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
x
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))
x
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):
x
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:
________________________________________________________________________________________________
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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__________________________________________________________________________________________
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(4) Proposed
maximum aggregate value of transaction:
________________________________________________________________________________________________
(5) Total
fee paid:
________________________________________________________________________________________________
¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
|
(1) Amount
Previously Paid:
________________________________________________________________________________________________
(2) Form,
Schedule or Registration Statement No.:
________________________________________________________________________________________________
(3) Filing
Party:
________________________________________________________________________________________________
(4) Date
Filed:
________________________________________________________________________________________________
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FREQUENCY
ELECTRONICS, INC.
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55
Charles Lindbergh Boulevard
Mitchel
Field, New York 11553
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To be
held on October 6, 2009
To the
Stockholders:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Frequency Electronics,
Inc. (the “Company”) will be held at the offices of the Company, 55 Charles
Lindbergh Boulevard, Mitchel Field, New York 11553, on the 6th day of October
2009, at 10:00 A.M., Eastern Daylight Time, for the following
purposes:
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1.
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To
elect six (6) directors to serve until the next Annual Meeting of
Stockholders and until their respective successors shall have been elected
and qualified;
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2.
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To
consider and act upon ratifying the appointment of Eisner LLP as
independent auditors for the fiscal year commencing May 1, 2009;
and
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3.
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To
transact such other business as may properly come before the meeting or
any adjournment or adjournments
thereof.
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Only
stockholders of record as of the close of business on August 21, 2009, 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
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/s/ Harry Newman
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HARRY
NEWMAN
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Secretary
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Mitchel
Field, New York
August
27, 2009
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 PERSON 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 October 6, 2009
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 Annual Meeting of Stockholders to be held at the office of the
Company, 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553, on the
6th day of October 2009, at 10:00 A.M., Eastern Daylight Time, or any
adjournment or adjournments thereof. A Notice of Internet
Availability of Proxy Materials on the Company’s website and a Proxy card were
first mailed to shareholders on or about August 27, 2009. Only
stockholders of record as of the close of business on August 21, 2009 are
entitled to notice of, and to vote at, the meeting.
The Board
may use the services of the Company'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
material 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 executed and returned by a stockholder may be revoked at any time
thereafter by filing a later dated proxy or by appearing at the meeting and
voting in person. Attendance at the meeting will not, in itself,
constitute revocation of a proxy.
VOTING
SECURITIES
The Board
has fixed the close of business on August 21, 2009, as the record date for
determination of stockholders entitled to notice of, and to vote at, the
meeting. On August 21, 2009, the Company had outstanding 8,175,550
shares of common stock, $1.00 par value per share ("Common Stock") (excluding
988,389 treasury shares), each of which entitled the holder to one
vote. No shares of preferred stock were outstanding as of such
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 shareholders 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 meeting for the purpose of determining
the presence of a quorum. Broker non-votes also will be counted for
the purpose of determining the presence of a quorum.
Brokers
who do not receive a stockholder's instructions are entitled to vote on the
election of directors and the ratification of the independent
auditors. Broker non-votes and stockholder abstentions will have no
effect on the outcome of the election of directors, but stockholder abstentions
will have the same practical effect as a negative vote on the proposal ratifying
the appointment of the independent auditors.
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 six (6) directors
("Director(s)") to the Board to hold office until the next annual meeting of
stockholders and until their respective successors are elected and
qualified. Cumulative voting is not permitted. The
accompanying Proxy will be voted for the election of all six 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
any such nominee is unable or declines to serve, the Proxy may be voted for the
election of another person in his place. The Board knows of no reason
to anticipate that this will occur.
Nominees
for Election as Directors
The
director nominees are as follows:
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Year First
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Elected
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Name
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Principal Occupation
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Age
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Director
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Joseph
P. Franklin
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Chairman
of the Board
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75
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1990
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of
Directors
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(Major
General,
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U.S.
Army – Ret.)
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Martin
B. Bloch
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President,
Chief
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73
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1961
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Executive
Officer
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and
a Director
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Joel
Girsky
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President,
Jaco
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70
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1986
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Electronics,
Inc., and a
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Director
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E.
Donald Shapiro
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Dean
Emeritus,
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77
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1998
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New
York Law School
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and
a Director
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S.
Robert Foley, Jr.
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Director
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81
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1999
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(Admiral,
U.S.
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Navy
– Retired)
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Richard
Schwartz
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Director
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73
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2004
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All
directors hold office for a one-year period or until their successors are
elected and qualified.
The
Company’s Board has determined that Messrs. Foley, Girsky, Shapiro 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) officers of the Company (Messrs. Bloch and Franklin) and the four (4)
independent directors, is in full compliance with the listing requirements of
the NASDAQ as required under corporate governance rules promulgated by the
Securities and Exchange Commission (“SEC”).
Business
Experience of Directors
MARTIN B.
BLOCH, age 73, has been a Director of the Company and of its predecessor since
1961. He has served continuously since 1961 as the Company’s
President and, except for December 1993 through April 1999, as its Chief
Executive Officer. Previously, he served as chief electronics
engineer of the Electronics Division of Bulova Watch Company.
JOSEPH P.
FRANKLIN, age 75, has served as a Director of the Company since March
1990. In December 1993, he was elected Chairman of the Board and,
from December 1993 through April 1999, served as Chief Executive Officer of the
Company. From August 1987 to November 1993, he was the chief
executive officer of Franklin S.A., a Spanish business consulting company
located in Madrid, Spain, specializing in joint ventures, and was a director of
several prominent Spanish companies. General Franklin was a Major
General in the United States Army until he retired in July 1987. He
was Vice Chairman of the Board of Trustees of the US Military Academy at West
Point from 2000 to 2004.
JOEL
GIRSKY, age 70, has served as a Director of the Company since October
1986. He is the president and a director of Jaco Electronics, Inc.,
which is in the business of distributing electronics components, and has served
in such a capacity for over forty years. Mr. Girsky is the Chairman
of the Company’s Compensation Committee.
