SCHEDULE
14A
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to
§240.14a-12
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MEASUREMENT SPECIALTIES,
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
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of each class of securities to which transaction
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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paid previously with preliminary materials.
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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.
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Previously Paid:
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Measurement
Specialties, Inc.
1000
Lucas Way
Hampton,
VA 23666
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
Measurement Specialties, Inc. (the
“Company,” “we,” “us” or “our”) will hold its Annual Meeting of Shareholders at
the Company’s facility, 1000 Lucas Way in Hampton, Virginia 23666 on Wednesday,
September 22, 2010, at 8:30 a.m. Eastern time. We are holding the
meeting for the following purposes:
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1.
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To
elect Frank D. Guidone and John D. Arnold to the Board of Directors, whose
terms are described in the proxy
statement.
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2.
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To
approve the Company’s proposed 2010 Equity Incentive
Plan.
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3.
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To
ratify the appointment of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending March 31,
2011.
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4.
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To
transact such other business as may properly come before the meeting and
any postponement or adjournment
thereof.
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Holders of record of common stock of
the Company at the close of business on July 26, 2010 are entitled to vote at
the meeting.
In addition to the proxy statement and
proxy card, a copy of the Company’s Annual Report on Form 10-K for the fiscal
year ended March 31, 2010, which is not part of the proxy soliciting material,
is enclosed.
It is important that your shares be
represented and voted at the meeting. You may vote your shares by
completing and returning a proxy card. Most shareholders can also
vote over the internet or by telephone. If Internet and telephone
voting are available to you, you can find voting instructions on the enclosed
proxy card. You can revoke a proxy at any time prior to its exercise
at the meeting by following the instructions in the enclosed proxy
statement. Whichever method you
choose, your vote is important so please vote as soon as possible.
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By
Order of the Board of Directors,
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MARK
THOMSON
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Chief
Financial Officer and Secretary
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July 29,
2010
PROXY
STATEMENT
We are providing these proxy materials
in connection with the solicitation by the Board of Directors of Measurement
Specialties, Inc. (the “Company”, “we”, “us” or “our”) of proxies to be voted at
our Annual Meeting of Shareholders, to be held on September 22, 2010 (the
“Annual Meeting”), and at any meeting following postponement or adjournment of
the Annual Meeting.
You are cordially invited to attend the
Annual Meeting, which will begin at 8:30 a.m., Eastern Daylight
time. The meeting will be held at the Company’s facility, 1000 Lucas
Way in Hampton, Virginia 23666 on Wednesday, September 22,
2010. Shareholders will be admitted beginning at 8:00 a.m., Eastern
Daylight time.
We are first mailing this proxy
statement and proxy card (including voting instructions) on or about July 29,
2010 to persons who were shareholders at the close of business on July 26, 2010,
the record date for the meeting.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF
PROXY
MATERIALS FOR THE SHAREHOLDER MEETING
TO
BE HELD ON SEPTEMBER 22, 2010.
This
proxy statement and annual report to shareholders, which includes the Company’s
Annual Report on Form 10-K for the 2010 fiscal year, are available at www.meas-spec.com.
Our fiscal year begins on April 1 and
ends on March 31. References in this proxy statement to the year 2009
or fiscal 2009 refer to the 12-month period from April 1, 2008 through March 31,
2009. References in this proxy statement to the year 2010 or fiscal
2010 refer to the 12-month period from April 1, 2009 through March 31,
2010. References in this proxy statement to the year 2011 or fiscal
2011 refer to the 12-month period from April 1, 2010 through March 31,
2011.
PROXIES
AND VOTING PROCEDURES
Who
Can Vote?
You are entitled to vote at the Annual
Meeting all shares of the Company’s common stock that you held as of the close
of business on July 26, 2010, the record date for the meeting. Each
share of common stock is entitled to one vote with respect to each matter
properly brought before the meeting.
On July 26, 2010, there were 14,561,408
shares of common stock outstanding.
In accordance with New Jersey law, a
list of shareholders entitled to vote at the meeting will be available at the
meeting.
Who
Is the Record Holder?
You may own common stock either (1)
directly in your name, in which case you are the record holder of such shares,
or (2) indirectly through a broker, bank or other nominee, in which case such
nominee is the record holder.
If your shares are registered directly
in your name, we are sending these proxy materials directly to
you. If the record holder of your shares is a nominee, you will
receive proxy materials from such record holder.
How
Do I Vote?
If you are the record
holder:
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By
Internet. You can vote on the Internet. The website address for
Internet voting is on your proxy card, and voting is also available 24
hours a day. If you vote by Internet, you do not need to request or return
your proxy card. Your vote by Internet must be received by
11:59 p.m., Eastern Daylight time, September 20, 2010. Please
be aware that if you vote over the Internet, you may incur costs such as
telephone and Internet access charges for which you will be
responsible.
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By
Telephone. You can also vote your shares by telephone, by calling the
toll-free telephone number on your proxy card and following the
instructions. Telephone voting is also available 24 hours a
day. If you vote by telephone, you do not need to request or
return your proxy card. Your vote by telephone must be received by 11:59
p.m., Eastern Daylight time, September 21,
2010.
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By
Mail. If you choose to vote by mail, mark your proxy, date and
sign it, and return it in the postage-paid envelope
provided. Your vote by mail must be received by the close of
voting at the Annual Meeting on September 22,
2010.
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By
Attending the Annual Meeting. If you attend the Annual Meeting,
you can vote your shares in person.
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If your stock is held by brokers,
banks or other nominees:
If your common stock is held by a
broker, bank or other nominee, you will receive instructions from such nominee
that you must follow in order to have your shares voted.
If you plan to attend the Annual
Meeting and vote in person, you will need to contact the broker, bank or other
nominee to obtain evidence of your ownership of common stock on July 26,
2010.
If you hold your shares through a
broker, your shares may be voted even if you do not provide voting instructions
to your broker, bank or other nominee. Under the rules governing the
voting of shares held in street name, member brokers who do not receive
instructions from beneficial owners are permitted to vote shares for which their
customers do not provide voting instructions on certain “routine”
matters. The Company believes that the ratification of our
independent registered public accounting firm is considered a routine
matter. On non-routine matters, including the election of members of
the board of directors and the approval of the 2010 Equity Incentive Plan,
shares held by your broker will not be voted absent specific instructions from
you. This means your shares may go unvoted and not affect the outcome
if you do not specify your vote. If a broker does not receive voting
instructions from a customer on non-routine matters and accordingly does not
vote on these matters, this is called a broker non-vote. Broker
non-votes will be counted for the purposes of establishing a quorum to conduct
business at the meeting but are not counted as votes cast.
The method by which you vote will in no
way limit your right to vote at the meeting if you later decide to attend in
person.
How
Many Votes Are Required?
A quorum is required to transact
business at the Annual Meeting. We will have a quorum and be able to conduct the
business of the Annual Meeting if the holders of a majority of the shares
entitled to vote are present at the meeting, either in person or by
proxy.
If a quorum is present, a plurality of
votes cast is required to elect Directors. Thus, a Director may be
elected even if the Director receives votes of less than a majority of the
shares represented at the meeting. Proxies cannot be voted for a
greater number of nominees than are named in this Proxy Statement. To
approve the 2010 Equity Incentive Plan, the affirmative vote of a majority of
the votes cast is required. To ratify the appointment of our independent
registered public accounting firm, the affirmative vote of a majority of the
votes cast is required.
In the event that there are not
sufficient votes for a quorum or to approve any proposal at the Annual Meeting,
the Annual Meeting may be adjourned in order to permit the further solicitation
of proxies.
How
Are Votes Counted?
All shares that have been properly
voted, and not revoked, will be voted at the Annual Meeting in accordance with
the instructions given. If you sign and return your proxy card or
submit your proxy via the Internet or by telephone, but do not specify how you
wish your shares to be voted, your shares represented by that proxy will be
voted as recommended by the Board of Directors: (1) “for” the nominees for
Director (2) “for” the proposal to approve the 2010 Equity Incentive Plan, and
(3) “for” the ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm for fiscal 2011.
Proxies marked as abstaining or, with
respect to the election of directors, withheld, and any proxies returned by
brokers as “non-votes” on behalf of shares held in street name because
beneficial owners’ discretion has been withheld as to one or more matters to be
acted upon at the Annual Meeting, will be treated as present for purposes of
determining whether a quorum is present at the Annual Meeting. Broker
non-votes will not be counted as votes cast for or against any of the proposals
at the Annual Meeting and therefore will have no effect on the outcome of such
proposals. Under applicable NASDAQ rules, marked abstentions on
proposal 2 (approval of the 2010 Equity Incentive Plan) are considered votes
cast on the matter and therefore will have the effect of a vote against the
matter. Marked abstentions on the election of directors or proposals
other than proposal 2 are not considered votes cast and therefore will have no
effect on such matters.
How
Can I Revoke My Proxy or Change My Vote?
You can revoke your proxy at any time
before it is exercised by timely delivery of a properly executed, later-dated
proxy (including an Internet or telephone vote) or by voting in person at the
meeting (attendance at the meeting will not itself revoke a proxy).
Who
Will Pay the Expenses of Proxy Distribution?
The Company will pay the expenses of
the preparation of the proxy materials and the solicitation of
proxies. Proxies may be solicited on behalf of the Company by
Directors, officers or employees of the Company, who will receive no additional
compensation for soliciting, in person or by telephone, e-mail or facsimile or
other electronic means. In accordance
with the regulations of the Securities and Exchange Commission (the “SEC”) and
NASDAQ, we will reimburse brokerage firms and other custodians, nominees and
fiduciaries for their expenses incurred in sending proxies and proxy materials
to beneficial owners of the Company’s common stock.
What
Does it Mean if I Get More Than One Set of Proxy Materials?
If you receive more than one set of
proxy materials, your shares are probably registered differently or are held in
more than one account. Please vote all proxies to ensure that all
your shares are voted. Also, unless you intend to have some of your
shares registered differently than others, please have all of your accounts
registered in the same name and address. You may do this by
contacting our transfer agent, American Stock Transfer & Trust Company at
(718) 921-8293.
ITEM
1 — ELECTION OF DIRECTORS
The Board of Directors is divided into
three classes. One class is elected each year for a term of three
years.
Two Directors will be elected at this
Annual Meeting to serve for a three-year term expiring at our Annual Meeting in
2013. The Board has nominated John D. Arnold and Frank D. Guidone to
serve for the term expiring at our Annual Meeting in 2013. You can
find information about Messrs. Arnold and Guidone below.
The persons named in the proxy card
will vote such proxy “for” the election of Messrs. Arnold and Guidone unless you
indicate that your vote should be withheld. If elected, each of
Messrs. Arnold and Guidone will continue in office until his successor has been
duly elected and qualified, or until the earliest of his death, resignation,
retirement or removal. Each of Messrs. Arnold and Guidone has
indicated to the Company that he will serve if elected. We do not
anticipate that either of Messrs. Arnold and Guidone will be unable to stand for
election, but, if that happens, your proxy will be voted in favor of another
person nominated by the Board.
The Board of Directors has determined
that all of our current directors, including Messrs. Arnold and Guidone, are
qualified to serve as directors of the Company. In addition to the
specific business experience listed below, each of our directors has the
tangible and intangible skills and attributes which we believe are required to
be an effective Director of the Company, including experience at senior levels
in areas of expertise helpful to the Company, a willingness and commitment to
assume the responsibilities required of a Director of the Company and the
character and integrity we expect of our Directors.
The Board of Directors recommends a
vote FOR the election of
Messrs. Arnold and Guidone as Directors.
NOMINEES
FOR A TERM EXPIRING IN 2013
John D. Arnold has been a
Director since June 1995. Mr. Arnold has been in private law practice
since 1988, primarily representing technology companies with relationships with
Asian investors and/or manufacturers. Prior to 1988, Mr. Arnold was
employed with the law firms of Wilson, Sonsini, Goodrich & Rosati in Palo
Alto, California and Foley & Lardner in Milwaukee, Wisconsin. Mr.
Arnold received a B.B.A. in business administration from the University of
Wisconsin and a J.D. from Stanford Law School. In assessing Mr.
Arnold’s qualifications to serve on the Company’s Board our Directors considered
his extensive experience representing and advising companies with significant
manufacturing operations in Asia and his experience in corporate finance,
governance and oversight. Additionally, in his role as audit
committee chairman, Mr. Arnold has brought extensive knowledge and experience in
the areas of finance and accounting, which are critically important to the
Company as a global and complex public company. In addition, the determination
by the Company’s Board of Directors that Mr. Arnold is an Audit Committee
“financial expert” lends further support to his financial acumen and
qualification for serving on the Board of Directors. Age 55.
Frank D. Guidone has served
as Chief Executive Officer since June 2002 and has been a Director since
December 2002. Mr. Guidone has been instrumental in the restructuring
and expansion of the Company, increasing market capitalization tenfold.
Prior to his service with the Company, Mr. Guidone was a Managing
Director/Principal of Corporate Revitalization Partners, a Dallas-based
turnaround/crisis management consultancy firm, from 2000 to 2006, where he
guided multiple companies through complex operational and balance sheet
restructurings. Mr. Guidone has been a partner at Four Corners
Capital Partners, a boutique private investment firm of which Mr. Guidone is a
co-founder, since 1999, and where he retains interests in partnerships that
acquired several private companies through leveraged buyouts. Prior
to forming Four Corners, Mr. Guidone spent 13 years in management consulting
with Andersen Consulting and George Group, Inc. Through his career,
Mr. Guidone has worked with numerous solvent and insolvent companies, focusing
on operational and financial restructurings. Mr. Guidone received a
B.S. in mechanical engineering from The University of Texas at
Austin. He is a member of the board of Port-A-Cool LLC, a private
Texas-based company jointly owned by Four Corners and Rosewood Private
Investments. In assessing Mr. Guidone’s qualifications to serve on the Company’s
Board our Directors considered his position, history and performance as our
Chief Executive Officer and his extensive experience directly managing and
consulting with various manufacturing and service companies, particularly in the
areas of financial and business analysis, corporate development and operational
improvements through lean manufacturing. Additionally, Mr.
Guidone’s leadership and strategic vision has guided the Company down a path of
consistent profitability, especially during the recent economic downturn, as
well as prior to the recession with the turnaround and restructuring of the
Company after he became CEO. Mr. Guidone was also instrumental in building the
Company organically and through acquisitions into a leading global sensor
company. Mr. Guidone’s leadership experience gives him insight into
business strategies, technology trends, acquisition strategy and financing, each
of which represents key opportunities for the Company. Age
45.
DIRECTORS
WITH A TERM EXPIRING IN 2012
R. Barry Uber has been a
Director since October 2003. Since 2005, Mr. Uber has been a partner
of Coastal Capital Consultants, L.L.C., an investment firm. Mr. Uber was
President and Chief Operating Officer of American Commercial Lines Inc.
(formerly American Commercial Barge Line), a provider of marine transportation
and manufacturing services and solutions, from July 2001 to July
2003. From 1998 to 2000, he served as President and Chief Executive
Officer of North American Van Lines. Prior to joining North American
Van Lines, Mr. Uber served for 30 years at Ingersoll-Rand Co. Inc., a
diversified commercial products manufacturer, where he held increasingly
responsible executive positions, last serving as Corporate Vice President and
President of the Construction Machinery Equipment Group. Mr. Uber
received a B.B.A. in business administration from Penn State University where he
was awarded an Alumni Fellow Award in 1996. In assessing Mr. Uber’s
qualifications to serve on the Company’s Board our Directors considered his
experience managing manufacturing companies, his extensive experience with
mergers and acquisitions and his experience as chairman
of the board of two private companies, Tread Corporation and Oneida Molded
Plastics LLC. Age 65.
Satish Rishi has been a
Director since September 2005. Since April 2006, Mr. Rishi has served
as Senior Vice President, Finance and Chief Financial Officer of Rambus, Inc., a
designer of high-speed chip interfaces. From 2001 to April 2006, he
served at Toppan Photomasks, Inc. (formerly DuPont Photomasks, Inc.), a global
provider of photomask technology, where he last held the positions of Executive
Vice President and Chief Financial Officer. During his career, Mr.
Rishi has held senior financial management positions at semiconductor and
electronics manufacturers. He served as Vice President and Assistant Treasurer
at Dell Inc. from 1999 until 2001, and prior to his service at Dell, spent 13
years at Intel Corp., where he held financial management positions of increasing
responsibility, both in the United States and overseas. His last position at
Intel was Assistant Treasurer. Mr. Rishi received a B.S. with honors
in Mechanical Engineering from Delhi College of Engineering, Delhi University,
and an M.B.A. with a concentration in Finance from the Walter J. Hass School of
Business, University of California, Berkeley. In assessing Mr.
Rishi’s qualifications to serve on the Company’s Board our Directors considered
his extensive experience in the technology products manufacturing industry, and
strategic planning experience with other technology and manufacturing companies,
particularly in the areas of financial and business analysis and financial
planning. In his prior and current roles, Mr. Rishi has had responsibility over
all aspects of business planning, financial reporting, investor relations and
information technology, which experience allows him to provide oversight over
our financial reporting and planning processes. In addition, the determination
by the Company’s Board of Directors that Mr. Rishi is an Audit Committee
“financial expert” lends further support to his financial acumen and
qualification for serving on the Board of Directors. Age 50.
DIRECTORS
WITH TERM EXPIRING IN 2011
Kenneth E. Thompson has been
a Director since November 2006. Since October 2006, Mr. Thompson has
served as Senior Vice President, General Counsel and Corporate Secretary of
Verisk Analytics, Inc., (and its predecessor, Insurance Services Office, Inc.) a
provider of data, analytical tools and decision support services that help
measure, manage and reduce risk. From January 1997 through September
2006, Mr. Thompson was a partner of McCarter & English, LLP, a law firm that
provided legal services to the Company. Mr. Thompson received a B.A.
in Political Science from the State University of New York at Stony Brook and a
J.D. from Boston University School of Law. In assessing Mr.
Thompson’s qualifications to serve on the Company’s Board our Directors
considered his extensive experience representing and advising manufacturing and
technology companies, as well as his expertise in corporate governance,
evaluation, oversight, and public company reporting gained as General Counsel of
a public company. Age 50.
Morton L. Topfer has been a
Director since January 2002 and has been Chairman of the Board since January
2003. Mr. Topfer is Managing Director of Castletop Capital,
L.P., an investment firm. He previously served at Dell, Inc., a
global systems and services company, as Counselor to the Chief Executive
Officer, from December 1999 to February 2002, and Vice Chairman, from June 1994
to December 1999. Mr. Topfer was a member of the Board of Directors
of Dell from December 1999 to July 2004. Prior to joining Dell,
Mr. Topfer served for 23 years at Motorola, Inc., where he held
several executive positions, including CEO of a $5 billion segment of the
company, and last served as Corporate Executive Vice President and President of
the Land Mobile Products Sector. Mr. Topfer was conferred the
Darjah Johan Negeri Penang State Award in July 1996 by the Governor of Penang
for contributions to the development of the electronics industry in
Malaysia. Mr. Topfer also served as a director for Staktek
Technologies until December 31, 2005 and Advanced Micro Devices until July
2009. In assessing Mr. Topfer’s qualifications to serve on the
Company’s Board our Directors considered his extensive strategic planning
experience with other technology and manufacturing companies, particularly in
the areas of financial and business analysis, his extensive experience with
electronics manufacturing in Asia, and his experience as a board
member of several other public companies, including, in addition to those listed
above, Bio-Reference Laboratories, Inc., Pharmacia & Upjohn, Inc., Bally
Technologies, Inc. and Autodesk, Inc, and several private
companies. Mr. Topfer holds honorary doctorate degrees from Brooklyn
College and Polytechnic Institute of New York. Age 73.
ITEM
2 — PROPOSAL TO APPROVE THE 2010 EQUITY INCENTIVE PLAN
The Board
of Directors recommends that our shareholders approve the Measurement
Specialties, Inc. 2010 Equity Incentive Plan (the “2010 Plan” or “plan”),
adopted by the Board on June 21, 2010, subject to the approval of our
shareholders at the 2010 Annual Meeting. The 2010 Plan will not become effective
unless it is approved by our shareholders.
Overview
of the 2010 Plan
The
following summary describes the material terms of the 2010
Plan. While we believe that the description covers the material terms
of the 2010 Plan, this summary may not contain all of the information that is
important to you. You should carefully read the full text of the 2010
Plan, which is attached to this proxy statement as Exhibit A, for a more
complete understanding of the 2010 Plan. The discussion is qualified
in its entirety by reference to Exhibit
A.
The 2010
Plan permits the grant of (1) incentive stock options (“ISOs”),
(2) nonqualified stock options (“NQOs” and, together with ISOs, “Options”),
and (3) restricted stock units (“RSUs” and, collectively with the Options,
“Awards”), as more fully described below. All Awards granted under
the Plan are governed by separate written agreements (“Agreements”) between the
participants and us.
The 2010
Plan is intended to promote the best interests of the Company and our
shareholders by:
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enabling
us to attract and retain the best available individuals for positions of
substantial responsibility, including directors, officers, employees,
consultants and advisors;
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providing
additional incentives to such persons by affording them an equity
participation in the Company;
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rewarding
those Directors, executive officers and employees for their contributions
to our organization; and
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promoting
the success of our business by aligning the financial interests of our
Directors, executive officers and employees providing personal services to
our organization with long-term shareholder value through compensation
based on the performance of the Company’s common
stock.
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The
Company has provided stock-based compensation opportunities to our Directors,
executive officers and employees through the Measurement Specialties, Inc. 2008
Equity Incentive Plan, the Measurement Specialties, Inc. 2006 Employee Stock
Option Plan, the Measurement Specialties, Inc. 2003 Stock Option Plan, and the
Measurement Specialties, Inc. 1998 Stock Option Plan. If shareholders
approve the 2010 Plan, no future grants will be made under these
plans.
