|
| | |
Nominees and Principal Occupation | Director Since | Age |
Bernard F. Reynolds Retired President Aon Consulting, Human Resources Outsourcing Group | 2009 | 70 |
| | |
Julian A. Tiedemann Executive Vice President and Chief Operating Officer The InterTech Group | 2011 | 47 |
| | |
Continuing Director whose Term of Office Expires in 2013 | | |
W. Gregory Robertson Chairman TM Capital Corp. | 1991 | 68 |
| | |
Continuing Directors whose Term of Office Expires in 2014 | | |
Kenneth M. Darby Chairman and CEO Vicon Industries, Inc. | 1987 | 66 |
| | |
Arthur D. Roche Retired Executive Vice President Vicon Industries, Inc. Retired Partner Arthur Andersen & Co. | 1992 | 73 |
| | |
Nominees and | Director | | | |
Principal Occupation | Since | | Age | |
| | | | |
Peter F. Neumann | | | | |
Retired President | | | | |
Flynn-Neumann Agency, Inc. | 1987 | | | 74 | |
| | | | | |
Bernard F. Reynolds | New Nominee | | | 67 | |
Retired President | | | | | |
Aon Consulting, | | | | | |
Human Resources Outsourcing Group | | | | | |
| | | | | |
Continuing Directors whose Term of Office Expires in 2010 | | | | | |
Clifton H. W. Maloney | | | | | |
President | | | | | |
C.H.W. Maloney & Co., Inc. | 2004 | | | 71 | |
| | | | | |
W. Gregory Robertson | | | | | |
Chairman | | | | | |
TM Capital Corp. | 1991 | | | 65 | |
| | | | | |
Continuing Director whose Term of Office Expires in 2011 | | | | | |
Kenneth M. Darby | | | | | |
Chairman and CEO | | | | | |
Vicon Industries, Inc. | 1987 | | | 63 | |
| | | | | |
Arthur D. Roche | | | | | |
Retired Executive Vice President | | | | | |
Vicon Industries, Inc. | | | | | |
Retired Partner | | | | | |
Arthur Andersen & Co. | 1992 | | | 70 | |
| | | | | |
Kenneth M. Darby - Chairman of the Board, President and Chief Executive Officer.Mr. NeumannDarby has been retired since 1998 and had previously served as the PresidentChairman of the Flynn-Neumann Agency, Inc., an insurance brokerage firm.Board since April 1999, as Chief Executive Officer since April 1992 and as President since October 1991. He has served as a director since 1987. Mr. Neumann’sDarby also served as Chief Operating Officer and Executive Vice President and as Vice President, Finance and Treasurer since joining the Company in 1978. Mr. Darby brings extensive knowledge of the Company and industry experience having served in various executive capacities prior to becoming Chairman of the Board and Chief Executive Officer. Mr. Darby's current term on the Board ends in May 2009.2014.
Bernard F. Reynolds - Director.Mr. Reynolds has been a director of the Company since 2009. He has been retired since 2004 and had previously served as the President of Aon Consulting’sConsulting's Human Resources Outsourcing Group. Prior to the merger of Aon Consulting Worldwide and ASI Solutions Incorporated in May 2001, Mr. Reynolds served as the Chairman and Chief Executive Officer of ASI, a company he founded in 1978.
Mr. Maloney isReynolds has extensive business knowledge having served as the President of C.H.W. Maloney & Co., Inc., a private investment firmdivision of a global risk management services, insurance brokerage and human resources management consulting company. Prior to that, he founded in 1981. From 1974 to 1984, he wasMr. Reynolds served as the Chairman of the Board and Chief Executive Officer of a Vice President in investment banking at Goldman, Sachs & Co.publicly listed human resources outsourcing company, and brings general business experience and a particular knowledge of human resources and compensation matters. Mr. Maloney is a Director of Chromium Industries, Inc. and The Wall Street Fund. Mr. Maloney’sReynolds' current term on the Board ends in May 2010.2012.
W. Gregory Robertson - Director.Mr. Robertson has been a director of the Company since 1991. He is the Chairman of TM Capital Corporation, a financial services company which he founded in 1989. From 1985 to 1989, he was employed by ThompsonThomson McKinnon Securities, Inc., as head of investment banking and public finance. Mr. Robertson’sRobertson has extensive experience in investment banking and public finance having served as President and now Chairman of a financial services company. Mr. Robertson has worked with a diverse group of both publicly listed and private companies in merger, acquisition, divestiture and finance transactions and provides valuable insight into the shareholder's perspective on value creation and strategic decisions. Mr. Robertson's current term on the Board ends in May 2010.2013.
Arthur D. Roche - Director.Mr. DarbyRoche has served as Chairmanbeen a director of the BoardCompany since April 1999, as Chief Executive Officer since April 1992 and as President since October 1991. Mr. Darby also1992. He served as Chief Operating Officer and as Executive Vice President Vice President, Finance and Treasurer of the Company. He joined the Company in 1978 as Controller after more than nine years at Peat Marwick Mitchell & Co., a public accounting firm. Mr. Darby’s current term on the Board ends in May 2011.
