VICON INDUSTRIES, INC.
89 Arkay Drive
Hauppauge, NY 11788
(631) 952-2288 (CCTV)
Notice of Annual Meeting of Shareholders
To Be Held on May 27, 2005
To the Shareholders of Vicon Industries, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of Vicon
Industries, Inc. (the "Company"), a New York corporation, will be held at the
Company's corporate headquarters located at 89 Arkay Drive, Hauppauge, New York
11788, on May 27, 2005 at 10:00 a.m. local time for the following purposes, all
of which are more completely described in the accompanying proxy statement:
1. To elect two directors for terms expiring in 2008;
2. To ratify the appointment of BDO Seidman, LLP, as the Company's
independent auditors for the fiscal year ending September 30, 2005;
and
3. To receive the reports of officers and to transact such other business
as may properly come before the meeting.
Shareholders entitled to notice of and to vote at the Annual Meeting are
shareholders of record at the close of business on April 15, 2005 fixed by
action of the Board of Directors.
The Annual Report to Shareholders for the year ended September 30, 2004 is
included with this proxy statement.
By Order of the Board of Directors,
Hauppauge, New York Joan L. Wolf
April 15, 2005 Secretary
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YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your proxy so that your shares
may be voted in accordance with your wishes and in order that the presence of a
quorum may be assured. The prompt return of your signed proxy, regardless of the
number of shares you hold, will aid the Company in reducing the expense of
additional proxy solicitation. The giving of such proxy does not affect your
right to vote in person in the event you attend the meeting.
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1
PROXY STATEMENT FOR 2005 ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the Annual Meeting of Shareholders to
be held on May 27, 2005 at 10:00 a.m., and any and all adjournments thereof, is
solicited on behalf of the Board of Directors of Vicon Industries, Inc. (the
"Company").
Any shareholder executing a proxy retains the right to revoke it by notice
in writing to the Secretary of the Company at any time prior to its use. The
cost of soliciting the proxy will be borne by the Company.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of electing two
directors whose terms of office expire in 2008; ratifying the appointment of
independent auditors; receiving the reports of officers; and transacting such
other business as may properly come before the meeting.
The persons named in the enclosed proxy have been selected by the Board of
Directors and will vote shares represented by valid proxies. They have indicated
that, unless otherwise specified in the proxy, they intend to vote FOR the
election of two directors whose terms of office expire in 2008; and FOR
ratification of the appointment of independent auditors.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received at the Company's principal executive
office no later than November 1, 2005, and must comply with all other legal
requirements in order to be included in the Company's proxy statement and form
of proxy for that meeting. Proposals of security holders not meeting the
requirements of Rule 14a-8 of Regulation 14A must comply with the requirements
set forth in the Company's Bylaws relating to business conducted at the Annual
Meeting of Shareholders.
This proxy statement and the enclosed proxy card are being furnished to
shareholders on or about April 20, 2005.
VOTING SECURITIES
The Company has one class of capital stock, consisting of common stock, par
value $.01 per share, of which each outstanding share entitles its holder to one
vote. Cumulative voting is not provided under the Company's Certificate of
Incorporation or Bylaws. Shareholders entitled to vote or to execute proxies are
shareholders of record at the close of business on April 15, 2005. As of March
15, 2005, there were 4,566,584 shares outstanding.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. In the event that there are insufficient votes for
a quorum or to approve any proposal at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit the further solicitation of
proxies.
2
As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD" authority to vote for the nominees being
proposed. Directors are elected by a plurality of shares voted, without regard
to either (i) broker non-votes, or (ii) proxies as to which authority to vote
for one or more of the nominees being proposed is withheld.
As to the ratification of independent auditors, a shareholder may: (i) vote
"FOR" the ratification; (ii) vote "AGAINST" the ratification; or (iii) "ABSTAIN"
from voting on the ratification. The ratification of independent auditors shall
be determined by a majority of the votes cast affirmatively or negatively,
without regard to broker non-votes or proxies marked "ABSTAIN" as to the matter.
Proxies solicited hereby will be returned to the Board and will be
tabulated by the inspector of election designated by the Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 15, 2005 by (i) those persons known by the Company to
be beneficial owners of more than 5% of the Company's outstanding Common Stock;
(ii) each current executive officer named in the Summary Compensation Table;
(iii) each director; and (iv) all directors and executive officers as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned (1) of Class
------------------- ---------------------------- --------
CBC Co., Ltd.
and affiliates
2-15-13 Tsukishima
Chuo-ku
Tokyo, Japan 104 543,715 11.3%
Al Frank Asset Management, Inc.
32392 Coast Highway, Suite 260
Laguna Beach, CA 92651 333,530 (10) 6.9%
Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401 273,200 (11) 5.7%
Leviticus Partners, L.P.
30 Park Avenue, Suite 12F
New York, NY 10016 250,000 5.2%
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3
C/O Vicon Industries, Inc.
Kenneth M. Darby 293,616 (2) 6.1%
Arthur D. Roche 151,601 (3) 3.2%
Peter F. Neumann 37,072 (4) *
W. Gregory Robertson 33,847 (5) *
John M. Badke 32,900 (6) *
Yigal Abiri 26,000 (7) *
Christopher J. Wall 15,300 (8) *
Thomas Finstein - *
Clifton H.W. Maloney - *
Total all Executive Officers
and Directors as a group (14 persons) 681,037 (9) 14.2%
* Less than 1%.