Administration
The Board
of Directors or, if the Board of Directors delegates its authority to the
Compensation Committee, the Compensation Committee will administer the 2010
Plan. The Committee will have at least two members who are
non-employee directors and outside directors under applicable rules and
regulations of the SEC and the Internal Revenue Service. The Board or
the Compensation Committee will have broad authority with respect to the 2010
Plan, including the power to:
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select
the persons who will be eligible for
Awards;
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determine
the amount and type of Awards to be granted to
participants;
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determine
the terms and conditions of Awards to be granted to participants (not
inconsistent with the provisions of the 2010 Plan), including, without
limitation, the applicable exercise price per share, the expiration date,
the restriction period, and such other terms and conditions as may be
deemed appropriate by the Board or the Compensation
Committee;
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determine
and interpret the terms of
Agreements;
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determine
whether the Options will be treated as ISOs or
NQOs;
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adopt
procedures for carrying out the 2010 Plan and to change such procedures
from time to time as it deems advisable;
and
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establish
performance goals, if applicable, that must be met as a condition to the
payment of certain Awards.
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The Board
of Directors may also delegate its authority to administer the 2010 Plan to our
Chief Executive Officer, subject to limitations specified in the 2010 Plan,
applicable legal requirements and the rights and authority specified in the
delegation of authority.
Share
Authorization; Individual Limitations
Subject
to certain adjustments, the maximum number of shares of common stock that may be
issued under the 2010 Plan in connection with Awards is 1,600,000
shares. The maximum number of shares of our common stock that may be
granted pursuant to awards of RSUs is 500,000. There are also maximum
annual limitations applicable to Awards as follows: (a) the maximum
aggregate number of shares of our common stock subject to Options that may be
granted in any one year to any one participant is 150,000; and (b) the
maximum aggregate number of shares of our common stock subject to RSUs that may
be granted in any one year to any one participant is the fair market value
(determined on the date of grant) of 75,000 shares of common stock.
In the
event that the Board or the Compensation Committee determines that any stock
dividend, extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation, stock
split, spin-off, combination, exchange of shares, warrants or rights offering to
purchase our stock at a price substantially below fair market value, or other
similar transaction affects our stock such that an adjustment is required to
preserve the benefits or potential benefits intended under the Plan, the Board
or Compensation Committee will have the right to adjust (1) the number of shares
of stock that may be awarded, (2) the number and kind of shares subject to
outstanding Awards held by participants, (3) the exercise price of Awards, (4)
the annual Award limits, or (5) the amount and/or type of payment to be received
under Awards. The Board may also provide for a cash payment for any
outstanding Awards, provided that the number of shares subject to any Award must
always be a whole number. Shares of our common stock subject to
Awards that expire unexercised or are otherwise forfeited shall again be
available for Awards under the 2010 Plan.
Performance
Goals
Awards under the 2010 Plan may be
conditioned upon the achievement of certain performance goals established by the
Board or Compensation Committee. Performance goals may be linked to a
variety of factors, including the participant’s completion of a specified period
of employment or service with us or an affiliated company. Additionally,
performance goals can include objectives stated with respect to our, an
affiliated company’s or a business unit’s (1) total shareholder return,
(2) total shareholder return as compared to total return (on a comparable
basis) of a publicly available index, (3) net income, (4) pretax
earnings, (5) funds from operations, (6) earnings before interest
expense, taxes, depreciation and amortization, (7) operating margin,
(8) earnings per share, (9) return on equity, capital, assets and/or
investment, (10) operating earnings, (11) working capital,
(12) ratio of debt to shareholders equity, (13) expense reduction or
containment, (14) revenue, or (15) such other criteria as may be determined
by the Board or Compensation Committee in its sole discretion. Additionally, the
Board or Compensation Committee may impose restrictions, including without
limitation, confidentiality and non-solicitation restrictions, on the grant,
exercise or payment of an Award as it determines appropriate.
Participation
Persons eligible to participate in the
2010 Plan include any person who is our employee, consultant, advisor or member
of the Board. The participants in the 2010 Plan are selected by the Board or
Compensation Committee, in its sole discretion. As of March 31, 2010,
there were approximately 2,550 persons eligible to participate in the 2010 Plan,
including all of our employees and directors.
Types
of Awards under the 2010 Plan
Under the
2010 Plan, we may grant ISOs, NQOs, or RSUs. The following is a brief
description of each type of Award.
Stock Options. A
stock option entitles the holder to purchase from us a stated number of shares
of our common stock. The 2010 Plan permits the grant of both ISOs and
NQOs. An ISO may only be granted to our employees or to an employee
of one of our subsidiaries (provided applicable law so permits). The
Board or Compensation Committee will specify the number of shares of common
stock subject to each Option and the exercise price for such
Option. The exercise price may not be less than the closing price of
a share of our common stock on the date the Option is granted. If we
grant ISOs to any shareholder owning more than 10% of our common stock, the
exercise price shall not be less than 110% of the fair market value of our
common stock on the date the Option is granted. Generally, all or
part of the exercise price may be paid (1) in cash, (2) by tendering
shares of common stock, (3) by cashless-broker-assisted exercise, (4) net
exercise, (5) by any combination of such methods or (6) any other method
accepted by the Board or Compensation Committee.
All
Options shall be exercisable in accordance with the terms of the applicable
Agreement. The maximum period in which an Option may be exercised
shall be determined by the Board or Compensation Committee on the date of grant
but shall not exceed 10 years. However, if we grant ISOs to any more
than 10% shareholder, then the maximum period in which the Option may be
exercised is five years. In the case of ISOs, the aggregate fair
market value (determined as of the date of grant) of our common stock with
respect to which such ISOs become exercisable for the first time during any
calendar year under any of our plans or the plans of any affiliated companies
cannot exceed $100,000. ISOs granted in excess of this limitation
will be treated as NQOs, with respect only to such excess.
Unless
otherwise determined by the Board or the Compensation Committee at the time of
grant, the following provisions will apply upon a participant’s termination of
employment or service with the Company. If a participant’s employment
with us (or any of our subsidiaries) terminates due to death or disability, the
participant’s unexercised Options may be exercised, to the extent they were
exercisable on the termination date, for a period of 12 months from the
termination date or until the expiration of the Option term, if
shorter. If the participant’s employment with us (or one of our
subsidiaries) is terminated for cause (as defined in the 2010 Plan), all
unexercised Options (whether vested or unvested) shall terminate and be
forfeited on the termination date. If the participant’s employment
terminates for any other reason other than death, disability, or termination for
cause, any vested but unexercised Options may be exercised by the participant,
to the extent exercisable at the time of termination, for a period of 90 days
from the termination date or until the expiration of the Option term, whichever
period is shorter. Unless otherwise provided by the Compensation
Committee, any Options that are not exercisable at the time of termination of
employment shall terminate and be forfeited on the termination
date.
As of
June 15, 2010, the fair market value of a share of our common stock, determined
by the last reported sale price per share of the common stock on such date as
quoted on The NASDAQ Global Market, was $17.25.
Restricted Stock
Units. RSUs are granted in reference to a specified number of
shares of our common stock and entitle the holder to receive shares of common
stock or cash (as determined by the Board or Compensation Committee) upon
vesting due to (1) the participant’s continued service over a period of time,
(2) the achievement of certain performance goals established by the Board or
Compensation Committee, or (3) any combination of these conditions as specified
in the applicable Agreement. A participant will not have any rights
as a shareholder with respect to any shares of common stock underlying a
restricted stock unit until such time as the shares of common stock have been
issued.
Transferability
of Awards
Generally, Awards granted under the
2010 Plan shall be nontransferable except by will or by the laws of descent and
distribution.
Rights
as a Shareholder
No participant shall have any rights as
a shareholder with respect to shares covered by Options or RSUs unless and until
such Awards are settled in shares of our common stock. No Option
shall be exercisable, no shares of our common stock shall be issued, no
certificates for shares of our common stock shall be delivered and no payment
shall be made under the 2010 Plan, except in compliance with all applicable
laws.
Amendment
and Termination
Our Board of Directors may amend,
suspend or terminate the 2010 Plan at any time provided that a termination shall
not affect outstanding Awards under the 2010 Plan. Shareholder
approval may be needed for an amendment to the 2010 Plan if the amendment would
increase benefits to participants, increase the 2010 Plan’s share reserve, or
modify eligibility. The Board may also amend any outstanding Award
without consent of the participant to comply with legal requirements (including
requirements under Internal Revenue Code (the “Code”) Sections 409A and 162(m)),
or to make adjustments to an Award in recognition of unusual or nonrecurring
events affecting our financial status or in order to prevent dilution or
enlargement of the intended benefits. The Board may also amend,
modify or terminate any outstanding Award without the participant’s consent if
the action would not materially and adversely affect the participant. Other
amendments may be made to outstanding Awards with the consent of the
participant. The exercise price of an Option may not be changed after
the Option is granted without approval of the Company’s
shareholders.
Change
in Control
In the event of a change in control (as
defined in the 2010 Plan) of the Company, the Board or Compensation Committee
may, on a participant-by-participant basis, or on a broader plan basis, take
such action as the Board or Compensation Committee determines in its sole
discretion, which may include one or more of the following: (1) accelerate
the vesting of outstanding Awards, (2) fully vest and/or accelerate the
restriction period for any Awards, (3) terminate or cancel any outstanding
Awards in exchange for cash payments and/or provide limited opportunities to
exercise Awards prior to the effectiveness of such termination or cancellation,
(4) require that Awards be assumed by the successor entity or that Awards
for shares or other interests in the successor entity with equivalent value be
substituted for such Awards, or (5) take such other action as the Board or
Compensation Committee deems reasonable under the circumstances to retain the
original intent of the Award.
Federal
Income Tax Consequences of Options
The
following is a general summary of the current federal income tax treatment of
Options which may be granted under the 2010 Plan, based upon the current
provisions of the Code and regulations thereunder.
ISOs: ISOs under
the 2010 Plan are intended to meet the requirements of Section 422 of the
Code. No tax consequences result from the grant of the
ISO. If an ISO holder acquires stock upon exercise, the ISO holder
will not recognize income for ordinary income tax purposes (although the
difference between the Option exercise price and the fair market value of the
stock subject to the Option may result in alternative minimum tax liability to
the Option holder) and we will not be allowed a deduction as a result of such
exercise, provided that the following conditions are met: (a) at all times
during the period beginning with the date of the granting of the Option and
ending on the day three months before the date of such exercise, the Option
holder is our employee or an employee of one of our subsidiaries; and (b) the
Option holder makes no disposition of the stock within two years from the date
of the Option grant nor within one year after the transfer of the stock to the
option holder. The three-month period extends to one year in the
event of disability and is waived in the event of death of the
employee. If the Option holder sells the stock after complying with
these conditions, any gain realized over the price paid for the stock ordinarily
will be treated as capital gain, and any loss will be treated as capital loss,
in the year of the sale.
If the
Option holder fails to comply with the employment requirement, the tax
consequences will be substantially the same as for an NQO, discussed
below. If the Option holder fails to comply with the holding period
requirements, the Option holder will recognize ordinary income in an amount
equal to the lesser of (i) the excess of the fair market value of the stock on
the date of the exercise of the Option over the exercise price or (ii) the
excess of the amount realized upon such disposition over the adjusted tax basis
of the stock. Any additional gain ordinarily will be recognized by
the Option holder as capital gain, either long-term or short-term, depending on
the holding period of the shares. If the Option holder is treated as
having received ordinary income because of his or her failure to comply with
either condition above, we will be allowed an equivalent deduction in the same
year.
NQOs: No tax
consequences result from the grant of the Option. An Option holder
who exercises an NQO with cash generally will realize compensation taxable as
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the shares on the date of exercise, and we will be
entitled to a deduction in the same amount in the fiscal year in which the
exercise occurred. When the holder disposes of the shares, he or she
will recognize capital gain or loss, either long-term or short-term, depending
on the holding period of the shares.
Disallowance of
Deductions: The Code disallows deductions by publicly held
corporations with respect to compensation in excess of $1,000,000 paid to the
company’s Chief Executive Officer and its three other most highly compensated
officers (other than its Chief Financial Officer). However,
compensation payable solely on account of attainment of one or more performance
targets is not subject to this deduction limitation if certain statutory
requirements are satisfied. Under this exception, the deduction
limitation does not apply with respect to compensation otherwise deductible on
account of Options granted at fair market value under a plan that limits the
number of shares that may be issued to any individual and which is approved by
the Company’s shareholders.
Vote
Required
If a
quorum is present at the meeting, the proposal to approve the 2010 Plan must be
approved by the affirmative vote of a majority of the votes cast at the Annual
Meeting.
The Board of Directors recommends a
vote FOR the proposal to
approve the Company’s 2010 Equity Incentive Plan.
Equity
Compensation Plan Information
The following table
presents information as of March 31, 2010 with respect to compensation plans
under which shares of our common stock are authorized for
issuance. The table does not include securities that may be
issuable under the 2010 Plan, which is being submitted to shareholders for
approval at the Annual Meeting and has not been implemented.
Plan Category
|
|
Number of Securities to Be
Issued upon Exercise of
Outstanding Options,
Warrants and Rights (1)
|
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
|
Number of Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans (2)
|
|
Equity
Compensation Plans Approved by Shareholders
|
|
|
3,065,184 |
|
|
$ |
16.42 |
|
|
|
133,986 |
|
Employee
Stock Purchase Plan
|
|
|
4,876 |
|
|
$ |
14.71 |
|
|
|
214,267 |
|
Equity
Compensation Plans Not Approved by Shareholders(3)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
3,070,060 |
|
|
$ |
16.42 |
|
|
|
348,253 |
|
(1)
|
There
are no outstanding warrants or
rights.
|
(2)
|
Amounts
exclude any securities to be issued upon exercise of outstanding
options.
|
(3)
|
We
do not have any equity compensation plans that have not been approved by
shareholders.
|
ITEM
3 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Appointment
of Independent Registered Public Accounting Firm for Fiscal 2011
As part of the Audit Committee’s
oversight of the Company’s independent registered public accountants, the
Committee conducted a competitive process to review the selection of the
Company’s independent registered public accounting firm. Based on the results of
that process, the Audit Committee appointed Ernst & Young LLP as our
independent registered public accounting firm for fiscal 2011. KPMG
LLP, the Company’s independent registered public accounting firm for the fiscal
years ended March 31, 2010 and March 31, 2009, was dismissed on June
22, 2010. Ernst & Young LLP was engaged as the Company’s
independent registered public accounting firm on June 22, 2010.
The audit reports of KPMG LLP on the
consolidated financial statements of the Company as of and for the fiscal years
ended March 31, 2010 and March 31, 2009 did not contain any adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principle except that KPMG LLP's report on the
consolidated financial statements of the Company as of and for the year ended
March 31, 2009, contained a separate paragraph stating that, “As discussed in
note 2 to the consolidated financial statements, Measurement Specialties,
Inc. adopted the provisions of Financial Accounting Standards Board
Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, effective April 1, 2007.”
The audit reports of KPMG LLP on the
effectiveness of internal control over financial reporting as of March 31, 2010
and 2009 did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope, or accounting
principles, except that KPMG LLP’s reports on the effectiveness of internal
control as of March 31, 2010 and 2009 indicated that management’s assessment of
and conclusion on the effectiveness of internal controls over financial
reporting excluded the evaluation of internal controls for the Company’s joint
venture in Japan, Nikkiso-THERM (NT). NT is an entity consolidated
pursuant to FIN 46R. The Company does not have the ability to dictate or modify
the controls of NT, and the Company does not have the ability, in practice, to
assess those controls. At March 31, 2010 and 2009, NT represented $5,108,000 and
$5,525,000, respectively, in total assets and $4,582,000 and $4,090,000
respectively, in net sales. Additionally, KPMG LLP’s audit report on the
effectiveness of internal control as of March 31, 2009 indicated that
management’s assessment of and conclusion on the effectiveness of internal
controls over financial reporting excluded the evaluation of internal
controls for the Company’s recent acquisitions of RIT SARL (“Atexis”) and FGP
Instrumentation, GS Sensors and ALS (collectively “FGP”) during
2009. At March 31, 2009, Atexis and FGP represented $11,465,000 in
total assets, excluding goodwill and intangible assets resulting from these
acquisitions, and $3,215,000 in net sales.
During the fiscal years ended
March 31, 2010 and March 31, 2009 and the subsequent period through
June 22, 2010, there were no disagreements with KPMG LLP on any matter of
accounting principles, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of KPMG LLP
would have caused them to make reference thereto in KPMG LLP’s audit reports on
the financial statements of the Company for such fiscal years. In addition,
during the fiscal years ended March 31, 2010 and March 31, 2009 and
the subsequent period through June 22, 2010, there were no “reportable events”
(as defined in Regulation S-K Item 304(a)(1)(v)).
The Company provided KPMG LLP with a
copy of the disclosures above and requested that KPMG LLP furnish the Company
with a letter addressed to the Commission stating whether it agreed with the
above statements. A copy of KPMG LLP’s letter, dated June 28, 2010, was filed as
Exhibit 16.1 to the Current Report on Form 8-K filed with the Commission on June
28, 2010.
During the fiscal years ended
March 31, 2010 and March 31, 2009 and the subsequent period through June
22, 2010, the Company did not consult with Ernst & Young LLP regarding
either: (i) the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company’s financial statements, nor did Ernst & Young LLP
provide written or oral advice to the Company that Ernst & Young LLP
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue or (ii) any
matter that was either the subject of a “disagreement” (as defined in Regulation
S-K Item 304(a)(1)(iv) and the related instructions), or a “reportable
event” (as defined in Regulation S-K Item 304(a)(1)(v)).
We are not required to have the
shareholders ratify the selection of Ernst & Young LLP as our independent
registered public accounting firm. We are doing so because we believe
it is a matter of good corporate practice. If the shareholders do not
ratify the selection, the Audit Committee will reconsider whether or not to
retain Ernst & Young LLP but may retain such
independent registered public accounting firm. Even if the selection
is ratified, the Audit Committee, in its discretion, may change the appointment
at any time during the year if it determines that such a change would be in the
best interests of the Company and its shareholders. Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting with
an opportunity to make a statement if they desire to do so and to be available
to respond to appropriate questions. Representatives of KPMG LLP are
not expected to be present at the Annual Meeting.
The Board of Directors recommends a
vote FOR the
ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm for fiscal 2011.
Fees
Paid to Our Independent Registered Public Accounting Firm During Fiscal 2010 and
Fiscal 2009
Audit Fees. The
Company was billed the aggregate amounts of $1,199,391 and $1,565,647 for the
fiscal years 2010 and 2009, respectively, for professional services rendered by
KPMG LLP for its audit of our financial statements for such years, review of the
financial statements included in our Forms 10-Q during such respective fiscal
years, Sarbanes-Oxley related audits of internal control over financial
reporting and its audit of our employee benefit plan. In fiscal 2010
and 2009, Ernst & Young LLP did not perform any audit services for the
Company.
Audit-Related
Fees. In fiscal 2010 and 2009, the Company did not pay any
fees for
audit-related services rendered by KPMG LLP or Ernst & Young
LLP.
Tax Fees. The
Company was billed the aggregate amounts of $177,396 and $134,043 for the
fiscal years 2010 and 2009, respectively, for tax consulting services rendered
by KPMG LLP. In fiscal 2010 and 2009, Ernst & Young LLP did not
perform any tax consulting services for the Company.
All Other Fees. In
fiscal 2010, the Company was billed the aggregate amount of $2,100 by KPMG LLP
for use of an accounting research tool. In fiscal 2009, the
Company did not pay KPMG LLP any fees other than those described
above. In fiscal 2010 and fiscal 2009, the Company did not pay Ernst
& Young LLP any
fees.
Pre-Approval
of Audit and Permissible Non-Audit Services
The Audit Committee pre-approves all
audit and permissible non-audit services provided by our independent registered
public accounting firm. These services may include audit services,
audit-related services, tax services and other services. The Audit
Committee has adopted a policy for the pre-approval of services provided by our
independent registered public accounting firm. Under the policy,
pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is subject to
a specific budget. In addition, the Audit Committee may pre-approve
particular services on a case-by-case basis. For each proposed
service, the independent registered public accounting firm is required to
provide detailed back-up documentation at the time of approval. The Audit
Committee may, when applicable, form and delegate authority to subcommittees
consisting of one or more members who are independent directors of the Board,
including the authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such subcommittee to grant pre-approvals
are required to be presented to the full Audit Committee at its next scheduled
meeting. All audit and permissible non-audit services provided by
KPMG LLP to the Company for fiscal 2010 and fiscal 2009, respectively, were
pre-approved by the Audit Committee.
GOVERNANCE
OF THE COMPANY
Pursuant to New Jersey law and the
Company’s by-laws, the Company’s business, property and affairs are managed by
or under the direction of the Board of Directors. Members of the
Board are kept informed of the Company’s business through discussions with the
Chief Executive Officer and other officers, by reviewing materials provided to
them and by participating in meetings of the Board and its
committees. We currently have six members on our
Board. The Board has determined that five of its members, John D.
Arnold, R. Barry Uber, Satish Rishi, Morton L. Topfer and Kenneth E. Thompson,
are “independent,” as defined in the NASDAQ listing standards.
The Board of Directors meets on a
regularly scheduled basis during the year to review significant developments
affecting the Company and to act on matters requiring Board approval, and may
hold special meetings between scheduled meetings when
appropriate. During fiscal 2010, the Board held six
meetings. Each incumbent Director attended more than 75% of the total
number of meetings of the Board of Directors and the Board committees of which
he was a member during the period he served as a Director in fiscal
2010. The Company does not have a policy requiring all Directors to
attend annual meetings of shareholders. All of the Directors then
serving attended the Company’s 2009 Annual Meeting.