Mr. Roche has been retired since 1999 and had previously served as the Executive Vice President and co-participantco‑participant in the Office of the President of the Company sincefrom August 1993.1993 until his retirement in November 1999. For the six months prior to that time, Mr. Roche provided consulting services to the Company. In October 1991, Mr. Roche retired as a partner of Arthur Andersen & Co., an international accounting firm which he joined in 1960. Mr. Roche’sRoche brings extensive Company knowledge and financial experience having served as the Company's Executive Vice President and formerly serving as a partner with an international public accounting firm. Mr. Roche brings particular insight to the Board based on his former management responsibilities and provides strategic planning and financial oversight. His current term on the Board ends in May 2011.2014.
Julian A. Tiedemann - Director. Mr. Tiedemann was appointed to the Board in May 2011. He has served as Executive Vice President and Chief Operating Officer of The InterTech Group, a holding company and operator of a diverse global group of companies, since 2008. From 1996 to 2008, Mr. Tiedemann was Vice President of Human Resources, Risk Management and Administration for The InterTech Group. In addition, he previously served on the Board of Directors of Hudson's Bay Company, a multi-billion dollar Canadian national retailer. Mr. Tiedemann brings extensive knowledge and experience in operating and administration matters having served as Chief Operating Officer of a diverse group of global companies and having previously served as a director of a multi-billion dollar retailer. His current term on the Board ends in May 2013.
THE ROLE OF THE BOARD OF DIRECTORS
General
The Board of Directors has the responsibility for establishing broad corporate policies and for the overall performance of the Company. Outside members of the Board are kept informed of the Company's business through various reports and documents sent to them, as well as through operating and financial reports made at Board and committee meetings by Mr. Darby and other officers.
Board Leadership Structure
The Board of Directors has appointed the Company's Chief Executive Officer to serve as Chairman of the Board. In his position as CEO, Mr. Darby has primary responsibility for the day-to-day operations of the Company and provides consistent leadership on the Company's key strategic objectives. In his role as Chairman of the Board, he sets the strategic priorities for the Board of Directors, presides over its meetings and communicates its strategic findings and guidance to management. The Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy and is important in unifying the Company's strategy behind a single vision.
In addition, the Company has found that its CEO is the most knowledgeable member of its Board of Directors regarding risks it may be facing and is best able to facilitate the Board's oversight of such risks in his role as its Chairman. However, no single leadership model is right for all companies at all times, and the Company has no bylaw or policy in place that mandates that the CEO serve as the Chairman of the Board. The Board recognizes that other leadership models such as a separate independent Chairman of the Board might be appropriate depending on the circumstances. Accordingly, the Board of Directors periodically evaluates its leadership structure to ensure that it remains the optimal structure for the Company and its stockholders.
The Company has not found it necessary to appoint a lead independent director due principally to the limited size of the Board, the long tenure of its members and the fact that all Board Committees are comprised of independent directors. The Company's Board is comfortable that its existing leadership structure provides for an appropriate balance that best serves the Company and its stockholders.
Board Oversight of Risk
The Board of Directors recognizes that although risk management is primarily the responsibility of the Company's management team, the Board plays a critical role in the oversight of risk. The Board believes that an important part of its responsibilities is to assess the major risks which the Company faces and review the Company's options for monitoring and controlling these risks. The Board has delegated responsibility for the Company's overall risk assessment and risk management policies to the Audit Committee. The Audit Committee also has specific responsibility for oversight of risks associated with financial accounting and audits, internal control over financial reporting and the Company's major financial risk exposures. The Compensation Committee oversees the risks relating to the Company's compensation policies and practices, as well as management development and leadership succession in the Company. The Board of Directors as a whole examines specific business risks in its periodic reviews of the individual business units and also on a company-wide basis as part of its regular reviews.
Outside of formal meetings, the Board and its committees have regular access to senior executives, including the Company's Chief Executive Officer and Chief Financial Officer. The Board believes that this structure allows it to maintain effective oversight over the Company's risks and ensures that management personnel are following prudent and appropriate risk management practices.
Board Composition
The Company's Board of Directors is comprised of individuals with diverse experience at policy-making levels in a variety of industries and businesses in areas that are relevant to the Company's activities. Each director was nominated on the basis of the unique experience, qualifications, attributes and skills that he brings to the board, as well as how those factors blend with those of the others on the Board as a whole. On an individual basis:
Mr. Darby brings extensive knowledge of the Company and industry experience having joined the Company in 1978 and having served in various executive capacities prior to becoming Chairman of the Board and Chief Executive Officer in 1992.
Mr. Neumann has significant general business experience and knowledge of insurance and other financial products having served as the President of his own insurance brokerage firm. Mr. Neumann also brings experience and insight to the Board with respect to regulated industries and risk mitigation.
Mr. Reynolds has extensive business knowledge having served as the President of a division of a global risk management services, insurance brokerage and human resources management consulting company. Prior to that, Mr. Reynolds served as the Chairman of the Board and Chief Executive Officer of a publicly listed human resources outsourcing company, which he founded in 1978. Mr. Reynolds brings general business experience and a particular knowledge of human resources and compensation matters.
Mr. Robertson has extensive experience in investment banking and public finance having served as President and now Chairman of a financial services company which he founded in 1989. Mr. Robertson has worked with a diverse group of both publicly listed and private companies in merger, acquisition, divestiture and finance transactions. Mr. Robertson provides valuable insight into the stockholder's perspective on value creation and strategic decisions.
