UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Under §240.14a-12
FREQUENCY ELECTRONICS, 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):
☒ No fee required.
☐Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
☐Fee paid previously with preliminary materials.
☐Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
FREQUENCY ELECTRONICS, INC.
55 Charles Lindbergh Boulevard
Mitchel Field, New York 11553
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 8, 2017
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Frequency Electronics, Inc. (the “Company”) will be held atvirtually over the offices ofinternet using the Company, 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553,following link (www.virtualshareholdermeeting.com/FEIM2021), on the 8th6th day of November 2017,October 2021, at 10:00 A.M., Eastern Daylight Time, for the following purposes:
1. | To elect |
2. | To consider and act upon ratifying the appointment of |
3. | To conduct a non-binding advisory vote on executive compensation; and |
4. | To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. |
Only stockholders of record as of the close of business on SeptemberAugust 13, 2017,2021, the date fixed by the Board of Directors as the record date for the meeting, are entitled to notice of, and to vote at, the meeting.
By order of the Board of Directors
/s/Steven L. Bernstein
STEVEN L. BERNSTEIN
Chief Financial Officer,
Mitchel Field, New York
August 30, 2021
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSONAT THE MEETING IF YOU ATTEND THE MEETING.
FREQUENCY ELECTRONICS, INC.
55 Charles Lindbergh Boulevard
Mitchel Field, New York 11553
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on November 8, 2017
This Proxy Statement is being furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors (the “Board”) of Frequency Electronics, Inc., a Delaware corporation (hereinafter called the “Company”), for use at the 2017 annual meeting2021 Annual Meeting of its stockholdersStockholders (the “Annual Meeting”) to be held atvirtually over the office ofinternet using the Company, 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, following link (www.virtualshareholdermeeting.com/FEIM2021) on the 8th6th day of November 2017,October 2021, at 10:00 A.M., Eastern Daylight Time, or any adjournment or adjournments thereof. This Proxy Statement, together with the accompanying Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and the Proxy Card, wasare first being mailed to stockholders on or about September 28, 2017.August 30, 2021. Only stockholders of record as of the close of business on SeptemberAugust 13, 2017,2021 are entitled to notice of, and to vote at, the Annual Meeting.
The Board may use the services of the Company'sCompany’s directors, officers and other regular employees to solicit proxies personally or by telephone and may request brokers, fiduciaries, custodians and nominees to send proxies, proxy statements and other materials to their principals and reimburse them for their out-of-pocket expenses in so doing. The cost of solicitation of proxies, which it is estimated will not exceed $7,500, will be borne by the Company. Each proxy duly executed and returned to the Company is revocable. The procedure a stockholder must follow to revoke its proxy depends on how such stockholder holdholds its shares. Registered holders of the Company’s common stock, par value $1.00 per share (“Common StockStock”), may revoke a previously submitted proxy by submitting another valid later-datedlater dated proxy or by providing a signed letter of revocation to the Corporate Secretary of the Company before the closing of the polls at the Annual Meeting. Only the latest-datedlatest dated validly executed proxy will count. Stockholders also may revoke any previously submitted proxy by attending the Annual Meeting and voting their shares in person.during the Annual Meeting. Note that simply attending the Annual Meeting without taking one of the above actions will not revoke a proxy. In general, stockholders holding shares in street name“street name” may revoke a previously submitted voting instructioninstructions by submitting to their custodian another valid voting instruction or a signed letter of revocation. Stockholders holding shares in street name“street name” should contact their custodian for detailed instructions on how to revoke their voting instruction and the applicable deadlines.
Instructions for the Virtual Annual Meeting
As a result of the ongoing coronavirus (COVID-19) pandemic, the Annual Meeting will be a completely virtual meeting. There will be no physical meeting location. The meeting will be conducted via live webcast. Stockholders will have the same rights and opportunities to participate in our virtual annual meeting as they would at an in-person meeting.
To attend the virtual meeting, visit www.virtualshareholdermeeting.com/FEIM2021 and enter the 16-digit control number included on your proxy card or voting instruction form. The meeting will start at 10:00 A.M., Eastern Time, on October 6, 2021. We encourage you to access the meeting prior to the start time to familiarize yourself with the virtual platform and ensure you can hear the streaming audio. Online access will be available starting at 9:30 A.M., Eastern Time, on October 6, 2021.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection from wherever they intend to participate in the meeting.
While we strongly encourage you to vote your shares prior to the Annual Meeting, stockholders may also vote during the meeting. Once logged in, you will be able to vote your shares by clicking the “Vote Here!” button.
Stockholders may submit written questions once logged into the virtual platform. Questions pertinent to meeting matters will be answered during the question and answer portion of meeting, subject to a time limit prescribed by the Rules of Conduct that will be posted to the virtual meeting platform on the day of the meeting. The Rules of Conduct will also provide additional information about the relevancy of questions to meeting matters.
If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, you should call the technical support number that will be posted on the virtual stockholder meeting login page.
Voting Securities and Votes Required
The Board has fixed the close of business on SeptemberAugust 13, 2017,2021, as the record date for determination of stockholders entitled to notice of, and to vote at, the meeting on September 13, 2017,Annual Meeting (the “Record Date”). As of the Record Date, the Company had outstanding 8,729,6829,224,891 shares of common stock, $1.00 par value per share (“Common Stock”)Stock, (excluding 332,3121,376 treasury shares). Each share of Common Stock entitles the record holder thereof to one vote on each matter brought before the Annual Meeting. No shares of preferred stock were outstanding as of September 13, 2017.the Record Date. A majority of the outstanding shares of Common Stock, represented in person or by proxy, constitutes a quorum. Rights of appraisal or similar rights of dissenters are not available to stockholders of the Company with respect to any matter to be acted upon at the Annual Meeting.
A stockholder who abstains from voting on any or all proposals will be included in the number of stockholders present at the meetingAnnual Meeting for the purpose of determining the presence of a quorum. ABroker shares that include “broker non-vote”non-votes” will also be counted for the purpose of determining the presence of a quorum. A “broker non-vote” occurs when a beneficial owner whose shares are held of record by a broker does not instruct the broker how to vote those shares and the broker does not otherwise have discretionary authority to vote on a particular matter.
Broker non-votes will have no effect on the outcome of Proposal Number 1 (the election of directors) or Proposal Number 3 (the advisory vote on executive compensation). Likewise, the stockholder abstentions will have no effect on the outcome of Proposal Number 1 (the election of directors); however, stockholder abstentions will have the effect of a vote “against” Proposal Number 2 (the ratifying of the appointment of the independent registered public accounting firm) and Proposal Number 3 (the advisory vote on executive compensation).
If you are a stockholder whose shares are registered directly in your name with American Stock Transfer & Trust Company, LLC, our transfer agent, and you return a signed Proxy Card without giving specific voting instructions, then the individuals designated as proxyholders on the Proxy Card will vote your shares in accordance with the recommendations of the Board: (i) “FOR” the election of directors. each of the five (5) Board nominees listed herein, (ii) “FOR” the ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending April 30, 2022 and (iii) “FOR” the approval of the non-binding advisory vote on the Company’s executive compensation.
Please vote your proxy so your vote can be counted. Stockholder abstentions will have no effect on the outcome of the election of directors, but will have the same practical effect as a negative vote on Proposal Number 2 (ratifying the appointment of the independent auditors) and Proposal Number 3 (advisory vote on executive compensation).
It is expected that the following business will be considered at the meeting and action will be taken thereon.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, stockholders will be asked to elect seven (7)five (5) directors (“Director(s)”) to the Board to hold office until the next annual meeting of the Company’s stockholders (the “2022 Annual Meeting”) and until their respective successors are elected and qualified. Cumulative voting is not permitted. The accompanying Proxytable below includes each director nominee’s principal occupation, age and year first elected to the Board. Each director nominee served as a director during fiscal year 2021 and was elected at the 2020 annual meeting of the Company’s stockholders (the “2020 Annual Meeting”).
Although it is not anticipated that any of the individuals listed below will be votedunable or unwilling to stand for the election, of all seven of the members of the Board, each of whose principal occupations are set forth in the following table, if no direction to the contrary is given. In the event that anyof such nominee is unable or declines to serve, the Proxyan occurrence, submitted proxies may be voted for a substitute designated by the electionBoard. However, in lieu of another person in his place. Thedesignating a substitute, the Board knowsmay reduce the number of no reason to anticipate that this will occur.
The director nominees are as follows:
| Name of Director | Principal Occupation | Age | Year First Elected | ||||
| Joel Girsky | Chairman of the Board of Directors | 78 | 1986 | ||||
| Lance W. Lord (1) | Chairman and Chief Executive Officer of L2 Aerospace (General, U.S. Air Force – Retired) | 71 | 2016 | ||||
| Stanton D. Sloane | Chief Operating Officer of the Company | 66 | 2016 | ||||
| Russell M. Sarachek | Managing Director of Contra Capital Management LLC | 54 | 2016 | ||||
| Richard Schwartz | Director | 81 | 2004 | ||||
| S. Robert Foley, Jr. | Director (Admiral, U.S. Navy – Retired) | 89 | 1999 | ||||
| Martin B. Bloch | President and Chief Executive Officer of the Company | 81 | 1961 |
��
Name of Director | Principal Occupation | Age | Year First Elected | ||||
Jonathan Brolin | Founding and Managing Partner, Edenbrook Capital, LLC | 48 | 2017 | ||||
Lance W. Lord (1) | Chairman and Chief Executive Officer of L2 Aerospace; retired four-star Air Force general | 75 | 2016 | ||||
Russell M. Sarachek | Managing Director of Contra Capital Management LLC | 58 | 2016 | ||||
Richard Schwartz | Retired Chief Executive Officer and Chairman of ATK | 85 | 2004 | ||||
Stanton D. Sloane | President and Chief Executive Officer of the Company | 71 | 2016 |
(1) | General Lord was appointed to the Board pursuant to a Settlement Agreement, dated September 13, 2016, (the “Settlement Agreement”) by and among the Company, on the one hand, and Mr. Ryan Levenson, Privet Fund LP, Privet Fund Management LLC, and General Lord, on the other hand. Pursuant to the Settlement Agreement and subject to the terms, conditions and exceptions contained therein, the Company |
All directors hold office for a one-year period or until their successor is elected and qualified.