Board
of Directors Leadership Structure
We separate the roles of CEO and
Chairman of the Board of Directors in recognition of the differences between the
two roles. The CEO is responsible for setting the strategic direction
for the Company and the day to day leadership and performance of the Company,
while the Chairman of the Board of Directors provides guidance to the CEO and
sets the agenda for Board of Directors meetings and presides over meetings of
the full Board of Directors. Our CEO serves on our Board of Directors, which we
believe helps the CEO serve as a bridge between management and the Board of
Directors, ensuring that both groups act with a common purpose. We
believe that the CEO’s presence on the Board of Directors enhances his ability
to provide insight and direction on important strategic initiatives to both
management and the independent directors and, at the same time, ensures that the
appropriate level of independent oversight is applied to all decisions by the
Board of Directors.
The
Role of the Board of Directors in Risk Oversight
The Board of Directors oversees the
Company’s risk management process directly and through its
committees. The role of the Board of Directors in our risk oversight
process includes receiving regular reports from members of senior management on
areas of material risk, including operational, financial, legal and regulatory,
and strategic and reputational risks. The Board of Directors (or the
appropriate committee) receives these reports from senior management to enable
it to understand our risk identification, risk management and risk mitigation
strategies. When a committee receives such a report, the chairman of
the relevant committee reports on the discussion to the full Board of Directors
at the next meeting of the Board of Directors. This enables the Board
of Directors and its committees to coordinate the risk oversight role,
particularly with respect to risk interrelationships. As part of its
charter, the Audit Committee oversees risks related to financial controls and
related compliance risks, as well as discusses our policies with respect to risk
assessment and risk management.
COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors has established
various committees to assist it with the performance of its
responsibilities. These committees and their current members are
discussed below.
Audit
Committee
During fiscal year 2010, the Audit
Committee consisted of John D. Arnold (Chairman), Satish Rishi and Kenneth E.
Thompson. All of the Audit Committee members are “independent,” as
independence for audit committee members is defined in the NASDAQ listing
standards, and under the heightened independence standards for audit committee
members under Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The Board has determined that all Audit Committee members have
the financial sophistication and experience required by NASDAQ listing
standards. The Board has also determined that Satish Rishi and John
Arnold qualify as “audit committee financial experts,” as defined in Item
407(d)(5) of SEC Regulation S-K. For additional information regarding
the experience and background of Mr. Rishi and Mr. Arnold, see “Item 1 –
Election of Directors” above.
During
fiscal 2010, the Audit Committee met six times. The functions of the
Audit Committee are described in its report, which is included in this proxy
statement. The Board has adopted a written charter setting forth the
functions of the Audit Committee. This charter is available to
shareholders in the “About Us” section on our website, www.meas-spec.com.
Compensation
Committee
During
fiscal 2010, the Compensation Committee consisted of R. Barry Uber (Chairman),
Morton L. Topfer and Kenneth E. Thompson. All of the Compensation
Committee Members are “independent,” as independence for Compensation Committee
members is defined in the NASDAQ listing standards.
The
functions of the Compensation Committee are to (1) develop and maintain
compensation policy and strategy that creates a direct relationship between pay
levels and corporate performance and returns to shareholders, (2) recommend to
our Board of Directors for approval, compensation and benefit plans for
executive officers, (3) review and approve annually corporate and personal goals
and objectives to serve as the basis for the Chief Executive Officer’s
compensation, evaluate the Chief Executive Officer’s performance in light of the
goals and, based on such evaluation, determine, or recommend to the Board of
Directors for determination, the annual total compensation for our other
executive officers, (4) approve the grants of stock options and other
equity-based incentives to the extent provided under our compensation plans, and
(5) review and recommend to our Board of Directors compensation for non-employee
directors.
During
fiscal 2010, the Compensation Committee met three times. The Board
has adopted a written charter setting forth the functions of the Compensation
Committee. This charter is available to shareholders in the “About
Us” section on our website, www.meas-spec.com.
Nominating
Committee
During
fiscal year 2010, the Nominating Committee consisted of R. Barry Uber
(Chairman), Morton L. Topfer and Satish Rishi. All of the Nominating
Committee members are “independent,” as independence for nominating committee
members is defined in the NASDAQ listing standards. The Nominating
Committee was formed to evaluate and recommend to the Board the persons to be
nominated for election as Directors at any meeting of shareholders, and the
persons to be elected by the Board to fill any vacancy on the
Board.
During
fiscal 2010, the Nominating Committee met one time. The Board has
adopted a written charter setting forth the functions of the Nominating
Committee. This charter is available to shareholders in the “About
Us” section on our website, www.meas-spec.com.
The
Nominating Committee carefully considers all Director candidates recommended by
our shareholders that are timely submitted in accordance with the procedures for
making such recommendations set forth herein, and the Nominating Committee does
not and will not evaluate such candidate recommendations any differently from
the way it evaluates other candidates. In its evaluation of each
proposed candidate, the Nominating Committee considers many factors including,
without limitation, the individual’s experience, character, diversity,
demonstrations of judgment and ability, and financial and other special
expertise. The Nominating Committee is also authorized to obtain the
assistance of an independent third party to complete the process of finding,
evaluating and selecting suitable candidates for director. Any
shareholder who wishes to recommend an individual as a nominee for election to
the Board should submit such recommendation in writing to the attention of Mark
Thomson (who will forward the recommendation to the Nominating Committee)
through e-mail ([email protected]) or by mail to the Company (1000
Lucas Way, Hampton, VA 23666, Attn: Chairman of Nominating Committee), together
with information regarding the experience, education and general background of
the individual and a statement as to why the shareholder believes such
individual to be an appropriate candidate for Director of the
Company.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
The
Company encourages shareholder communications with the Board of Directors but
does not have a formal process. All such communications should be
sent to Frank D. Guidone through the Company’s website
(www.meas-spec.com/myMEAS/investors/ceo_comment.asp) or by mail to the Company
(1000 Lucas Way, Hampton, VA 23666). Mr. Guidone will circulate
communications to the other members of the Board. If the
communication is directed to a particular Director, Mr. Guidone will forward the
communication to that Director. The Company does not screen
shareholder communications, other than for security purposes.
COMPENSATION
OF DIRECTORS
For fiscal 2010, each of our
non-employee directors received an annual cash retainer of $35,000 payable in
equal quarterly installments in arrears. In addition, each of our
non-employee directors received an annual grant on January 4, 2010 of options to
purchase 5,000 shares of our common stock at an exercise price of $10.94 per
share. The options were granted under the Company’s 2008 Equity
Incentive Plan (the “2008 Equity Incentive Plan”). Directors who are
our employees do not receive additional compensation for serving on our Board of
Directors or on committees of the Board. Mr. Guidone, as President
and Chief Executive Officer, is the only member of the Board of Directors who is
also an employee. For fiscal 2010, Directors who are not employees or full-time
consultants of the Company each received compensation as
follows:
Name
|
|
Fees
Earned
or Paid in
Cash
($)
|
|
|
Option
Awards
($) (1)
|
|
|
Total
($)
|
|
John
D. Arnold
|
|
|
35,000 |
|
|
|
26,037 |
(2) |
|
|
61,037 |
|
Satish
Rishi
|
|
|
35,000 |
|
|
|
26,037 |
(3) |
|
|
61,037 |
|
Kenneth
E. Thompson
|
|
|
35,000 |
|
|
|
26,037 |
(4) |
|
|
61,037 |
|
Morton
L. Topfer
|
|
|
35,000 |
|
|
|
26,037 |
(5) |
|
|
61,037 |
|
R.
Barry Uber
|
|
|
35,000 |
|
|
|
26,037 |
(6) |
|
|
61,037 |
|
|
(1)
|
Reflects the
aggregate grant date fair value of the 5,000
stock
options granted to each non-employee
director during fiscal
2010
calculated in accordance with FASB ASC Topic 718. For a
more detailed discussion on the assumptions used to calculate the fair
value of our options, refer to Notes 2 and 14 of the Notes to the
Consolidated Financial Statements included in our Annual Report on Form
10-K for the fiscal year ended March 31,
2010.
|
|
(2)
|
At
March 31, 2010, Mr. Arnold held options to purchase 31,000 shares of our
common stock.
|
|
(3)
|
At
March 31, 2010, Mr. Rishi held options to purchase 30,000 shares of our
common stock.
|
|
(4)
|
At
March 31, 2010, Mr. Thompson held options to purchase 25,000 shares of our
common stock.
|
|
(5)
|
At
March 31, 2010, Mr. Topfer held options to purchase 20,000 shares of our
common stock.
|
|
(6)
|
At
March 31, 2010, Mr. Uber held options to purchase 30,000 shares of our
common stock.
|
It is the
responsibility of the Compensation Committee to review and recommend to the
Board the appropriate structure and amount of Board compensation. The
Board makes the final determination with respect to Board
compensation. The Compensation Committee will consider whether
directors’ independence may be jeopardized if director compensation exceeds
customary levels, if the Company makes substantial charitable contributions to
organizations with which a director is affiliated, or if the Company enters into
consulting contracts with (or provides other indirect forms of compensation to)
a director or an organization with which the director is affiliated. Under its charter, the
Compensation Committee has the authority to retain third-party consultants,
including compensation consultants. For fiscal 2010, the Compensation
Committee did not engage any compensation consultants for purposes of its review
and recommendation of director compensation.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2010, the
Compensation Committee consisted of R. Barry Uber (Chairman), Morton L. Topfer
and Kenneth E. Thompson. None of the members has ever been an officer
or employee of the Company or any of its subsidiaries, and none of our executive
officers currently serves, or in the past fiscal year has served, as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving on our Board of Directors or Compensation
Committee.
CODE
OF ETHICS
The
Company has adopted a Code of Ethics in accordance with SEC regulations,
applicable to the Company’s Chief Executive Officer, senior financial officers
and the Board of Directors. The Code of Ethics is available to
shareholders in the “About Us” section on our website, www.meas-spec.com.
RELATED
PERSON TRANSACTIONS
The
Company has adopted a policy regarding the review and approval of related person
transactions. In the event that the Company proposes to enter into a
related person transaction, the transaction must be reported to the Audit
Committee. As provided in its charter, the Audit Committee is
required to review and approve each related person transaction and any
disclosures that are required by Item 404 of Regulation S-K. The
Audit Committee reviews each related person transaction on a case by case
basis.
For
purposes of this policy, a “related person transaction” has the same meaning as
in Item 404 of Regulation S-K: a transaction, arrangement or relationship (or
any series of related transactions, arrangements or relationships) in which the
Company is, was or will be a participant and the amount involved exceeds
$120,000 and in which any “related person” has, had or will have a direct or
indirect material interest.
For
purposes of this policy, a “related person” has the same meaning as in Item 404
of Regulation S-K: any person who was a director, a nominee for director or an
executive officer of the Company during the Company’s preceding fiscal year (or
an immediate family member of such a director, nominee for director or executive
officer of the Company) or a beneficial owner of more than five percent of our
outstanding common stock (or an immediate family member of such
owner).
REPORT
OF THE AUDIT COMMITTEE
The Audit Committee is appointed by the
Board to assist the Board in monitoring:
|
·
|
the
integrity of the financial statements of the
Company,
|
|
·
|
the
independent registered public accounting firm’s qualifications and
independence,
|
|
·
|
the
performance of the Company’s independent registered public accounting
firm, and
|
|
·
|
the
compliance by the Company with legal and regulatory
requirements.
|
The Audit Committee meets with
management periodically to consider the adequacy of the Company’s internal
control over financial reporting and the objectivity of its financial
reporting. The Audit Committee discusses these matters with the
Company’s independent registered public accounting firm and with appropriate
Company financial personnel.
The Audit Committee regularly meets
privately with the independent registered public accounting firm, which has
unrestricted access to the Committee.
The Audit Committee selects, evaluates
and, where appropriate, replaces the independent registered public accounting
firm, and reviews periodically their performance, fees and independence from
management.
Each of the Directors who serves on the
Audit Committee is “independent” for purposes of the NASDAQ listing standards,
including the heightened independence standards for audit committees under the
Exchange Act.
The Board has adopted a written charter
setting out the audit related functions the Audit Committee is to perform and
reviews the charter on a periodic basis to assure that the functions and duties
of the Audit Committee will continue to conform to applicable SEC and stock
exchange regulations as they may be amended or modified in the
future.
Management has primary responsibility
for the Company’s financial statements and the overall reporting process,
including the Company’s system of internal control over financial
reporting. The independent registered public accounting firm audits
the annual financial statements prepared by management, expresses an opinion as
to whether those financial statements fairly present the financial position,
results of operations and cash flows of the company in conformity with
accounting principles generally accepted in the United States, expresses an
opinion on the Company’s internal control over financial reporting and discusses
with the Audit Committee any issues they believe should be raised with the
Committee. The Audit Committee monitors these processes, relying
without independent verification on the information provided to the Committee
and on the representations made by management and the Company’s independent
registered public accounting firm.
This year, the Audit Committee reviewed
the Company’s audited financial statements as of and for the fiscal years ended
March 31, 2010 and 2009, respectively, and met with both management and KPMG
LLP, the Company’s independent registered public accounting firm for fiscal
years 2010, 2009 and 2008 to discuss those financial statements and for each of
the fiscal years in the three-year period ended March 31,
2010. Management has represented to the Audit Committee that the
financial statements were prepared in accordance with accounting principles
generally accepted in the United States.
The Audit Committee received from KPMG
LLP the written disclosure and the letter required by the applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountant’s communications with the audit committee concerning
independence, and has discussed with the independent accountant the independent
accountant’s independence. The Audit Committee also discussed with
KPMG LLP any matters required to be discussed by Statement on Auditing Standards
No. 61 as amended (AICPA, Professional Standards, Vol
1. AU 380) as adopted by the Public Company Accounting Oversight Board in Rule
3200T.
Based on these reviews and discussions,
the Audit Committee recommended to the Board that the Company’s audited
financial statements be included in the Company’s Annual Report on Form 10-K for
the fiscal year ended March 31, 2010.
The Audit Committee approved a request
for proposal for the audit of the fiscal year ending March 31, 2011, and during
the Audit Committee meeting held on June 22, 2010, the Audit Committee approved
the selection of Ernst & Young LLP as the Company’s independent registered
public accounting firm.
John D.
Arnold (Chairman)
Satish
Rishi
Kenneth
E. Thompson
COMPENSATION
DISCUSSION AND ANALYSIS
Through
the following questions and answers, we explain all material elements of our
executive compensation program.
General
What
are the objectives of our executive compensation programs?
Measurement
Specialties, Inc. is a leader in the design, development and manufacture of
sensors and sensor-based systems for original equipment manufacturers and end
users, based on a broad portfolio of proprietary technologies. We
operate in highly fragmented markets that are characterized by high levels of
competition. We believe that we need qualified executive officers who
are capable of independent thinking and responsible decision making in order to
compete in the markets we serve. Under the direction of the
Compensation Committee of our Board of Directors, we seek to compensate our
executive officers at levels that are competitive so that we may attract, retain
and motivate highly capable executive officers. We also seek to
design our compensation programs to align our executive officers’ interests with
those of our shareholders and, in doing so, build long-term value for our
shareholders.
Our fiscal 2010 executive compensation,
including base compensation and stock option grants awarded for and in fiscal
2010, reflect our efforts to realize the objectives of our executive
compensation programs, in spite of reductions in compensation in response to one
of the worst global economic recessions in decades.
What
impact did the economic recession have on our executive compensation programs in
fiscal 2010?
The
global recession presented a challenging business environment for the Company
and we aggressively reduced costs. In direct response to the global
economic recession and the resulting impact on our financial performance, we
proactively reduced our fiscal 2010 executive compensation. During
the third quarter of fiscal 2009, we reduced executive salaries and eliminated
year-end bonuses and 401(k) matching contributions. Additionally, we
reorganized the three business group structure into one operating segment,
effecting certain changes within the management group to reduce executive and
overall headcount and to better focus on cross selling.
Although
the Company’s sales and profitability were impacted by the recession, especially
during the first half of fiscal 2010, the Company remained profitable and
generated positive cash flow in fiscal 2010. Because of the
significant reductions in cash compensation to our executives and to encourage
retention, the Compensation Committee made somewhat larger awards of stock
options in fiscal 2010 than in fiscal 2009. Total direct compensation (base
salary, bonus, other cash compensation such as the 401(k) match, and stock
options) to executive officers was lower than previous years, but considered
appropriate considering the objectives of the Company’s compensation
programs.
Since the
Company’s financial profitability returned to pre-recession levels during the
third quarter of fiscal 2010, the Company reinstated its 401(k) match
program. During the fourth quarter of fiscal 2010 the Company accrued
a discretionary bonus, in part to reward employees for sacrifices made over the
prior year. The Company reinstated the prior annual base salaries
effective April 2010.
What
are the principal components of our executive compensation
programs?
Overview: The
Company’s policy for compensating our executive officers is intended to support
the Company’s short-term and long-term goals by providing our executive officers
an appropriate mix of compensation elements that effectively balance short-term
annual incentives that reward executives for current performance and the
achievement of near-term goals with long-term incentives that reward executives
for performance over a sustained period. To support this policy, our
executive compensation programs consist of three principal
components:
|
·
|
long-term
incentive compensation.
|
We have
selected programs that we believe are commonly used by public companies, both
within and outside of our industry, because we believe commonly used programs
are well understood by our shareholders, employees and
analysts. Moreover, we selected each program only after we first
confirmed, with the assistance of outside professional advisors, that the
program comports with settled legal and tax rules. We describe each
of these principal components below.
Relationship of the principal
components: The Compensation Committee exercises its judgment
in making executive compensation decisions, and considers various factors within
the overall framework of our executive compensation program. While we
review each element of compensation individually and in the aggregate, we do not
have a specific policy on the percentage of an executive officer’s total
compensation that should be “short-term” versus “long-term” nor do we have a
specific policy on the percentage of total compensation that should be “cash”
versus “equity.” We allocate the three principal components of our
executive compensation programs in a manner that we believe optimizes each
executive officer’s contribution to us.
Base Salary: We
believe base salaries provide basic compensation at a level that allows us to
recruit and retain key executive talent. Base salaries are based on a
combination of factors, primarily the performance of the executive, relative
level of responsibility and experience, salaries of similarly situated executive
officers at peer companies and, with respect to the base salaries of executive
officers other than our Chief Executive Officer, the recommendations of our
Chief Executive Officer. Although our Compensation Committee annually
reviews salaries of our executive officers, our Compensation Committee does not
automatically adjust base salaries if it concludes that adjustments to other
components of the executive’s compensation would be more
appropriate. In addition, as discussed below, the employment
agreements that we have with certain of our executive officers provide for fixed
annual base salaries or minimum annual base salaries, thereby limiting the
discretion of the Compensation Committee with respect to compensation decisions
regarding base salaries.
Annual
Incentives: We have provided annual incentive opportunities to
executive officers to motivate their performance in achieving our current year
business goals. In setting the respective potential bonus levels of
the executive officer, the Compensation Committee considers such factors as the
executive officer’s individual performance and relative level of
responsibility. Typically, each year we adopt an annual incentive
compensation plan that establishes specifically identified payout opportunities
dependent upon achieving pre-determined financial performance targets and
personal performance objectives. When payments are made under our
annual incentive compensation plan, they are made in cash after the fiscal
year-end results are finalized. In response to the global economic
recession and its impact on our financial performance we did not adopt an annual
incentive compensation plan in fiscal 2010. However, in response to
our improved financial performance, in April 2010 the Compensation Committee
adopted an annual incentive compensation plan for fiscal 2011 and, for fiscal
2010, granted to executives and employees discretionary cash bonuses totaling
$1.76 million and restricted stock units (“RSUs”) having a total value of $0.26
million, which RSUs would vest one year after the grant date assuming continuous
service of the recipient.
Long-Term Incentive
Compensation: Our long-term incentive program is focused on
rewarding performance that enhances shareholder value through the use of
equity-based awards that link compensation to the value of our common stock and
strengthen the alignment of management and shareholder
interests. Long-term incentive awards granted by the Compensation
Committee consist of stock options with performance and extended time-based
vesting criteria, as well as a limited number of RSUs with time-based vesting
criteria.
The
Compensation Committee believes that stock options and RSUs promote the
objectives of our executive compensation program in the following
ways:
|
·
|
Time-based
vesting encourages officers to take a long-term view of our performance
and promote stability within our executive ranks, facilitating realization
of our long-term objectives to create shareholder
value.
|
|
·
|
Notwithstanding
the recent stock market declines, given the long tenure of our named
executive officers, each holds significant unexercised stock options that
are expected to have significant value over the long
term.
|
|
·
|
Stock
options have been one of our most effective tools in overall compensation
in recruiting, motivating and retaining skilled officers, and we believe
they will continue to be effective tools over the
long-term.
|
The
number of stock options subject to an award has been computed by taking into
account the Company’s performance, the executive officer’s individual
performance, our retention objectives, and other factors.
Stock
options are granted on the first day of the month following the day on which
they are approved by the Compensation Committee and are priced at 100% of fair
market value on the date of grant, which under the 2008 Equity Incentive Plan is
the closing market price of our common stock on the date of the
grant. Executive officers benefit from stock option grants only to
the extent the price of our common stock appreciates above the exercise price of
the stock options.
Other Benefits: In
addition to the components of compensation discussed above, we also provide
certain other benefits to our executive officers to ensure that our executive
compensation program remains competitive. These other benefits
include 401(k) matching, and health and life insurance premiums, and in certain
cases housing reimbursement and family travel reimbursement, which are
specifically disclosed in the “All Other Compensation” column of the Summary
Compensation Table on page 38 of this proxy statement. Our
Compensation Committee reviews annually the dollar value of these other benefits
to the executive officers and the cost of providing these other benefits to the
Company. However, such review does not influence the Compensation
Committee’s decisions regarding the determination of the principal elements of
an executive officer’s current level of compensation.