Mr. Roche brings extensive Company knowledge and financial experience having served as the Company's Executive Vice President from 1993 through 1999 and formerly serving as a partner with an international public accounting firm. Mr. Roche brings particular insight to the Board based on his former management responsibilities and provides strategic planning and financial oversight.
Mr. Tiedemann brings extensive knowledge and experience in operating and administration matters having served as Chief Operating Officer of a diverse group of global companies and having previously served as a director of a multi-billion dollar retailer.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors has a number of committees including the Executive Committee, the Compensation Committee, the Audit Committee and the Nominating and Corporate Governance Committee. All independent directors are members of each of the Committees.
The Executive Committee is chaired by Mr. Darby and meets in special situations when the full Board cannot be convened. The Committee met oncedid not meet during the last fiscal year.
The Compensation Committee consists of Messrs. Neumann (Chairman), Maloney,Reynolds, Robertson, Roche and Roche,Tiedemann, all of whom are non-employee directors. The function of the Compensation Committee is to establish and approve the appropriate compensation for Mr. Darby, recommend to the Board the award of stock options, and to review and approve the recommendations of Mr. Darby with respect to the compensation of all other officers. A copy of the Compensation Committee Charter is available on the Company's website at http://www.vicon-security.com. The Committee met three timestwice during the last fiscal year.
The Audit Committee consists of Messrs. Roche (Chairman), Maloney, Neumann, Reynolds, Robertson and Robertson,Tiedemann, each of whom is an “independent director” as defined by NYSE Amex Listing Standards. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee management’smanagement's conduct of the Company’sCompany's financial reporting process, including review of the financial reports and other financial information of the Company, the Company’sCompany's system of internal accounting controls, the Company’sCompany's compliance with legal and regulatory requirements and the qualifications, independence and performance of the Company’sCompany's independent registered public accountants. The Audit Committee has sole authority to appoint, retain, compensate, evaluate and terminate the independent registered public accountants. The Board has determined that Mr. Roche is an “Audit Committee financial expert” under the rules of the Securities and Exchange Commission. The Audit Committee will periodically review the Audit Committee Charter in light of new developments in applicable regulations and may make additional recommendations to the Board of Directors for further revision of the Audit Committee Charter to reflect evolving best practices. A copy of the Company’sAudit Committee Charter is available on itsthe Company's website at HTTP:http://www.vicon-cctv.com.www.vicon-security.com. The Committee met fivefour times during the last fiscal year.
The Nominating and Corporate Governance Committee (the "Committee") consists of Messrs. Roche (Chairman), Maloney, Neumann, Reynolds, Robertson and Robertson.Tiedemann. The primary function of the Nominating Committee is to recommend individuals qualified to serve as directors and on committees of the Board; to advise the Board with respect to Board composition, procedures and committees; and to evaluate the overall Board and Committee effectiveness.effectiveness and to evaluate and monitor the Company's corporate governance policies and programs. All director candidates, including those recommended by stockholders, are evaluated on the same basis. In its evaluation of director candidates, the Nominating Committee considers a variety of characteristics, including, but not limited to, core competencies, experience, independence, level of commitment, Board and company needs and considerations, and personal characteristics. The Nominating Committee may engage a third party to assist it in identifying potential director nominees. The Committee has generally identified nominees based upon recommendations from existing directors and will consider candidates recommended by stockholders if submitted to the Committee in writing and complying with shareholder proposal requirements outlined elsewhere in this proxy statement. The Committee does not have a specific policy with regard to the consideration of diversity in identifying director nominees. The Committee also makes recommendations to the Board on changes to the Company's corporate governance principles based upon emerging governance trends. The Board of Directors has determined that each member of the Nominating Committee meets the definition of an "independent“independent director” as defined by NYSE Amex Listing Standards. A copy of the Nominating and Corporate Governance Committee Charter is available on the Company's website at http://www.vicon-security.com. The Committee doesdid not have aany formal written charter and did not meetmeetings last fiscal year.
The Board of Directors has the responsibility for establishing broad corporate policies and for the overall performance of the Company. Outside members of the Board are kept informed of the Company's business through various reports and documents sent to them, as well as through operating and financial reports made at Board and committee meetings by Mr. Darby and other officers.
The Board of Directors held twentyten meetings in the Company’s 2008Company's 2011 fiscal year, including all regularly scheduled and annual meetings. No Board member attended fewer than 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which he was a director) and (2) the total number of meetings held by all committees on which he served (during the periods that he served). The prior year annual meeting was attended by all of the current directors.
The non-employee directors are each compensated at the rate of $22,400 per year retainer and $1,600 per Committee meeting attended in person or by teleconference. The Chairman of the Audit Committee receives an additional annual retainer of $8,000. Employee directors are not compensated for Board or committee meetings. Directors may not stand for re-election after 70, except that any director may serve additional three-year terms after age 70 with the unanimous consent of the Board of Directors.
Certain Relationships and Related Transactions
The Company and CBC Co., Ltd. (CBC), a Japanese corporation which beneficially owns 11.3%11.5% of the outstanding shares of the Company, have been conducting business with each other since 1979. During this period, CBC has served as a lender, a product supplier and a private label reseller of the Company’sCompany's products. In fiscal 2008,2011, the Company purchased approximately $448,000$911,000 of products from or through CBC. CBC competes with the Company in various markets, principally in the sale of video products and systems. Sales of Vicon products to CBC were $53,000$9,000 in 2008.2011.