The Board has determined that Messrs. Foley, Girsky,Brolin, Lord, Sarachek, and Schwartz, are “independent,” as defined in the listing standards of the NASDAQ Stock Market (“NASDAQ”). The composition of the Board, consisting of two (2) officersone (1) officer of the Company (Mr. Bloch and Dr.(Dr. Sloane) and the five (5)four (4) independent directors, is in full compliance with the listing requirements of the NASDAQ.
Nominees for Election as Directors
JONATHAN BROLIN, age 78,48, has served as a Director of the Company since October 1986. In July 2016, he was elected Chairman of the Board. Until September 2017 he was the president and a director of Jaco Electronics, Inc. where he served in such capacity for over forty years. Mr. Girsky also serves as the Chairman of the Company's Audit Committee. Mr. Girsky's knowledge of the Company through his service as a director of the Company since November 2017, and as wellLead Independent Director from 2018 until 2020. Mr. Brolin is the Founder and Managing Partner of Edenbrook Capital, LLC, which he founded in 2011. Edenbrook takes a private equity approach to public markets, principally through concentrated, long-term investments in small and mid-cap companies. Mr. Brolin has over 20 years of experience in public and private equity investing and investment banking. In addition, Mr. Brolin serves as an Adjunct Professor of Finance at Fordham’s Gabelli School of Business, where he teaches Advanced Topics in Value Investing. He earned his MBA from Columbia Business School, where he was a member of the Beta Gamma Sigma Honor Society. Mr. Brolin earned his BA from the University of Pennsylvania, where he was a Benjamin Franklin Scholar and General Honors Student. Mr. Brolin’s extensive business and investment banking experience as CEO of a publicly-traded company,and his demonstrated leadership capacities allow him to bring valuable insight and knowledge to the Board.
LANCE W. LORD, age 71,75, has served as a Directordirector of the Company since September 2016. General Lord is the Founder Chairman and Chief Executive OfficerChairman of L2 Aerospace, an innovative company formed to shape and influence the business competition in the dynamic and emerging commercial, civil and defense aerospace markets. General Lord is the former Commander of Air Force Space Command (“AFSPC”) and CEOChief Executive Officer of ASTROTECH Space Operations. While with AFSPC at Peterson Air Force Base in Colorado, General Lord was responsible for the development, acquisition and operation of Air Force space and missile weapon systems. Overseeing a global network of satellite command and control, communications, missile warning and launch facilities to ensure the combat readiness of the U.S. intercontinental ballistic missile force, he led more than 39,700 personnel who provided combat capabilities to North American Aerospace Defense Command and U.S. Strategic Command. General Lord was the recipient of several prestigious military decorations throughout his 37-year military career – including the Distinguished Service Medal, Legion of Merit and the Defense Meritorious Service Medal. General Lord retired from the Air Force in 2006. General Lord is a member of the Board of Directors of Aerojet Rocketdyne Holdings (NYSE:AJRD), Sletten Construction Companiesa technology-based engineering and Marotta Controls Corporation.manufacturing company that develops and produces specialized propulsion and armament systems. General Lord is also a Senior Associate of the Four Star Group;Group, a senior advisor to US Global HF Net, LLC, a member of the Iridium Corporation'sCorporation’s Government Advisory Board; aBoard, an emeritus member of the boardBoard of advisorsDirectors for the Challenger Learning Center in Colorado Springs, Colorado;Colorado, a Trustee of the Falcon Foundation, Chairman of the Board of Advisors of USO Colorado Springs and President of the Association of Air Force Missileers. General Lord served as a member of the President'sPresident’s Space-Based Position, Navigation and Timing Advisory Board from 2011 to 2013. He is also a director of Boneal Aerospace LLC and a senior advisor to Chandra Space Technologies and Skeyeon Space Systems.
RUSSELL M. SARACHEK, age 66,58, has served as a Directordirector of the Company since August 2016. Since September 2017, Dr. Sloane has served2016 and as the Chief Operating OfficerChairman of the Company. Dr. Sloane was President and Chief Executive Officer of Comtech Telecommunications Corp. (Nasdaq: CMTL) from January 2015 until September 2016 and a director of Comtech from January 2012 until September 2016. Prior to joining Comtech, Dr. Sloane was President and CEO and a Director of Decision Sciences International Corporation, a privately-held advanced security and detection systems company, from August 2011 through January 2015. Prior to that, he served as President and CEO and a Directors of SRA International, Inc. (“SRA”), an information solutions company. He served as President and CEO of SRA from April 2007 through July 2011, during which time he helped lead the sale of SRA to a private equity firm. Prior to joining SRA, he was Executive Vice President of Lockheed Martin's Integrated Systems & Solutions from June 2004 until April 2007. He began his business career with General Electric Aerospace in 1984 and progressed through engineering, program management, and business development assignments in a variety of General Electric Aerospace and subsequently Lockheed Martin businesses. He also served as an officer in the U.S. Navy from 1976 until 1981. Dr. Sloane holds a bachelor's degree in Professional Studies (Aeronautics) from Barry University, a master's degree in Human Resources Management from Pepperdine University, and a Doctor of Management degree from the Weatherhead Business School at Case Western Reserve University.
RICHARD SCHWARTZ, age 81,85, has served as a Directordirector of the Company since 2004. He was a trustee and chairman of the Finance Committee of Cooper Union in New York City, a position he held from 2004 through 2008. Prior to his retirement in 2000, Mr. Schwartz was Chief Executive Officer and Chairman of ATK.ATK, a major aerospace and defense company. He served in senior executive positions at ATK and predecessor companies beginning in 1990. Prior to that, Mr. Schwartz had been president of the Rocketdyne division of Rockwell International, a company he first joined in 1957. Mr. Schwartz was part of the originator team on GPS where he was the satellite Program Manager for Rockwell andRockwell. For his work on the GPS originator team, Mr. Schwartz was elected to the GPS Hall of Fame. In addition, in February 2019, Mr. Schwartz and three other members of the GPS originator team were recognized for their GPS success with the Queen Elizabeth Prize for Engineering award. Mr. Schwartz also serves on the board of directors of Astronautics Corporation of America. Mr. Schwartz'sSchwartz’s extensive industry experience, his prior board and executive management experience and his demonstrated leadership capabilities allow him to bring valuable insight and knowledge to the Board.
STANTON D. SLOANE, age 89,71, has served as a Directordirector of the Company since 1999. He retired as Vice President for Laboratory Management, University of California, a position he held from 2003 to 2009. He served as Vice President of Raytheon International, Inc. and President of Raytheon Japan from 1995 to 1998. Admiral Foley served in the United States Navy for 35 years, including the position of Commander-In-Chief of the Pacific Fleet. Admiral Foley is also a director of INTELSAT General Corp. Admiral Foley’s leadership background, and his executive management and business experience with a defense-oriented company, allow him to bring valuable insight and knowledge to the Board.
Family Relationships
There are no family relationships between any director and executive officer.
Involvement in Certain Legal Proceedings
No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
Transactions with Related Persons
On August 25, 2021, the Company settled its dispute with Martin B. Bloch, the Company’s former Chief Scientist and a former member of the Company’s Board. As previously disclosed, on January 28, 2020, Mr. Bloch filed a complaint against the Company and certain members of the Board, in their capacity as Board members (collectively, the “Director Defendants”), in the Supreme Court of the State of New York, County of Nassau, asserting seven claims in connection with the “for cause” termination of Mr. Bloch’s employment by the Company’s Board on January 27, 2020. With the filing of an amended complaint on May 12, 2020, certain claims against the Company and the Director Defendants were withdrawn, and on September 22, 2020, three of the four remaining claims, including all of the remaining claims against the Director Defendants, were dismissed by the court. Also as previously disclosed, Mr. Bloch initiated two arbitration proceedings related to his deferred compensation agreements. The Company denied Mr. Bloch’s claims and allegations in the litigation and arbitration proceedings.
Under the Agreement on Material Terms of Settlement (the “Settlement Terms”), dated August 25, 2021, between and among the Company, the Director Defendants, and the Compensation Committee, in its capacity as administrator under the deferred compensation agreements, and Mr. Bloch and certain members of Mr. Bloch’s family, in full and complete settlement of all claims asserted and all sums sought by Mr. Bloch in the litigation and arbitration proceedings, the Company has agreed to pay Mr. Bloch $6 million on or before September 24, 2021. Prior to the termination of Mr. Bloch’s employment and commencement of the litigation and arbitration proceedings, the Company had been regularly accruing amounts pertaining to Mr. Bloch’s post-employment deferred compensation retirement benefits. As of July 31, 2021, the Company has accrued $6 million for deferred compensation and contingent liability in connection with the settlement with Mr. Bloch. The settlement will result in a net expense of $650,000 to the Company and will eliminate further legal expenses with respect to the dispute between Mr. Bloch and the Company. This net expense for financial statement purposes will be recognized in the first quarter of fiscal 2022. Additionally, the Settlement Terms include general releases between and among parties to the agreement. As reflected in the Settlement Terms, the settlement is not an admission of any wrongdoing by the Company.
The Board approved the Settlement Terms. There were no transactionsother transaction between the Company and any related persons duringsince the beginning of the Company’s last fiscal years ended April 30, 2017year.
