the
Chief Executive Officer, the Chief Financial Officer and the Secretary,
Treasurer is a
13
President of one of the Company's operating subsidiaries. Under the Incentive
Compensation Plan, the President of each of these subsidiaries is entitled to
receive a bonus of up to a fixed percentage of each subsidiary's pre-tax profit
each year, subject to the attainment of subsidiary pre-tax profit, new orders,
and cash flow targets and personal performance targets that are proposed by
senior management and established by the Executive Compensation Committee, plus
such additional amounts, if any, as the Board of Directors may from time to time
determine. The Chief Financial Officer and the Secretary, Treasurer's incentive
compensation is subject to attainment of certain corporate goals and personal
performance targets that are proposed by senior management and established by
the Executive Compensation Committee, plus such additional amounts, if any, as
the Board of Directors may from time to time determine.
Long Term Incentives. The Company provides its executive officers with long-term
incentive compensation through grants of stock options under the Company's stock
option plan. The grant of stock options aligns the executive's interests with
those of the Company's stockholders by providing the executive with an
opportunity to purchase and maintain an equity interest in the Company and to
share in the appreciation of the value of the Company's Common Stock. In fiscal
2001, 137,500 options to purchase shares of the Company's Common Stock were
granted to the Company's five executive officers other than the Chief Executive
Officer.
CEO's Compensation. Pursuant to Mr. Kornberg's employment agreement referred to
in Note (1) to the Summary Compensation Table in "Executive Compensation," Mr.
Kornberg received a base salary of $332,000 for fiscal 2001 and a bonus of
$370,000 which is equal to 3.5% of the Company's pre-tax income. In addition,
Mr. Kornberg was awarded options to purchase an aggregate of 70,000 shares in
the Company's Common Stock. The options are vested equally over five years and
expire on the tenth anniversary of the date of the grant.
The Executive Compensation Committee
George Bugliarello, Chairman
Gerard R. Nocita
Sol S. Weiner
COMPENSATION OF DIRECTORS
Each Director who is not a salaried employee of the Company receives an annual
retainer of $20,000. Under the Company's 2000 Stock Incentive Plan, each
director who is not already an employee of the Company receives an option grant
to purchase: (i) 3,000 shares of Common Stock as of the date the director begins
service on the Board and (ii) 5,000 shares of Common Stock on each August 1st,
commencing August 1, 2002 (before such date 3,500 shares) during the term of the
Plan; and (iii) 1,500 shares of Common Stock as of November 1, 2001. The options
are exercisable one year after the date of grant. The exercise price of all such
options is equal to the stock's fair market value on the date of grant.
The Audit Committee has furnished the following report. The information
contained in the "Audit Committee Report" is not to be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor is
such information to be incorporated by reference into any future filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates it
by reference into such filing.
Audit Committee Report
The Audit Committee reviews the Company's financial reporting process on behalf
of the Board of Directors. Management is responsible for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for expressing an opinion on the
conformity of the audited financial statements with accounting principles
generally accepted in the United States of America.
14
In fulfilling its responsibilities:
o The Audit Committee reviewed and discussed the audited financial
statements contained in the 2001 Annual Report on SEC Form 10-K with
the Company's management and the independent auditors.
o The Audit Committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees).
o The Audit Committee received from the independent auditors written
disclosures regarding the auditors' independence, as required by
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and discussed with the auditors their independence from
the Company and its management.
In reliance on the reviews and discussions noted above, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Company's Annual Report on SEC
Form 10-K for the year ended July 31, 2001, for filing with the Securities and
Exchange Commission.
Audit Committee of the Board of Directors
Sol S. Weiner, Chairman
Gerard R. Nocita
George Bugliarello
15
STOCK COMPARISON GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG COMTECH TELECOMMUNICATIONS CORP., THE S & P 500 INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
[LINE GRAPH OMITTED]
[The following table was depicted as a line graph in the printed material.]
Cumulative Total Return
-------------------------------------------------------------
7/96 7/97 7/98 7/99 7/00 7/01
COMTECH TELECOMMUNICATIONS CORP. 100.00 92.98 182.46 500.00 605.26 612.63
S & P 500 100.00 152.14 181.48 218.14 237.72 203.66
NASDAQ TELECOMMUNICATIONS 100.00 133.20 220.68 339.25 347.10 150.10
* $100 INVESTED ON 7/31/1996 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases its facilities in Melville, New York from a partnership
controlled by the Company's Chairman and Chief Executive Officer. The lease, as
amended, provides for the Company's exclusive use of the premises as they now
exist for an initial term of ten years. The Company has the option to extend the
term of the lease for an additional ten-year period, and a right of first
refusal in the event of a sale of the facility. The Company has exercised its
option to extend the lease for an additional ten-year period. The annual rental
under the lease ($468,000 in fiscal 2001) is subject to adjustments.
The Company leases its St. Cloud, Florida facility from a partnership in which
J. Preston Windus, Jr., Group Vice President and President of Comtech PST, was a
general partner. The annual rental under the lease ($207,000 in fiscal 2001) is
subject to adjustments. Mr. Windus sold his interest in the facility during
fiscal 2001.
During fiscal 2001, Robert L. McCollum, Senior Vice President and President of
Comtech EF Data, borrowed $250,000 from the Company. Such indebtedness bore
interest at an annual rate of 6.24% and was repaid in full on September 10,
2001.
16
VOTING OF PROXIES AND OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at the
meeting. If other matters do come before the meeting, the persons acting
pursuant to the proxy will vote on them in their discretion.