All named directors other than Mr. Darby are independent directors in accordance with the NYSE Amex Company Guide.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that applies to all its employees, including its chief executive officer, chief financial and accounting officer, controller, and any persons performing similar functions. Such Code of Ethics and Business Conduct is published on the Company’sCompany's internet website (www.vicon-cctv.com)(http://www.vicon-security.com).
Ability of Stockholders to Communicate with the Board of Directors
Shareholders may contact the Board of Directors or a specified individual director by sending a written communication addressed to the Board of Directors or such individual director(s) in care of the Secretary of the Company at Vicon Industries, Inc., 89 Arkay Drive, Hauppauge, NY 11788. The Company’sCompany's Corporate Secretary will relay all such communications to the Board of Directors, or individual members, as appropriate.
Report of the Audit Committee
The Audit Committee reviews the Company’sCompany's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control.
In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited consolidated financial statements as of and for the fiscal year ended September 30, 2008.2011 Additionally, the Committee has reviewed and discussed with management and the independent registered public accountants the Company’sCompany's unaudited interim financial statements as of and for the end of each fiscal quarter. Such discussions occur prior to issuance of news releases reporting quarterly results.
The Committee has discussed with the independent registered public accountants the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Committee has received the written disclosures and the letter from the independent registered public accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants’accountants' communications with the audit committee concerning independence, and has discussed with the independent accountants the independent accountants’accountants' independence.
Based on the reviews and discussions referred to above, the Committee recommends to the Board of Directors that the audited fiscal year-end financial statements referred to above be included in the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended September 30, 2008.2011.
Submitted by the Audit Committee,
|
| |
Arthur D. Roche, Chairman | Clifton H.W. Maloney |
Peter F. Neumann |
Bernard F. Reynolds | W. Gregory Robertson |
Julian A. Tiedemann | |
OTHER OFFICERS OF THE COMPANY
In addition to Mr. Darby, the Company has six other officers. They are:
|
| |
John M. Badke, age 4952 | Sr.Senior Vice President, Finance and
Chief Financial Officer |
| |
Peter A. Horn, age 5457 | Vice President, Operations |
Frank L. Jacovino, age 53 | Vice President, Corporate Engineering |
Bret M. McGowan, age 4346 | Vice President, U.S. Sales and Marketing (Americas) |
Mark S. Provinsal, age 45 | |
Yacov A. Pshtissky, age 57 | Vice President, TechnologySales and Development |
| Marketing Director, Vicon Industries, Ltd. |
Christopher J. Wall, age 5558 | Managing Director, Vicon Industries, Ltd. |
| |
Yigal Abiri, age 59 | General Manager, Vicon Systems Ltd. |
| |
Mr. Badke has been Senior Vice President, Finance since May 2004 and Chief Financial Officer since December 1999. Previously, he was Vice President, Finance since October 1998 and served as Controller since joining the Company in 1992. Prior to joining the Company, Mr. Badke was the Controller for NEK Cable, Inc. and an audit manager with the international accounting firms of Arthur Andersen & Co. and Peat Marwick Main & Co.
Mr. Horn has been Vice President, Operations since June 1999. From 1995 to 1999, he was Vice President, Compliance and Quality Assurance. Prior to that time, he served as Vice President in various capacities since his promotion in May 1990.
Mr. McGowanJacovino has been Vice President, U.S. SalesCorporate Engineering since February 2010. Prior to joining the Company, Mr. Jacovino served as Vice President of Engineering of Tactronics International, LLC since 2008. From 2005 to 2008, Mr. Jacovino served as Vice President Technology & Operations of RVSI Inspection, and Marketing since April 2005. Fromfrom 2001 to 2005 he served as Vice President/General Manager Inspection Products for Robotic Vision Systems, Inc and held other positions within the company since joining it in 1985.
Mr. McGowan has been Vice President, Marketing.Sales and Marketing (Americas) since January 2012. Previously, he served in varying Sales and Marketing vice president capacities since 2001. Previously, he served as Director of Marketing since 1998 and as Marketing Manager since 1994. He joined the Company in 1993 as a Marketing Specialist.
Mr. Pshtissky has beenProvinsal joined the Company in January 2010 as its Vice President, TechnologyMarketing and Development since May 1990. Mr. Pshtissky wasProduct Management and in January 2012, transferred to the Company's U.K. based subsidiary, Vicon Industries, Ltd., to serve as its Director of ElectricalSales and Marketing. Prior to joining the Company, Mr. Provinsal served as Executive Vice President of Dedicated Micros Inc. (U.S.) since 2008 and prior as its Vice President Marketing and Product Strategy since joining the company in 2006. From 2000 to 2006, he served as the Director of Marketing and Product Development from March 1988 through April 1990.of IPIX Corporation.