Policy Regarding Hedging
Because the hedging of the Company’s securities may weaken the alignment of the interests of our directors and 2016.
Compensation of Directors:
Directors who are not officers of the Company receive an annual honorariumdirectors’ fees of $18,000 and $2,500 for attendance at each Board meeting or meeting of a Board committee of which he is a member ($1,500 if such attendance is telephonic).$25,000 per year. In addition, the chairman of the Audit Committee receives an additional annual stipend of $10,000.$8,000 and the chairman of the Compensation Committee receives an additional annual stipend of $4,000. Company officers do not receive additional compensation for their service on the Board or for attendance at Board meetings or committee meetings. Directors who are not officers do not participate in Company-sponsored pensions or deferred compensation programs.
| Name | Fees Earned or Paid in Cash ($) | Equity-based Awards (1)(2) | Total ($) | |||||||||
| Joel Girsky | $ | 38,000 | $ | 34,085 | $ | 72,085 | ||||||
| S. Robert Foley | 25,000 | 34,085 | 59,085 | |||||||||
| Russell Sarachek | 20,500 | 0 | 20.500 | |||||||||
| Richard Schwartz | 27,500 | 34,085 | 61,585 | |||||||||
| Stanton Sloane | 20,500 | 36,963 | 57,463 | |||||||||
| Lance W. Lord | 19,000 | 36,963 | 55,963 | |||||||||
| Ryan J. Levenson (3) | 19,000 | 36,963 | 55,963 | |||||||||
The amounts in this column do not represent actual cash payments, but represent the aggregate grant date fair value of stock appreciation rights awardedtable below reflects director fees paid to non-employee directors during the 2017 fiscal year computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company's consolidated financial statements, which are included in its Annual Report on Form 10-K for the year ended April 30, 2017, as filed with the Securities and Exchange Commission (“SEC”).
Director Compensation
Fees Earned or | ||||||||
Name | Paid in Cash ($) | Total ($) | ||||||
Russell M. Sarachek | 25,000 | 25,000 | ||||||
Richard Schwartz | 29,000 | 29,000 | ||||||
Jonathan Brolin | 33,000 | 33,000 | ||||||
Lance W. Lord | 25,000 | 25,000 | ||||||
Joel Girsky (1) | 6,250 | 6,250 | ||||||
Martin B. Bloch (1) | 9,103 | 9,103 | ||||||
(1) Mr. LevensonGirsky resigned from the Board effective ason August 24, 2020. Mr. Bloch resigned from the Board on September 11, 2020. Therefore, each of September 12, 2017.
Vote Required and Board Recommendation
Assuming the presence of a quorum at the Annual Meeting, the affirmative vote of a plurality of the votes cast by holders of shares of Common Stock represented at the Annual Meeting and entitled to vote is required for the election of directors. The sevenfive (5) nominees receiving the highest number of FOR“FOR” votes will be elected. WithholdingsAbstentions will be counted as present for the purposes of this votedetermining a quorum but are not counted as votes cast. Broker non-votes,shares that include “broker non-votes”, if any, will be counted as present for the purposes of determining a quorum but are not entitled to vote on the proposal.
THE BOARD DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR”“FOR” EACH OF THE COMPANY’SCOMPANY DIRECTOR NOMINEES.
PROPOSAL NO. 2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board, upon recommendation of the Audit Committee, has appointed the firm of EisnerAmperBDO USA, LLP (“EisnerAmper”BDO”), independent accountants, to be the Company's external auditorsCompany’s independent registered public accounting firm for the fiscal year commencing May 1, 2017,ending April 30, 2022, and recommends to stockholders that they vote for ratification of that appointment.
It is anticipated that a representative of EisnerAmperBDO will be present at the Annual Meeting. Such representative will be given the opportunity to make a statement and will be available to respond to appropriate questions.
Audit and 2016 and the subsequent interim period through July 31, 2017, there have been no disagreements with EisnerAmper on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EisnerAmper, would have caused EisnerAmper to make reference thereto in their reports on the Company's financial statements for such years.
The following table presents the aggregate fees and expenses paid or accrued by the Company for professional services rendered by the Company’s auditors, EisnerAmper, in fiscal years 20172021 and 2016.2020 rendered by BDO. Other than as set forth below, no professional services were rendered or fees billed by EisnerAmperBDO during fiscal years 2017year 2021 and 2016.
| Service | 2017 | 2016 | ||||||
Audit Fees (1) | $ | 360,000 | $ | 371,000 | ||||
Audit-Related Fees (2) | 25,000 | 48,000 | ||||||
Tax Fees (3) | 40,000 | - | ||||||
All Other Fees (4) | - | - | ||||||
| TOTAL | $ | 425,000 | $ | 419,000 | ||||
Service | 2021 | 2020 | ||||||
Audit Fees (1) | $ | 338,506 | $ | 359,425 | ||||
Audit-Related Fees (2) | 30,010 | 26,500 | ||||||
Tax Fees (3) | - | - | ||||||
All Other Fees (4) | 64,631 | - | ||||||
TOTAL | $ | 433,147 | $ | 385,925 | ||||
(1) | Audit fees consist of professional services rendered for the audit of the Company’s annual financial statements, the reviews of the quarterly financial statements, issuance of consents and assistance with and review of documents filed with the SEC. |
(2) | Other audit-related services provided by |
(3) | Tax fees consist of fees for services rendered to the Company for tax compliance, tax planning and advice. |
(4) | The services disclosed under this category include a comprehensive assessment and validation of all cyber security technical controls, including a review and gap assessment of all Company |
Pre-Approved Services
The Audit Committee’s policy is to engaging EisnerAmper to render the above services during fiscal year 2017, and pursuant to its charter, the Audit Committee approved the engagement for each of the services and determined that the provision of such services by the external auditor was compatible with the maintenance of EisnerAmper's independence in the conduct of its auditing services.
Audit Services
include audit work performed on theAudit-Related Services
are for assurance and related services that are traditionally performed by the independent auditors, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatoryTax Services
include all services, except those services specifically related to the audit of the financial statements, performed by the independentOther Services
are those associated with services not captured in the other categories. The CompanyDuring the year, circumstances may arise when it may become necessary to engage the Company’s independent auditorsregistered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires specific pre-approval before engaging the independent auditors.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
Vote Required and Board Recommendation
Stockholder ratification of the selection of BDO as the Company’s independent registered public accounting firm is not required by the Company’s Amended and Restated Bylaws (the “Bylaws”) or otherwise. However, the Board is submitting the selection of BDO to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain BDO. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company and the Company’s stockholders. The affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting and entitled to vote is required for the ratification of EisnerAmperBDO as the Company'sCompany’s independent auditorsregistered public accounting firm for the 2018 fiscal year.
THE BOARD DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR”“FOR” APPROVAL THEREOF.
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables the Company’s stockholders to vote to approve, on a non-binding advisory basis, the compensation of the Company’s principal executive officer and twothe other most highly compensated executive officers (collectively, the “Named Executive Officers”) as disclosed in this Proxy Statement in accordance with SEC rules.
The Company’s objective is to provide a fair and competitive compensation package to its Named Executive Officers that rewards long-term performance and enhances stockholder value. In order to achieve its goals, the Company is dependent on its ability to attract, retain and motivate individuals who can achieve superior technical, operational and financial results. This approach has enabled the Company to attract and retain the executive talent that has resulted in increased revenues and profitability in recent years and has established the basisplatform for sustaining suchpotential further growth in the future. For an overview of the compensation of the Company’s Named Executive Officers, see the “Executive Compensation.”
The Company is asking for non-binding approval of the compensation of its Named Executive Officers as disclosed in this Proxy Statement in accordance with SEC rules, which disclosures includeincludes the disclosures under the section “Executive Compensation,”Compensation” section, the summary compensation table, the related footnotes and the narrative discussion following the summary compensation table. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s Named Executive Officers and the policies and practices described in this Proxy Statement, as disclosed under the “Executive Compensation” section.Statement. Accordingly, stockholders are asked to vote “FOR” the following non-binding resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers pursuant to the compensation disclosure rules of the SEC as described in the Executive Compensation,“Executive Compensation” section, the summary compensation tables, the related footnotes and the narrative discussion in the Company’s Proxy Statement for the 20172021 Annual Meeting of Stockholders.”
While the Company intends to carefully consider the voting results of this proposal, this vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. Accordingly, and given that some ofNevertheless, the compensation to be paid is a contractual obligation with the applicable executives, regardless of the outcome of this advisory vote, such compensation may still be payable. The Board and the Compensation Committee value the opinions of the Company’s stockholders, and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in this Proxy Statement, the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
The Company currently intends to hold the next non-binding advisory vote to approve the compensation of its Named Executive Officers at the 2022 Annual Meeting, unless the Board modifies its policy of holding this vote on an annual basis.
Vote Required and Board Recommendation
The affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting and entitled to vote is required for advisory approval of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR”“FOR” THE APPROVAL OF THE COMPENSATION OF THE COMPANY’SCOMPANY’S NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE SEC’SSEC’S EXECUTIVE COMPENSATION DISCLOSURE RULES.
PROPOSALS OF STOCKHOLDERS
In accordance with the rules promulgated by the SEC, any stockholder who wishes to submit a proposal pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for inclusion in the proxy material to be distributed by the Company in connection with the 20182022 Annual Meeting of Stockholders must submit such proposal to the Company no later than July 11, 2018.