What
do we seek to reward and accomplish through our executive compensation
programs?
We
provide annual incentive opportunities primarily to provide performance
incentives to our key employees to meet annual performance
objectives. Our annual corporate objectives are measured by sales
increases, net income, Adjusted EBITDA margins (defined as earnings before
deduction of interest, taxes, depreciation, amortization, share-based
compensation, foreign currency exchange gains and losses, and certain
non-recurring items to sales) and other financial metrics of performance, such
as working capital reductions. In the case of our Chief Executive
Officer, our Compensation Committee has also taken into account the strategic
direction he has provided the Company and his stewardship of the Company since
the beginning of his involvement with the Company. We provide
long-term incentive awards primarily to motivate and reward key employees over
longer periods. Through vesting and forfeiture provisions that we
include in awards of stock options, we provide an additional incentive to
executives to act in furtherance of our longer-term interests. An
executive whose employment with us terminates before equity-based awards have
vested, either because the executive has not performed in accordance with our
expectations or because the executive chooses to leave, will generally forfeit
the unvested portion of the award. As a result, the Compensation
Committee believes that providing the executive officers with compensation in
the form of stock options serves to encourage retention of the executive
officers.
How
do we determine the amount of each principal component of compensation to our
executives?
Our
Compensation Committee exercises judgment and discretion in setting compensation
for our executive officers. The Committee exercises its judgment and
discretion only after it has first reviewed peer company practices, evaluated
the recommendations of our Chief Executive Officer and evaluated our corporate
performance. See “To what extent do we benchmark total compensation
and material elements of compensation and what are the benchmarks that we use?”
below.
Our Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer and
Executive Vice Presidents each have an employment agreement with us that
provides for, among other things, an annual salary and for an annual bonus,
including, in certain cases, a minimum annual bonus, thereby limiting the
discretion of the Compensation Committee with respect to their compensation, as
well as certain post-employment severance payments. See “Executive
Agreements and Related Transactions” below for a discussion of each of these
employment agreements.
What
is the role of our executive officers in the compensation process?
Our
Compensation Committee meets periodically with our Chief Executive Officer to
address executive compensation, including the rationale for our compensation
programs and the efficacy of the programs in achieving our compensation
objectives. The Compensation Committee also relies on our executive
officers to evaluate compensation programs to assure that they are designed and
implemented in compliance with laws and regulations, including SEC reporting
requirements. The Compensation Committee relies on the
recommendations of our Chief Executive Officer regarding the performance of
individual executive officers, other than the Chief Executive
Officer. At meetings in fiscal 2010, the Compensation Committee
received recommendations from our Chief Executive Officer regarding salary
adjustments, annual incentive and stock option and RSU awards for our executive
officers. The Compensation Committee believes that it is important
for it to receive the input of the Chief Executive Officer on compensation
matters since he is knowledgeable about the activities of our executive officers
and the performance of their duties and responsibilities, as well as their
contributions to the growth of the Company and its business.
To
what extent do we benchmark and what are the benchmarks that we
use?
The
Compensation Committee compares each element of total compensation and total
compensation in the aggregate to compensation provided by peer groups of
publicly-traded companies in the sensory devices and similar industries in
evaluating the compensation of our executive officers. The Committee
does not typically engage in formal benchmarking or rely on peer group
comparisons to set executive compensation for our executive officers other than
our Chief Executive Officer. Instead, the Compensation Committee
typically uses peer group comparisons to assess the reasonableness of its
executive compensation decisions in an effort to ensure that our compensation
program remains competitive. However, in fiscal 2010, to assist the
Committee in evaluating the current competitiveness of the Company’s executive
compensation program, the Company engaged 3C Consulting to complete a market
compensation analysis of total compensation for our Chief Executive Officer, our
Chief Financial Officer, our Chief Operating Officer and our most senior
sales-related executive, Glen MacGibbon, an Executive Vice President, as
compared to a peer group of companies. The peer company group was limited by
industry and based on revenue and market capitalization ranges of approximately
one-half to four times that of the Company. The companies comprising our peer
group were Harvard Bioscience, Inc., Hurco Companies Inc., OYO Geospace
Corporation, IRIS International, Inc., Caliper Life Sciences, Inc., Faro
Technologies, Inc., Cognex Corp., IGP Photonics Corp., Mercury Computer Systems,
Inc., X-Rite, Inc., K-Tron International, Inc., American Science &
Engineering Inc., Badger Meter, Inc., II-VI Inc., Newport Corp. and MTS Systems
Corp. 3C Consulting’s analyses included the following data collected from the
proxy statements of the peer group companies: (i) base salary, (ii) annual
incentive compensation and (iii) long-term incentive compensation including
expected value of stock options.
Under its
charter, our Compensation Committee has the sole authority to retain, and
terminate, any third-party consultants to assist in the evaluation of executive
compensation, and the sole authority to approve such consultant’s fees and other
retention terms. For fiscal 2009, our Compensation Committee did not
engage any consulting firm to assist in the determination of our executives’
compensation. For fiscal 2010, 3C Consulting was retained to assist our
Compensation Committee in its determination of our executive officers’
compensation.
We aim to
provide total target compensation for our Chief Executive Officer that
approximates the 65th
percentile compared to total target compensation for chief executive officers at
companies in our industry and of similar size based on data from published
surveys. The Board of Directors believes that providing our Chief
Executive Officer with total target compensation that approximates the 65th
percentile of the peer group is appropriate given his leadership and role in the
growth in sales and profitability that we have experienced over the past five
fiscal years prior to 2010, and his addressing the many challenges confronting
the Company in light of the current global economic recession.
What
specific items of corporate performance do we take into account in setting
compensation policies and making compensation decisions?
Our
corporate performance primarily impacts the annual incentives and long-term
incentive compensation that we provide our executive officers. We use
or weight items of corporate performance differently in our annual incentive
awards and long-term compensation awards and some items are more determinative
than others.
Goals for
executive officers in fiscal 2010 varied because the scope of responsibility and
authority of executive officers differ. Goals are generally developed
around metrics tied to our growth and profitability, including increases in
revenue, decreases in expenses, completion of developments in accordance with
budgets and timelines, execution of acquisitions in accordance with targets,
enhanced operational efficiencies and development of additional opportunities
for our long-term growth.
How
do we determine when awards are granted, including awards of equity-based
compensation?
Historically,
our Compensation Committee has awarded annual bonuses in the quarter following
the fiscal year end. The Compensation Committee makes an annual grant
of stock options, following review of pertinent financial information and
industry data. In addition, the Compensation Committee conducts a
thorough review of stock option awards and grant procedures
annually. In the case of newly-hired executive officers or
promotions, the Compensation Committee has made awards simultaneous with the
executive’s hire or promotion date. The date on which the
Committee has met has varied from year to year, primarily based on the schedules
of Committee members and the timing of compilation of data requested by the
Committee.
We have
not engaged in backdating options. We do not have any program or plan
to time option grants in coordination with the release of material non-public
information.
What
factors do we consider in decisions to increase or decrease compensation
materially?
We
decreased the base salaries of our executive officers in 2009 in response to the
global economic recession but reinstated the prior annual base salaries
effective April 5, 2010. Historically, however, we have generally not
decreased the base salaries of our executive officers or reduced their annual
incentive compensation targets. In fact, under the terms of the
employment agreements with certain of our executive officers, we are unable to
do so without consent of the executive. As the employment agreements
provide for annual salaries and for an annual incentive payment, including, in
certain cases, a minimum annual incentive payment. When an executive
officer’s performance falls short of our expectations, we believe our interests
are best served by replacing the executive officer with an executive who
performs at the level we expect. Annual incentive compensation may
vary since the amount awarded to an executive officer depends in part upon his
individual performance. As a result, total compensation is
effectively decreased if individual performance is poor. The factors
that we consider in decisions to increase compensation include the individual
performance of the executive and our corporate performance, as discussed
above.
To
what extent does our Compensation Committee consider amounts accumulated or
potentially realizable from prior compensation in setting current
compensation?
The
primary focus of our Compensation Committee in setting executive compensation is
the executive officer’s current level of compensation. Although the
Compensation Committee reviews accumulated or potentially realizable
compensation, including from previously granted stock options, such review
generally does not influence the Compensation Committee’s decisions regarding
the determination of an executive officer’s current level of
compensation. This reflects the Compensation Committee’s view that an
executive officer’s compensation level should reflect the executive’s
performance, the Company’s performance and the executive’s contribution to the
Company’s performance. The Compensation Committee further believes
that reducing an executive officer’s annual direct compensation based on the
value of accumulated or potentially realizable compensation would weaken the
competitiveness of the Company’s compensation program and make it more difficult
to attract and retain key executive talent.
What
are our equity or other security ownership requirements for
executives?
We
provide our executive officers with a commensurate portion of their total
compensation in the form of stock options and restricted stock units, which are
intended to reward performance that enhances value for all of our shareholders
and strengthen the alignment of management and shareholder
interests. We generally believe that our executive officers should be
able to share in the value that they create for all of our shareholders
throughout their careers with us. Therefore, we do not maintain
minimum share ownership requirements for our executive officers.
Why
have we entered into agreements with executive officers that provide for
post-employment payments, including following a change-in-control?
The
employment agreements with our Chief Executive Officer and our Chief Financial
Officer, as well as with other executive officers of the Company, provide for
post-employment severance absent a change of control if we terminate the
applicable executive (other than for cause) prior to the expiration of the
stated employment term. We believe this approach provides us with the
flexibility to terminate the applicable executive at any time and for any reason
while providing the executive with the benefit of his or her bargained for
compensation. The Company’s obligations under these agreements would
be assumed by a successor to the Company following a change in
control. We believe it is in our best interest to have agreements
with certain of our executive officers that maintain their focus on, and
commitment to, us notwithstanding a potential merger or other change of
control. The terms of these employment agreements, including the
compensation payable thereunder, were based on our review of the market for key
executive talent at the time of hiring and negotiations with the executive
officer. Additionally, these agreements contain confidentiality and
non-competition provisions.
Do
we have a policy regarding the recovery of awards or payments if corporate
performance measures upon which awards or payments are based are restated or
adjusted in a manner that would reduce the size of an award or
payment?
We have
not adopted a policy that provides for recovery of an award if a performance
measure used to calculate the award is subsequently adjusted in a manner that
would have reduced the size of the award. Although we have not
previously experienced any such adjustment, if we were to experience such an
adjustment, our Compensation Committee would assess the circumstances relating
to the adjustment and take such actions as it believes to be appropriate,
including, potentially, an action to recover the excess portion of the
award.
How
do accounting considerations impact our compensation practices?
Accounting
consequences are not a material consideration in designing our compensation
practices. However, we designed our fiscal 2010 equity awards so that
their overall cost fell within a budgeted dollar amount and so that the awards
would qualify for classification as equity awards under FASB ASC Topic
718. Under FASB ASC Topic 718 the compensation cost recognized for an
award classified as an equity award is fixed for the particular award and,
absent modification, is not revised with subsequent changes in market prices of
our common shares or other assumptions used for purposes of the
valuation.
How
do tax considerations impact our compensation practices?
Prior to
implementation of a compensation program and awards under the program, we
evaluate the federal income tax consequences, both to us and to our executives,
of the program and awards. In certain cases, we have adjusted the
form or manner of some of our compensation programs in light of tax planning
considerations. Before approving a program, our Compensation
Committee receives an explanation from our outside professionals as to the tax
treatment of the program and awards under the program and assurances from our
outside professionals that the tax treatment should be respected by taxing
authorities.
Section
162(m) of the Code limits our tax deduction each year for compensation to each
of our Chief Executive Officer and our four other highest paid executive
officers to $1 million unless, in general, the compensation is paid under a plan
that is performance-related, non-discretionary and has been approved by our
shareholders. Generally, Section 162(m) has not had a significant
impact on our compensation programs.
How
do risk considerations impact our compensation practices?
While risk-taking is a necessary part
of growing a business, the Committee believes that the Company’s executive
compensation program supports the objectives described above without encouraging
inappropriate or excessive risk-taking. In reaching this conclusion, the
Committee considered in particular the following attributes and risk-mitigation
features of our program:
|
•
|
Our
program’s emphasis on long-term, equity-based compensation, which
discourages risk-taking that produces positive short-term results at the
expense of building long-term shareholder
value;
|
|
•
|
The
balance between options and full-value RSUs, which on a combined basis
results in what we believe is an appropriate degree of
leverage;
|
|
•
|
Our
program’s use of a time horizon over which our executives realize their
compensation consistent with achieving long-term shareholder
value;
|
|
•
|
Our
annual cash incentive plan, which encourages annual performance that
sustains rather than detracts from future
performance;
|
Fiscal
2010 Executive Compensation
Base
Salaries
As noted
above, our Compensation Committee annually reviews salaries of our executive
officers. However, as discussed above, the employment agreements that
we have with certain of our executive officers provide for annual base
salaries. Under their employment agreements, Messrs. Guidone,
Thomson, Smith and MacGibbon are entitled to minimum annual base salaries of
$450,000, $240,000, $200,000 and $213,000, respectively. However, the annual
base salaries for Messrs. Guidone, Thomson, Smith and MacGibbon were reduced in
fiscal 2009 to $396,000, $216,000, $180,000, and $191,700, respectively, in
response to the global economic recession. These reductions were in
effect through March 2010, with such individuals’ prior annual base salaries
reinstated effective April 5, 2010.
In making
base salary decisions for fiscal 2010 for our executive officers listed in the
Summary Compensation Table on page 38 of this proxy statement (“named executive
officers”), the Compensation Committee considered (1) the terms of the named
executive officer’s employment agreement, if any, (2) the performance of the
named executive officer, (3) his level of responsibility and experience and (4)
overall Company performance levels. The relative weight given to each
of these factors varied by position and individual and was within the sole
discretion of the Compensation Committee. As noted above, although
the Compensation Committee reviews base salaries annually, it does not
automatically adjust base salaries on an annual basis. In response to
on the economic recession, as noted, the Compensation Committee approved certain
decreases in the annual base salaries, but reinstated the prior annual base
salaries on April 5, 2010.
Annual
Incentive Compensation
For
fiscal 2010, in direct response to the global economic recession and its impact
on our financial performance the Company did not adopt an annual incentive
compensation plan. However, in response to our improved financial performance,
in April 2010 the Compensation Committee granted discretionary cash bonuses for
fiscal 2010 totaling $1.76 million and restricted stock units having a total
value of $0.26 million.
For
fiscal 2011, we adopted the fiscal year 2011 Bonus Plan (the “2011 Bonus Plan”
or the “Non-Equity Incentive Compensation Plan”). The 2011 Bonus Plan
will determine the amount of annual incentive compensation to be awarded to
Company’s named executive officers and certain other eligible employees of the
Company as follows.
Accrual
Calculation. The 2011 Bonus Plan establishes an aggregate
target bonus amount for fiscal year 2011 of $3.3 million (the “Aggregate Target
Bonus”). Pursuant to the 2011 Bonus Plan, the Company will accrue an aggregate
bonus amount only if the Company’s fiscal 2011 EBITDA exceeds $38 million and
fiscal 2011 EBITDA margin as a percentage of sales (“EBITDA Margin”) exceeds
17.5%. The actual aggregate bonus amount will be based on the amount
by which the Company’s fiscal 2011 EBITDA (excluding the bonus accrual)
exceeds the EBITDA (excluding the bonus accrual) that would have resulted if
EBITDA Margin at such level of sales were equal to 17.5% (the “Excess
Amount”). Under the 2011 Bonus Plan, the following amounts will be
accrued to the aggregate bonus amount: (i) 100% of the Excess Amount up to
a maximum accrual equal to the Aggregate Target Bonus, plus (ii)
33% of the Excess Amount above the Aggregate Target Bonus up to an
aggregate accrual of $4,000,000, plus (iii) 15% of the Excess Amount above
$4,000,000.
Adjustment. The
actual aggregate bonus amount accrued by the Company under the 2011 Bonus Plan
is then subject to adjustment by the Compensation Committee following the end of
the Company’s 2011 fiscal year to determine the amount (if any) that will
actually be paid.
Discretionary Allocation and
Employee Distribution. The Compensation Committee will
determine the portion of an actual accrued aggregate bonus amount that will be
paid to the Company’s Chief Executive Officer, and will determine, in
consultation with the Company’s Chief Executive Officer, the amount that will be
paid to the other named executive officers and other eligible employees of the
Company.
Long-Term
Incentive Compensation
The
Compensation Committee uses stock options and restricted stock units as an
important part of the long-term incentive compensation program and believes such
awards continue to be an effective way to link an executive officer’s
compensation to the performance of the Company. Awards are intended
to encourage each of the executive officers to achieve established performance
goals, to continue in the employ of the Company, to enhance their incentive to
perform at the highest level, and in general, to further the best interests of
the Company and its shareholders
For
fiscal 2010, the Compensation Committee considered the following factors in
determining the size of each stock option and restricted stock unit grant
awarded to each named executive officer:
|
·
|
the
executive officer’s individual
performance;
|
|
·
|
the
executive officer’s potential future contributions to the Company and
level of responsibility;
|
|
·
|
retention
issues and concerns; and
|
|
·
|
the
cost of the awards to the Company.
|
Based on
the foregoing, the Compensation Committee awarded the named executive officers
the number of stock options set forth in the “Grants of Plan-Based Awards in
Fiscal Year 2010” table beginning on page 39 of this proxy
statement.
Fiscal
2011 Developments
The Board
of Directors has adopted and is recommending that our shareholders approve the
2010 Plan, a description of which is included under “Item 2 — Proposal to
Approve the 2010 Equity Incentive Plan” beginning on page 9 of this proxy
statement.
Compensation
Committee Report
Our
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with our management and based on the review and discussion
recommended to the Board that the Compensation Discussion and Analysis be
included in this proxy statement and thereby incorporated by reference into our
Annual Report on Form 10-K. The Board accepted the Compensation
Committee’s recommendation. This report is made by the undersigned
members of the Compensation Committee:
R. Barry
Uber (Chair)
Morton L.
Topfer
Kenneth
E. Thompson
EXECUTIVE
OFFICERS
Our
executive officers are as follows as of July 29, 2010:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Frank
Guidone
|
|
45
|
|
Chief
Executive Officer, President and Director
|
|
|
|
|
|
Mark
Thomson
|
|
42
|
|
Chief
Financial Officer and Secretary
|
|
|
|
|
|
Glen
MacGibbon
|
|
48
|
|
Executive
Vice President
|
|
|
|
|
|
Steven
Smith
|
|
61
|
|
Chief
Operating Officer
|
|
|
|
|
|
Mitch
Thompson
|
|
55
|
|
Vice
President – Technology
|
|
|
|
|
|
Jeffrey
Kostelni
|
|
43
|
|
Treasurer
and Vice President –
Finance
|
Officers are not appointed for fixed
terms. Biographical information for our current officers who are not
also continuing Directors follows:
Mark Thomson was appointed as
Chief Financial Officer and Secretary of the Company effective April 2,
2007. Prior to his appointment, Mr. Thomson held the position of Vice
President and Chief Financial Officer of Allied Aerospace Industries, Inc., a
provider of complex engineering solutions for aerospace & defense
contractors and government agencies, since May 2002. Mr. Thomson
served as the Senior Director of Finance & Accounting at the Launch Systems
Group of Orbital Sciences Corporation, a designer and manufacturer of small
space and rocket systems, from January 2001 to May 2002 and Group Controller
from June 1998 to January 2001, prior to which he held financial management
positions with several subsidiaries of Lockheed Martin, a global designer and
manufacturer of aeronautics, electronic systems, information systems and space
systems, from 1991 to 1998. Mr. Thomson is a graduate of the Lockheed
Martin Financial Management program, holds an MBA from the University of Nevada,
Reno, and a BA in Financial Economics from Saint Anselm College and is a
graduate of the Harvard Business School General Management
program.
Glen MacGibbon has served as
Executive Vice President since March 2009. Prior to that, he was Group Vice
President – Pressure/Force since April 1, 2007, prior to which he served as Vice
President, Global Sales and Marketing of our Sensor Products Division since
March 1, 2005. Prior to that, he was Director of Global Sales &
Marketing since joining the Company in 1998. Mr. MacGibbon joined
Measurement Specialties through our 1998 acquisition of PiezoSensors from AMP
Incorporated, where he held various sales management roles since
1989. Previously he was working in both regional sales and technical
support roles for the Riston Division of Dupont Electronics, a supplier of
electronics and advanced display materials. He holds a B.S. in
Mechanical Engineering from Bucknell University, and an M.B.A. from Illinois
Benedictine College.
Steven Smith has served as
Chief Operating Officer since March 2009. Prior to that, he served as Vice
President/General Manager – Asia since January 2006. Prior to joining the
Company in December 2005, Mr. Smith spent five years as Vice President/General
Manager of a wholly owned subsidiary of Compass Aerospace, Inc.,
a manufacturer of precision aircraft parts; five years in management
consulting in the product development and private equity/due diligence practice
areas of George Group, Inc., a global management consulting, technology services
and outsourcing company; and 19 years combined with the aerospace electronics
firms of Rockwell International, a manufacturer of defense and
aerospace products, and Electrospace Systems, a manufacturer of electronic
equipment and systems. Mr. Smith has held operational, engineering,
marketing, financial and general management positions in his varied work
experience. Mr. Smith received a B.A. in Economics (with minor
studies in engineering) from the University of Southern California and a MBA
(Finance) from the University of Louisville.
Mitch Thompson was appointed
Vice President – Technology in April 2008, having previously served as Global
Engineering Director, Piezo Electric Products. Mr. Thompson joined
Measurement Specialties through our 1998 acquisition of PiezoSensors from AMP
Incorporated, a designer and manufacturer of sensor systems and applications,
where he held various technical and management roles since 1986. He
holds a B.S. in Meteorology (atmospheric physics) from Penn State
University.