Mr. Wall has been Managing Director, Vicon Industries, Ltd., since February 1996. Previously, he served as its Financial Director, Vicon Industries, Ltd. since joining the Company in 1989. Prior to joining the Company, Mr. Wall held a variety of senior financial positions within Westland plc, a UK aerospace company.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Mr. Abiri has been General Manager, Vicon Systems Ltd. since becomingThe following table sets forth the beneficial ownership of the Company's Common Stock as of March 15, 2012 by (i) those persons known by the Company to be beneficial owners of more than 5% of the Company's outstanding Common Stock; (ii) each current executive officer named in the Summary Compensation Table; (iii) each director; and (iv) all directors and executive officers as a member of management through acquisition of his company, QSR, Ltd., in August 1999. Previously, Mr. Abiri had been President of QSR, Ltd., a developer and manufacturer of remote video surveillance equipment.group.
|
| | | | | | | | |
Name and Address Of Beneficial Owner | | Number of Shares Beneficially Owned (1) | | % of Class |
| |
CBC Co., Ltd. and affiliates 2-15-13 Tsukishima, Chuo-ku, Tokyo, Japan 104 | | | | |
| | |
543,715 |
| | | 11.5 |
| % |
| | | | |
Anita G. Zucker, as Trustee of the Article 6 Marital Trust, a successor of the Jerry Zucker Revocable Trust c/o The InterTech Group, Inc. 4838 Jenkins Avenue North Charleston, SC 29405 | | | | |
| | |
| | |
| | |
507,122 |
| | (2) | 10.7 |
| % |
| | | | |
Dimensional Fund Advisors 1299 Ocean Avenue Santa Monica, CA 90401 | | | | |
| | |
384,396 |
| | (3) | 8.1 |
| % |
| | | | |
Renaissance Technologies, Corp. 800 Third Avenue New York, NY 10022 | | | | |
| | |
244,200 |
| | | 5.2 |
| % |
| | | | |
Henry Investment Trust, L.P. 255 South 17th Street, Suite 2608 Philadelphia, PA 19103 | | | | |
| | | |
| 238,000 |
| | (4) | 5.0 |
| % |
| | | | |
C/O Vicon Industries, Inc. | | | | |
Kenneth M. Darby | | 372,903 |
| | (5) | 7.9 |
| % |
Arthur D. Roche | | 90,571 |
| | (6) | 1.9 |
| % |
John M. Badke | | 72,046 |
| | (7) | 1.5 |
| % |
Peter F. Neumann | | 51,072 |
| | (8) | 1.1 |
| % |
W. Gregory Robertson | | 49,900 |
| | (8) | 1.1 |
| % |
Bret M. McGowan | | 39,135 |
| | (9) | * |
Bernard F. Reynolds | | 38,500 |
| | (10) | * |
Julian A. Tiedemann | | 4,000 |
| | | * |
Total all Executive Officers and Directors as a Group (12 persons) | | 837,209 |
| | (11) | 17.7 |
| % |
* Less than 1% | | | | |
| |
(1) | Unless otherwise indicated, the Company believes that all persons named in the table have sole voting and investment control over the shares of stock owned. |
| |
(2) | These shares are owned directly by the Article 6 Marital Trust, a successor of the Jerry Zucker Revocable Trust and indirectly by Anita Zucker, as trustee and as a beneficiary of the trust. |
| |
(3) | Dimensional Fund Advisors had voting control over 380,796 shares and investment control over 384,396 shares as investment advisor and manager for various mutual funds and other clients. These shares are beneficially owned by such mutual funds or other clients. |
| |
(4) | Henry Investment Trust, L.P. may be deemed a beneficial owner of 143,900 shares held by Henry Partners, L.P. and 94,100 shares held by Matthew Partners, L.P. solely because Henry Investment Trust, L.P. is the general partner of those partnerships. |
| |
(5) | Includes currently exercisable options to purchase 40,000 shares. |
| |
(6) | Includes 15,000 shares held by Mr. Roche's wife and currently exercisable options to purchase 18,000 shares. |
| |
(7) | Includes currently exercisable options to purchase 27,200 shares. |
| |
(8) | Includes currently exercisable options to purchase 18,000 shares. |
| |
(9) | Includes currently exercisable options to purchase 20,900 shares. |
| |
(10) | Includes currently exercisable options to purchase 18,500 shares. |
| |
(11) | Includes currently exercisable options to purchase 204,300 shares. |
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives of the Company’sOur Compensation Program
The Company’sCompany's compensation programs are intended to enable it to attract, motivate, reward and retain the management talent required to achieve corporate objectives, and thereby increase stockholder value. It is the Company’sCompany's policy to provide incentives to senior management to achieve both short-term and long-term objectives and to reward exceptional performance and contributions to the development of the business. To attain these objectives, the executive compensation program includes four key components:
Base Salary. Base salary for the Company’sCompany's executives is intended to provide competitive remuneration for services provided to the Company over a one-year period. Base salaries are set at levels designed to attract and retain the most appropriately qualified individuals for each of the key management level positions within the Company.