E. DONALD
SHAPIRO, age 77, has been The Joseph Solomon Distinguished Professor of Law, New
York Law School, since 1983 and Dean Emeritus since 2000 and was previously
Dean/Professor of Law from 1973 to 1983. He was formerly a director
of Loral Space & Communications, Ltd., Vasomedical, Inc., United Industrial,
Kramont Realty Trust, Bank Leumi and Rand Information Systems. Mr.
Shapiro became a member of the Board in 1998 and serves as Chairman of the
Company’s Audit Committee.
S. ROBERT
FOLEY, Jr., age 81, recently 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 became a member of
the Board in 1999.
RICHARD
SCHWARTZ, age 73, was a trustee and chairman of the Finance Committee of Cooper
Union in New York City, a position he has held from 2004 through
2008. Prior to his retirement in 2000, Mr. Schwartz was Chief
Executive Officer and Chairman of ATK. He served in senior executive
positions at ATK and predecessor companies since 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 also
serves on the board of directors of Astronautics Corporation of
America. Mr. Schwartz became a member of the Board in
2004.
Compensation
of Directors:
Directors
who are not officers of the Company receive an honorarium 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). In addition,
the chairman of the Audit Committee receives a stipend of
$10,000. Company officers do not receive additional compensation for
their service on the Board or for attendance at Board meetings or committee
meetings. Directors who are not officers do not participate in
Company-sponsored pensions or deferred compensation programs.
Director
Compensation
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Fees Earned or
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Equity-based
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Name
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Paid in Cash ($)
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Awards (1)(2)
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Total ($)
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E.
Donald Shapiro
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$
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39,000
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$
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8,820
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$
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47,820
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Joel
Girsky
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31,000
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8,820
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39,820
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S.
Robert Foley
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28,500
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8,820
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37,320
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Richard
Schwartz
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28,500
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8,820
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37,320
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(1)
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The
amounts in this column do not represent actual cash payments but represent
the fair value of stock appreciation rights awarded in the current year
recognized by the Company as an expense in fiscal year 2009 for financial
accounting purposes. The fair value of these awards and the
amounts expensed in fiscal year 2009 were determined in accordance with
FASB Statement of Financial Accounting Standards No. 123R,
Share-Based Payment
(FAS 123R), except the impact of estimated forfeitures related to
service-based vesting conditions have been disregarded in accordance with
SEC rules. In addition, since all directors are “retirement
eligible” the full fair value of the stock compensation expense has been
recognized rather than amortizing it over the vesting
period. 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, 2009, as filed with the
SEC.
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(2)
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Each
non-officer Director received a stock appreciation right to receive, upon
exercise, the number of shares of Common Stock equal to the appreciated
value of 6,000 shares of Common Stock between the award date and the
exercise date. Each such award was outstanding at the end of
fiscal year 2009 and no Directors were vested in such awards as of April
30, 2009. In addition, Mr. Schwartz has an option to acquire
30,000 shares of Common Stock in which he is fully vested as of April 30,
2009. The grant dates and exercise prices for these awards are
listed in note (10) under the section Stock Ownership of Certain
Beneficial Owners and Management beginning on page 7 of this Proxy
Statement.
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Vote
Required
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 meeting and entitled to vote is required for the election of
directors.
THE BOARD
OF DIRECTORS DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE NOMINEES NAMED
ABOVE.
PROPOSAL
NO. 2
APPOINTMENT
OF INDEPENDENT AUDITORS
The Board
of Directors, upon recommendation of the Audit Committee, has appointed the firm
of Eisner LLP (“Eisner”), independent accountants, to be the Company's external
auditors for the fiscal year commencing May 1, 2009, and recommends to
stockholders that they vote for ratification of that appointment.
It is
anticipated that a representative of Eisner will be present at the
meeting. Such representative will be given the opportunity to make a
statement and will be available to respond to appropriate
questions. On August 1, 2008, the Audit Committee approved the
dismissal of Holtz Rubenstein Reminick LLP (“HRR”) as the Company’s independent
auditors. On August 4, 2008, the Company notified HRR of its
dismissal as the Company’s independent auditors. On August 1, 2008,
the Audit Committee engaged Eisner as the Company’s independent auditors for the
fiscal year ending April 30, 2009.
The
reports of HRR on the Company’s financial statements for the years ended April
30, 2008 and 2007 did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.
In
connection with the audits of the Company's financial statements for the years
ended April 30, 2009 and 2008 and the subsequent interim period through August
1, 2009, there have been no disagreements with Eisner or with the predecessor
accountants, HRR, 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 Eisner or HRR, would have caused Eisner or
HRR to make reference thereto in their reports on the Company's financial
statements for such years.
No
reportable event of the type described in Item 304(a)(1)(v) of Regulation S-K
occurred during the years ended April 30, 2009 and 2008 and the subsequent
interim period through August 1, 2009.
During
the Company’s two fiscal years ended April 30, 2009 and 2008 and the subsequent
interim period through August 1, 2009, the Company has not consulted with Eisner
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's consolidated financial statements, or any matter that
was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions) or reportable event (within the
meaning of Item 304(a)(1)(v) of Regulation S-K).
AUDIT
AND NON-AUDIT FEES
The
following table presents the aggregate fees and expenses paid or accrued by the
Company for professional services rendered by the Company’s auditors, Eisner LLP
in fiscal year 2009 and its former auditors, Holtz Rubenstein Reminick LLP in
fiscal year 2008. Other than as set forth below, no professional
services were rendered or fees billed by Eisner or HRR during fiscal years 2009
and 2008.
Service
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2009
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2008
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Audit
Fees
(1)
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$
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321,800
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$
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260,138
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Audit-Related
Fees
(2)
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35,000
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73,016
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Tax
Fees
(3)
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-
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54,259
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All
Other Fees
(4)
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-
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-
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TOTAL
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$
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356,800
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$
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387,413
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(1)
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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. The fiscal year 2009 amount
includes $59,800 paid to HRR as a final billing for the fiscal year 2008
audit. Such amount was in excess of the amount accrued as of
April 30, 2008 and was not included in the fiscal year 2008 audit fee
above.