Jeffrey Kostelni has served
as Treasurer and Vice President of Finance since January 2008, having previously
served as Vice President of Finance from November 2006 until January 2008, as
Corporate Controller from May 2005 until November 2006, and as SEC and Technical
Accounting Director from June 2004 until May 2005. Prior to joining the
Company, he was Chief Financial Officer and Treasurer of Bontex, Inc., an
international specialty fiberboard manufacturer, from 1994 to 2004, and held
various positions in the audit department of Deloitte & Touche, a public
accounting firm, from 1988 to 1993. He holds a Bachelor of Science degree
in Accountancy from Villanova University and is a Certified Public
Accountant.
EXECUTIVE
COMPENSATION
Summary
Compensation. The following table contains summary information
concerning the annual compensation for our principal executive officer (“CEO”),
principal financial officer (“CFO”), our three most highly compensated executive
officers other than our CEO and CFO for the fiscal years ended March 31, 2010,
March 31, 2009 and March 31, 2008:
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Non-
Equity
Incentive
Plan
Compensation /
Bonus
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All Other
Compensation
($) (2)
|
|
|
Total
($)
|
|
Frank
Guidone
|
|
2010
|
|
|
396,000 |
|
|
|
147,000 |
(4) |
|
|
207,892 |
|
|
|
21,084 |
(5) |
|
|
771,976 |
|
President
and Chief Executive Officer (3)
|
|
2009
|
|
|
439,892 |
|
|
|
— |
|
|
|
99,568 |
|
|
|
10,639 |
(6) |
|
|
550,099 |
|
|
|
2008
|
|
|
450,000 |
|
|
|
139,000 |
(7) |
|
|
160,573 |
|
|
|
17,222 |
(8) |
|
|
766,795 |
|
Mark
Thomson
|
|
2010
|
|
|
216,000 |
|
|
|
61,000 |
(4) |
|
|
103,946 |
|
|
|
14,831 |
(10) |
|
|
395,777 |
|
Chief
Financial Officer (9)
|
|
2009
|
|
|
228,200 |
|
|
|
— |
|
|
|
49,784 |
|
|
|
— |
|
|
|
277,984 |
|
|
|
2008
|
|
|
230,000 |
|
|
|
50,000 |
(7) |
|
|
729,906 |
|
|
|
— |
|
|
|
1,009,906 |
|
Steve
Smith
|
|
2010
|
|
|
180,000 |
|
|
|
54,000 |
(4) |
|
|
103,946 |
|
|
|
20,063 |
(12) |
|
|
358,009 |
|
Chief
Operating Officer (11)
|
|
2009
|
|
|
196,385 |
|
|
|
— |
|
|
|
39,827 |
|
|
|
47,934 |
(13) |
|
|
284,146 |
|
|
|
2008
|
|
|
192,567 |
|
|
|
32,000 |
(7) |
|
|
60,212 |
|
|
|
54,253 |
(14) |
|
|
339,032 |
|
Jean-Francois
Allier
|
|
2010
|
|
|
170,681 |
|
|
|
— |
|
|
|
91,689 |
|
|
|
— |
|
|
|
262,370 |
|
Executive
Vice President (15)
|
|
2009
|
|
|
204,675 |
|
|
|
— |
|
|
|
44,724 |
|
|
|
— |
|
|
|
249,399 |
|
|
|
2008
|
|
|
181,226 |
|
|
|
45,000 |
(7) |
|
|
115,629 |
|
|
|
— |
|
|
|
341,855 |
|
Glen
MacGibbon
|
|
2010
|
|
|
191,700 |
|
|
|
61,000 |
(4) |
|
|
103,946 |
|
|
|
13,732 |
(17) |
|
|
370,378 |
|
Executive
Vice President (16)
|
|
2009
|
|
|
201,688 |
|
|
|
— |
|
|
|
49,784 |
|
|
|
— |
|
|
|
251,472 |
|
|
|
2008
|
|
|
189,621 |
|
|
|
60,000 |
(7) |
|
|
177,625 |
|
|
|
12,453 |
(18) |
|
|
439,699 |
|
Mitch
Thompson
|
|
2010
|
|
|
144,000 |
|
|
|
40,000 |
(7) |
|
|
51,973 |
|
|
|
— |
|
|
|
235,973 |
|
|
(1)
|
Reflects the
aggregate grant date fair value of stock options granted during
a
year
calculated in accordance with FASB ASC Topic 718. For a
more detailed discussion on assumptions used to calculate the fair value
of our options, refer to Notes 2 and 14 of the Notes to the Consolidated
Financial Statements included in our Annual Report on Form 10-K for the
fiscal year ended March 31,
2010.
|
|
(2)
|
Excludes
perquisites and other personal benefits unless the aggregate amount of
such compensation exceeds
$10,000.
|
|
(3)
|
Mr.
Guidone is party to an employment agreement with the Company that provides
for an annual base salary of $450,000. The employment agreement was
amended effective January 12, 2009 to effect a temporary salary reduction
of 12%. Mr. Guidone’s prior salary was restored effective April 5,
2010.
|
|
(4)
|
Represents
bonuses earned in fiscal 2010 but paid in June
2010.
|
|
(5)
|
Represents
reimbursement of dental expenses of $406, reimbursement of medical
expenses of $4,670, payment of disability insurance premium of $3,662 and
payment of life insurance premium of $1,760 and employer matching
contribution of $10,586 under the Company’s 401(k)
plan.
|
|
(6)
|
Represents
employer reimbursement of dental expenses of $402, reimbursement of
medical expenses of $4,488, payment of disability insurance premium of
$3,989 and payment of life insurance premium of
$1,760.
|
|
(7)
|
Represents
bonuses earned in fiscal 2008 but paid in June
2008.
|
|
(8)
|
Represents
reimbursement of dental expenses of $406, reimbursement of medical
expenses of $3,720, payment of disability insurance premium of $3,686 and
payment of life insurance premium of $1,760 and employer matching
contribution of $7,650 under the Company’s 401(k)
plan.
|
|
(9)
|
Mr.
Thomson was hired as Chief Financial Officer effective as of April 2,
2007. Mr. Thomson is party to an employment agreement with the
Company that provides for an annual base salary of $230,000. During fiscal
2009, Mr. Thomson’s salary was increased to $240,000. Subsequently, the
employment agreement was amended effective January 12, 2009 to effect a
temporary salary reduction of 10%. Mr. Thomson’s prior salary was restored
effective April 5, 2010.
|
|
(10)
|
Represents
reimbursement of dental expenses of $406, reimbursement of medical
expenses of $4,670 and employer matching contribution of $9,755 under the
Company’s 401(k) plan
|
|
(11)
|
Mr.
Smith is party to an employment agreement with the Company that provides
for an annual base salary of $190,000 and various perquisites, including
housing and travel. During fiscal 2009, Mr. Smith’s salary was increased
to $200,000. Subsequently, the employment agreement was amended effective
January 12, 2009 to effect a temporary salary reduction of 10%. Mr.
Smith’s prior salary was restored effective April 5,
2010.
|
|
(12)
|
Represents
housing reimbursement of $9,430, life insurance of $18, reimbursement of
dental expenses of $126, reimbursement of medical expenses of $841 and
relocation of $1,505 and employer matching contribution of $8,143 under
the Company’s 401(k) plan.
|
|
(13)
|
Represents
housing reimbursement of $37,500, family travel reimbursement of $7,049,
life insurance of $71, reimbursement of dental expenses of $497 and
reimbursement of medical expenses of
$2,817.
|
|
(14)
|
Represents
housing reimbursement of $34,466, family travel reimbursement of $7,662,
life insurance of $71, reimbursement of dental expenses of $497,
reimbursement of medical expenses of $2,817 and employer matching
contribution of $8,740 under the Company’s 401(k)
plan.
|
|
(15)
|
Mr.
Allier served as Executive Vice President from March 2009 until January
20, 2010, prior to which he served as Group Vice President -
Humidity/Temperature starting in December 31, 2007. Mr. Allier passed away
on January 20, 2010.
|
|
(16)
|
Mr.
MacGibbon is party to an employment agreement with the Company that
provides for an annual base salary of $203,000. During fiscal 2009, Mr.
MacGibbon’s salary was increased to $213,000. Subsequently, the employment
agreement was amended effective January 12, 2009 to effect a temporary
salary reduction of 10%. Mr. MacGibbon’s prior salary was restored
effective April 5, 2010.
|
|
(17)
|
Represents
reimbursement of dental expenses of $406, reimbursement of medical
expenses of $4,670, and employer matching contribution of $8,656 under the
Company's 401(k)
plan.
|
|
(18)
|
Represents
reimbursement of dental expenses of $391, reimbursement of medical
expenses of $3,587, and employer matching contribution of $8,475 under the
Company’s 401(k) plan.
|
Grants
of Plan-Based Awards in
Fiscal Year 2010. The following table contains information
related to the grant of stock options under the Company’s 2008 Equity Incentive
Plan during the fiscal year ended March 31, 2010 to the executive officers named
in the Summary Compensation Table. There were no other equity awards
granted during the fiscal year ended March 31, 2010.
|
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
|
|
|
Exercise
or Base
Price of
Option
|
|
|
Grant Date
Fair Market
Value of Stock
and Option
|
|
Name
|
|
Grant
Date
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
Awards
($/Sh)
|
|
|
Awards
($) (1)
|
|
Frank
Guidone
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
60,000 |
(2) |
|
|
7.10 |
|
|
|
207,892 |
|
Mark
Thomson
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
(2) |
|
|
7.10 |
|
|
|
103,946 |
|
Steve
Smith
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
(2) |
|
|
7.10 |
|
|
|
103,946 |
|
Jean-Francois
Allier
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
(2) |
|
|
7.10 |
|
|
|
91,689 |
|
Glen
MacGibbon
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
(2) |
|
|
7.10 |
|
|
|
103,946 |
|
Mitch
Thompson
|
|
7/1/2009
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,000 |
(2) |
|
|
7.10 |
|
|
|
51,973 |
|
|
(1)
|
Represents
the dollar amount recognized for financial statement reporting purposes
with respect to fiscal 2010 for the fair value of options granted to the
named executive officers. The fair value was estimated in
accordance withFASB ASC Topic
718. For a more detailed discussion on assumptions used
to calculate the fair value of our options, refer to Note 2 and 14
of the Notes to the Consolidated Financial Statements included in our
Annual Report on Form 10-K for the fiscal year ended March 31,
2010.
|
|
(2)
|
Represents
non-qualified stock options that vest in three equal installments on July
1, 2010, 2011 and 2012.
|
Outstanding Equity Awards at Fiscal
Year-End 2010. The following table contains information
concerning unexercised options held as of March 31, 2010 by the executive
officers named in the Summary Compensation Table. There were no other
outstanding equity awards as of March 31, 2010.
|
|
Option Awards
|
Name
|
|
Number of Securities
Underlying
Unexercised Options
(#)
Exercisable
|
|
|
Number of Securities
Underlying Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration
Date
|
Frank
Guidone
|
|
|
— |
|
|
|
60,000 |
(1) |
|
|
7.10 |
|
7/1/2017
(1)
|
|
|
|
12,500 |
(2) |
|
|
37,500 |
(2) |
|
|
4.85 |
|
12/1/2017
(2)
|
|
|
|
15,672 |
(3) |
|
|
3,918 |
(3) |
|
|
25.52 |
|
3/31/2016
(3)
|
|
|
|
224,328 |
(4) |
|
|
56,082 |
(4) |
|
|
25.52 |
|
3/31/2016
(4)
|
|
|
|
13,334 |
(5) |
|
|
6,667 |
(5) |
|
|
23.90 |
|
12/3/2015
(5)
|
Mark
Thomson
|
|
|
— |
|
|
|
30,000 |
(6) |
|
|
7.10 |
|
7/1/2017
(6)
|
|
|
|
6,250 |
(7) |
|
|
18,750 |
(7) |
|
|
4.85 |
|
12/1/2017
(7)
|
|
|
|
8,876 |
(8) |
|
|
13,314 |
(8) |
|
|
22.53 |
|
4/2/2017
(8)
|
|
|
|
21,124 |
(9) |
|
|
31,686 |
(9) |
|
|
22.53 |
|
4/2/2017
(9)
|
|
|
|
3,334 |
(10) |
|
|
1,667 |
(10) |
|
|
23.90 |
|
12/3/2015
(10)
|
Steve
Smith
|
|
|
— |
|
|
|
30,000 |
(6) |
|
|
7.10 |
|
7/1/2017
(6)
|
|
|
|
5,000 |
|
|
|
15,000 |
(11) |
|
|
4.85 |
|
12/1/2017
(11)
|
|
|
|
16,076 |
(12) |
|
|
4,019 |
(12) |
|
|
24.88 |
|
11/30/2015
(12)
|
|
|
|
63,924 |
(13) |
|
|
15,981 |
(13) |
|
|
24.88 |
|
11/30/2015
(13)
|
|
|
|
5,000 |
(14) |
|
|
2,500 |
(14) |
|
|
23.90 |
|
12/3/2015
(14)
|
Jean-Francois
Allier (15)
|
|
|
30,000 |
(16) |
|
|
— |
|
|
|
7.10 |
|
7/1/2017
(16)
|
|
|
|
25,000 |
(17) |
|
|
— |
|
|
|
4.85 |
|
12/1/2017
(17)
|
|
|
|
50,000 |
(18) |
|
|
— |
|
|
|
24.14 |
|
11/9/2015
(18)
|
|
|
|
16,000 |
(19) |
|
|
— |
|
|
|
24.22 |
|
6/21/2016
(19)
|
|
|
|
15,000 |
(20) |
|
|
— |
|
|
|
23.90 |
|
12/3/2015
(20)
|
Glen
MacGibbon
|
|
|
— |
|
|
|
30,000 |
(6) |
|
|
7.10 |
|
7/1/2017
(6)
|
|
|
|
6,250 |
|
|
|
18,750 |
(7) |
|
|
4.85 |
|
12/1/2017
(7)
|
|
|
|
30,000 |
(21) |
|
|
— |
|
|
|
13.48 |
|
5/1/2012
(21)
|
|
|
|
3,200 |
(22) |
|
|
800 |
(22) |
|
|
24.14 |
|
11/9/2015
(22)
|
|
|
|
6,666 |
(23) |
|
|
3,333 |
(23) |
|
|
23.90 |
|
12/3/2015
(23)
|
|
|
|
4,000 |
(24) |
|
|
6,000 |
(24) |
|
|
23.63 |
|
7/2/2017
(24)
|
Mitch
Thompson
|
|
|
— |
|
|
|
15,000 |
(25) |
|
|
7.10 |
|
7/1/2017
(25)
|
|
|
|
3,000 |
(26) |
|
|
9,000 |
(26) |
|
|
4.85 |
|
12/1/2017
(26)
|
|
|
|
3,333 |
(27) |
|
|
6,667 |
(27) |
|
|
17.08 |
|
5/1/2016
(27)
|
|
|
|
1,334 |
(28) |
|
|
667 |
(28) |
|
|
23.90 |
|
12/3/2015
(28)
|
|
|
|
3,000 |
(29) |
|
|
2,000 |
(29) |
|
|
23.09 |
|
11/22/2016
(29)
|
|
|
|
420 |
(30) |
|
|
— |
|
|
|
1.64 |
|
11/7/2011
(30)
|
|
(1)
|
Represents
grant of 60,000 non-qualified stock options that vest in three equal
installments of 20,000 on July 1, 2010, 2011 and 2012 and expire in three
equal installments of 20,000 on July 1, 2015, 2016 and 2017,
respectively.
|
|
(2)
|
Represents grant of
50,000 non-qualified stock options that vest in four equal
installments of 12,500 on December 1, 2009, 2010, 2011 and 2012 and expire
in four
equal installments of 12,500 on December 1, 2014, 2015, 2016 and 2017,
respectively.
|
|
(3)
|
Represents
grant of 19,590 incentive stock options that vest in five equal
installments of 3,918 on March 31, 2007, 2008, 2009, 2010, and 2011 and
expire in five equal installments of 3,918 on March 31, 2012, 2013,
2014, 2015, and 2016, respectively.
|
|
(4)
|
Represents
grant of 280,410 non-qualified stock options that vest in five equal
installments of 56,082 on March 31, 2007, 2008, 2009, 2010, and 2011 and
expire in five equal installments of 56,082 on March 31, 2012, 2013, 2014,
2015, and 2016, respectively.
|
|
(5)
|
Represents
grant of 20,001 non-qualified stock options that vest in three equal
installments of 6,667 on December 3, 2008, 2009 and 2010 and expire in
three equal installments of 6,667 on December 3, 2013, 2014 and
2015.
|
|
(6)
|
Represents
grant of 30,000 non-qualified stock options that vest in three equal
installments of 10,000 on July 1, 2010, 2011 and 2012 and expire in three
equal installments of 10,000 on July 1, 2015, 2016 and 2017,
respectively.
|
|
(7)
|
Represents grant of
25,000 non-qualified stock options that vest in four equal
installments of 6,250 on December 1, 2009, 2010, 2011 and 2012 and
expire in four equal
installments of 6,250 on December 1, 2014, 2015, 2016 and 2017,
respectively.
|
|
(8)
|
Represents
grant of 22,190 incentive stock options that vest in five equal
installments of 4,438 on April 2, 2008, 2009, 2010, 2011 and 2012 and
expire in five equal installments of 4,438 on April 2, 2013, 2014, 2015,
2016 and 2017.
|
|
(9)
|
Includes
(a) 27,810 non-qualified stock options that vest in five equal
installments of 5,562 on April 2, 2008, 2009, 2010, 2011 and 2012 and
expire in five equal installments of 5,562 on April 2, 2013, 2014, 2015,
2016 and 2017, respectively and (b) 25,000 non-qualified stock options
that vest in
five equal installments of up to 5,000 on April 2, 2008, 2009, 2010, 2011
and 2012 subject to performance targets determined by the Compensation
Committee and expire on April 2, 2013, 2014, 2015, 2016 and 2017,
respectively.
|
|
(10)
|
Represents
grant of 5,001 non-qualified stock options that vest in three equal
installments of 1,667 on December 3, 2008, 2009 and 2010 and
expire in three equal installments of 1,667 on December 3, 2013, 2014
and 2015, respectively.
|
|
(11)
|
Represents grant of
20,000 non-qualified stock options that vest in four equal
installments of 5,000 on December 1, 2009, 2010, 2011 and 2012 and expire
in four
equal installments of 5,000 on December 1, 2014, 2015, 2016 and 2017,
respectively.
|
|
(12)
|
Represents
grant of 20,095 incentive stock options that vest in five equal
installments of 4,019 on November 30, 2006, 2007, 2008, 2009 and 2010 and
expire in five equal installments of 4,019 on November 30, 2011,
2012, 2013, 2014 and 2015.
|
|
(13)
|
Represents
grant of 79,905 non-qualified stock options that vest in five equal
installments of 15,981 on November 30, 2006, 2007, 2008, 2009 and 2010 and
expire in five equal installments of 15,981 on November 30, 2011,
2012, 2013, 2014 and 2015,
respectively.
|
|
(14)
|
Represents
grant of 7,500 non-qualified stock options that vest in three equal
installments of 2,500 on December 3, 2008, 2009 and 2010 and expire in
three equal installments of 2,500 on December 3, 2013, 2014 and 2015,
respectively.
|
|
(15)
|
Mr.