Cash Incentive Bonuses. The Company's bonus programs are intended to reward executive officers for the achievement of various annual performance goals approved by the Company’sCompany's Board of Directors. For fiscal 2008,2011, a performance based bonus plan was established for certain of the Company’sCompany's executive officers, including among others Kenneth M. Darby, Chief Executive Officer;Officer and John M. Badke, Chief Financial Officer; and Peter A. Horn, Vice President of Operations,Officer, whereby the participants would share a specified profit based bonus pool uponof between $300,000 for the achievement of a certain minimum annual consolidated sales and pretax profit target as defined byloss targets of $53 million and $1 million, respectively, and $500,000 for the Company’s Boardachievement of Directors. Underannual consolidated sales and pretax loss targets of $56 million (and above) and $250,000 (and below), respectively. Messrs. Darby and Badke earned no bonuses under such plan Messrs. Darby, Badke and Horn earned bonuses of $218,000, $109,000 and $73,000, respectively, based upon the allocation of an aggregate bonus pool of nine percent (9%) of the Company’s consolidated pretax profit for 2008, after certain adjustments.fiscal 2011. In addition, a performance based bonus plans wereplan was established for Christopher J. Wall, the Company’s European subsidiary Managing Director and Bret M. McGowan, Vice President U.S.of Sales and Marketing for fiscal year 2008(Americas), whereby Mr. Wallhe would earn an amount equalup to between 2%$95,000 for the achievement of certain annual U.S. and 6% (based on achievement levels) of the combined pretax operating profits of the Company’s Europe based subsidiaries andexport sales targets. Mr. McGowan willearned no bonus under such plan for fiscal 2011. However, Messrs. Darby, Badke and McGowan were granted discretionary bonuses of $15,000, $10,000 and $10,000, respectively for fiscal 2011. Such bonuses were approved by the Company's Board of Directors upon the recommendation of its Compensation Committee.
For fiscal 2010, the Company had no formal bonus plan for its named executive officers other than for Mr. McGowan. A performance based bonus plan was established for Mr. McGowan whereby he would earn a specified commission upon achievingcommissions for the achievement of certain quarterly and annual U.S. sales targets. Under such plans, Mr. Wall earned a bonus of $191,000 for fiscal 2008 and Mr. McGowan earned no commissions of $75,000 duringunder such plan for fiscal 2008.2010.
Equity-based Compensation. Equity-based compensation is designed to provide incentives to the Company’sCompany's executive officers to build shareholder value over the long term by aligning their interests with the interest of shareholders. The Compensation Committee of the Board of Directors believes that equity-based compensation provides an incentive that focuses the executive's attention on managing the company from the perspective of an owner with an equity stake in the business. Among our executive officers, the number of shares of stock awarded or common stock subject to options granted to each individual generally depends upon the level of that officer's responsibility. The largest grants are generally awarded to the most senior officers who, in the view of the Compensation Committee, have the greatest potential impact on the Company’sCompany's profitability and growth. Previous grants of stock options or stock grants are reviewed in determining the size of any executive's award in a particular year.
In March 2007, the Board of Directors adopted the Company’sCompany's 2007 Stock Incentive Plan, which was approved by the Company’sCompany's stockholders at its Annual Meeting of Stockholders held on May 18, 2007. Under such plan, a total of 500,000 shares of Common Stock were reserved for issuance and include the grant of stock options, restricted stock
and other stock awards as determined by the Compensation Committee. The purpose of the Stock Incentive Plan is to attract and retain executive management by providing them with appropriate equity-based incentives and rewards for superior performance and to provide incentive to a broader range of employees. In fiscal 2008,2011, the Compensation Committee awarded a total of 52,50029,000 stock options to named executive officers, including 20,00015,000 to Mr. Darby, 10,0007,000 to Mr. Badke 10,000and 7,000 to Mr. Wall, 7,500 to Mr. Horn and 5,000 to Mr. McGowanMcGowan.
Retirement, Health and Welfare Benefits and Other Perquisites. The Company’sCompany's executive officers are entitled to a specified retirement/severance benefit pursuant to employment agreements as detailed below.
In addition, the executive officers are entitled to participate in all of the Company’sCompany's employee benefit plans, including medical, dental, group life, disability, accidental death and dismemberment insurance and the Company’sCompany's sponsored 401(k) and mandated foreign Retirement Plans. Further, Mr. Wall receives a supplemental retirement benefit in the form of a defined contribution of five percent (5%) of his annual salary.. The Company also provides its Chief Executive Officer with a country club membership and certain additional insurances not covered by primary insurance plans available to other employees and certain of the Company’sCompany's named executive officers are provided either a leased car.
car or auto allowance.
Employment Agreements
The Company has entered into employment agreements with certain of its named executive officers that provide certain benefits upon termination of employment or change in control of the Company without Board of Director approval. Under Mr. Darby’s employment agreement, he is entitled to receive a lump sum payment equal to the balance owing under his agreement in the event of a change in control of the Company under any condition. All the othersuch agreements provide the named executive officer with a payment of three times their average annual compensation for the previous five year period if there is a change in control of the Company without Board of Director approval, as defined. Such payment can be taken in a present value lump sum or equal installments over a three year period. The agreements also provide the named executive officers other than Mr. Darby with certain severance/retirement benefits upon certain occurrences including termination of employment without cause as defined, termination of employment due to the Company’sCompany's breach of specified employment conditions (good reason termination), death, disability or retirement at a specified age. Such severance/retirement benefit provisions survive the expiration of the agreements and include a fixed stated benefit of $350,000 for Mr. Badke $200,000 (100,000 Pounds Sterling) for Mr. Wall, $316,000 for Mr. Horn and $290,000 for Mr. McGowan. In addition, Messrs.Mr. Badke and Horn each receivereceives an additional deferred compensation benefit upon such employment termination occurrences in the form of 6,561 and 9,759 shares respectively, of the Company’sCompany's common stock.