Proxies may be solicited by mail, telephone, telegram, and personally by
directors, officers and other employees of the Company. The cost of soliciting
proxies will be borne by the Company. A complete list of stockholders entitled
to vote at the Annual Meeting will be available for inspection beginning
December 3, 2001 at the Company's headquarters located at 105 Baylis Road,
Melville, New York 11747.
SECTION 16(a) BENEFICIAL OWNERSHIP VOTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, if any, to
file with the Securities and Exchange Commission ("SEC") reports of ownership,
and reports of changes in ownership, of equity securities of the Company. Such
persons are also required to furnish the Company with copies of all such reports
that they file. Based solely on such reports and written representations of the
Company's directors and executive officers, the Company believes that during the
two fiscal year period ended July 31, 2001, the Company's executive officers and
directors complied with all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Eligible stockholders wishing to have a proposal for action by the stockholders
at the 2002 Annual Meeting included in the Company's proxy statement must submit
such proposal at the principal offices of the Company not later than July 3,
2002. It is suggested that any such proposals be submitted by certified mail,
return receipt requested. Under the Company's By-Laws, a stockholder nomination
for election to the Board of Directors may not be made at the 2002 Annual
Meeting unless notice (including all information that would be required in
connection with such nomination under the Securities and Exchange Commission's
proxy rules if such nomination were the subject of a proxy solicitation and the
written consent of each nominee for election to the Board of Directors named
therein to serve if elected) and the name, address and number of shares of
Common Stock held of record or beneficially by the person proposing to make such
nomination is delivered in person or mailed to the Company and received by it
not earlier than August 13, 2002 or later than September 12, 2002; provided,
however, that such notice must be received not more than 90 days prior to the
2002 Annual Meeting or less than 60 days prior to the 2002 Annual Meeting if the
2002 Annual Meeting is not held within 30 days before or after the anniversary
date of the 2001 Annual Meeting. Under the Securities and Exchange Commission's
proxy rules, proxies solicited by the Board of Directors for the 2002 Annual
Meeting may be voted at the discretion of the persons named in such proxies (or
their substitutes) with respect to any shareholder proposal not included in the
Company's proxy statement if the Company does not receive notice of such
proposal on or before September 16, 2002, unless the 2002 Annual Meeting is not
held within 30 days before or after the anniversary date of the 2001 Annual
Meeting.
By order of the Board of Directors
Gail Segui
Secretary
Date: November 1, 2001
17
COMTECH TELECOMMUNICATIONS CORP. VOTE BY INTERNET - www.proxyvote.com
C/O AMERICAN STOCK TRANSFER Use the Internet to transmit your voting
6201 15TH AVENUE instructions and for electronic delivery
BROOKLYN, NY 11219 of information up until 11:59 P.M.
Eastern Time the day before the cut-off
date or meeting date. Have your proxy
card in hand when you access the web
site. You will be prompted to enter your
12-digit Control Number which is located
below to obtain your records and to
create an electronic voting instruction
form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
P.M. Eastern Time the day before the
cut-off date or meeting date. Have your
proxy card in hand when you call. You
will be prompted to enter your 12-digit
Control Number which is located below and
then follow the simple instructions the
Vote Voice provides you.
VOTE BY MAIL -
Mark, sign, and date your proxy card and
return it in the postage-paid envelope we
have provided or return it to Comtech
Telecommunications Corp., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |_| CTECH1 KEEP THIS PORTION FOR YOUR RECORDS
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Fold & Tear Here Fold & Tear Here
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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COMTECH TELECOMMUNICATIONS CORP.
PROPOSAL 1. For Withhold For All To withhold authority to vote, mark "For
1. Election of Directors. All All Except All Except" and write the nominee's number
Nominees: 01) Fred Kornberg on the line below.
02) Sol S. Weiner |_| |_| |_|
03) Edwin Kantor ----------------------------------------
This proxy will be voted or withheld from being voted in accordance with the
instructions specified. WHERE NO CHOICE IS SPECIFIED, THIS PROXY WILL CONFER
DISCRETIONARY AUTHORITY AND WILL BE VOTED FOR THE NOMINEES LISTED AT ABOVE LEFT
AND FOR APPROVAL OF PROPOSALS 2 AND 3. For Against Abstain
PROPOSAL 2. |_| |_| |_|
2. Approval of amendment to the Company's 2000 Stock Incentive Plan.
|_| |_| |_|
PROPOSAL 3.
3. Ratification of selection of KPMG LLP as auditors.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears hereon. When signing as executor,
administrator, attorney, trustee or guardian, please give your 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. If a joint tenancy, please have both tenants
sign.
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| |
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Please SIGN HERE Date SIGNATURE (IF HELD JOINTLY) Date
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Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
COMTECH TELECOMMUNICATIONS CORP.
December 11,2001
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COMTECH TELECOMMUNICATIONS CORP.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Fred Kornberg and Robert G. Rouse
and each of them full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Comtech Telecommunications Corp. (the
"Company") to be held at the Marriott Hotel, 1350 Walt Whitman Road,
Melville, New York 11747 on December 11, 2001, at 10:00 a.m., local time,
and at any adjournment or adjournments thereof, hereby revoking any
proxies heretofore given, to vote all shares of Common Stock of the
Company held or owned by the undersigned as directed on the reverse side
of this proxy card, and in their discretion upon such other matters as may
come before the meeting.
This proxy will be voted as specified and, unless otherwise
specified in the spaces provided, this proxy will be voted FOR the
election of directors and FOR the proposals referred to in Items 2 and 3
hereon.
(To be Signed on Reverse Side.)
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