In order to nominate a person for election as director or propose any other business other than pursuant to Rule 14a-8 of the Company's 2018 Annual Meeting of Stockholders is held on schedule,Exchange Act, the Company must receive notice of a stockholder'sstockholder’s intention to introduce a nomination or other item of business at that meeting no earlier than July 11, 2018,June 8, 2022, and no later than August 10, 2018. Stockholder proposals delivered before July 11, 2018 or after August 10, 2018 will be considered untimely. If8, 2022, and such stockholders must otherwise comply with the Company does not receive notice by August 10, 2018, or if the Company meets certain other requirements of the SEC rules, the persons named as proxiesprocedures set forth in the proxy materials relatingBylaws with respect to that meeting will use their discretion in voting the proxies when these matters are raised at the meeting.such notice. The business of the Company’s 20182022 Annual Meeting of Stockholders shall not include voting on any stockholder nominee or proposal if proper notice as to such nominee or proposal is not properly delivered to the Company in accordance with these deadlines and the Company’s Bylaws.
EXECUTIVE OFFICERS
The executive officers hold office until the annual meeting of the Board of Directors following the annual meeting of stockholders, subject to earlier removal by the Board of Directors.
The names of all executive officers of the Company and all positions and offices with the Company which they presently hold are as follows:
Stanton D. Sloane | - | President, Chief Executive Officer and Director |
Oleandro Mancini | - | Senior Vice President, Business Development |
Steven Strang | - | President, FEI-Zyfer |
Thomas McClelland | - | Senior Vice President |
Adrian Lalicata | - | Vice President, RF & Microwave Systems |
John Caulfield | - | Vice President of Manufacturing |
Steven L. Bernstein | - | Chief Financial Officer, |
For biographical information concerning Dr. Sloane, see “Proposal No. 1 – Election of the Company and of its predecessor since 1961. Mr. Bloch is the Company’s President and Chief Executive Officer and has held such positions since inception of the Company, except for the period from December 1993 through October 1998 when General Franklin held the CEO position. Previous to forming the Company, Mr. Bloch served as chief electronics engineer of the Electronics Division of Bulova Watch Company.
Oleandro Mancini, age 68,72, joined the Company in August 2000 as Vice President, Business Development and was promoted to Senior Vice President, Business Development in 2010. Prior to joining the Company, Mr. Mancini had served from 1998 as Vice President, Sales and Marketing at Satellite Transmission Systems, Inc. since 1998 and from 1995 to 1998 as Vice President, Business Development at Cardion, Inc., a Siemens A.G. company. From 1987 to 1995, he held the position of Vice President, Engineering at Cardion, Inc.
Steven Strang, age 53,57, was named President of FEI-Zyfer, Inc., effective May 1, 2005. Previously, Mr. Strang was Executive Vice President of this subsidiary and its predecessor companies where he has served for 20 years in various technical and management positions.
Thomas McClelland, age 62,67, joined the Company as an engineer in 1984 and was elected Vice President, Commercial Products in March 1999. In fiscal year 2011, Mr. McClelland’s title was modified to Vice President Advanced Development to describe his expanded role in the Company.
Adrian Lalicata, age 70,74, joined the Company in 2006 as Vice President, RF & Microwave Systems. Prior to joining the Company, Mr. Lalicata served as Vice President of Engineering at Herley-CTI and Communication Techniques, a Dover Company. Mr. Lalicata has served as Director of Engineering at Microphase Corp. and Adcomm, Inc. He also held leading engineering positions at Loral Electronic Systems, Cardion Electronics, and Airborne Instruments Laboratories.
John Caulfield, age 64, joined the Company in 1979 and has served in many different positions related to high volume manufacturing. In 2019, Mr. Caulfield was appointed to the position of Vice President of Manufacturing.
Steven L. Bernstein, age 52,56, joined the Company in April 2010 as its Controller and was appointed to the position of Chief Financial Officer in April 2016. Prior to joining the Company, Mr. Bernstein worked in the North America accounting group of Arrow Electronics Company, a Fortune 500 electronics distributor.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 13, 2017,July 31, 2021, information concerning the beneficial ownership of the Common Stock held by (i) each person who is known by the Company to own beneficially more than 5% of the Common Stock, (ii) each of the Company'sCompany’s directors and nominees for director, (iii) each of the Company'sCompany’s Named Executive Officers, who were serving as executive officers at the end of the last completed fiscal year, and (iv) all directors and executive officers of the Company as a group:
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | ||||||
Edenbrook Capital, LLC (3) 2 Depot Plaza Bedford Hills, New York 10507 | 1,821,373 | 19.7 | % | |||||
Needham Asset Management, LLC. (4) 250 Park Avenue, 10th Floor | ||||||||
New York, NY 10177 | 607,850 | 6.6 | % | |||||
Dimensional Fund Advisors LP (5) | ||||||||
6300 Bee Cave Road, Bldg One | ||||||||
Austin, TX 78746 | 630,507 | 6.9 | % | |||||
Frequency Electronics, Inc. | ||||||||
401(k) Savings Plan (6) | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 507,637 | 5.4 | % | |||||
Royce & Associates, LP (7) | ||||||||
745 Fifth Avenue | ||||||||
New York, New York 10151 | 658,990 | 7.2 | % | |||||
Jonathan Brolin (3) | ||||||||
c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 1,821,373 | 19.7 | % | |||||
Russell M. Sarachek (9) | ||||||||
c/o Contra Capital Management, LLC | ||||||||
945 Fifth Avenue | ||||||||
New York, New York 10021 | 422,996 | 4.6 | % | |||||
Oleandro Mancini (8) c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 74,634 | less than 1 | % | |||||
Richard Schwartz | ||||||||
c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 63,616 | less than 1 | % | |||||
Stanton D. Sloane (8) | ||||||||
c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 122,250 | 1.3 | % | |||||
Thomas McClelland (8) | ||||||||
c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 77,643 | less than 1 | % | |||||
Lance W. Lord | ||||||||
c/o Frequency Electronics, Inc. | ||||||||
55 Charles Lindbergh Blvd. | ||||||||
Mitchel Field, NY 11553 | 10,000 | less than 1 | % | |||||
All executive officers | ||||||||
and directors as a group (9) | ||||||||
(11 persons) | 3,235,782 | 35.1 | % | |||||
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | ||||||
Edenbrook Capital, LLC (5) 2 Depot Plaza Bedford Hills, New York 10507 | 1,075105 | 12.3 | % | |||||
Privet Fund LP (3) 79 West Paces Ferry Road | ||||||||
| 200B | ||||||||
| Atlanta, GA 30305 | 1,043,947 | 12.0 | % | |||||
| Dimensional Fund Advisors LP (4) | ||||||||
| 6300 Bee Cave Road, Bldg One | ||||||||
| Austin, TX 78746 | 692,926 | 7.9 | % | |||||
| North Star Partners L.P. (6) | ||||||||
| 274 Riverside Avenue | ||||||||
| Westport, CT 06880 | 458,510 | 5.3 | % | |||||
| Frequency Electronics, Inc. | ||||||||
| 401(k) Savings Plan (8) | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | 749,075 | 8.6 | % | |||||
| Martin B. Bloch (9) (12) | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | 1,052,435 | 12.1 | % | |||||
| Russell M. Sarachek (7) | ||||||||
| c/o Contra Capital Management, LLC | ||||||||
| 945 Fifth Avenue | ||||||||
| New York, New York 10021 | 344,000 | 3.9 | % | |||||
| Lance W. Lord | ||||||||
| 1110 Trumpeters CT.E. | ||||||||
| Monument, CO 80132 | - | - | ||||||
| Joel Girsky (10) | ||||||||
| c/o Frequency Electronics, Inc. | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | 88,050 | 1.0 | % | |||||
| S. Robert Foley (11) | ||||||||
| One Lakeside Dr. | ||||||||
| Oakland, CA 94612 | 37,050 | less than 1 | % | |||||
| Richard Schwartz (11) | ||||||||
| 4427 Golf Course Dr. | ||||||||
| Westlake Village, CA 91362 | 63,050 | less than 1 | % | |||||
| Stanton D. Sloane | ||||||||
| c/o Frequency Electronics, Inc. | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | - | - | ||||||
| Markus Hechler (12) | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | 73,731 | less than 1 | % | |||||
| Oleandro Mancini (12) | ||||||||
| 55 Charles Lindbergh Blvd. | ||||||||
| Mitchel Field, NY 11553 | 103,826 | 1.2 | % | |||||
| All executive officers | ||||||||
| and directors as a group | ||||||||
| (18 persons) | 3,248,490 | 37.2 | % | |||||
Notes:
Name | Profit Sharing Plan & Trust 401(k) (a) | ISO, NQSO or SAR Shares (b) | ||||||
| Martin B. Bloch | 31,737 | 369,237 | ||||||
| Markus Hechler | 15,531 | 73,031 | ||||||
| Oleandro Mancini | 6,267 | 98,767 | ||||||
All Directors and Officers as a Group (16 persons) | 77,645 | 878,000 | ||||||
(1) | Each person has sole voting and investment power over the shares reported, except as noted. |
(2) | Based on 9,224,891 shares outstanding as of July 31, 2021. |
(3) | As reported in Form 4 dated April 1, 2021, filed collectively by Edenbrook Capital, LLC, Edenbrook Long Only Value Fund LP and Jonathan Brolin. The principal business of Edenbrook Capital, LLC is that of investment manager to certain private investment funds; Edenbrook Long Only Value Fund LP is a Delaware limited partnership with respect to the Common Stock owned by such private investment funds; and Jonathan Brolin is the Managing Member of Edenbrook Capital, LLC and, as such, is in the position to determine the investment and voting decisions made by Edenbrook Capital, LLC. Each of Jonathan Brolin, Edenbrook Capital, LLC and Edenbrook Long Only Value Fund LP specifically disclaim beneficial ownership in these shares, except to the extent of their pecuniary interest therein. |
(4) | As reported in a Form 13G dated July 6, 2021, filed by Needham Asset Management, LLC (“Needham”). Needham possesses shared investment and voting power over 607,850 shares. |
(5) | As reported in a Form 13G/A dated February 16, 2021, filed by Dimensional Fund Advisors LP (“Dimensional”). Dimensional possesses investment power over 632,523 shares and voting authority over 630,507 shares. Dimensional disclaims beneficial ownership of such securities. |
(6) | Represents shares of stock held by the Frequency Electronics, Inc. 401(k) Savings Plan, a profit sharing plan and trust under section 401(k) of the Internal Revenue Code of 1986 (the “401(k) Savings Plan”), all of which shares have been allocated to the individual accounts of employees of the Company (including the Named Executive Officers). In May 2015, the Frequency Electronics, Inc. ESOP Trust (the “Trust”) for the Company’s Employee Stock Ownership Plan (“ESOP”) was merged into the 401(k) Savings Plan. All ESOP shares allocated to the individual accounts of employees of the Company were re-allocated to the individual accounts (including those of the Named Executive Officers) in the 401(k) Savings Plan. |
(7) | As reported in a Form 13G/A dated January 21, 2021, filed by Royce & Associates, LP (“Royce”). Royce possesses investment and voting power over 658,990 shares. |
(8) | Includes the number of shares which, as at July 31, 2021, were deemed to be beneficially owned by the persons named below, by way of their respective rights to acquire beneficial ownership of such shares within 60 days through (i) the exercise of SARs or vesting of RSUs; (ii) the automatic termination of a trust, discretionary account, or similar arrangement; or (iii) by reason of such person’s having sole or shared voting powers over such shares. The following table sets forth for each person named below the total number of shares which may be so deemed to be beneficially owned by him and the nature of such beneficial ownership: |
Name | Profit Sharing Plan & Trust 401(k) (a) | SAR or RSU Shares (b) | ||||||
Stanton D. Sloane | 0 | 92,250 | ||||||
Oleandro Mancini | 7,658 | 44,500 | ||||||
Thomas McClelland | 14,301 | 55,750 | ||||||
All Directors and Executive Officers as a Group (11 persons) | 41,133 | 354,000 | ||||||
(a) Includes all shares allocated under the Company'sCompany’s 401(k) Savings Plan including those shares allocated from the former ESOP plan following the May 2015 plan merger. This plan permits eligible employees, including officers, to defer a portion of their income through voluntary contributions to the plan. Under the provisions of the plan, the Company made discretionary matching contributions of the Company'sCompany’s Common Stock. All participants in the plan become fully vested in the Company contribution after six years of employment. All of the officers named above are fully vested in the shares attributable to their accounts. Upon the allocation of shares to an employee'semployee’s 401(k) Savings Plan account, eithersuch employee has the Company or the employee mayright to direct the 401(k) Savings Plan trustees in the exercise of the voting rights of such shares.