On August 11, 2008, the Company entered into a one-year employment agreement with Kenneth M. Darby, the Company’s Chief Executive Officer, to expire on September 30, 2009. The terms of the new agreement provide for an annual base salary of $400,000. In the event the agreement is terminated prior to its expiration for reasons other than cause as defined, Mr. Darby is entitled to receive all remaining salary owed him through its expiration.
Mr. Horn is subject to an employment agreement that expired on December 31, 2008 and provides for an annual base salary of $168,000. Mr. Wall had a one year employment agreement that expired on September 30, 2008, which was subsequently renewed to expire on September 30, 2009.
2011 Summary Compensation Table
2008 Summary Compensation Table
The following table sets forth all compensation for the fiscal year ended September 30, 20082011 awarded to or earned by the Company’sCompany's Chief Executive Officer, Chief Financial Officer and by each of our other named executive officers whose total compensation exceeded $100,000 during such period.
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($)(2) | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Kenneth M. Darby | 2008 | | $ | 400,000 | | | | - | | | | - | | | $ | 9,792 | (1) | | $ | 218,182 | (2) | | | - | | | $ | 23,693 | (4) | | $ | 651,667 | |
Chairman and Chief Executive Officer | 2007 | | $ | 325,000 | | | | - | | | | - | | | $ | 27,495 | (1) | | $ | 346,711 | (3) | | $ | 852,429 | (5) | | $ | 22,324 | (4) | | $ | 1,573,959 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
John M. Badke | 2008 | | $ | 190,000 | | | | - | | | | - | | | $ | 12,336 | (1) | | $ | 109,091 | (2) | | | - | | | $ | 7,927 | (6) | | $ | 319,354 | |
Senior Vice President and Chief Financial Officer | 2007 | | $ | 180,000 | | | | - | | | | - | | | $ | 17,252 | (1) | | $ | 173,355 | (3) | | | - | | | $ | 7,152 | (6) | | $ | 377,759 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christopher J. Wall | 2008 | | $ | 203,013 | | | | - | | | | - | | | $ | 9,180 | (1) | | $ | 190,891 | (8) | | | - | | | $ | 31,022 | (7) | | $ | 434,106 | |
Managing Director Vicon Industries, Ltd. | 2007 | | $ | 200,000 | | | | - | | | | - | | | $ | 11,263 | (1) | | $ | 188,490 | (8) | | | - | | | $ | 25,014 | (7) | | $ | 424,767 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Peter A. Horn | 2008 | | $ | 168,000 | | | | - | | | | - | | | $ | 7,834 | (1) | | $ | 72,727 | (2) | | | - | | | $ | 6,909 | (6) | | $ | 255,470 | |
Vice President, Operations | 2007 | | $ | 163,000 | | | | - | | | | - | | | $ | 8,375 | (1) | | $ | 115,570 | (3) | | | - | | | $ | 7,244 | (6) | | $ | 294,189 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bret M. McGowan | 2008 | | $ | 180,000 | | | | - | | | | - | | | $ | 12,091 | (1) | | $ | 74,803 | (9) | | | - | | | $ | 6,000 | (6) | | $ | 272,894 | |
Vice President, U.S. Sales and Marketing | 2007 | | $ | 170,000 | | | | - | | | | - | | | $ | 12,856 | (1) | | $ | 60,641 | (9) | | | - | | | $ | 6,000 | (6) | | $ | 249,497 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | Option Awards ($)(2) | | Non-Equity Incentive Plan Compensation ($)(3) | | All Other Compensation ($) | | Total ($) |
Kenneth M. Darby Chairman and Chief Executive Officer | | 2011 | | 340,000 |
| | | 15,000 |
| | | 39,300 |
| | | — |
| | | 19,613 |
| | (4) | 413,913 |
| |
| 2010 | | 370,000 |
| | | — |
| | | — |
| | | — |
| | | 21,026 |
| | (4) | 391,026 |
| |
| | | | | | | | | | | | | | |
John M. Badke Senior Vice President and Chief Financial Officer | | 2011 | | 190,000 |
| | | 10,000 |
| | | 18,340 |
| | | — |
| | | 8,245 |
| | (5) | 226,585 |
| |
| 2010 | | 190,000 |
| | | — |
| | | — |
| | | — |
| | | 8,311 |
| | (5) | 198,311 |
| |
| | | | | | | | | | | | | | |
Bret M. McGowan Vice President, Sales and Marketing (Americas) | | 2011 | | 180,000 |
| | | 10,000 |
| | | 18,340 |
| | | — |
| | | 6,000 |
| | (5) | 214,340 |
| |
| 2010 | | 180,000 |
| | | — |
| | | — |
| | | 855 |
| | | 6,000 |
| | (5) | 186,855 |
| |
| |
(1) | Represents discretionary bonus approved by the Board of Directors upon the recommendation of its Compensation Committee. |
| |
(2) | Represents the compensation costs recognized for financial statement reporting purposes for theaggregate grant date fair value of stock optionsoption awards computed in accordance with StatementASC 718 (Statement of Financial Accounting Standards No. 123R. (See “Note 1” under the caption “Accounting for Stock-Based Compensation” to the accompanying financial statements.) |
Financial Accounting Standards No. 123R).