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(2)
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Other
audit-related services provided by Eisner LLP or Holtz Rubenstein Reminick
LLP include the annual audit of the Company’s employee benefit plans as
well as accounting consultations regarding significant transactions during
the fiscal year.
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(3)
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Tax
fees consist of fees for services rendered to the Company for tax
compliance, tax planning and advice. Beginning in fiscal year
2009, the Company has engaged another accounting firm to provide such
services.
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(4)
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No
other services were performed by either Eisner LLP or Holtz Rubenstein
Reminick LLP in connection with financial information systems design and
implementation or otherwise.
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Pre-Approved
Services
Prior to
engaging Eisner LLP to render the above services during fiscal year 2009, 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 Eisner LLP’s independence in the
conduct of its auditing services.
The
procedures used by the Audit Committee for the pre-approval of all audit and
permissible non-audit services provided by the independent auditors are
described below.
Before
engagement of Eisner LLP as independent auditors for the fiscal year 2010, the
independent auditors will submit a detailed description of services expected to
be rendered during that year within each of four categories of services to the
Audit Committee for approval.
Audit Services
include audit
work performed on the Company’s financial statements, as well as work that
generally only the independent auditors can reasonably be expected to provide,
including statutory audits, comfort letters, consents and assistance with and
review of documents filed with the SEC.
Audit-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 regulatory requirements and discussions surrounding the proper
application of financial accounting and/or reporting standards.
Tax Services
include all
services, except those services specifically related to the audit of the
financial statements, performed by the independent auditors’ tax personnel,
including tax analysis; assisting with coordination of execution of tax related
activities, primarily in the area of corporate development; supporting other tax
related regulatory requirements; and tax compliance and reporting. As
indicated above, the Company has engaged another accounting firm to provide such
services which will thus not impair Eisner LLP’s independence.
Other Services
are those
associated with services not captured in the other categories. The
Company generally does not request such services from the independent
auditors.
Prior to
engagement, the Audit Committee pre-approves independent auditor services within
each category. The fees are budgeted and the Audit Committee requires
the independent auditors to report actual fees versus the budget periodically
throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
auditors 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
The
affirmative vote of a majority of the shares of common stock represented at the
meeting and entitled to vote is required for the ratification of Eisner LLP as
the Company's independent auditors for the 2010 fiscal year.
THE BOARD
OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
OTHER
BUSINESS
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 meeting are 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.
PROPOSALS
OF STOCKHOLDERS
In
accordance with the rules promulgated by the SEC, any stockholder who wishes to
submit a proposal for inclusion in the proxy material to be distributed by the
Company in connection with the 2010 Annual Meeting of Stockholders must submit
such proposal to the Company no later than April 23, 2010.
Assuming
that the Company’s 2010 Annual Meeting of Stockholders is held on schedule, the
Company must receive notice of a stockholder’s intention to introduce a
nomination or other item of business at that meeting by July 8,
2010. If the Company does not receive notice by that date, or if the
Company meets certain other requirements of the SEC rules, the persons named as
proxies in the proxy materials relating to that meeting will use their
discretion in voting the proxies when these matters are raised at the
meeting.
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth as of August 21, 2009, information concerning the
beneficial ownership of the Common Stock 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's directors and nominees for director, (iii) each of the Company'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:
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Amount and Nature of
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Name and Address of Beneficial Owner
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Beneficial Ownership (1)
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Percent of Class (2)
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Dimensional
Fund Advisors, Inc. (3)
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1299
Ocean Ave.
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Santa
Monica, CA 90401
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688,247
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8.4
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%
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Frequency
Electronics, Inc.
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Employee
Stock Ownership Plan (4)
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55
Charles Lindbergh Blvd.
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Mitchel
Field, NY 11553
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481,865
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5.9
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%
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Martin
B. Bloch (5)(6)(9)
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55
Charles Lindbergh Blvd.
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|
|
Mitchel
Field, NY 11553
|
|
|
977,518
|
|
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
Joseph
P. Franklin (6)(7)(9)
|
|
|
|
|
|
|
|
|
55
Charles Lindbergh Blvd.
|
|
|
|
|
|
|
|
|
Mitchel
Field, NY 11553
|
|
|
157,878
|
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
Joel
Girsky (10)
|
|
|
|
|
|
|
|
|
c/o
Jaco Electronics, Inc.
|
|
|
|
|
|
|
|
|
145
Oser Avenue
|
|
|
|
|
|
|
|
|
Hauppauge,
NY 11788
|
|
|
25,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
E.
Donald Shapiro (10)
|
|
|
|
|
|
|
|
|
10040
E. Happy Valley Road
|
|
|
|
|
|
|
|
|
Scottsdale,
AZ 85255
|
|
|
3,600
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
S.
Robert Foley (10)
|
|
|
|
|
|
|
|
|
One
Lakeside Dr.
|
|
|
|
|
|
|
|
|
Oakland,
CA 94612
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Richard
Schwartz (10)
|
|
|
|
|
|
|
|
|
4427
Golf Course Dr.
|
|
|
|
|
|
|
|
|
Westlake
Village, CA 91362
|
|
|
30,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Markus
Hechler (8)(9)
|
|
|
|
|
|
|
|
|
55
Charles Lindbergh Blvd.
|
|
|
|
|
|
|
|
|
Mitchel
Field, NY 11553
|
|
|
117,336
|
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
Oleandro
Mancini (9)
|
|
|
|
|
|
|
|
|
55
Charles Lindbergh Blvd.
|
|
|
|
|
|
|
|
|
Mitchel
Field, NY 11553
|
|
|
74,900
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
All
executive officers
|
|
|
|
|
|
|
|
|
and
directors as a group
|
|
|
|
|
|
|
|
|
(15
persons) (8)(9)
|
|
|
1,875,470
|
|
|
|
22.9
|
%
|
*designates
less than one percent (1%) of issued and outstanding shares of Common Stock.