(b) All amounts in this column represent the number ofIncluding all shares that may be obtained upon exercise of SARs in which the officers are fully vested or may become vested within 60 days of September 13, 2017. Such grantsJuly 31, 2021 or upon the vesting of RSUs within 60 days of July 31, 2021. Grants of both SARs and RSUs have been made under the Company'sCompany’s 2005 Stock Award Plan. For the individual grants, exercise prices and expiration dates, as applicable, for the Named Executive Officers, see “Outstanding Equity Awards at Fiscal Year-End.”
(9) | Mr. Sarachek is deemed to be the indirect beneficial owner of 422,996 shares owned by Contra Capital Management, LLC, of which he is the sole managing member, by virtue of his having sole investment discretion and voting control over the shares. |
CERTAIN INFORMATION AS TO COMMITTEES AND MEETINGS OF THE BOARD
During the past fiscal year, four (4)twelve (12) meetings of the Board were held. Each of the Company’s directors attended, in person or telephonically, all of the meetings of the Board and all of the meetings of committees of the Board of which such director was a member that were held during the past fiscal year.
In addition to attendance at Board meetings, the Board encourages, but does not require, all directors to attend annual meetings of the Company’s stockholders. All of the Company’s then serving directors virtually attended the Company’s 2016 annual meeting of stockholders except one who participated telephonically.
Audit Committee
The Audit Committee consists of the following fivethree independent directors:Directors: Messrs. Foley, Girsky,Brolin, Lord Sarachek and Schwartz.Sarachek. Each of these directors is independent in accordance with the independence standards for audit committee membership set forth in Section 10A (m)10A(m)(3) of the Exchange Act and the listing standards of the NASDAQ, upon which the Company’s Common Stock is listed and trades. The Board has determined that each member of the Audit Committee is able to read and understand fundamental financial statements. In addition, the Board has determined that Mr. Girsky,Brolin, chairman of the Audit Committee, satisfies the SEC’s criteria as an “audit committee financial expert.” Each of Mr. Levenson and Mr. Sloane were members of the audit committee until September 12, 2017. Mr. Levenson resigned from the audit committee at the same time he resigned from the Board. Mr. Sloane resigned from the audit committee upon his appointment to Chief Operating Officer of the Company.
The Audit Committee has procedures in place to receive, retain and handle complaints received regarding accounting, internal controls or auditing matters and to allow for the confidential and anonymous submission by anyone of concerns regarding questionable accounting or auditing matters.
The purpose of the Audit Committee is to overseeassist the Board by (i) overseeing the accounting and financial reporting processes of the Company, including the Company’s internal controls, and the audits of the Company’s financial statements. The functionsstatements of the Audit Committee include, without limitation, (i) responsibility forCompany, the appointment, compensation, retentionqualifications and oversightindependence of the Company’s independent auditors (ii) review and pre-approvalthe performance of all audit and non-audit services provided to the Company by the independent auditors and the Company’s internal audit function, (ii) providing an open avenue of communication among the independent auditors, management and the Board, (iii) reviewing the financial reports and other than as mayfinancial information to be allowedprovided by applicable law,the Company to any governmental body or the public and (iii) review(iv) preparing a report of the Audit Committee required by the rules and regulations of the SEC to be included in the Company’s annual audited and quarterly consolidated financial statements.proxy statement. The Audit Committee Charter, which describes all of the Audit Committee’s responsibilities, is posted on the Company’s website at http://www.frequencyelectronics.com.
The Audit Committee held four (4) meetings during the last fiscal year. For the Audit Committee’s report, see “Report of the Audit Committee,”Committee” below.
Compensation Committee
The Compensation Committee consists of the following fivethree independent directors: Messrs. Foley, Girsky, Lord,Brolin, Sarachek and Schwartz. The primary function of the Compensation Committee adopted a formal charter,is to oversee the Company’s overall compensation structure, policies and programs, and to assist the Board in fulfilling its responsibilities with respect to (i) establishing and reviewing the Company’s long-term incentive plans, (ii) evaluating the performance of and recommending the compensation for the Company’s President and Chief Executive Officer and other executive officers of the Company and (iii) producing the report on Named Executive Officer Compensation required to be included in the Company’s annual report on Form 10-K or proxy statement, if necessary. The Compensation Committee Charter, which describes all of the Compensation Committee’s responsibilities, is posted on the Company’s website at http://www.frequencyelectronics.com.www.frequencyelectronics.com. The Compensation Committee is responsible for determining remuneration arrangements for the highest paid executives and oversees the Company's stock option, bonus and other incentive compensation plans. The Compensation Committee may not delegate these responsibilities. Because the fiscal year 2017 remuneration arrangements for the Company’s highest paid executives remained largely unchanged from fiscal year 2016, the Compensation Committee held one (1) meetingfive (5) meetings during fiscal year 2017. Each of Mr. Levenson and Mr. Sloane were members of the compensation committee until September 12, 2017. Mr. Levenson resigned from the compensation committee at the same time he resigned from the Board. Mr. Sloane resigned from the compensation committee upon his appointment to Chief Operating Officer of the Company.
The Company’s President and Chief Executive Officer, Martin Bloch,Dr. Sloane, recommends to the Compensation Committee base salary, bonus payouts from the short-term incentive pool and long-term incentive grants for the Company’s officers (other than himself) and other eligible employees (see “Executive Compensation” below). Mr. BlochDr. Sloane makes these recommendations to the Compensation Committee based on input from the Company’s Human Resources Manager using compensation data as described below, as well as qualitative judgments regarding individual performance. The Compensation Committee reviews and considers Mr. Bloch’sDr. Sloane’s recommendations prior to making its own recommendations to the Board. Mr. BlochDr. Sloane is not involved with any aspect of determining his own pay. Mr. Bloch’s compensation is based upon an employment agreement dated March 17, 2008, a description of which is found below.
In order to assess whether the compensation program that the Company provides to its executive officers is competitive, its human resourcesthe Company’s Human Resources department annually participates in a survey of electronics companies in the New York metropolitan area. This survey compares base salaries by job type as well as benefits offered by other companies in the electronics industry. The Compensation Committee has established salaries and benefits which are in the mid-range of those companies which participate in this survey.