Allier passed away on January 20, 2010. At the direction of the Board of
Directors, all of Mr. Allier’s unvested options vested immediately upon
his death and may be exercised by Mr. Allier’s legal respresentative at
any time prior to the expiration date set forth in each such option,
notwithstanding Mr. Allier’s death.
|
|
(16)
|
Represents
grant of 30,000 non-qualified stock options that vested on January 20,
2010 and expire in three equal installments of 10,000 on July 1,
2015, 2016 and 2017.
|
|
(17)
|
Represents
grant of 25,000 non-qualified stock options that vested on January 20,
2010 and expire in four equal installments of 6,250 on December
1, 2014, 2015, 2016 and 2017.
|
|
(18)
|
Represents
grant of 50,000 incentive stock options that vested on January 20,
2010 and expire in five equal installments of 10,000 om November
9, 2011, 2012, 2013, 2014 and 2015.
|
|
(19)
|
Represents
grant of 20,000 incentive stock options that vested on January 20,
2010 and expire in five equal installments of 4,000 on June 21,
2012, 2013, 2014, 2015 and 2016.
|
|
(20)
|
Represents
grant of 15,000 non-qualified stock options that vested on January 20,
2010 and expire in three equal installments of 5,000 on
Decmember 3, 2013, 2014 and 2015.
|
|
(21)
|
Represents
remaining options from a grant of 40,000 incentive stock options that vest
in one installment of 10,000 on April 1, 2006 and one installment of
20,000 on April 1, 2007, and expire in one installment of 10,000 on April
1, 2011 and one installment of 20,000 on April 1, 2012,
respectively.
|
|
(22)
|
Represents
grant of 4,000 incentive stock options that vest in five equal
installments of 800 on November 9, 2006, 2007, 2008, 2009 and 2010 and
expire in five equal installments of 800 on November 9, 2011, 2012,
2013, 2014 and 2015, respectively.
|
|
(23)
|
Represents
grant of 9,999 non-qualified stock options that vest in three equal
installments of 3,333 on December 3, 2008, 2009 and 2010 and
expire in three equal installments of 3,333 on December 3, 2013, 2014
and 2015, respectively.
|
|
(24)
|
Represents
grant of 10,000 non-qualified stock options that vest in five equal
installments of 2,000 on July 2, 2008, 2009, 2010, 2011 and 2012 and
expire in five equal installments of 2,000 on July 2, 2013, 2014,
2015, 2016 and 2017, respectively.
|
|
(25)
|
Represents
grant of 15,000 non-qualified stock options that vest in three equal
installments of 5,000 on July 1, 2010, 2011 and 2012 and expire in three
equal installments of 5,000 on July 1, 2015, 2016 and 2017,
respectively.
|
|
(26)
|
Represents
grant of 12,000 non-qualified stock options that vest in four equal
installments of 3,000 on December 1, 2009, 2010, 2011 and 2012 and expire
in four equal installments of 3,000 on December 1, 2014, 2015, 2016 and
2017, respectively.
|
|
(27)
|
Represents
grant of 10,000 non-qualified stock options that vest in three
installments of 3,333 on each of May 1, 2009 and 2010 and 3,334 on May 1,
2011 and expire in three installments of 3,333 on each of May 1, 2014 and
2015 and 3,334 on May 1, 2016,
respectively.
|
|
(28)
|
Represents
grant of 2,001 non-qualified stock options that vest in three equal
installments of 667 on December 3, 2008, 2009 and 2010 and expire in
three equal installments of 667 on December 3, 2013, 2014 and 2015,
respectively.
|
|
(29)
|
Represents
grant of 5,000 incentive stock
options that vest in five equal installments of 1,000 on November
22, 2007, 2008, 2009, 2010 and 2011 and expire in five equal installments
of 1,000 on November 22, 2012, 2013, 2014, 2015 and 2016,
respectively.
|
|
(30)
|
Represents
remaining options
from a grant of
1,200 incentive stock
options that vest in four installments of 420 on November 7, 2003,
360 on November 7, 2004, 240 on November 7, 2005 and 180 on November 7,
2006 and expire in four installments of 420 on November 7, 2008, 360
on November 7, 2009, 240 on November 7, 2010 and 180 on November 7, 2011,
respectively.
|
Option Exercises
and Stock Vested in Fiscal Year 2010. The following table sets
forth certain information concerning option exercises by our named executive
officers and vesting of our Common Stock held by them during the fiscal year
ended March 31, 2010:
|
|
|
|
|
|
|
|
|
Number of
shares acquired
on exercise (#)
|
|
|
Value realized
on exercise ($)
(2)
|
|
|
Number of
shares acquired
on vesting (#)
|
|
|
Value realized
on vesting ($)
|
|
Frank
Guidone
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Mark
Thomson
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Steve
Smith
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Jean-Francois
Allier
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Glen
MacGibbon
|
|
|
1,288 |
(1) |
|
|
20,080 |
|
|
|
— |
|
|
|
— |
|
|
(1)
|
Reflects
a pyramid exercise of an option exercisable for 10,000 shares in
successive swap transactions pursuant to which an aggregate of 8,712
shares were forfeited in consideration of the exercise price payable with
respect to such 10,000 shares.
|
|
(2)
|
Based
on the market price of our Common Stock on the date of
exercise.
|
EXECUTIVE
AGREEMENTS AND RELATED TRANSACTIONS
Agreement
with Frank Guidone
The
Company entered into an employment agreement with Frank Guidone, the Company’s
current Chief Executive Officer, effective as of March 31, 2006. From
June 2002 through March 2006, Mr. Guidone served as Chief Executive Officer
through consulting arrangements with consulting firms of which Mr. Guidone was a
principal. Mr. Guidone’s employment agreement is for an initial term of two
years with automatic renewal for successive one-year terms unless either party
gives timely notice of non-renewal. Under the terms of Mr. Guidone’s
employment agreement, Mr. Guidone will continue to serve as the Chief Executive
Officer at an annual base salary of $450,000 subject to annual increases at the
discretion of the Board of Directors. In response to the economic
recession, Mr. Guidone’s salary was reduced in fiscal 2009 to
$396,000. Mr. Guidone’s prior salary was restored effective April 5,
2010. Mr. Guidone is eligible to receive an annual bonus pursuant to
the Company’s Bonus Plan, payable in accordance with the terms thereof, based
upon annual performance criteria and goals established by the Compensation
Committee. In addition, Mr. Guidone received a guaranteed bonus in
the amount of $50,000 paid in April 2006 in connection with the execution of his
employment agreement. Further, pursuant to Mr. Guidone’s employment agreement,
upon the termination of employment by Mr. Guidone for good reason, or
termination of employment by the Company other than for cause (as such events
are described in Mr. Guidone’s employment agreement), Mr. Guidone will be
entitled to receive a lump sum payment of 150% of his then annual
salary. Further, pursuant to the terms of his employment agreement,
Mr. Guidone received an option to purchase 300,000 shares of the Company’s
common stock at an exercise price per share equal to the fair market value of a
share of the Company’s common stock on March 30, 2006. Upon a change of control
of the Company, all unvested options will immediately vest. Mr.
Guidone’s option was granted pursuant to the Company’s 2006 Stock Option Plan
and is subject to the terms, conditions and provisions thereof and of the
related option award agreement.
On
November 6, 2007, the Company and Mr. Guidone entered into an amendment and
restatement of Mr. Guidone’s employment agreement. The restated employment
agreement was approved by the Compensation Committee. The Restated employment
agreement, among other things, (1) removes the target bonus amount of 55% of Mr.
Guidone’s annual salary and provides that the amount of any bonus payable to Mr.
Guidone will be determined by the Compensation Committee or the Board, (2)
removes the fixed employment term (previously an initial term of two years
continuing through March 31, 2008 and automatic renewal terms of one year
thereafter) and (3) provides for the payment of severance benefits in the event
that Mr. Guidone’s employment is terminated by the Company without cause or by
Mr. Guidone for good reason. Such severance benefits include a lump sum payment
in the amount of (1) accrued but unpaid salary, (2) earned but unpaid bonus, (3)
incurred but unreimbursed business expenses plus (4) 150% of Mr. Guidone’s
annual salary. Effective April 5, 2010, the Compensation Committee
established a target bonus amount of 95% of Mr. Guidone’s annual salary. If
earned, such target bonus together with Mr. Guidone’s base salary would result
in total cash compensation of approximately the 75th percentile of the Company’s
identified peer group. However, a relatively higher portion of such total cash
compensation would be earned by Mr. Guidone through incentive compensation than
the peer group.
Agreement
with Mark Thomson
The
Company entered into an employment agreement with Mark Thomson, the Company’s
current Chief Financial Officer, effective as of April 2, 2007. Pursuant to his
employment agreement, Mr. Thomson will receive an annual base salary of
$230,000, subject to annual increases at the discretion of the Board of
Directors or Compensation Committee. During fiscal 2009, Mr. Thomson’s salary
was increased to $240,000, but in response to the economic recession, Mr.
Thomson’s salary was subsequently reduced to $216,000. Mr. Thomson’s
prior salary was restored effective April 5,
2010. Mr. Thomson will be eligible for an annual bonus of up to 40%
of his annual salary based on minimum Company and individual performance
standards to be determined on an annual basis by management of the Company,
except that, with respect to the first year of Mr. Thomson’s employment, he was
entitled to receive and did receive a guaranteed minimum bonus of
$45,000. In addition, pursuant to Mr. Thomson’s employment agreement,
on April 2, 2007 the Company granted Mr. Thomson an option to purchase up to
75,000 shares of the Company’s common stock at an exercise price per share equal
to the fair market value of a share of the Company’s common stock on the date of
such grant. A portion of Mr. Thomson’s options equal to 50,000 shares will vest
over a five year period in equal 20% installments on each of the successive five
year anniversaries of the date of the grant contingent on the continued
employment of Mr. Thomson with the Company. The remaining 25,000 options are
subject to vesting conditions based upon performance targets to be determined by
the Compensation Committee, up to a maximum of 5,000 options vesting per year on
each of the successive five year anniversaries of the date of the grant. Upon a
change of control of the Company, all unvested options will immediately vest.
Mr. Thomson’s option was granted pursuant to the Company’s 2006 Stock Option
Plan and will be subject to the terms, conditions and provisions thereof and of
the related option award agreement. Furthermore, pursuant to Mr. Thomson’s
employment agreement, upon the termination of employment by Mr. Thomson for good
reason, or termination of employment by the Company other than for cause (as
such events are described in the employment agreement), Mr. Thomson will be
entitled to receive 100% of his annual salary in effect at the time of such
termination to be paid in equal installments over the course of one year in
accordance with the Company’s payroll practices then in effect.
Effective
April 5, 2010, the Compensation Committee increased Mr. Thomson’s base salary to
$250,000, or slightly less than the 50th percentile of the Company’s identified
peer group, and established a target bonus amount of 55% of annual salary. If
earned, such target bonus together with Mr. Thomson’s base salary would result
in total cash compensation of between the 50th and 75th percentiles of the
Company’s identified peer group.
Agreement
with Steve Smith
The
Company entered into an employment agreement with Steve Smith, then its Vice
President and General Manager – Asia (now Chief Operating Officer), effective as
of December 7, 2005. Pursuant to Mr. Smith’s employment agreement,
Mr. Smith receives an annual base salary of $190,000, subject to
annual
increases at the discretion of the Board of Directors, a moving allowance/sign-on
bonus of $30,000, a housing allowance, reimbursement for return airfare for four
(4) trips per year from Shenzhen to the United States, and a “gross-up” payment
for any tax and tax preparation obligations incurred as a result of his
assignment in China that are less favorable to Mr. Smith than the tax
obligations he would incur had he worked at the Company’s principal office in
Virginia. During fiscal 2009, Mr. Smith’s salary was increased
to $200,000, but in response to the economic recession, Mr. Smith’s salary was
subsequently reduced to $180,000. Mr. Smith’s prior salary was
restored effective April 5,
2010. Mr. Smith is eligible for an annual bonus of up to 25% of his
annual salary based on minimum company and individual performance standards to
be determined on an annual basis by the Board of Directors. In
addition, pursuant to Mr. Smith’s employment agreement, on November 30, 2005 the
Company granted Mr. Smith an option to purchase up to 100,000 shares of the
Company’s common stock at an exercise price per share equal to the fair market
value of a share of the Company’s common stock on the date of such grant. Mr.
Smith’s option vests over a five year period in equal 20% installments on each
of the successive five year anniversaries of the date of the grant contingent on
the continued employment of Mr. Smith with the Company. Upon a change of control
of the Company, all unvested options will immediately vest. Mr. Smith’s option
was granted pursuant to the Company’s 2003 Stock Option Plan and is subject to
the terms, conditions and provisions thereof and of the related option award
agreement. Furthermore, pursuant to Mr. Smith’s employment agreement, upon the
termination of employment by Mr. Smith for good reason, or termination of
employment by the Company other than for cause (as such events are described in
the employment agreement), Mr. Smith will be entitled to receive 100% of his
annual salary in effect at the time of such termination to be paid semi-monthly
and an allowance of up to $10,000 for repatriation and relocation to the United
States.
Effective
April 5, 2010, the Compensation Committee increased Mr. Smith’s base salary to
$215,000, or slightly less than the 50th percentile of the Company’s identified
peer group, and established a target bonus amount of 55% of annual salary. If
earned, such target bonus together with Mr. Smith’s base salary would result in
total cash compensation of between the 50th and 75th percentiles of the
Company’s identified peer group.
Agreement
with Glen MacGibbon
The
Company entered into an employment agreement with Glen MacGibbon, then its Group
Vice President - Pressure/Force (now Executive Vice President), effective as of
March 14, 2008. Pursuant to Mr. MacGibbon’s employment agreement, Mr.
MacGibbon receives an annual base salary of $203,000, subject to
annual increases at the discretion of the Board of Directors or Compensation
Committee. During fiscal 2009, Mr. MacGibbon’s salary was increased
to $213,000, but in response to the economic recession, Mr. MacGibbon’s salary
was subsequently reduced to $191,700. Mr. MacGibbon’s prior salary
was restored effective April 5,
2010. Mr. MacGibbon is eligible for an annual bonus of up to 60% of
his annual salary based on minimum Company and individual performance standards
to be determined on an annual basis by management of the Company. In
addition, pursuant to Mr. MacGibbon’s employment agreement, Mr. MacGibbon is
eligible for an annual grant of options to purchase up to 15,000 shares of the
Company’s common stock as the Company may determine from time to time. Mr.
MacGibbon’s options granted pursuant to his employment agreement shall vest over
a three year period in equal installments on each of the successive three year
anniversaries of the date of the grant contingent on the continued employment of
Mr. MacGibbon with the Company. Upon a change of control of the Company, all
unvested options will immediately vest. Upon the termination of
employment by Mr. MacGibbon for good reason, or termination of employment by the
Company other than for cause (as such events are described in the employment
agreement), Mr. MacGibbon’s options otherwise vesting within 12 months
thereafter will immediately vest. Mr. MacGibbon’s options shall be
granted pursuant to the Company’s 2006 Stock Option Plan and are subject to the
terms, conditions and provisions thereof and of the related option award
agreement. Furthermore, pursuant to Mr. MacGibbon’s employment agreement, upon
the termination of employment by Mr. MacGibbon for good reason, or termination
of employment by the Company other than for cause (as such events are described
in the employment agreement), Mr. MacGibbon will be entitled to receive 100% of
his annual salary in effect at the time of such termination to be paid in equal
installments over the course of one year in accordance with the Company’s
payroll practices then in effect, together with any accrued but unpaid annual
bonus earned in the fiscal year prior to such termination or a pro-rata portion
of the accrued annual bonus versus the total target bonus for the current fiscal
year.
Effective
April 5, 2010, the Compensation Committee increased Mr. MacGibbon’s base salary
to $230,000, or slightly more than the 75th percentile of the Company’s
identified peer group, and established a target bonus amount of 65% of annual
salary. If earned, such target bonus together with Mr. Smith’s base salary would
result in total cash compensation of approximately the 75th percentile of the
Company’s identified peer group. However, a relatively higher portion of such
total cash compensation would be earned by Mr. MacGibbon through incentive
compensation than the peer group.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The
following table reflects the estimated potential compensation payable to each of
the executive officers named in the Summary Compensation Table under the
Company’s compensation and benefit plans and arrangements, and under each such
executive’s respective employment agreement, as applicable, in the event of
termination of such executive’s employment under various
scenarios. The amounts shown are estimates of the amounts that would
be paid out to the executives upon termination of their employment assuming that
such termination was effective March 31, 2010. For a description of
our employment agreements with each of Messrs. Guidone, Thomson, Smith, and
MacGibbon, see “Executive Agreements and Related Transactions” beginning on page
44 of this proxy statement.
Name
|
|
Cash Severance
Payment
($)
|
|
|
Acceleration
and
Continuation
of Equity
Awards
($) (1)
|
|
|
Total
Termination
Benefits
($)
|
|
Frank
Guidone
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
|
675,000 |
|
|
|
— |
|
|
|
675,000 |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
949,600 |
|
|
|
949,600 |
|
·
Voluntary
|
|
|
— |
|
|
|
949,600 |
|
|
|
949,600 |
|
·
Death
|
|
|
— |
|
|
|
949,600 |
|
|
|
949,600 |
|
·
Retirement
|
|
|
— |
|
|
|
949,600 |
|
|
|
949,600 |
|
·
Without Cause or for Good Reason
|
|
|
675,000 |
|
|
|
949,600 |
|
|
|
1,624,600 |
|
Mark
Thomson
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
|
240,000 |
|
|
|
— |
|
|
|
240,000 |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
474,800 |
|
|
|
474,800 |
|
·
Voluntary
|
|
|
— |
|
|
|
474,800 |
|
|
|
474,800 |
|
·
Death
|
|
|
— |
|
|
|
474,800 |
|
|
|
474,800 |
|
·
Retirement
|
|
|
— |
|
|
|
474,800 |
|
|
|
474,800 |
|
·
Without Cause or for Good Reason
|
|
|
240,000 |
|
|
|
474,800 |
|
|
|
714,800 |
|
Steve
Smith
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
|
200,000 |
|
|
|
— |
|
|
|
200,000 |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
425,500 |
|
|
|
425,500 |
|
·
Voluntary
|
|
|
— |
|
|
|
425,500 |
|
|
|
425,500 |
|
·
Death
|
|
|
— |
|
|
|
425,500 |
|
|
|
425,500 |
|
·
Retirement
|
|
|
— |
|
|
|
425,500 |
|
|
|
425,500 |
|
·
Without Cause or for Good Reason
|
|
|
200,000 |
|
|
|
425,500 |
|
|
|
625,500 |
|
Jean-Francois
Allier
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
45,000 |
|
|
|
— |
|
|
|
45,000 |
|
·
Voluntary
|
|
|
45,000 |
|
|
|
— |
|
|
|
45,000 |
|
·
Death
|
|
|
45,000 |
|
|
|
— |
|
|
|
45,000 |
|
·
Retirement
|
|
|
45,000 |
|
|
|
— |
|
|
|
45,000 |
|
·
Without Cause or for Good Reason
|
|
|
45,000 |
|
|
|
— |
|
|
|
45,000 |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
45,000 |
|
|
|
|
|
|
|
45,000 |
|
·
Voluntary
|
|
|
45,000 |
|
|
|
|
|
|
|
45,000 |
|
·
Death
|
|
|
45,000 |
|
|
|
|
|
|
|
45,000 |
|
·
Retirement
|
|
|
45,000 |
|
|
|
|
|
|
|
45,000 |
|
·
Without Cause or for Good Reason
|
|
|
45,000 |
|
|
|
|
|
|
|
45,000 |
|
Glen
MacGibbon
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
$ |
213,000 |
|
|
|
— |
|
|
$ |
213,000 |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
$ |
292,889 |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
$ |
292,889 |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
$ |
292,889 |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
$ |
292,889 |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
$ |
213,000 |
|
|
$ |
292,889 |
|
|
$ |
505,889 |
|
Mitch
Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
Without Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Termination
Following Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
·
Cause
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Voluntary
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Death
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Retirement
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
·
Without Cause or for Good Reason
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(1)
|
The
acceleration of any unvested options at March 31, 2010 is based on the
difference between the closing price of our common stock at March 31, 2010
and the exercise prices of the
options.
|
BENEFICIAL
OWNERSHIP OF MEASUREMENT SPECIALTIES COMMON STOCK
The
following table shows information regarding the beneficial ownership of our
common shares as of April 30, 2010 for:
|
·
|
each
executive officer named in the summary compensation table;
and
|
|
·
|
all
directors and executive officers as a
group.
|
Name and Address of Beneficial Owner (1)
|
|
Amount and Nature of
Beneficial Ownership (2)
|
|
|
Percent (2)
|
|
Morton
L. Topfer (3)
|
|
|
951,782 |
|
|
|
6.5 |
% |
Frank
D. Guidone (4)
|
|
|
374,089 |
|
|
|
2.5 |
% |
Glen
MacGibbon (5)
|
|
|
113,592 |
|
|
|
* |
|
John
D. Arnold (6)
|
|
|
116,575 |
|
|
|
* |
|
Jean
Francois Allier (7)
|
|
|
157,500 |
|
|
|
1.0 |
% |
Steven
Smith (8)
|
|
|
103,283 |
|
|
|
* |
|
R.
Barry Uber (9)
|
|
|
37,200 |
|
|
|
* |
|
Satish
Rishi (10)
|
|
|
25,000 |
|
|
|
* |
|
Mark
Thomson (11)
|
|
|
56,462 |
|
|
|
* |
|
Kenneth
E. Thompson (12)
|
|
|
23,500 |
|
|
|
* |
|
Mitch
Thompson (13)
|
|
|
13,065 |
|
|
|
* |
|
All
directors and executive officers as a group (11 persons)
(14)
|
|
|
1,972,048 |
|
|
|
13.61 |
% |
|
(1)
|
The
address of each person is c/o Measurement Specialties, Inc., 1000 Lucas
Way, Hampton, VA 23666.
|
|
(2)
|
Beneficial
ownership is determined in accordance with the rules and regulations of
the SEC. In computing the number of shares beneficially owned
by a person and all of our directors and executive officers as a group and
the percentage ownership of that person and all of our directors and
executive officers as a group, shares of common stock subject to options
and warrants held by that person and all of our directors and executive
officers as a group that are currently exercisable or exercisable within
60 days of the date hereof are deemed outstanding. Such shares,
however, are not deemed outstanding for the purposes of computing the
percentage ownership of any other person. Except as indicated
in the footnotes to this table and pursuant to applicable community
property laws, each shareholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
shareholder’s name. The percentage of beneficial ownership is
based on 14,561,408 shares of common stock outstanding as of July 26,
2010.
|
|
(3)
|
Includes
options held by Mr. Topfer to purchase 15,000 shares and shares of our
common stock held by Castletop Capital, L.P., a private investment company
of which Mr. Topfer is a Managing Director. Mr. Topfer has
shared voting and shared investment power with respect to the shares held
by Castletop Capital.
|
|
(4)
|
Includes
options to purchase 265,834 shares.
|
|
(5)
|
Includes
options to purchase 50,116 shares.
|
|
(6)
|
Includes
options to purchase 26,000 shares and 54,000 shares pledged in connection
with a margin loan.
|
|
(7)
|
Includes
options to purchase 136,000 shares.
|
|
(8)
|
Includes
options to purchase 90,000 shares.
|
|
(9)
|
Includes
options to purchase 25,000 shares.
|
|
(10)
|
Includes
options to purchase 25,000 shares.
|
|
(11)
|
Includes
options to purchase 39,584 shares.
|
|
(12)
|
Includes
options to purchase 20,000 shares.
|
|
(13)
|
Includes
options to purchase 11,087 shares.
|
|
(14)
|
Includes
options to purchase an aggregate of 703,621
shares.
|
CERTAIN
BENEFICIAL OWNERS
The
following table gives information about each shareholder, other than any of our
directors or executive officers, known by us to be a beneficial owner of more
than 5% percent of common stock as of March 31, 2010, based on information filed
with the SEC:
Name
and Address of Beneficial Owner
|
|
Amount
of Beneficial Ownership
|
|
|
Percent
|
|
Brown
Capital Management, Inc.