Notes:
(1)
|
Each
person has sole voting and investment power over the shares reported,
except as noted.
|
(2)
|
Based
on 8,175,550 shares outstanding as of August 21,
2009.
|
(3)
|
As
reported in a Form 13F for the quarter ended June 30, 2009, filed by
Dimensional Fund Advisors Inc. (“Dimensional”), which is an investment
advisor registered under the Investment Advisors Act of
1940. Per a Schedule 13G filing dated December 31, 2008,
Dimensional furnishes investment advice to four investment companies
registered under the Investment Advisors Act of 1940 and serves as
investment manager to certain other commingled group trusts and separate
accounts. Per the Form 13F, in its role as investment advisor
or manager, Dimensional possesses investment power over 688,247 shares and
voting authority over 685,302 shares that are owned by such investment
companies, commingled group trusts and separate accounts, and Dimensional
disclaims beneficial ownership of such
securities.
|
(4)
|
Includes
360,770 shares of stock held by the Frequency Electronics, Inc. ESOP Trust
(the “Trust”) for the Company's Employee Stock Ownership Plan, all of
which shares have been allocated to the individual accounts of employees
of the Company (including the Named Executive Officers as defined on page
13); also includes 121,095 shares held by the Trust under the Company’s
Stock Bonus Plan (converted by amendment to the Employee Stock Ownership
Plan as of January 1, 1990).
|
(5)
|
Includes
198,000 shares issuable on the full exercise of the following options
granted to Mr. Bloch: an option to purchase 18,000 shares granted on
August 31, 1998 at an exercise price of $7.125 under the Senior ESOP, as
that term is hereinafter defined, and an option to purchase 180,000 shares
granted on March 1, 2001 at an exercise price of $13.49, per terms of Mr.
Bloch’s employment agreement. (See the discussion on the Chief
Executive Officer Employment Agreement on page
15.)
|
(6)
|
Includes
57,000 shares owned by members of Mr. Bloch’s immediate family, 197,748
shares held by a partnership over which Mr. Bloch maintains discretionary
control and 35,600 shares held in trust for Mr. Bloch’s wife for which
General Franklin is the trustee. Mr. Bloch disclaims beneficial
ownership of such shares.
|
(7)
|
Includes
61,045 shares held in a family trust and 37,255 shares in charitable
foundations over which General Franklin retains discretionary
control. General Franklin disclaims beneficial ownership of
such shares.
|
(8)
|
Includes
the following shares granted to the officers of the Company pursuant to a
stock purchase agreement in connection with the Company’s Restricted Stock
Plan:
|
Name
|
|
Restricted
Stock
|
|
Markus
Hechler
|
|
|
7,500
|
|
All
Officers as a Group
(11
persons)
|
|
|
15,000
|
|
(9)
|
Includes
the number of shares which, as at August 21, 2009, 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 options or stock appreciation rights (“SARs”);
(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
|
|
Stock Bonus
Plan Shares
(a)
|
|
|
ESOP Shares
(b)
|
|
|
Profit Sharing
Plan & Trust
401(k) (c)
|
|
|
ISO or
NQSO or
SAR
Shares (d)
|
|
Martin
B. Bloch
|
|
|
22,317
|
|
|
|
4,205
|
|
|
|
3,438
|
|
|
|
50,000
|
|
Joseph
P. Franklin
|
|
|
-0-
|
|
|
|
4,031
|
|
|
|
276
|
|
|
|
5,000
|
|
Markus
Hechler
|
|
|
2,707
|
|
|
|
5,968
|
|
|
|
3,348
|
|
|
|
92,250
|
|
Oleandro
Mancini
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
2,900
|
|
|
|
72,000
|
|
All
Directors and
Officers
as a Group
(15
persons)
|
|
|
25,831
|
|
|
|
34,573
|
|
|
|
26,557
|
|
|
|
453,375
|
|
|
(a)
|
Includes
all shares allocated under the Company's Stock Bonus Plan ("Bonus Plan")
to the respective accounts of the named persons, ownership of which shares
is fully vested in each such person. No Bonus Plan shares are
distributable to the respective vested owners thereof until after their
termination of employment with the Company. As of January 1,
1990, the Bonus Plan was amended to be an "Employee Stock Ownership Plan"
(see footnote (b) to the table).
|
|
(b)
|
Includes
all shares allocated under the Company's Employee Stock Ownership Plan
("ESOP") to the respective accounts of the named persons, ownership of
which shares was fully vested in each such person as at April 30,
2009. ESOP shares are generally not distributable to the
respective vested owners thereof until after their termination of
employment with the Company. However, upon the attainment of
age 55 and completion of 10 years of service with the Company, a
participant may elect to transfer all or a portion of his vested shares,
or the cash value thereof, to a Directed Investment
Account. Upon the allocation of shares to an employee's ESOP
account, such employee has the right to direct the ESOP trustees in the
exercise of the voting rights of such
shares.
|
|
(c)
|
Includes
all shares allocated under the Company’s profit sharing plan and trust
under section 401(k) of the Internal Revenue Code of 1986. 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’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.
|
|
(d)
|
All
amounts in this column represent the number of shares that may be obtained
upon exercise of incentive stock options (“ISO”), non-qualified stock
options (“NQSO”) or SARs in which the officers are fully vested or may
become vested within 60 days of August 21, 2009. Such grants
have been made under the Company’s 1993 Nonstatutory Stock Option Plan,
2001 Incentive Stock Option Plan and 2005 Stock Award Plan. The
individual grants, exercise prices and expiration dates for the Named
Executive Officers are listed in the Outstanding Equity Awards at Fiscal
Year-End Table on page 16 of this Proxy
Statement.