Nominating and Corporate Governance Committee
The Company does not have a formal nominating or corporate governance committee. New director nominations,Nominating and Corporate Governance Committee consists of the following three independent directors: Messrs. Brolin, Lord and Schwartz. The Nominating and Corporate Governance Committee Charter, which are infrequent,describes all of the Committee’s responsibilities, is posted on the Company’s website at http://www.frequencyelectronics.com. The primary function of the Nominating and compliance with corporate governance rules, are reviewed and approved by the independent directors. By Board resolution, the Company has determined that if a new directorCorporate Governance Committee is to be nominated,assist the independentBoard by (i) identifying individuals qualified to become directors, ofconsistent with the Company (currently Messrs. Foley, Girsky, Lord, Sarachek and Schwartz.) will conduct interviews of qualified candidates and, as appropriate, will recommend selected individuals to the Board. The independent directors consider director candidates based on criteria approved by the Board, (ii) overseeing and evaluating the performance and effectiveness of directors, the Board and committees of the Board, (iii) recommending changes in Board composition and committee structure and (iv) reviewing and recommending appropriate changes to the Company’s governance documents, including such individuals' backgrounds, skills, expertise, accessibilityits charter, bylaws, Corporate Governance Guidelines and availability to serve constructivelycommittee charters, and effectively onthe policies and procedures of the Board. The Nominating and Corporate Governance Committee and the Board has no formal policy onhave not established any specific minimum qualification standards for director nominees (including diversity characteristics); rather, in evaluating the consideration to be given to diversitysuitability of individuals for Board membership, the Nominating and Corporate Governance Committee and the Board consider the way in which it believes the nomination process, other than to seek candidates who have skillsindividual can assist the Company in pursuing its goals and experience that are appropriate toadvancing its strategies. The Nominating and Corporate Governance Committee was established in June 2020, and had one (1) meeting during the position and complementary to those of the other board members or candidates using the criteria identified above. The Company may retain a director search firm to assist it in identifying qualified director nominees.
Director Candidates ProposedRecommended by Stockholders
The Company will consider recommendations for director candidates submitted in good faith by stockholders of the Company. A stockholder recommending an individual for consideration by the Board (andNominating and Corporate Governance Committee and the independent directors)Board must provide (i) evidence in accordance with Rule 14a-8 of the Exchange Act of compliance with the stockholder eligibility requirements, (ii) the written consent of the candidate(s) for nomination as a director, (iii)(ii) a resume or other written statement of the qualifications of the candidate(s) for nomination as a director, and (iv)(iii) all information regarding the candidate(s) and the stockholder that would be required to be disclosed in a proxy statement filed with the SEC if the candidate(s) were nominated for election to the Board, including, without limitation, name, age, business and residence address and principal occupation or employment during the past five years. Stockholders should send the required information to the Company at 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, Attention: Corporate Secretary.
Such recommendations must be sent via registered, certified or express mail (or other means that allows the stockholder to determine when the recommendation was received by the Company). The Company'sCompany’s Corporate Secretary will send properly submitted stockholder recommendations to the independent directorsNominating and Corporate Governance Committee for consideration at a future meeting. Individuals recommended by stockholders in accordance with these procedures will receive the same consideration as other individuals evaluated by the independent directors.
CORPORATE GOVERNANCE MATTERS
Communications with Directors
Stockholders and other interested parties may communicate directly with any Director,director, including any non-management member of the Board, by writing to the attention of such individual at the following address: Frequency Electronics, Inc., 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, Attention: Corporate Secretary. The Company’s Corporate Secretary will distribute any stockholder communications received to the Director(s)director(s) to whom the letter is addressed or to all of the Directorsdirectors if addressed to the entire Board.
Communications that are intended for the non-management directors generally should be marked “Personal and Confidential” and sent to the attention of the Chairman of the Audit Committee.Board. The Chairman of the Board will distribute any communications received to the non-management member(s) to whom the communication is addressed.
Executive Sessions of Independent Directors
The independent directors regularly meet without any management directors or employees present. Such executive sessions are held at least annually and as often as necessary to fulfill the independent directors’ responsibilities.
Size of Board
The Company's Amended and RestatedCompany’s Bylaws provide that the size of the Board shall consist of not less than three (3) but not more than twelve (12) members, as determined from time to time by the Board.
Code of Ethics
All directors, officers and employees of the Company must act ethically and in accordance with the Company’s Code of Ethics (the “Code of Ethics”). The Code of Ethics satisfies the definition of “code of ethics” under the rules and regulations of the SEC and is available on the Company’s website at http://www.frequencyelectronics.com. The Code of Ethics is also available in print to anyone who requests it by writing to the Company at the following address: Frequency Electronics, Inc., 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, Attention: Ethics Officer. Annually, the Company’s Directors review the Code of Ethics. Any waiver granted by the Company to its principal executive officer, principal financial officer or controller under the Code of Ethics, and certain amendments to the reportCode of Ethics, will be disclosed on the Company’s website at http://www.frequencyelectronics.com within the time period required by applicable rules. The Company has also adopted Corporate Governance Guidelines to assist the Board in exercising its responsibilities and serving the interests of the Company and its stockholders. The Corporate Governance Guidelines are available on the Company’s Ethics Committee.
Board Leadership Structure
The Board believes that it is important to retain flexibility to allocate the responsibilities of the Chairman of the Board and the Chief Executive Officer in a way that it considers to be in the best interests of the Company and its stockholders. The positions of Chairman of the Board and Chief Executive Officer are currently held by different persons. The Chairman of the Board is Mr. Sarachek; whereas, Dr. Sloane serves as President and Chief Executive Officer. The Board believes that having a separatethe current Board structure, including the separation of Chairman allowsof the Board and Chief Executive Officer, Mr. Bloch, to focus onis in the day-to-day management of the Company while enabling the Board to maintain an independent perspective on the activitiesbest interest of the Company and executive management.
Board Risk Oversight
The Company’s senior management manages the day-to-day risks facing the Company under the oversight and supervision of the Board, which oversees the Company’s risk management strategy, focusing on the adequacy of the Company’s risk management and mitigation processes. The Board’s role in the risk oversight process includes receiving regular reports from senior management on areas of material risk, including cybersecurity protections, operational, financial, legal and regulatory risks and strategic and reputational risks. The full Board receives these reports to enable it to understand the Company’s risk identification, risk management and risk mitigation strategies. While the fullentire Board is ultimately responsible for risk oversight at the Company, the Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk in the areas of financial reporting and internal controls. In performing its functions, the Audit Committee has access to management and is able to engage advisors, if deemed necessary. The Board receives regular reports from the Audit Committee regarding its areas of focus.
REPORT OF THE AUDIT COMMITTEE
The Report of the Audit Committee is not to be considered as filed with the SEC or incorporated by reference into any other filings which the Company makes with the Exchange CommissionSEC under the Securities Act of 1933, as amended, or the Exchange Act, nor is this information considered as proxy soliciting material.This portion of this proxy statement is not a part of any of those filings unless otherwise specifically stated in those filings.
The members of the Audit Committee have been appointed by the Board. The Audit Committee is comprised of fivethree non-employee directors, each of whom satisfies the independence standards for audit committee membership set forth in Section 10A(m)(3) of the Exchange Act and the independence requirements of the NASDAQ. The Audit Committee is governed by a charter that has been approved and adopted by the Board and which is reviewed and reassessed annually by the Audit Committee.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements for the fiscal year ended April 30, 2017,2021, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted accounting principles,in the United States of America, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.in accordance with the audit standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). In addition, management and the independent auditors havehas represented to the Audit Committee that the financial statements were prepared in accordance with generally accepted accounting principles.
The Audit Committee has also discussed with the independent auditors any matters required to be discussed by Statement on Auditing Standards No. 61.the applicable requirements of the PCAOB and the SEC. The Audit Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB 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 discussed with the Company’s independent auditors the overall scope and plans for their audit. The Audit Committee met with the independent auditors, with and without management present, to discuss the results of their examination, their evaluationunderstanding of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held four meetings during fiscal year 2017.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended April 30, 20172021 for filing with the SEC.
Jonathan Brolin, Chairman, Audit Committee
Lance W. Lord
Russel M. Sarachek
Executive Compensation
Summary Compensation Table
The following table sets forth certain information regarding compensation awarded to, earned by or paid to the Company'sCompany’s Named Executive Officers based on total compensation for the last two completed fiscal years, reduced by above market or preferential earnings on non-qualified deferred compensation.
Summary Compensation Table
Name and Principal Position | Year | Salary | Bonus (1) | Stock Awards (2) | Option & SAR Awards (3) | Non-Qualified Deferred Compensation Earnings (4) | All Other Compensation (5) | Total | |||||||||||||||||||
Stanton D. Sloane | 2021 | $ | 343,750 | $ | 190,360 | $ | 0 | $ | 0 | $ | 0 | $ | 42,585 | $ | 576,695 | ||||||||||||
President, Chief Executive Officer | 2020 | 325,000 | 0 | 310,200 | 0 | 0 | 35,604 | 670,804 | |||||||||||||||||||
Oleandro Mancini | 2021 | 236,112 | 67,544 | 7,163 | 0 | 0 | 10,577 | 321,396 | |||||||||||||||||||
Senior Vice President, Business Development | 2020 | 234,384 | 23,800 | 0 | 0 | 0 | 16,210 | 274,394 | |||||||||||||||||||
Thomas McClelland | 2021 | 259,254 | 33,418 | 9,550 | 0 | 0 | 11,938 | 314,160 | |||||||||||||||||||
Senior Vice President and Chief Scientist | |||||||||||||||||||||||||||
Notes:
(1) | |||||||||||||||||||||||||||
Dr. Sloane is awarded bonuses based |
(2) | The amounts in this column do not represent actual cash payments to the Named Executive Officers. Each value |
(3) | The amounts in this column do not represent actual cash payments to the |
(4) | The |
(5) | The amounts shown in this column are composed of the following: |
Name | Costs of Purchased or Leased Automobile | Health, Life, Disability Insurance & Medical Reimbursement (a) | Additional Life Insurance Premiums (b) | Financial Planning Advice and Other (c) | Total All Other Compensation | |||||||||||||||
Stanton D. Sloane | ||||||||||||||||||||
2021 | $ | 18,202 | $ | 4,920 | $ | 10,000 | $ | 9,463 | $ | 42,585 | ||||||||||
2020 | 14,213 | 3,666 | 10,000 | 7,725 | 35,604 | |||||||||||||||
Oleandro Mancini | ||||||||||||||||||||
2021 | 2,772 | 4,805 | 0 | 3,000 | 10,577 | |||||||||||||||
2020 | 9,514 | 3,696 | 0 | 3,000 | 16,210 | |||||||||||||||
Thomas McClelland | ||||||||||||||||||||
2021 | 5,557 | 3,381 | 0 | 3,000 | 11,938 | |||||||||||||||
(a) | ||||||||||||||||||||
All employees of the Company are eligible for health, term life and disability insurance, the premiums for which are partially paid by the Company. |
(b) | Company-paid premiums for additional whole life insurance |
(c) | The amounts include financial planning advice and the fair market value of contributions by the Company of Common Stock to the accounts of the Named Executive Officers in the Company’s 401(k) Savings Plan, which may not exceed $3,000 in a calendar year. |
Narrative Disclosure of Summary Compensation Table
Short-Term Incentives
The Company maintains short-term incentive bonus programs for certain employees which are based on bookings, revenue, operating profitsincome and certain other relevant criteria of the Company or the individual subsidiaries to which the employees are assigned. The Company'sCompany’s employment agreement with its Chief Executive Officer includes a bonus formula based on consolidated pre-tax profitsvarious criteria (see “Chief Executive Officer Employment Agreement” below). The Company also provides bonus opportunities to the other employees, including its other Named Executive Officers (see “Senior Vice President, Business Development Employment Agreement” and “Senior Vice President and Chief Scientist Employment Agreement” below). These plansbonus programs are designed to create incentives for superior performance and to allowreward certain Company employees for their contributions to the Company's executive officers to share in the success of the Company by rewarding the contributions of individual officers.Company’s success. Focused on short-term or annual business results, these plansbonus programs enable the Company to award designated executives with annual cash bonuses based on their contributions to the profits ofCompany. The Board, in its sole discretion, determines the Company.