(2) | |
(3) | Represents cash awards under the Company’s 2008 performance based bonus plan. These amounts were earned in fiscal 2008 and paid in fiscal 2009.sales related commissions. |
(3) | Represents cash awards under the Company’s 2007 performance based bonus plan. These amounts were earned in fiscal 2007 and paid in fiscal 2008. |
(4) | All other compensation represents: (a) automobile expense of $12,894$10,021 for both fiscal 2011 and $11,857 for fiscal 2008 and 2007, respectively,2010, (b) country club membership of $8,589$9,592 and $8,257$8,795 for fiscal 20082011 and 2007,fiscal 2010, respectively, and (c) long-term disability insurance of $2,210 paid by the Company for Mr. Darby in both fiscal 2008 and 2007.2010. |
(5) | Represents the distribution of a $620,000 severance/retirement benefit and 70,647 shares of the Company’s common stock with a market value of $232,429 upon the expiration of Mr. Darby’s previous employment agreement on September 30, 2006. Such amounts were earned by Mr. Darby over his thirty years of service with the Company and charged to expense over prior year periods. |
(6) (5) | Represents automobile expense paid by the Company. |
(7) | All other compensation represents: (a) automobile expense of $16,929 and $15,380 for fiscal 2008 and 2007, respectively, and (b) supplemental retirement contributions of $14,093 and $9,634 for fiscal 2008 and 2007, respectively. |
(8) | Represents cash award under Mr. Wall’s performance based bonus plan. |
(9) | Represents sales commissions earned. |
Outstanding Equity Awards at Fiscal 20082011 Year-End
The following table sets forth information with respect to the outstanding equity awards of the named executive officers as of September 30, 2008.
2011.
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | Option Expiration Date |
| | | | | | | | | | | | | |
Kenneth M. Darby | | | 16,129 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
Chairman and Chief | | | - | | | | 10,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
Executive Officer | | | - | | | | 20,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | |
John M. Badke | | | 10,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
Senior Vice President | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
and Chief Financial Officer | | | 5,000 | (2) | | | - | | | | - | | | $ | 3.17 | | 12/09/10 |
| | | - | | | | 15,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | - | | | | 10,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | |
Christopher J. Wall | | | 10,000 | (1) | | | - | | | | - | | | $ | 2.80 | | 11/04/08 |
Managing Director | | | 10,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
Vicon Industries, Ltd. | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | 1,500 | (1) | | | 3,500 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | - | | | | 5,000 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | - | | | | 10,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | |
Peter A. Horn | | | 5,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
Vice President, Operations | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | 1,500 | (1) | | | 3,500 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | - | | | | 3,500 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | - | | | | 7,500 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
| | | | | | | | | | | | | | | | | |
Bret M. McGowan | | | 7,500 | (1) | | | - | | | | - | | | $ | 2.80 | | 11/04/08 |
Vice President | | | 5,000 | (1) | | | - | | | | - | | | $ | 3.95 | | 08/12/09 |
U.S. Sales and Marketing | | | 3,000 | (1) | | | 2,000 | (1) | | | - | | | $ | 3.00 | | 05/27/11 |
| | | 1,924 | (2) | | | - | | | | - | | | $ | 3.17 | | 12/09/10 |
| | | 923 | (1) | | | 2,153 | (1) | | | - | | | $ | 3.17 | | 12/09/11 |
| | | - | | | | 13,500 | (1) | | | - | | | $ | 3.59 | | 10/25/12 |
| | | - | | | | 5,000 | (3) | | | - | | | $ | 4.79 | | 05/22/18 |
|
| | | | | | | | | | |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | | Option Expiration Date |
Kenneth M. Darby Chairman and Chief Executive Officer | 10,000 |
| (1) | — |
| (1) | — | $3.59 | | 10/25/2012 |
12,000 |
| (2) | 8,000 |
| (2) | — | $4.79 | | 5/22/2018 |
10,000 |
| (2) | 15,000 |
| (2) | — | $5.00 | | 11/5/2018 |
— |
| | 15,000 |
| (2) | | $4.06 | | 10/15/2020 |
| | | | | | | | |
John M. Badke Senior Vice President and Chief Financial Officer | 15,000 |
| (1) | — |
| | — | $3.59 | | 10/25/2012 |
6,000 |
| (2) | 4,000 |
| (2) | — | $4.79 | | 5/22/2018 |
3,200 |
| (2) | 4,800 |
| (2) | — | $5.00 | | 11/5/2018 |
— |
| (2) | 7,000 |
| (2) | | $4.06 | | 10/15/2020 |
| | | | | | | | |
Bret M. McGowan Vice President, Sales and Marketing (Americas) | 3,076 |
| (1) | — |
| | — | $3.17 | | 12/9/2011 |
13,500 |
| (1) | — |
| (1) | — | $3.59 | | 10/25/2012 |
3,000 |
| (2) | 2,000 |
| (2) | — | $4.79 | | 5/22/2018 |
1,500 |
| (1) | 3,500 |
| (1) | — | $5.00 | | 11/5/2014 |
— |
| (2) | 7,000 |
| (2) | | $4.06 | | 10/15/2020 |
| |
(1) | Options vest over a four year period at 30% of the shares on the firstsecond anniversary of the grant date, 30% of the shares on the secondthird anniversary of the grant date and the remaining 40% of the shares on the thirdfourth anniversary of the grant date. Options expire after the sixth anniversary of the grant date. |