|
(10)
|
Includes
30,000 shares issuable on the exercise of options granted to Mr. Schwartz
in December 2004 at an exercise price of $14.76 under the Independent
Contractors Stock Option Plan. Previous option grants to the
other non-officer Directors of the Company expired unexercised during
fiscal year 2009. During fiscal year 2009, the Company awarded
SARs to each of the Directors based on 6,000 shares at an exercise price
of $3.15. None of these rights were vested as of August 21,
2009.
|
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s directors, officers and any person who is the beneficial
owner of more than 10% of the Company’s equity securities (“10% stockholder”) to
file reports of ownership and reports of changes in ownership of the Company’s
Common Stock and other equity securities with the SEC. Directors,
executive officers and 10% stockholders are required to furnish the Company with
copies of all Section 16(a) forms they file. Based on a review of the
copies of such reports furnished to it, the Company believes that during the
fiscal year ended April 30, 2009, the Company’s directors, officers and 10%
stockholders complied with all Section 16(a) filing requirements applicable to
them, with the following exceptions:
Due to an
oversight, on January 16, 2009, the Company reported the December 22, 2008 award
of a SAR based on 3,000 shares of the Common Stock at an exercise price of $2.74
to the president of its subsidiary, FEI-Zyfer, Inc.
Due to a
delay in obtaining certain electronic filing access codes from the SEC for one
of its independent directors, the January 30, 2009 award of a SAR based on 6,000
shares of the Common Stock at an exercise price of $3.15, was not reported until
February 9, 2009.
CERTAIN
INFORMATION AS TO COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During
the past fiscal year, four (4) 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 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 directors attended the Company’s
2008 Annual Meeting of Stockholders.
Audit
Committee
The Audit
Committee consists of the Company’s four independent directors, Messrs. Foley,
Girsky, Shapiro and Schwartz. Each of these directors is independent
in accordance with the independence standards for audit committee membership set
forth in Section 10A(m)(3) of the Exchange Act and as defined in Rule
4350(d)(2)(A) of the listing standards of The NASDAQ Stock Market, 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 both Mr. Shapiro, chairman of the Audit Committee, and Mr.
Girsky satisfy the SEC’s criteria as “audit committee financial
experts.”
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 oversee the accounting and financial
reporting processes of the Company and the audits of the Company’s financial
statements. The functions of the Audit Committee include, without
limitation, (i) responsibility for the appointment, compensation, retention and
oversight of the Company’s independent auditors, (ii) review and pre-approval of
all audit and non-audit services provided to the Company by the independent
auditors, other than as may be allowed by applicable law, and (iii) review of
the annual audited and quarterly consolidated financial
statements. 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 six (6) meetings during the last fiscal year. The
Audit Committee’s report appears on page 12 of this Proxy
Statement.
Compensation
Committee
The
Compensation Committee consists of the four independent directors, Messrs.
Foley, Girsky, Shapiro and Schwartz. The Compensation Committee does
not have a formal charter. 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. The Compensation Committee held four (4) meetings
during fiscal year 2009.
The
Company’s President and Chief Executive Officer, Martin Bloch, 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 section
below). Mr. Bloch makes these recommendations to the Compensation
Committee based on input from the Company’s Director of Human Resources using
compensation data as described below, as well as qualitative judgments regarding
individual performance. Mr. Bloch is not involved with any aspect of
determining his own pay.
In order
to assess whether the compensation program that the Company provides to its
executive officers is competitive, its 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. In
addition, during fiscal year 2008, the Company engaged compensation consultants
to review its existing programs and received recommendations for enhancements or
improvements. As a result of such review, the Company made no major
adjustments to the current compensation program for its officers.
Director
Nominations
Due to
the relatively small size of its Board, the Company does not have a formal
nominating or corporate governance committee. New director
nominations, which are infrequent, 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 director is to be
nominated, the independent directors of the Company (currently Messrs. Foley,
Girsky, Shapiro 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, including such individuals’ backgrounds,
skills, expertise, accessibility and availability to serve constructively and
effectively on the Board. The Company may retain a director search
firm to assist it in identifying qualified director nominees.
Director
Candidates Proposed 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 (and the independent directors) 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) a resume or
other written statement of the qualifications of the candidate(s) for nomination
as a director and (iv) 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.
In order
for a recommendation to be considered by the Company for the 2010 Annual Meeting
of Stockholders, the Company’s Corporate Secretary must receive the
recommendation no later than 5:00 p.m., local time, on April 23,
2010. 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’s Corporate
Secretary will send properly submitted stockholder recommendations to the
independent directors 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,
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 Secretary will distribute any
stockholder communications received to the Director(s) to whom the letter is
addressed or to all of the Directors 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. The Chairman 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.
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
and the report of the Company’s Ethics Committee.
REPORT
OF THE AUDIT COMMITTEE
The
members of the Audit Committee have been appointed by the Board. The
Audit Committee is comprised of four non-employee directors, each of whom
satisfies the independence standards for audit committee membership set forth in
Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the
independence requirements of the NASDAQ Stock Market. 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
following Audit Committee Report does not constitute soliciting material and
shall not be deemed filed or incorporated by reference into any other Company
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent the Company specifically
incorporates this Audit Committee Report by reference therein.
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 internals
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, 2009, 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 generally accepted accounting principles, 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 addition, management
and the independent auditors have 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 Audit
Committee has received the written disclosures and the letter from the
independent accountant required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications
with the audit committee concerning independence, and has discussed with the
independent accountant the independent accountant’s independence.
The Audit
Committee 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 evaluation of the Company’s internal
controls, and the overall quality of the Company’s financial
reporting. The Audit Committee held six meetings during fiscal year
2009.
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, 2009 for filing with the Securities and Exchange
Commission.
E.
Donald Shapiro, Chairman, Audit Committee
|
S.