Long-Term Incentives
As part of its comprehensive compensation program, the Company stresses long-term incentives through awards of shares of its Common Stock through the grant of RSUs, SARs, orstock options to purchase Common Stockand other equity awards through its 2005 Stock Award Plan. Grants and awards are aimed at attracting new personnel, recognizing and rewarding current executive officers for special individual accomplishments, and retaining high-performing officers and key employees by linking financial benefit to the performance of the Company (as reflected in the market price of Common Stock) and to continued employment with the Company. Grants of RSUs, SARs, stock options and other equity awards are generally determined on an individual-by-individual basis. The factors considered are the individual'sindividual’s performance and potential for contributing to the Company'sCompany’s future growth, the number of RSUs, SARs, stock options and other equity awards previously granted to the individual and the Company'sCompany’s financial and operational performance.
The Company does not maintain any compensation plans for its executive officers or directors nor for any of its other employees which provide compensation intended to serve as incentive for performance to occur over a period longer than one fiscal year other than the stock award plansawards discussed above and the Company'sCompany’s 401(k) Savings Plan discussed below. The grant date fair market values of SARthe RSU awards under the 2005 Stock Award Plan isgranted during fiscal year 2021 and 2020 are shown in the Summary Compensation Table above.
Nonqualified Deferred Compensation Agreements
The Company has no tax-qualified defined benefit or actuarial retirement plans in effect. It has entered into certain deferred compensation agreements with certain key employees, including its officers, providing for the payment of benefits upon retirement or death or upon the termination of employment not for cause. The Company pays compensation benefits out of its working capital but has also purchased whole or universal life insurance (of which it is the sole beneficiary) on the lives of each of the participants to cover the optional lump sum obligations under the deferred compensation agreements upon the death of the participant. The annual premiums paid during fiscal year 20172021 were less than the increase in cash surrender value of the whole and universal life insurance policies.
The deferred compensation for participants in the program is reviewed annually by the Compensation Committee. The annual benefit may be increased based upon recent performance, length of service, economic conditions and other factors. The annual benefit to be provided to each of the Named Executive Officers upon his retirement is as follows:
| Martin Bloch, President & CEO | $ | 235,000 | ||
| Markus Hechler, Executive VP | 100,000 | |||
| Oleandro Mancini, Senior VP | 85,000 |
Stanton D. Sloane, President & CEO | $ | 0 | ||
Oleandro Mancini, Senior VP, Business Development | $ | 85,000 | ||
Thomas McClelland, Senior VP and Chief Scientist | $ | 85,000 |
Such benefits are payable for the remaining life of the individual with a minimum payment over ten years (25 years for Mr. Bloch) to either the employee or his beneficiaries. Benefits may be paid in a lump sum in the case of a participant’s death, disability or early termination of employment without cause. The change in actuarial value in nonqualified deferred compensation benefits under the deferred compensation agreements for each of the Named Executive Officers is presented in footnote 4 to the Summary Compensation Table.
Supplemental Separation Benefits
Included in the deferred compensation agreements of certain executive officers and certain key employees are provisions for supplemental separation benefits. Under the agreements, in the event of a change in control or ownership of part or all of the Company which gives rise to discharge of any officer or employee without cause, then such officer or employee will receive supplemental severance pay equal to one and one-half times the employee’s average base salary plus cash bonus from the previous five calendar years prior to the change of control if such discharge occurs in the first year after the change of control. If discharge occurs more than one year but less than two years after the change of control, then the employee will receive two-thirds of the five-year average of base salary and bonus.
Chief Executive Officer Employment Agreement
Pursuant to his employment agreement, Mr. Bloch’sDr. Sloane’s base annual salary is $400,000. Mr. Blochat least $325,000. Dr. Sloane also receives additional compensation of up to $52,000$20,000 in the form of financial planning advice and Company-paid premiums for life insurance coverage, the beneficiaries of which are Mr. Bloch’sDr. Sloane’s heirs. Mr. Bloch’sDr. Sloane’s employment agreement provides a fixed annual bonus of 6%100% of his base salary at the end of the pre-tax profit ofapplicable fiscal year, only payable if the Company withshows a cap onprofit for the pre-tax profit at $20,000,000,year, as well as separation benefits in the event of a change in control or ownership of part or all of the Company, and continuation of disability, medical and life insurance,insurance. The actual amount of Dr. Sloane’s annual bonus, if any, is determined by the cost of an annual physical examinationBoard in its sole discretion based on certain goals and a new automobile every three years. Mr. Bloch wasdirectives. Dr. Sloane has been awarded SARs based on 355,00090,000 shares of the Company’s Common Stock and the market value of the Common Stock onas of the date of grant. The SARs are exercisable for a period of ten years from theapplicable date of grant, with the exception of the fiscal years 2017 and 2015 award which is exercisable for a period of five years from the date of grant. (See “Outstanding Equity Awards at Fiscal Year-End” and footnotes (8) and (9) under “Stock Ownership of Certain Beneficial Owners and Management” above.)
Senior Vice President, Business Development Employment Arrangement
The Company has not entered into an employment agreement with Mr. Mancini. Mr. Mancini’s annual base salary is $232,719.$236,112. Mr. Mancini is paid an annual bonus, if any, based on the revenues and operating profitsbookings generated by the FEI-NY Gillam-FEI and FEI-Zyfer segments. In fiscal year 2016,The actual amount of Mr. Mancini’s annual bonus, was $122,922if any, is determined by the Board in its sole discretion based on certain goals and in fiscal year 2017, Mr. Mancini’s annual bonus was $80,000.directives. In addition, the Company has entered into a deferred compensation agreement with Mr. Mancini providing for the payment of an annual benefit of $85,000 upon his retirement or death or upon the termination of his employment (other than for cause). Mr. Mancini is also is eligible for health, term life and disability insurance, the premiums of which are partially paid by the Company, and for reimbursement of medical expenses and an automobile leasing arrangement. Mr. Mancini was awarded SARs based on 95,00045,000 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant and RSUs based on 750 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. The RSUs vest equally over a four-year period from the date of the grant. The SARs are exercisable for a period of ten years from the date of grant with the exception of the fiscal years 2019 through 2017 and 2015 awards which are exercisable for a period of five years from the date of grant. (See “Outstanding Equity Awards at Fiscal Year-End” below and footnotesfootnote (8) and (12) under “Stock Ownership of Certain Beneficial Owners and Management” above.)
Senior Vice President and Chief Scientist Employment Arrangement
The Company has not entered into an employment agreement with Mr. McClelland. Mr. McClelland’s annual base salary is $259,254. Mr. McClelland is paid an annual bonus, if any, based on specific metrics relating to his job description. The actual amount of Mr. McClelland’s annual bonus, if any, is determined by the Board in its sole discretion. In addition, the Company has entered into a deferred compensation agreement with Mr. McClelland providing for the payment of an annual benefit of $85,000 upon his retirement or death or upon the termination of his employment (other than for cause). Mr. McClelland is also eligible for health, term life and disability insurance, the premiums of which are partially paid by the Company, and for reimbursement of medical expenses. Mr. McClelland was awarded SARs based on 56,000 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. The SARs are exercisable for a period of ten years from the date of grant with the exception of the fiscal years 2019 through 2017 awards which are exercisable for a period of five years from the date of grant. In addition Mr. McClelland was awarded RSUs based on 2,000 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. These RSUs vest equally over a four-year period from the date of grant. (See “Outstanding Equity Awards at Fiscal Year-End” below and footnote (8) under “Stock Ownership of Certain Beneficial Owners and Management” above.)
Employee Benefit Plans
Officers, including the Named Executive Officers, are eligible to participate in the Company’s 401(k) Savings Plan. This plan permits eligible employees to defer a portion of their income through voluntary contributions to the plan. Under the provisions of the plan, the Company makes discretionary matching contributions of the Company’s Common Stock, the fair market value of which may not exceed $3,000 in a calendar year. All participants in the plan become fully vested in the Company contribution after six years of employment. All of the Named Executive Officers are fully vested in the shares attributable to their accounts. (See footnote (8) under “Stock Ownership of Certain Beneficial Owners and Management” above.)