1201
N Calvert Street
Baltimore,
Maryland 21201
|
|
|
2,819,449 |
(1) |
|
|
19.20 |
%(1) |
Investment
Counselors of Maryland LLC,
803
Cathedral Street,
Baltimore,
Maryland 21201
|
|
|
1,275,900 |
(2) |
|
|
8.69 |
%(2) |
BlackRock
Global Investors
40
E. 52nd Street
New
York, NY 10022
|
|
|
788,695 |
(3) |
|
|
5.37 |
%(3) |
T.
Rowe Price Associates, Inc.
100
E. Pratt Street
Baltimore,
Maryland 21202
|
|
|
784,500 |
(4) |
|
|
5.34 |
%(4) |
(1)
|
Based
solely on the disclosures made in a report on Schedule 13F filed with
the SEC by Brown Capital Management, Inc. on April 26,
2010.
|
(2)
|
Based
solely on the disclosures made in a report on Schedule 13F filed with the
SEC by Investment Counselors of Maryland LLC on April 28,
2010.
|
(3)
|
Based
solely on the disclosures made in a report on Schedule 13F filed with
the SEC by BlackRock Global Investors on May 14,
2010
|
(4)
|
Based
solely on the disclosures made in a report on Schedule 13F filed with
the SEC by T. Rowe Price Associates, Inc. on May 14,
2010.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our directors, executive officers, and the
persons who beneficially own more than 10% of our common stock, to file reports
of ownership and changes in ownership with the SEC. Copies of all
filed reports are required to be furnished to us. Based solely on the
reports received by us and on the representations of the reporting persons, we
believe that these persons have complied with all applicable filing requirements
during fiscal 2010, except for Jean-Francois Allier (one late Form 4 filing
which reported one transaction), Frank D. Guidone (one late Form 4 filing which
reported one transaction), Jeffrey C. Kostelni (one late Form 4 filing which
reported one transaction), Glen MacGibbon (one late Form 4 filing which reported
one transaction), Steve Smith (one late Form 4 filing which reported one
transaction), Mark Thomson (one late Form 4 filing which reported one
transaction) and Mitch Thompson (one late Form 4 filing which reported one
transaction).
ANNUAL
REPORT ON FORM 10-K
In
addition to the proxy statement and proxy card, a copy of the Company’s Annual
Report on Form 10-K for the fiscal year ended March 31, 2010 is
enclosed. The Annual Report on Form 10-K is being furnished to you
without the exhibits thereto. Upon your request, the Company will
provide you with a copy of the exhibits. You may under some
circumstances be responsible for the Company’s reasonable expenses in furnishing
such exhibits.
SHAREHOLDER
PROPOSALS FOR THE 2011 ANNUAL MEETING
Shareholders
who wish to present proposals to be considered for inclusion in the Company’s
proxy materials for the 2011 Annual Meeting of Shareholders must submit such
proposals to our Secretary at Measurement Specialties, Inc., 1000 Lucas Way,
Hampton, VA 23666 by March 31, 2011. For any proposal that is not
submitted for consideration for inclusion in next year’s proxy materials, but is
instead sought to be presented directly at the 2011 Annual Meeting, SEC rules
permit us to exercise discretionary voting authority to the extent conferred by
proxy if we: (1) receive notice of the proposal before June 24, 2011 and advise
shareholders in the 2011 proxy statement of the nature of the proposal and how
management intends to vote on such matter or (2) do not receive notice of the
proposal before June 24, 2011. Notices of intention to present
proposals at the 2011 Annual Meeting should be submitted to our Secretary at
Measurement Specialties, Inc., 1000 Lucas Way, Hampton, VA 23666.
Our
by-laws provide that a shareholder entitled to vote for the election of
directors may nominate persons for election to our Board of Directors by
delivering written notice to our Secretary. With respect to an election to be
held at an annual meeting of shareholders, such notice generally must be
received by our Secretary not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day
before the first anniversary of the preceding year’s annual meeting. In the
event that the date of an annual meeting is more than 30 days before or more
than seventy days after the first anniversary of the preceding year’s annual
meeting, such notice must be received by our Secretary not earlier than the
close of business on the 120th day
before the annual meeting and not later than the close of business on the later
of the 90th day
before the annual meeting or the 10th day
following the day on which we publicly announce the date of the annual meeting.
With respect to an election to be held at a special meeting of shareholders,
such notice must be received by our Secretary not earlier than the close of
business on the 120th day
before such special meeting, and not later than the close of business on the
later of the 90th day
before such special meeting or the 10th day
following the day on which we publicly announce the date of the special meeting
and the nominees proposed by our Board of Directors to be elected at such
special meeting.
The
shareholder’s notice must include:
|
·
|
as
to each person whom the shareholder proposes to nominate for election as a
director:
|
|
·
|
all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest
or is otherwise required pursuant to Regulation 14A under the Exchange
Act; and
|
|
·
|
such
person’s written consent to being named in the proxy statement as a
nominee and to serving as such a director if elected;
and
|
|
·
|
as
to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination is
made:
|
|
·
|
the
name and address of such shareholder, as they appear on our books, and of
such beneficial owner;
|
|
·
|
(a)
the class and number of shares of capital stock of the Company that are
owned beneficially and of record by such shareholder and such beneficial
owner, and (b) any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion
privilege or a settlement payment or mechanism at a price related to any
class or series of shares of the Company or with a value derived in whole
or in part from the value of any class or series of shares of the Company,
whether or not such instrument or right shall be subject to settlement in
the underlying class or series of capital stock of the Company or
otherwise directly or indirectly owned beneficially by such shareholder
and any other direct or indirect opportunity to profit or share in any
profit derived from any increase or decrease in the value of shares of the
Company;
|
|
·
|
a
representation that the shareholder is a holder of record of the Company’s
common stock entitled to vote at such meeting and intends to appear in
person or by proxy at the annual meeting to propose such nomination;
and
|
|
·
|
a
representation whether the shareholder or the beneficial owner, if any,
intends or is part of a group that intends (1) to deliver a proxy
statement and/or form of proxy to holders of at least the percentage of
the Company’s common stock required to elect the nominee and/or (2)
otherwise to solicit proxies from shareholders in support of such
nomination.
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Because
the 2010 annual meeting is to be held on September 22, 2010, written notice of a
shareholder proposal to be acted upon at the 2011 annual meeting must be
received by our Secretary not later than the close of business on June 24, 2011,
nor earlier than the close of business on May 25, 2011.
In order
for a shareholder to bring other business before a shareholder meeting, notice
must be received by our Secretary within the time limits described in the
immediately preceding paragraph. The shareholder’s notice must
contain:
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·
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a
brief description of the business desired to be brought before the annual
meeting;
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·
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the
text of the proposal or business (including the text of any resolutions
proposed for consideration and in the event that such business includes a
proposal to amend our by-laws, the language of the proposed
amendment);
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·
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the
reasons for conducting such business at the annual meeting;
and
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·
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any
material interest in such business of such shareholder and for the
beneficial owner, if any, on whose behalf the proposal is made;
and
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as
to the shareholder giving the notice and the beneficial owner, if any, on
whose behalf the proposal is made, the information described above with
respect to the shareholder proposing such
business.
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The
requirements found in our by-laws are separate from and in addition to the
requirements of the Securities and Exchange Commission that a shareholder must
meet to have a proposal included in our proxy statement.
OTHER
MATTERS
The Board of Directors is not aware of
any matters other than those set forth in this proxy statement that will be
presented for action at the Annual Meeting. However, if any other
matter should properly come before the meeting, the persons authorized by the
accompanying proxy will vote and act with respect thereto, in what according to
their judgment, is in the interests of the Company and its
shareholders.
July 29,
2010
EXHIBIT
A
MEASUREMENT
SPECIALTIES, INC.
2010
EQUITY INCENTIVE PLAN
The
purpose of the Measurement Specialties, Inc. 2010 Equity Incentive Plan (the
“Plan”) is to enable Measurement Specialties, Inc. (the “Company”) to attract,
retain, motivate and provide additional incentives to certain directors,
officers, employees, consultants and advisors, whose contributions are essential
to the growth and success of the Company, by enabling them to participate in the
long-term growth of the Company through stock ownership.
As used
in the Plan:
“Award”
means a grant of an Option or Restricted Stock Units under the terms of this
Plan.
“Award
Agreement” means the agreement between the Company and a Participant pursuant to
which an Award is granted, and which specifies the terms and conditions of the
Award.
“Board”
means the Board of Directors of the Company.
“Cause”
means the termination of a Participant’s employment, consulting or advisory
relationship with the Company or the termination of a Participant’s membership
on the Board because of the occurrence of any of the following events, as
determined by the Board:
(i) the
Participant materially breaches or fails to perform any of his obligations as an
employee or director of the Company;
(ii) the
Participant conducts his duties with respect to the Company in a manner that is
improper or negligent; or
(iii) the
Participant fails to perform his obligations faithfully as provided in any
employment agreement executed between the Company and the Participant or is
otherwise terminated for “cause” as “cause” may be defined in such agreement,
engages in habitual drunkenness, drug abuse, or commits a felony, fraud or
willful misconduct which has resulted, or is likely to result, in material
damage to the Company, or as the Board in its sole discretion may
determine.
“Change
in Control” means any of the following events:
(i) a
change during any 12-month period in the ownership of the capital stock of the
Company, whereby a corporation, partnership, other entity, person, or group
acting in concert, as described in Section 14(d)(2) of the Exchange Act holds or
acquires, directly or indirectly, beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of a number of shares of capital stock of the
Company, as the case may be, which constitutes more than fifty percent (50%) of
the combined voting power of the Company’s then outstanding capital stock
entitled to vote generally in the election of directors (the “Company Voting
Stock”); or
(ii) the
consummation of any merger, consolidation, share exchange, business combination
or reorganization plan involving the Company if immediately after such
transaction persons who hold a majority of the outstanding voting securities
entitled to vote generally in the election of directors of the surviving entity
(or the entity owning 100% of such surviving entity) are not the persons who
immediately prior to such transaction held the Company Voting Stock, or the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of more than 50% of the combined assets of the Company to
any corporation, partnership, other entity, person, or group acting in concert,
as described in Section 14(d)(2) of the Exchange Act, other than to a
wholly-owned subsidiary of the Company or to any “affiliate” (as defined in Rule
12b-2 under the Exchange Act) of any of the foregoing;
provided,
that the following events shall not constitute a Change in Control:
(i) the
acquisition of shares of capital stock of the Company by the Company or any of
their subsidiaries or “affiliates” (as defined in Rule 12b-2 under the Exchange
Act);
(ii) the
acquisition of shares of capital stock of the Company by any employee benefit
plan (or trust) sponsored or maintained by the Company;
(iii) any
transfer of shares of capital stock by gift, devise or descent by a stockholder
to a member of such stockholder’s family or to a trust established or maintained
for the benefit of a stockholder or any member of his family; or
(iv) the
acquisition of shares of capital stock by any officer or employee of the Company
pursuant to any stock option plan established by the Company.
“Code”
means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
“Committee”
means the Compensation Committee of the Board (or any successor committee of the
Board) or such other committee that is responsible for making recommendations to
the Board (or for exercising authority delegated to it by the Board pursuant to
Section 3 of the Plan, if any) with respect to the grant and terms of Awards
under the Plan; provided, however, that (i) with respect to Awards to any
employees who are officers of the Company or members of the Board for purposes
of Section 16 of the Exchange Act, Committee means all of the members of the
Compensation Committee who are “non-employee directors” within the meaning of
Rule 16b-3 adopted under the Exchange Act, or any successor rule, (ii) with
respect to Awards to any employees who are officers of the Company or members of
the Board for purposes of Section 16 and who are intended to satisfy the
requirements for “performance based compensation” within the meaning of
Section 162(m)(4)(C) of the Code, the regulations promulgated thereunder,
and any successors thereto, Committee means all of the members of the
Compensation Committee who are “outside directors” within the meaning of
Section 162(m) of the Code, and (iii) with respect to all Awards, the
Committee shall be comprised of “independent” directors to the extent required
by the listing requirements or rules of any stock exchange or quotation system
on which the Common Stock may be listed or quoted.
“Company”
means Measurement Specialties, Inc., a New Jersey corporation, and any present
or future parent or subsidiary corporations (as defined in Section 424 of the
Code) or any successor to such corporations. “Company” shall be
limited to Measurement Specialties, Inc. for purposes of the definition of
“Change in Control.”
“Common
Stock” or “Stock” means the common stock, no par value per share, of the
Company.
“Disability”
means permanent and total disability as defined in Section 22(e)(3) of the Code
or, in the case of any employee with a written employment agreement,
“Disability” shall have the meaning ascribed to such term, if so defined in such
written employment agreement.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fair
Market Value”, with respect to Common Stock, shall be determined as
follows:
(i) If
the Common Stock is at the time listed on any stock exchange or quotation
system, the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the stock exchange or determined by the
Board to be the primary market for the Common Stock, as such price is officially
reported on such exchange or system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such quotation
exists.
(ii) If
the Common Stock is at the time traded on the Nasdaq Global Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question as such price is quoted on the Nasdaq Global Market or
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(iii) If
the Common Stock is not listed or traded on any stock exchange, quotation system
or the Nasdaq System, the Fair Market Value shall be determined using a
reasonable valuation method consistent with the final regulations issued under
Section 409A of the Code.
“Incentive
Stock Option” means an option to purchase shares of Common Stock awarded to a
Participant under the Plan which is designated as such or is otherwise intended
to meet the requirements of Section 422 of the Code or any successor
provision.
“Non-Employee
Director” means a member of the Board who is not an employee of the
Company.
“Non-Qualified
Stock Option” means an option to purchase shares of Common Stock granted to a
Participant under the Plan which is designated as such or is otherwise not
intended to be an Incentive Stock Option.
“Option”
means an Incentive Stock Option or a Non-Qualified Stock Option.
“Participant”
means an eligible person selected by the Board to receive an Award under the
Plan.
“Plan”
means the Measurement Specialties, Inc. 2010 Equity Incentive Plan.
“Restricted
Stock Units” means an Award granted hereunder and stated with reference to a
specified number of shares of Common Stock, which entitles the Participant to
receive shares of Common Stock or cash (as determined by the Board), upon the
lapse of a Restriction Period and/or subject to such other conditions and
criteria (including the attainment of Performance Goals) as the Board may
determine at the time of the grant of the Award.
“Restriction
Period” means the period during which an Award is subject to
forfeiture. A Restriction Period shall not lapse until all conditions
imposed under the particular Award Agreement, and/or this Plan, have been fully
satisfied.
“Retirement”
means termination of employment in accordance with the retirement provisions of
any retirement plan maintained by the Company.
Section
3. Administration
(a) The
Plan shall be administered by the Board. Among other things, the Board shall
have authority, subject to the terms of the Plan including, without limitation,
the provisions governing participation in the Plan, to grant Awards, to
determine the individuals to whom and the time or times at which Awards may be
granted and to determine the terms and conditions of any Award granted
hereunder. Subject to paragraph (d) of this Section 3, the Board may solicit the
recommendations of the Committee with respect to any of the foregoing, but shall
not be bound to follow any such recommendations.
(b) Subject
to the provisions of this Plan, the Board shall have authority to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall from time to time consider advisable, to
interpret the provisions of the Plan and any Award and to decide all disputes
arising in connection with the Plan. The Board’s decisions and interpretations
shall be final and binding. Any action of the Board with respect to the
administration of the Plan shall be taken pursuant to a majority vote or by the
unanimous written consent of its members.
(c) The
Board may employ such legal counsel, consultants and agents as it may deem
desirable for the administration of the Plan, and may rely upon any opinion
received from any such counsel or consultant and any computation received from
any such consultant or agent. The Board shall keep minutes of its actions under
the Plan.
(d) The Board may condition the payment
of any Award or the lapse of any Restriction Period (or any combination thereof)
upon the achievement of a Performance Goal (defined below) that is established
by the Board. A “Performance Goal” shall mean an objective goal that
must be met by the end of the Restriction Period specified by the Board based
upon one or more of the following as applied to the Company, a subsidiary, an
affiliate or a business unit thereof: (i) total stockholder return,
(ii) total stockholder return as compared to total return of a publicly
available index, (iii) net income, (iv) pretax earnings,
(v) funds from operations, (vi) earnings before interest expense,
taxes, depreciation and amortization, (vii) operating margin, (viii)
earnings per share, (ix) return on equity, capital, assets and/or
investment, (x) operating earnings, (xi) working capital,
(xii) ratio of debt to stockholders equity, (xiii) expense reduction
or containment, (xiv) revenue, or (xv) such other criteria as may be
determined by the Board in its sole discretion. In addition to the
foregoing, a Performance Goal may be the Participant’s achievement of a
specified period of service with the Company, its subsidiaries, or its
affiliates. The Board shall have discretion to determine the specific
targets with respect to each of these categories of Performance
Goals. Before paying an Award or permitting the lapse of any
Restriction Period on an Award subject to this Section, the Board shall certify
in writing that the applicable Performance Goal has been
satisfied. Performance Goals for Awards to officers who are subject
to the requirements and limitations of Section 162(m) of the Code, shall be
established not later than ninety (90) days after the beginning of the
applicable performance period (or at such other date as may be required or
permitted for “performance-based” compensation under Section 162(m) of the
Code), and shall otherwise meet the requirements of said Code section, including
the requirement that the outcome of the Performance Goal be substantially
uncertain at the time established.
(e)
Subject to any limitations specified in this Plan and to applicable legal
requirements the Board shall have the authority to delegate all or any portion
of the authority granted to it under this Section 3 or elsewhere under the Plan
to the Committee or the Chief Executive Officer of the Company. If
such authority is so delegated by Board, the Committee or the Chief Executive
Officer, as the case may be, shall have such rights and authority to make
determinations and administer the Plan as are specified in the delegation of
authority. To the extent that the Board delegates its authority as provided by
this Section 3(e), all references in the Plan to the Board’s authority to
grant Awards and make determinations with respect thereto shall be deemed to
include the Committee or the Chief Executive Officer, as the case may
be.
(f) For purposes of
accommodating or addressing the rules, laws, or regulatory requirements of local
or foreign jurisdictions or qualifying for preferred tax treatment in such
jurisdictions , the Committee is authorized to establish additional terms,
conditions rules or procedures or to establish, amend, modify, administer or
terminate sub-plans, and prescribe, amend and rescind rules and regulations
relating to such sub-plans.
All
employees, consultants and advisors of the Company who are from time to time
responsible for the management, growth and protection of the business of the
Company, and all directors of the Company, shall be eligible to participate in
the Plan. The Participants under the Plan shall be selected from time to time by
the Board, in its sole discretion, from among those eligible, and the Board
shall determine in its sole discretion the numbers of shares to be covered by
the Award or Awards granted to each Participant. Options intended to qualify as
Incentive Stock Options shall be granted only to key employees while actually
employed by the Company. Non-Employee Directors, consultants and advisors shall
not be entitled to receive Incentive Stock Options under the Plan.
Section
5. Shares of Stock Available for Awards
(a) Subject to adjustment as
provided in paragraph (e) below, the total number of shares of Common Stock
available for Awards under the Plan shall be 1,600,000; provided that, of such
aggregate number of shares, the number of shares of Common Stock available for
Awards of Restricted Stock Units shall be limited to 500,000.
(b) The following limits
(each an “Annual Award Limit”, and collectively, “Annual Award Limits”) shall,
subject to adjustment as provided in paragraph (e) below, apply to grants of
Awards under this Plan:
(i) Options: The
maximum aggregate number of shares of Common Stock subject to Options which may
be granted in any one year to any one Participant shall be 150,000.
(ii) Restricted
Stock Units: The maximum aggregate number of shares of Common Stock
subject to Awards of Restricted Stock Units which may be granted in any one year
to any one Participant shall be the Fair Market Value (determined on the date of
grant) of 75,000 shares of Common Stock.
(c) Any shares issued by the
Company through the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Awards under this
Plan. Any shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares or treasury shares. If any shares
subject to any Award granted hereunder are forfeited or such Award otherwise
terminates or is forfeited, the shares subject to such Award, to the extent of
any such forfeiture or termination, shall again be available for Awards under
this Plan.
(d) No Option shall be
exercisable, no shares of Common Stock shall be issued, no certificates for
shares of Common Stock shall be delivered and no payment shall be made under the
Plan, except in compliance with all applicable laws. In this
connection, it is intended generally that Awards granted under this Plan shall
not constitute “non-qualified deferred compensation” as defined under Section
409A of the Code. If, however, any Award is, or becomes, subject to
any of the requirements of Section 409A of the Code, such Award, and the
applicable Award Agreement, shall be interpreted and administered to be
consistent with such requirements, and the Board shall be entitled, on a
unilateral basis, to amend, reform, interpret and administer this Plan, such
Award and such Award Agreement accordingly.
(e) In the event that the Board
determines, that any stock dividend, extraordinary cash dividend, creation of a
class of equity securities, recapitalization, reclassification, reorganization,
merger, consolidation, stock split, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price substantially
below Fair Market Value, or other similar transaction affects the Common Stock
such that an adjustment is required in order to preserve the benefits or
potential benefits intended to be granted under the Plan to Participants, the
Board shall have the right to adjust equitably any or all of (i) the number of
shares of Common Stock in respect of which Awards may be granted under the Plan
to Participants, (ii) the number and kind of shares subject to outstanding
Awards held by Participants, (iii) the exercise price with respect to any Awards
held by Participants, (iv) the Annual Award Limits, (v) the amount and/or type
of payment to be received under Awards, and, if considered appropriate, the
Board may make provision for a cash payment with respect to any outstanding
Awards held by a Participant, provided that the number of shares subject to any
Award shall always be a whole number.