Robert Foley
|
Joel
Girsky
|
Richard
Schwartz
|
Members
of the Audit Committee
|
Executive
Compensation
Summary
Compensation Table
The
following table sets forth certain information regarding compensation awarded
to, earned by or paid to the Company's principal executive officer and two other
most highly compensated executive officers (collectively, the "Named Executive
Officers") based on total compensation for the last completed fiscal year,
reduced by above market or preferential earnings on non-qualified deferred
compensation.
Summary
Compensation Table
Name and Principal
Position
|
|
Year
|
|
Salary
|
|
|
Bonus
(1)
|
|
|
Option
Awards
(2)(3)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
(4)
|
|
|
All Other
Compen-
sation
(5)
|
|
|
Total
|
|
Martin B. Bloch
|
|
2009
|
|
$
|
415,385
|
|
|
$
|
-
|
|
|
$
|
72,503
|
|
|
$
|
212,165
|
|
|
$
|
99,513
|
|
|
$
|
799,566
|
|
President,
CEO
|
|
2008
|
|
|
423,077
|
|
|
|
55,000
|
|
|
|
8,925
|
|
|
|
502,848
|
|
|
|
141,291
|
|
|
|
1,131,141
|
|
Principal
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markus
Hechler
|
|
2009
|
|
|
199,985
|
|
|
|
0
|
|
|
|
42,661
|
|
|
|
63,507
|
|
|
|
39,013
|
|
|
|
345,166
|
|
Executive
Vice
|
|
2008
|
|
|
201,807
|
|
|
|
0
|
|
|
|
41,849
|
|
|
|
92,620
|
|
|
|
44,761
|
|
|
|
381,037
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oleandro Mancini
|
|
2009
|
|
|
189,808
|
|
|
|
11,881
|
|
|
|
62,167
|
|
|
|
48,514
|
|
|
|
40,807
|
|
|
|
353,177
|
|
Vice
President,
|
|
2008
|
|
|
181,539
|
|
|
|
9,044
|
|
|
|
63,824
|
|
|
|
69,609
|
|
|
|
30,307
|
|
|
|
354,323
|
|
Business
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1)
|
The
Company pays bonuses based on operating profits at each of its operating
units or, in the case of Mr. Bloch, on consolidated pretax
profits. In fiscal years 2009 and 2008, no Named Executive
Officer was awarded a bonus based on the operating losses recorded at the
FEI-NY segment. Mr. Bloch’s fiscal year 2008 bonus is based on
the consolidated pretax profit of the Company. The bonus amount
reported above for fiscal year 2008 differs from the amount reported in
the Company’s fiscal year 2008 proxy as Mr. Bloch voluntarily surrendered
$37,700 of the bonus to which he was entitled. Mr. Mancini is
awarded a bonus based on the revenues and operating profits generated by
the Gillam-FEI and FEI-Zyfer
segments.
|
(2)
|
The
amounts in this column do not represent actual cash payments to the Named
Executive Officers. Each value represents the proportionate
amount of the total fair value of stock option and SARs recognized by the
Company as an expense in fiscal years 2009 and 2008 for financial
accounting purposes. The fair value of these awards and the
amounts expensed were determined in accordance with FASB Statement of
Financial Accounting Standards No. 123R,
Share-Based Payment
(FAS 123R), except the impact of estimated forfeitures related to
service-based vesting conditions have been disregarded in accordance with
SEC rules. The awards for which expense is shown in this table
include the awards described in the 2009 Grants of Plan-Based Awards Table
on page 16 of this Proxy Statement, as well as awards granted in prior
fiscal years for which the Company continued to recognize expense in
fiscal year 2009. 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, 2009 as filed with
the SEC. For pre-fiscal year 2008 awards for which expense
amounts are included in 2009 and 2008 compensation, refer to the
assumptions for determining the fair value of such awards disclosed in the
notes to financial statements included in the Form 10-K for the year(s)
such awards were granted.
|
(3)
|
Other
than contributions of Common Stock to the accounts of participants in the
Company’s profit sharing plan and trust under section 401(k) of the
Internal Revenue Code of 1986, the Company did not make any awards of
Common Stock to any employees during fiscal years 2009 and
2008. The fair market value of contributions to the accounts of
participants, including the Named Executive Officers, may not exceed
$3,000 in a calendar year.
|
(4)
|
The
amounts in this column do not represent actual cash payments to the Named
Executive Officers. The Company has entered into certain
deferred compensation agreements with key employees (including the Named
Executive Officers) providing for the payment of benefits upon retirement
or death or upon the termination of employment not for
cause. The values in the table above reflect the change in the
actuarially calculated deferred compensation liability for each of the
Named Executive Officers for fiscal years 2009 and 2008. These
non-cash amounts are included in the Company’s general and administrative
expenses for the fiscal years ended April 30, 2009 and 2008,
respectively.
|
(5)
|
The
amounts shown in this column are composed of the
following:
|
Name
|
|
Costs of
Leased
Automobile
|
|
|
Health, Life,
Disability
Insurance &
Medical
Reimbursement
(a)
|
|
|
Additional
Life
Insurance
Premiums
(b)
|
|
|
Financial
Planning
Advice
and other
(b)
|
|
|
Total All Other
Compensation
|
|
Martin
Bloch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
10,177
|
|
|
$
|
41,880
|
|
|
$
|
24,063
|
|
|
$
|
23,393
|
|
|
$
|
99,513
|
|
2008
|
|
|
20,472
|
|
|
|
80,751
|
|
|
|
24,063
|
|
|
|
16,005
|
|
|
|
141,291
|
|
Markus
Hechler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
14,120
|
|
|
|
24,893
|
|
|
|
0
|
|
|
|
0
|
|
|
|
39,013
|
|
2008
|
|
|
21,596
|
|
|
|
23,165
|
|
|
|
0
|
|
|
|
0
|
|
|
|
44,761
|
|
Oleandro
Mancini
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
14,751
|
|
|
|
26,056
|
|
|
|
0
|
|
|
|
0
|
|
|
|
40,807
|
|
2007
|
|
|
9,994
|
|
|
|
20,313
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30,307
|
|
|
(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. Reimbursement of medical costs is available only to
officers.
|
|
(b)
|
Mr.