Other Compensation
Officers (other than Mr. Bloch) and certain key employees are provided with a leased automobile to use for both business and personal purposes. The operating costs of each vehicle are paid by the Company. The value of any personal use is included in the taxable income of each employee. Officers of the Company are also reimbursed for out-of-pocket medical expenses incurred by the officers and their families. Such reimbursement is also included in the officers’ taxable income.
Equity Compensation Plan Information
Securities Authorized for Issuance under Equity Compensation Plans:
The following table sets forth as of April 30, 2017,2021 the number of shares of Company Common Stock to be issued upon exercise of outstanding stock option and RSU grants and the number of shares available for future issuance under such plans:
| Plan Category | Number of securities to be issued upon exercise of outstanding options warrants and rights | Weighted-average exercise price of outstanding options warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity Compensation Plans | ||||||||||||
| Approved by Security Holders (1) | 1,642,625 | $ | 8.97 | 18,563 | ||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options and vesting of RSUs | Weighted-average exercise price of outstanding options warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity Compensation Plans | ||||||||||||
Approved by Security Holders (1) | 672,000 | $ | 8.90 | 755,923 | ||||||||
(1) | Equity compensation plans approved by security holders consist of the Company’s 2005 Stock Award. |
Outstanding Equity Awards at Fiscal Year-End
The following table includes certain information with respect to the value of all unexercised options or SARs and unvested RSUs previously awarded to the Named Executive Officers outstanding at the end of the fiscal year, April 30, 2017.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Securities Underlying Unexercised SARs (#) Exercisable | Number of Securities Underlying Unexercised SARs (#) Unexercisable | SARs Exercise Price ($) | SARs Expiration Date (1) | Number of RSUs that have not vested (#) (2) | Market Value of RSUs that have not vested ($) (3) | ||||||||||
Stanton D. Sloane | 10,000 18,750 13,750 | 0 6,250 41,250 | $ | 10.98 8.06 8.65 | 2/16/22 9/17/22 5/7/23 | 22,500 | $ | 241,650 | ||||||||
Oleandro Mancini | 10,000 10,000 10,000 10,000 3,750 | - -0- -0- -0- 0 1,250 | $ | 8.82 10.38 13.24 10.58 8.43 | 9/13/22 8/8/23 4/29/20 8/18/21 5/10/23 | 750 | 8,055 | |||||||||
Thomas McClelland | 10,000 10,000 10,000 8,000 10,000 3,750 | -- -0- -0- -0- -0- 2,500 1,250 | $ | 7.25 8.82 10.38 13.24 10.58 8.43 | 12/18/21 9/13/22 8/8/23 4/29/20 8/18/21 5/10/23 | 1,750 | 18,795 | |||||||||
(1) | |||||||||||||
SARs are generally exercisable cumulatively at 25% per year beginning one year after the date of grant. | ||
(2) | On July 30, 2020, Dr. Sloane was granted RSUs based on 30,000 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. The RSUs vest equally over a four-year period from the date of the grant based on the satisfaction of a performance criteria related to consolidated bookings. On November 1, 2020, Mr. Mancini was granted RSUs based on 750 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. The RSUs vest equally over a four-year period from the date of the grant and have no performance criteria attached to them. On each November 1, 2019 and November 1, 2020, Mr. McClelland was granted RSUs based upon 1,000 shares of the Company’s Common Stock and the market value of the Common Stock as of the applicable date of grant. The RSUs vest equally over a four-year period from the applicable date of the grant and have no performance criteria attached to them. On the applicable vesting date, the holder of an RSU becomes entitled to a share of the Company’s Common Stock. Prior to vesting, RSUs are not shares of the Company’s Common Stock and do not have any rights or privileges thereof, including voting or dividend rights. Additionally, RSUs are subject to certain restrictions and forfeiture provisions prior to vesting. | |
(3) | Market values are based on $10.74, the closing price of the Company’s Common Stock on April 30, 2021. For purposes of Dr. Sloane’s RSUs subject to certain performance criteria, we have assumed satisfaction of the applicable criteria. |
ANNUAL REPORT
A copy of the Company'sCompany’s Annual Report on Form 10-K, as amended, including the financial statements for the fiscal year ended April 30, 2017,2021, is included herewith. The Company’s Annual Report on Form 10-K includes the financial statements for the fiscal years ended April 30, 2021 and 2020. Additionally, the Annual Report on Form 10-K is available under the Investor Relations section of the Company’s website at http://www.frequencyelectronics.com. A Notice of Internet Availability of Proxy Materials is being mailed to stockholders which also includes instructions on how stockholders may obtain printed copies of the Annual Report on Form 10-K and the Proxy Statement.www.frequencyelectronics.com. Stockholders may also request printed copies of the Proxy MaterialsStatement and the Annual Report on Form 10-K by calling the Company at (516) 794-4500, extension 2131, or by sending an email to investorrelations@freqelec.com.investorrelations@freqelec.com. For a charge of $50, the Company agrees to provide a copy of the exhibits to the Annual Report on Form 10-K to any stockholdersstockholder who requestrequests such a copy.
STOCKHOLDERS SHARING THE SAME ADDRESS
SEC rules permit companies, brokers, banks or other intermediaries to deliver a single copy of a proxy statement and annual report to households at which two or more stockholders reside. This practice, known as “householding,“house holding,” is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Stockholders sharing an address who have been previously notified by their broker, bank or other intermediary and have consented to house holdinghouseholding will receive only one copy of the Company’s proxy statementProxy Statement and annual report.
If you would like to opt out of this practice for future mailings and receive separate proxy statements and annual reports for each stockholder sharing the same address, please contact your broker, bank or other intermediary. You may also obtain a separate proxy statement or annual reportProxy Statement and Annual Report on Form 10-K without charge by contacting the Company at Frequency Electronics, Inc., 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, Attention: Corporate Secretary; (516) 794-4500.794-4500, extension 2131. We will promptly send additional copies of the proxy statementProxy Statement or annual report.Annual Report on Form 10-K. Stockholders sharing an address that are receiving multiple copies of the proxy statement or annual reportProxy Statement and Annual Report on Form 10-K can request delivery of a single copy of thefuture proxy statement orstatements and annual reportreports by contacting their broker, bank or other intermediary or by contacting the Company as indicated above.
OTHER MATTERS
As of the date of this Proxy Statement, the only business which the Board intends to present and knows that others will present at the meetingAnnual Meeting is hereinabove set forth. If any other matter or matters are properly brought before the meeting or any adjournments thereof, it is the intention of the persons named in the accompanying Proxy to vote the Proxy on such matters in accordance with their judgment.
By Order of the Board of Directors,
/s/Steven L. Bernstein
STEVEN L. BERNSTEIN
Chief Financial Officer,
Dated: September 28, 2017August 30, 2021
FREQUENCY ELECTRONICS, INC. ATTN: STEVEN BERNSTEIN 55 CHARLES LINDBERGH BLVD. MITCHEL FIELD, NY 11553 | VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on October 5, 2021 for shares held directly and by 11:59 p.m. Eastern Time on October 3, 2021 for shares held in a Plan. 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. During The Meeting - Go to www.virtualshareholdermeeting.com/FEIM2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on October 5, 2021 for shares held directly and by 11:59 p.m. Eastern Time on October 3, 2021 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. 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. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D59243-Z80951 | KEEP THIS PORTION FOR YOUR RECORDS | |
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
FREQUENCY ELECTRONICS, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES IN PROPOSAL 1,AND “FOR” PROPOSALS 2 AND 3. | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||
1. Election of Five (5) directors to serve until the next Annual Meeting of Stockholders and until their respective successors shall have been elected and shall have qualified. NOMINEES: | ☐ | ☐ | ☐ | |||||
01) Jonathan Brolin 02) Richard Schwartz 03) Dr. Stanton D. Sloane 04) Russell Sarachek 05) Lance Lord | ||||||||
For | Against | Abstain | ||||||
2. Ratification of the appointment of BDO USA, LLP as the independent registered public accounting firm for the fiscal year ending April 30, 2022. | ☐ | ☐ | ☐ | |||||
3. Approval of the non-binding vote on executive compensation. | ☐ | ☐ | ☐ | |||||
All as described in the Proxy Statement dated August 30, 2021, receipt of which is hereby acknowledged. The Board of Directors requests that you fill in, date and sign the Proxy and return it in the enclosed postpaid envelope. | ||||||||
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. | ||||||||
The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and the Proxy Statement, each dated August 30, 2021. | ||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||
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.
D59244-Z80951
FREQUENCY ELECTRONICS, INC. Proxy - Annual Meeting of Stockholders - October 6, 2021 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of FREQUENCY ELECTRONICS, INC. (the “Company”), hereby revoking any proxy heretofore given, does hereby appoint RUSSELL SARACHEK and STEVEN BERNSTEIN, and each of them individually, as the undersigned’s true and lawful agents and proxies, with power of substitution in each, for and in the name of the undersigned to attend the Annual Meeting of Stockholders of the Company to be held virtually at www.virtualshareholdermeeting.com/FEIM2021 on October 6, 2021 at 10:00 A.M., Eastern Time, and any adjournment or postponement thereof, and authorizes them to vote upon all matters specified in the notice of the meeting, as set forth on the reverse hereof, and in their discretion upon such other business as may properly and lawfully come before the meeting, all shares of stock of the Company which the undersigned would be entitled to vote if personally present at the meeting. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 3. In the event that any of the Board of Directors’ nominees named in this Proxy are unable to serve, or for good cause will not serve, this Proxy conveys discretionary authority to Mr. Sarachek and Mr. Bernstein, and each of them individually, to vote as recommended by the Board of Directors with respect to the election of any person to replace such nominee. (Continued and to be signed on the reverse side) |