(f) In furtherance of the terms and
conditions of this Plan and for purposes of clarity, the following terms and
conditions shall apply to this Plan: (i) shares of Common Stock that
are tendered by a Participant to pay the exercise price of an Award made under
this Plan shall not be available for future grant under this
Plan; (ii) shares of Common Stock underlying Awards made pursuant to
this Plan that are withheld by the Company for tax considerations in relation to
an Award shall not be available for future grant under this Plan; and (iii) this
Plan does not permit the Company to use the cash proceeds from the exercise of
Options to repurchase shares of Common Stock on the open market for reuse in
this Plan.
Section
6. Incentive Stock Options
(a) Subject
to Federal statutes then applicable and the provisions of the Plan, the Board
may grant Incentive Stock Options and determine the number of shares to be
covered by each such Award, the option price therefor, the term of such Award,
the vesting schedule of such Award, and the other conditions and limitations
applicable to the exercise of the Award. The terms and conditions of Incentive
Stock Options shall be subject to and shall comply with Section 422 of the Code,
or any successor provision, and any regulations thereunder. Anything in the Plan
to the contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted to the Board under the Plan be so exercised, so as to
disqualify, without the consent of the Participant, any Incentive Stock Option
granted under the Plan pursuant to Section 422 of the Code. The foregoing
notwithstanding, any Award that fails to be an ISO shall remain outstanding
according to its terms and shall be treated by the Company as a Non-Qualified
Stock Option.
(b) The
option price per share of Common Stock purchasable under an Incentive Stock
Option shall not be less than 100% of the Fair Market Value of the Common Stock
on the date of grant. If the Participant owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation of the Company and an Incentive Stock Option is
granted to such Participant, the option price shall be not less than 110% of
Fair Market Value of the Common Stock on the date of grant.
(c) No
Incentive Stock Option shall be exercisable more than ten (10) years after the
date such option is granted. If a Participant owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation of the Company and an Incentive Stock Option is
granted to such Participant, such Option shall not be exercisable after the
expiration of five (5) years from the date of grant.
(d) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant’s employment terminates by reason of Retirement or Disability, any
Incentive Stock Option granted to such Participant which is then outstanding may
be exercised at any time prior to the expiration of the term of such Incentive
Stock Option or within three (3) months in the case of Retirement and twelve
(12) months in case of Disability (or such shorter period as the Board shall
determine at the time of grant) following the Participant’s termination of
employment, whichever period is shorter.
(e) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant’s employment is terminated by reason of death, any Incentive Stock
Option granted to such Participant which is then outstanding may be exercised by
the Participant’s legal representative at any time prior to the expiration date
of the term of the Incentive Stock Option or within twelve (12) months (or such
shorter period as the Board shall determine at the time of grant) following the
Participant’s termination of employment, whichever period is
shorter.
(f) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant’s employment shall terminate for Cause, any Incentive Stock Option
granted to such Participant which is then outstanding shall be canceled and
shall terminate.
(g) Unless
otherwise determined by the Board at or after the time of grant, in the event
that a Participant’s employment shall terminate for any reason other than death,
Disability, Retirement or Cause, any Incentive Stock Option granted to such
Participant which is then outstanding may be exercised as set forth in the
applicable Award Agreement. In the absence of a specific term, any Incentive
Stock Option outstanding upon such termination of employment may be exercised at
any time prior to the expiration of the term of such option or within three
months following Participant’s termination of employment, whichever period is
shorter.
(h) The
aggregate Fair Market Value of Common Shares first becoming subject to exercise
as an Incentive Stock Option by a Participant who is an employee during any
given calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000.00). Such aggregate Fair market Value shall be determined as of the
date such Option is granted.
Section
7. Non-Qualified Stock Options
(a) Subject
to the provisions of the Plan, the Board may grant Non-Qualified Stock Options
and determine the number of shares to be covered by each such Option, the option
price therefor, the term of such Option, the vesting schedule and the other
conditions and limitations applicable to the exercise of the Non-Qualified Stock
Options.
(b) The
option price per share of Common Stock purchasable under a Non-Qualified Stock
Option shall not be less than 100% of the Fair Market Value of the Common Stock
on the date of grant.
(c) No
Non-Qualified Stock Option shall be exercisable more than ten (10) years after
the date such option is granted.
(d) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant’s employment or engagement by the Company or membership on the Board
terminates by reason of Retirement or Disability, any Non-Qualified Stock Option
granted to such Participant which is then outstanding may be exercised at any
time prior to the expiration of the term of such Non-Qualified Stock Option or
within three (3) months in the case of Retirement and twelve (12) months in case
of Disability following the Participant’s termination of employment, engagement,
or service, whichever period is shorter.
(e) Unless
otherwise determined by the Board at the time of grant, in the event a
Participant’s employment or engagement by the Company or membership on the Board
is terminated by reason of death, any Non-Qualified Stock Option granted to such
Participant which is then outstanding may be exercised by the Participant’s
legal representative at any time prior to the expiration date of the term of the
Non-Qualified Stock Option or within twelve (12) months following the
Participant’s termination of employment, whichever period is
shorter.
(f) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant’s employment or engagement by the Company or membership on the Board
shall terminate for Cause, any Non-Qualified Stock Option granted to such
Participant which is then outstanding shall be canceled and shall
terminate.
(g) Unless
otherwise determined by the Board at or after the time of grant, in the event a
Participant’s employment or engagement by the Company or membership on the Board
shall terminate for any reason other than death, Disability, Retirement or
Cause, any Non-Qualified Stock Option granted to such Participant which is then
outstanding may be exercised at any time prior to the expiration of the term of
such Option or within three (3) months following Participant’s termination,
whichever period is shorter.
Section
8. Restricted Stock Units
(a) Subject to the
provisions of the Plan, the Board may grant Awards of Restricted Stock Units and
determine the number of shares to be covered by each such Award, the Restriction
Period, the applicable Performance Goals, whether the Award is payable in cash
or shares of Common Stock, and other conditions and limitations applicable to
such Awards.
(b) Unless otherwise
provided in the applicable Award Agreement, during the Restriction Period, the
Participant shall not have any rights as a shareholder with respect to any
shares of Common Stock underlying the Restricted Stock Units.
(c) The Board may condition
the expiration of the Restriction Period upon: (i) the Participant’s continued
service over a period of time with the Company, its subsidiaries or its
affiliates, (ii) the achievement of any other Performance Goals set by the
Board, or (iii) any combination of the above conditions, as specified in the
Award Agreement. If the specified conditions are not attained, the
Participant shall forfeit the Award, or portion of the Award with respect to
which those conditions are not attained, and the Award (including the underlying
Common Stock) shall be forfeited. Notwithstanding any provision
contained herein to the contrary, the Board, in its sole discretion, may grant
Restricted Stock Units that are not subject to any Restriction
Period.
(d) At the end of the
Restriction Period, if all applicable conditions have been satisfied, the
Participant shall be entitled to receive a share of Common Stock for each share
underlying the Restricted Stock Unit Award that is then free from restriction,
or cash equal to the Fair Market Value of such shares of Common Stock, and such
shares or cash shall be delivered to the Participant (or, where appropriate, the
Participant’s legal representative). The Board may, in its sole
discretion, accelerate the vesting and delivery of Restricted Stock Units under
circumstances determined by the Board to be appropriate.
(e) The applicable Award
Agreement shall specify the right, if any, of a Participant to receive a
distribution of the Restricted Stock Unit Award as a result of, or following,
the Participant’s termination of employment or engagement by the Company or
membership on the Board.
Section
9.
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Change
in Control
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(a) In
the event of a Change in Control, the Board may, on a Participant-by-Participant
basis or on a broader Plan basis, take such action as the Board, in its sole
discretion determines with respect to outstanding Awards. Such action
by the Committee may include, without limitation, any one or more of the
following:
(i) accelerate
the vesting of outstanding Awards issued under the Plan that remain
unvested;
(ii) fully
vest and/or accelerate the Restriction Period of any Awards;
(iii) terminate
or cancel Awards in exchange for cash payments and/or provide limited
opportunities to exercise such Awards prior to the effectiveness of such
termination or cancellation;
(iv) require
that Awards be assumed by the successor entity, or that awards for shares or
other interests in the successor entity having equivalent value be substituted
for such Awards; or
(v) take
such other action as the Board shall determine to be reasonable under the
circumstances in order to retain the original intent of the Awards.
The
application of the foregoing provisions shall be determined by the Board in its
sole discretion. Any adjustment may provide for the elimination of
fractional shares of Common Stock in exchange for a cash payment equal to the
Fair Market Value of the eliminated fractional shares of Common
Stock. Notwithstanding the foregoing provisions, the time for payment
of any Award shall not be accelerated, and the exercisability of an Award shall
not be extended to the extent such acceleration or extension would be contrary
to the requirements of Section 409A of the Code, or result in the imposition of
taxation and/or penalties under Section 409A of the Code.
(b) The
judgment of the Board with respect to any matter referred to in this Section 9
shall be conclusive and binding upon each Participant without the need for any
amendment to the Plan.
Section
10. General Provisions Applicable to Awards
(a) Each Award under the Plan
shall be evidenced by an Award Agreement delivered to the Participant specifying
the terms and conditions thereof and containing such other terms and conditions
not inconsistent with the provisions of the Plan as the Board considers
necessary or advisable to achieve the purposes of the Plan and/or to comply with
applicable tax and regulatory laws and accounting principles. For purposes of
Plan interpretation the terms and conditions contained in any Award Agreement
shall be deemed to have been determined by the Board at the time of
grant.
(b) Each
Award may be granted alone, in addition to or in relation to any other Award.
The terms of each Award need not be identical, and the Board need not treat
Participants uniformly. Except as otherwise provided by the Plan or a particular
Award, any determination with respect to an Award may be made by the Board at
the time of grant or at any time thereafter.
(c) The
Board shall determine whether Awards are settled in whole or in part in cash,
Common Stock, other securities of the Company, or other property, and may, in
its discretion, permit “cashless exercises” and “net exercises” of Options
pursuant to such procedures as may be established by the Board.
(d) No
shares shall be delivered pursuant to any exercise of an Option until payment in
full of the option price therefor is received by the Company. Such payment may
be made in whole or in part in cash or by certified or bank check or, to the
extent permitted by the Board at or after the grant of the Option, (i) by means
of a net exercise pursuant to procedures established by the Board, or (ii) by
delivery of shares of Common Stock owned by the Participant valued at their Fair
Market Value on the date of delivery, or (iii) such other lawful consideration
as the Board may in its sole discretion determine.
(e) No
Award shall be transferable by the Participant otherwise than (to the extent
permitted under the applicable Award Agreement) by will or by the laws of
descent and distribution, and all Awards shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s duly
appointed guardian or personal representative.
(f) The
Board may at any time accelerate the vesting and exercisability or distribution
of all or any portion of any Award, provided that such acceleration does not
violate the provisions of Section 409A of the Code, or result in the imposition
of any taxation and/or penalties under Section 409A of the Code.
(g) The
Participant shall pay to the Company, or make provision satisfactory to the
Board for payment of, any taxes required by law to be withheld in respect of
Awards under the Plan no later than the date of the event creating the tax
liability. In the Board’s sole discretion, a Participant may elect to have such
tax obligations paid, in whole or in part, in shares of Common Stock, including
shares retained from the Award creating the tax obligation. For withholding tax
purposes, the value of the shares of Common Stock shall be the Fair Market Value
on the date the withholding obligation is incurred. The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.
(h) For
purposes of the Plan, the following events shall not be deemed a termination of
employment of a Participant:
(i) a
transfer to the employment of the Company from a subsidiary or from the Company
to a subsidiary, or from one subsidiary to another;
(ii) an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Participant’s right to reemployment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Board otherwise so provides in
writing; or
(iii) unless
provided otherwise by the Board, a transfer to the employment of an entity in
connection with the purchase by such entity of substantially all of the assets
of a business conducted by the Company or any subsidiary.
Subject
to clause (iii) of this paragraph (h), employees of a subsidiary of the Company
shall be deemed to have terminated their employment on the date on which such
subsidiary ceases to be a subsidiary of the Company.
Section
11. Effective Date, Termination and Amendment
(a) The Plan is effective on
June 22, 2010 the date the Plan was approved by the Board, contingent, however,
on approval of the Plan by the Company’s shareholders within 12 months of such
date. No Award shall be granted under the Plan after the close of
business on the day immediately preceding the tenth anniversary of the effective
date of the Plan. Subject to other applicable provisions of the Plan,
all Awards made under the Plan prior to such termination of the Plan shall
remain in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.
(b) The Board shall have the
power to amend, suspend or terminate the Plan at any time, provided that any
such termination of the Plan shall not affect Awards outstanding under the Plan
at the time of termination. Notwithstanding the foregoing, an
amendment will be contingent on approval of the Company’s shareholders, to the
extent required by law or by the rules of any stock exchange on which the
Company’s securities are traded or if the amendment would (i) increase the
benefits accruing to Participants under the Plan, (ii) increase the
aggregate number of shares of Common Stock that may be issued under the Plan, or
(iii) modify the requirements as to eligibility for participation in the
Plan.
(c) The Board may amend any
outstanding Award in whole or in part from time to time. Any such
amendment which the Board determines, in its sole discretion, to be necessary or
appropriate to conform the Award to, or otherwise satisfy, any legal requirement
(including without limitation the provisions of Code sections 162(m) or 409A or
the regulations or rulings promulgated thereunder), may be made retroactively or
prospectively and without the approval or consent of the
Participant. Additionally, the Board may, without the approval or
consent of the Participant, make adjustments in the terms and conditions of an
Award in recognition of unusual or nonrecurring events affecting the Company or
the financial statements of the Company in order to prevent the dilution or
enlargement of the benefits intended to be made available pursuant to the
Award. In addition to the foregoing, the Board may amend, modify or
terminate any outstanding Award held by a Participant, including substituting
therefor another Award of the same or a different type, changing the date of
exercise or realization, and converting an Incentive Stock Option to a
Non-Qualified Stock Option, provided that the Participant’s consent to each
action shall be required unless the Board determines that the action, taking
into account any related action, would not materially and adversely affect the
Participant. Notwithstanding the foregoing, or any other provision of
this Plan, the exercise price of an Option may not be changed after the Option
is granted without approval of the Company’s shareholders.
Section
12. Miscellaneous
(a) No
person shall have any claim or right to be granted an Award, and the grant of an
Award shall not be construed as giving a Participant the right to continued
employment. The Company expressly reserves the right at any time to dismiss a
Participant free from any liability or claim under the Plan, except as expressly
provided in the applicable Award Agreement.
(b) The
Board may postpone any grant, exercise, vesting or payment of an Award for such
time as the Committee in its sole discretion may deem necessary in order to
permit the Company: (i) to effect, amend or maintain any necessary
registration of the Plan or the shares of Common Stock issuable pursuant to the
Award under applicable securities laws; (ii) to take any action in order to (A)
list such shares of Common Stock or other shares of stock of the Company on a
stock exchange if shares of Common Stock or other shares of stock of the Company
are not then listed on such exchange, or (B) comply with restrictions or
regulations incident to the maintenance of a public market for its shares of
Common Stock or other shares of stock of the Company, including any rules or
regulations of any stock exchange on which the shares of Common Stock or other
shares of stock of the Company are listed; (iii) to determine that such shares
of Common Stock in the Plan are exempt from such registration or that no action
of the kind referred to in (ii)(B) above needs to be taken; (iv) to comply with
any other applicable law, including without limitation, securities and tax laws;
or (v) to otherwise comply with any prohibition on such acts or payments during
any applicable blackout period. Additionally, the granting, exercise,
vesting or payment of an Award shall be postponed during any period that the
Company or any affiliate is prohibited from doing or permitting any of such acts
under applicable law, including without limitation, during the course of an
investigation of the Company or any affiliate, or under any contract, loan
agreement or covenant or other agreement to which the Company or any affiliate
is a party. The Company shall not be obligated by virtue of any terms
and conditions of any Award Agreement or any provision of the Plan to recognize
the grant, exercise, vesting or payment of an Award or to grant, sell or issue
shares of Common Stock or make any such payments in violation of any law,
including any securities or tax laws, or the laws of any government having
jurisdiction thereof or any of the provisions hereof. Any such
postponement shall not extend the term of the Award, and neither the Company nor
its directors and officers nor the Committee shall have any obligation or
liability to any Participant or to any other person with respect to shares of
Common Stock or payments as to which the Award shall lapse because of such
postponement.
(c)
Nothing contained in the Plan shall prevent the Company from adopting other or
additional compensation arrangements for its employees.
(d) Subject
to the provisions of the applicable Award, no Participant shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof.
(e)
Nothing contained in this Plan, nor any Award granted pursuant to this Plan nor
any Award Agreement, shall constitute or create any employment or other
relationship, or confer upon any Participant any right to continued employment
or service with the Company or any subsidiary or affiliate, nor interfere in any
way with the right of the Company, a subsidiary or an affiliate to terminate the
employment or service of any Participant at any time.
(f)
Nothing contained in this Plan, and no action taken pursuant to the provisions
of the Plan, shall create or shall be construed to create a trust of any kind,
or a fiduciary relationship between the Committee, the Company or its
subsidiaries or affiliates, or their officers or other representatives or the
Board, on the one hand, and the Participant, the Company, its subsidiaries or
affiliates or any other person or entity, on the other.
(g) Notwithstanding
anything to the contrary expressed in this Plan, any provisions hereof that vary
from or conflict with any applicable Federal or State securities laws (including
any regulations promulgated thereunder) shall be deemed to be modified to
conform to and comply with such laws.
(h) No
member of the Board shall be liable for any action or determination taken or
granted in good faith with respect to this Plan nor shall any member of the
Board be liable for any agreement issued pursuant to this Plan or any grants
under it. Each member of the Board shall be indemnified by the Company against
any losses incurred in such administration of the Plan, unless his action
constitutes willful misconduct.
(i) To
the extent that State laws shall not have been preempted by any laws of the
United States, the Plan shall be construed, regulated, interpreted and
administered according to the other laws of the State of New
Jersey.
(j) Awards
may be granted to employees of the Company who are foreign nationals or employed
outside the United States, or both, on such terms and conditions different from
those specified in the Plan as may, in the judgment of the Board, be necessary
or desirable in order to recognize differences in local law or tax policy. The
Board may also impose conditions on the exercise or vesting of Awards in order
to minimize the Company’s obligation with respect to tax equalization for
employees on assignments outside their home country.
Executed
effective as of June 22, 2010.
MEASUREMENT SPECIALTIES,
INC.
By: /s/ Mark Thomson
Title: Chief
Financial Officer
MEASUREMENTSPECIALTIES, INC.
1000 LUCAS
WAY
HAMPTON,
VA 23666
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery 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 and follow the instructions to obtain your records and
to create an electronic voting instruction form.
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ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future
years.
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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 and then follow the
instructions.
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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 Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY
11717.
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
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M26558-P00208
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KEEP
THIS PORTION FOR YOUR RECORDS
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THIS
PROXY CARD IS VALIDONLY WHEN SIGNED AND
DATED.
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DETACH
AND RETURN THIS PORTION ONLY
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MEASUREMENT
SPECIALTIES,INC.
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For
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Withhold
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For All
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To
withhold authority to vote for any individual
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THE
BOARD OF DIRECTORS RECOMMENDS A |
All
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All
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Except
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nominee(s),
mark “For All Except” and write the
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VOTE
"FOR" THE ELECTION OF TWO DIRECTORS,
AND
"FOR" PROPOSALS 2 AND 3.
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number(s)
of the nominee(s) on the line below.
________________________________________
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1.
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To
elect the following persons to the Board
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of
Directors of the Company for the term
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described
in the proxy statement:
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Nominees:
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01)
John D. Arnold
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02)
Frank D. Guidone
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Vote
on Proposals
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For
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Against
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Abstain
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2.
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To
approve the 2010 Equity Incentive Plan.
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3.
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To
ratify the appointment of Ernst & Young LLP as the Company's
independent registered public accounting firm for the fiscal year ending
March 31, 2011.
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SIGN,
DATE AND RETURN PROXY CARDPROMPTLY USING THE ENCLOSED
ENVELOPE.
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To
change the address on your account, please check the box at the right and
indicate your new address in the address space on the reverse side. Please
note that changes to the registered name(s) on the account may not be
submitted via this method.
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Note:
This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
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Signature
[PLEASE SIGNWITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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ANNUAL
MEETING OF SHAREHOLDERS OF
MEASUREMENT
SPECIALTIES, INC.
Wednesday,
September 22, 2010
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
The
Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
Please
detach and mail in the envelope provided if you are not voting via the
Internet or telephone.
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M26559-P00208
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PROXY
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MEASUREMENT SPECIALITIES,
INC.
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Annual Meeting
of Shareholders - Wednesday, September 22, 2010
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THISPROXYIS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE
2010 ANNUAL MEETING OF SHAREHOLDERS ON SEPTEMBER 22,
2010
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The
shares of common stock of Measurement Specialties,
Inc. (the "Company") you are entitled to vote at the 2010
Annual Meeting of Shareholders will be voted as you
specify.
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By
signing this proxy, you revoke all prior proxies and
appoint Frank D. Guidone, Mark Thomson, or other
designee, and each of them, with full power of
substitution, to vote all shares you are entitled to vote on
the matters shown on the reverse side, as directed in this
proxy and, in their discretion, on any
other matters which may
come before the Annual
Meeting and all postponements and
adjournments.
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This proxy,
when properly executed, will be voted as
directed, or if no direction is
given, will be voted FORthe nominees for
Director, FOR the 2010 Equity Incentive Plan and FOR the
ratification of the appointment of Ernst & Young LLP
as our independent
registered public accounting firm for fiscal
2011.
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Address Changes/Comments:
__________________________________________________
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___________________________________________________________________________ |
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(If
you noted any Address Changes/Comments above, please
mark corresponding box on the reverse side.)
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