Bloch’s compensation includes financial planning advice and Company-paid
premiums for additional whole life insurance policies, the beneficiaries
of which are Mr. Bloch’s
heirs.
|
Narrative
Disclosure of Summary Compensation Table
Short-Term
Incentives
The
Company maintains short-term incentive bonus programs for certain employees
which are based on operating profits and certain other relevant criteria of the
individual subsidiaries to which the employees are assigned. The
Company’s employment agreement with its Chief Executive Officer includes a bonus
formula based on consolidated pre-tax profits. These plans are
designed to create incentives for superior performance and to allow the
Company's executive officers to share in the success of the Company by rewarding
the contributions of individual officers. Focused on short-term or
annual business results, these plans enable the Company to award designated
executives with annual cash bonuses based on their contributions to the profits
of 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 under the Employee Stock
Ownership Plan (“ESOP”) and through the grant of stock appreciation rights
(“SARs”) or options to purchase Common Stock through various employee stock
award plans. 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. The number of shares granted to executive officers under the
Company's ESOP is determined on a pro-rata basis. Grants of SARs,
stock options and other equity awards are generally determined on an
individual-by-individual basis. The factors considered are the
individual's performance and potential for contributing to the Company’s future
growth, the number of stock options and awards previously granted to the
individual and the Company's financial and operational performance.
The
Company does not maintain any compensation plans for its executive officers or
directors or 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 ESOP and stock award plans discussed
above. The fair values of awards under these plans 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 key employees (including most 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 term life insurance (of which it is the
sole beneficiary) on the lives of certain 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 2009 were less than the increase in cash surrender value of the whole 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, CEO
|
|
$
|
200,000
|
|
Markus
Hechler, Exec VP
|
|
|
80,000
|
|
Oleandro
Mancini, VP
|
|
|
60,000
|
|
Such
benefits are payable for the remaining life of the individual with a minimum
payment over ten years 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 are presented in 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’s base annual salary is
$400,000. Beginning in fiscal year 2006, Mr. Bloch received
additional compensation of up to $52,000 in the form of financial planning
advice and Company-paid premiums for life insurance coverage, the beneficiaries
of which are Mr. Bloch’s heirs. During fiscal year 2009, in response
to a decline in the Company’s business due to various economic factors, Mr.
Bloch voluntarily reduced his base compensation by 10% to
$360,000. Such reduction will be restored when the Company returns to
a profitable level of business. Mr. Bloch’s employment agreement
provides a fixed annual bonus of 6% of the pre-tax profit of the Company with a
cap on the pre-tax profit at $20,000,000, as well as separation benefits in the
event of a change in control or ownership of part or all of the Company,
continuation of disability, medical and life insurance, the cost of an annual
physical examination and a new automobile every three years. Mr.
Bloch was awarded stock options to purchase an aggregate of 280,000 shares of
the Common Stock at the market value of the Company’s stock on the date of
grant. The options are exercisable for a period of ten (10) years
from the date of grant. (See Outstanding Equity Awards at Fiscal
Year-End Table on page 16 and notes (5) and (9) 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 profit sharing plan and trust under section 401(k) of the Internal
Revenue Code of 1986.
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 (reduced to
$1,250 for fiscal year 2010.). All participants in the plan become
fully vested in the Company contribution after six years of
employment. All of the Named Executive Officers are fully vested in
the shares attributable to their accounts. (See footnote (9) to the Stock
Ownership of Certain Beneficial Owners and Management beginning on page
7.)
In
addition, Mr. Bloch and Mr. Hechler are participants in the Company's Stock
Bonus Plan and the ESOP which replaced it. The ESOP began in 1990 and
no additional shares of Common Stock were allocated to participants after fiscal
year 2000. (See footnote (9) to the Stock Ownership of Certain
Beneficial Owners and Management beginning on page 7.)
Other
Compensation
Officers
and certain key employees are provided with a leased automobile to use for both
business and personal purposes. The operating costs of the vehicle
are paid by the Company. The value of any personal use is included in
the taxable income of each employee. Officers of the Company are also
reimbursed for out-of-pocket medical expenses incurred by the officers and their
families. Such reimbursement is also included in the officers’
taxable income.
Stock
Options
2009
Grants of Plan-Based Awards Table
Name
|
|
Grant
Date (2)
|
|
All Other
Option
Awards No.
of
Securities
Underlying
Options
|
|
|
Exercise or
Base Price
of
Option
Awards
($/Sh)
|
|
|
Grant Date Fair
Value of Stock
and
Option
Awards
($) (3)
|
|
Martin B.
Bloch
|
|
01/29/09
|
|
|
12,000
|
|
|
$
|
3.15
|
|
|
$
|
17,640
|
|
Markus
Hechler
|
|
01/29/09
|
|
|
6,000
|
|
|
$
|
3.15
|
|
|
$
|
8,820
|
|
Oleandro
Mancini
|
|
01/29/09
|
|
|
6,000
|
|
|
$
|
3.15
|
|
|
$
|
8,820
|
|
|
1)
|
The
Company does not have a Non-equity Incentive Plan and no awards were
granted as an Equity Incentive under the 2005 Stock Award Plan during
fiscal year 2009.
|
|
2)
|
During
fiscal year 2009, the Company awarded SARs to certain key employees,
including the Named Executive Officers above under the 2005 Stock Award
Plan. Upon vesting and the employees’ decision to exercise, the
Company will settle such SARs with the number of shares of Common Stock
equal in value to the appreciated value of a single share of Common Stock
on the exercise date as compared to the exercise price indicated in the
table above, multiplied by the number of shares underlying the SAR
grant.
|
|
3)
|
The
grant date fair value of the SARs has been computed in accordance with FAS
123R.
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table includes certain information with respect to the value of all
unexercised options or SARs previously awarded to the Named Executive Officers
at the end of the fiscal year, April 30, 2009. The Company has not
made any stock awards.
Option Awards or Stock
Appreciation Rights
Name
|
|
Number of
Securities
Underlying
Unexercised
Options or
SARs
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options or
SARs
(#)
Une
xercisable
|
|
|
Option or SARs
Exercise
Price
($)
|
|
Option or SARs
Expiration
Date (NOTE)
|
Martin
B. Bloch
|
|
|
18,000
|
|
|
|
-0-
|
|
|
$
|
7.125
|
|
*
10/01/09
|
|
|
|
30,000
|
|
|
|
-0-
|
|
|
|
7.625
|
|
*
10/01/09
|
|
|
|
180,000
|
|
|
|
-0-
|
|
|
|
13.490
|
|
2/28/11
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
7.835
|
|
3/16/18
|
|
|
|
-0-
|
|
|
|
12,000
|
|
|
|
3.150
|
|
1/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Markus
Hechler
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
7.125
|
|
*
10/01/09
|
|
|
|
20,000
|
|
|
|
-0-
|
|
|
|
7.06
|
|
*
10/01/09
|
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
23.75
|
|
*
8/07/10
|
|
|
|
15,000
|
|
|
|
-0-
|
|
|
|
11.10
|
|
10/29/11
|
|
|
|
8,000
|
|
|
|
-0-
|
|
|
|
6.615
|
|
7/25/12
|
|
|
|
8,000
|
|
|
|
-0-
|
|
|
|
9.575
|
|
7/31/13
|
|
|
|
7,500
|
|
|
|
-0-
|
|
|
|
14.40
|
|
12/21/14
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
11.95
|
|
7/30/16
|
|
|
|
1,875
|
|
|
|
5,625
|
|
|
|
11.16
|
|
7/23/17
|
|
|
|
2,500
|
|
|
|
7,500
|
|
|
|
9.67
|
|
12/10/17
|
|
|
|
-0-
|
|
|
|
6,000
|
|
|
|
3.15
|
|
1/29/19
|
Option Awards or Stock
Appreciation Rights (con’t)
Name
|
|
Number of
Securities
Underlying
Unexercised
Options or
SARs
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options or
SARs
(#)
Une
xercisable
|
|
|
Option or SARs
Exercise
Price
($)
|
|
Option or SARs
Expiration
Date (NOTE)
|
Oleandro
Mancini
|
|
|
10,000
|
|
|
|
-0-
|
|
|
$
|
23.75
|
|
*
8/07/10
|
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
11.10
|
|
10/29/11
|
|
|
|
7,000
|
|
|
|
-0-
|
|
|
|
6.615
|
|
7/25/12
|
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
9.575
|
|
7/31/13
|
|
|
|
7,500
|
|
|
|
-0-
|
|
|
|
14.40
|
|
12/21/14
|
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
11.22
|
|
4/24/15
|
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
11.95
|
|
7/30/16
|
|
|
|
2,500
|
|
|
|
7,500
|
|
|
|
9.91
|
|
8/28/17
|
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
9.67
|
|
12/10/17
|
|
|
|
-0-
|
|
|
|
6,000
|
|
|
|
3.15
|
|
1/29/19
|
Note:
Stock options and SARs are generally exercisable cumulatively at 25% per year
beginning one year after the date of grant. In the case of Mr.
Bloch’s award of 40,000 SARs on March 17, 2008, the SAR is 50% exercisable one
year after the grant date and fully exercisable two years after the grant
date. In general, awards expire ten years after the date of grant but
such terms may be modified at the discretion of the Company’s Compensation
Committee. Grants are made at the market value of Common Stock on the
date of grant. In the fiscal year 2008 proxy, the expiration dates
identified with an asterisk (*) above were reported as August 22,
2013. This date was based on a preliminary decision of the
Compensation Committee to define the expiration date of certain awards which had
not been explicitly specified in the respective agreements for the Named
Executive Officers and others. During fiscal year 2009, the
Compensation Committee made a final specification that all previous stock-based
awards expire on October 1, 2009 or ten years from date of grant, whichever is
later.
Option
Exercises and Stock Vested
The
following table shows all stock awards vested and value realized upon vesting,
by the Named Executive Officers during the fiscal year ended April 30,
2009. No stock options or SARs were exercised by the Named Executive
Officers during fiscal year 2009.
Option
Exercises and Stock Vested For Fiscal Year 2009
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
Value Realized on
Vesting
($)(1)
|
|
Martin B. Bloch
|
|
|
20,000
|
|
|
|
54,200
|
|
Markus
Hechler
|
|
|
8,750
|
|
|
|
37,450
|
|
Oleandro
Mancini
|
|
|
11,875
|
|
|
|
49,675
|
|
|
(1)
|
The value realized equals the
fair market value of the Company’s common stock on the vesting date,
multiplied by the number of shares that
vested.
|
OTHER
MATTERS
The
Report of the Audit Committee is not to be considered as filed with the
Securities and Exchange Commission or incorporated by reference into any other
filings which the Company makes with the Exchange Commission under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, 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 stated in those filings.
ANNUAL
REPORT
A copy of
the Company's Annual Report on Form 10-K, including the financial statements for
the fiscal year ended April 30, 2009, 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 shareholders may obtain
printed copies of the Annual Report and the Proxy
Statement. Shareholders may also request printed copies of the Proxy
Materials by calling the Company at (516) 794-4500, extension 2133 or by sending
an email to
investorrelations@freqelec.com
. For
a charge of $50, the Company agrees to provide a copy of the exhibits to the
Form 10-K to any stockholders who request such a copy.
By Order of the Board of
Directors,
|
|
/s/
Harry Newman
|
HARRY NEWMAN
|
Secretary
|
Dated: August
27, 2009
Frequency Electronics (NASDAQ:FEIM)
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Frequency Electronics (NASDAQ:FEIM)
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