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment control over the shares of stock
owned.
(2) Includes currently exercisable options to purchase 43,524 shares.
(3) Includes 50,000 shares held by Mr. Roche's wife and currently exercisable
options to purchase 21,947 shares.
(4) Includes currently exercisable options to purchase 20,000 shares.
(5) Includes currently exercisable options to purchase 21,947 shares.
(6) Includes currently exercisable options to purchase 21,461 shares.
(7) Includes currently exercisable options to purchase 26,000 shares.
(8) Includes currently exercisable options to purchase 3,000 shares.
(9) Includes currently exercisable options to purchase 183,939 shares.
(10) Al Frank Asset Management, Inc. had voting control over 160,001 shares and
investment control over 333,530 shares.
(11) Dimensional Fund Advisors had voting and investment control over 273,200
shares as investment advisor and manager for various mutual funds and other
clients. These shares are beneficially owned by such mutual funds or other
clients.
EQUITY COMPENSATION PLAN INFORMATION
At September 30, 2004
Number of securities
remaining available for
Number of securities Weighted average future issuance under
to be issued upon exercise price equity compensation
exercise of out- of outstanding plans (excluding
standing options, options, warrants securities reflected
warrants and rights and rights in column (a))
Plan category (a) (b) (c)
------------------- ------------------ ----------------- --------------------
Equity compensation
plans approved by
security holders 555,320 $3.50 75,751
Equity compensation
plans not approved
by security holders __ __ __
Total 555,320 $3.50 75,751
4
Equity Compensation Grants Not Approved by Security Holders
Through September 30, 2004, the Company had granted certain of its officers with
deferred compensation benefits aggregating 97,337 shares of common stock
currently held by the Company in treasury. Such shares vest upon retirement or,
in the case of 70,647 shares, the expiration of the Chief Executive Officer's
employment agreement in October 2005. All shares vest earlier under certain
occurrences including death, involuntary termination or a change in control of
the Company.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF TWO DIRECTORS
The Board is comprised of five directors; one director whose term expires
in 2006; two directors whose terms expires in 2007; and two directors to be
elected for a term expiring in 2008. Directors serve for a term of three years
or until their successors are elected and qualified. No person being nominated
as a director is being proposed for election pursuant to any agreement or
understanding between any person and the Company.
The nominees proposed for election to a term expiring in 2008 at the Annual
Meeting are Mr. Kenneth M. Darby and Mr. Arthur D. Roche. In the event that such
nominee is unable or declines to serve for any reason, the Board of Directors
shall elect a replacement to fill the vacancy. The Board of Directors has no
reason to believe that the persons named will be unable or unwilling to serve.
Unless authority to vote for the nominee is withheld,
it is intended that the shares represented by
the enclosed proxy will be voted FOR the
nominees named in the Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF THE NOMINEES NAMED IN THIS PROXY STATEMENT
Information with Respect to Nominee and Continuing Directors
The following sets forth the name of the nominees and continuing directors,
their ages, a brief description of their recent business experience, including
present occupations and employment, certain directorships held by each and the
year in which each became a director of the Company.
Nominee and Director
Principal Occupation Since Age
-------------------- -------- ----
Kenneth M. Darby
Chairman and CEO
Vicon Industries, Inc. 1987 59
5
Arthur D. Roche
Retired Executive Vice President
Vicon Industries, Inc.
Retired Partner
Arthur Andersen & Co. 1992 66
Continuing Directors whose Term of Office Expires in 2006
Peter F. Neumann
Retired President
Flynn-Neumann Agency, Inc. 1987 70
Continuing Directors whose Term of Office Expires in 2007
Clifton H. W. Maloney
President
C. H. W. Maloney & Co., Inc. 2004 67
W. Gregory Robertson
President
TM Capital Corp. 1991 61
--------------------------------------------------------------------------------
Mr. Darby has served as Chairman of the Board since April 1999, as Chief
Executive Officer since April 1992 and as President since October 1991. Mr.
Darby also served as Chief Operating Officer and as Executive Vice President,
Vice President, Finance and Treasurer of the Company. He joined the Company in
1978 as Controller after more than nine years at Peat Marwick Mitchell & Co., a
public accounting firm. Mr. Darby's current term on the Board ends in May 2005.
Mr. Roche served as Executive Vice President and co-participant in the
Office of the President of the Company from August 1993 until his retirement in
November 1999. For the six months prior to that time, Mr. Roche provided
consulting services to the Company. In October 1991, Mr. Roche retired as a
partner of Arthur Andersen & Co., an international accounting firm which he
joined in 1960. Mr. Roche's current term on the Board ends in May 2005.
Mr. Neumann is the retired President of Flynn-Neumann Agency, Inc., an
insurance brokerage firm. Mr. Neumann's current term on the Board ends in May
2006.
Mr. Maloney is the President of C.H.W. Maloney & Co., Inc., a private
investment firm that he founded in 1981. From 1974 to 1984, he was a Vice
President in investment banking at Goldman, Sachs & Co.. Mr. Maloney is a
Director of Interpool, Inc., Chromium Industries, Inc. and The Wall Street Fund.
Mr. Maloney's current term on the Board ends in May 2007.
Mr. Robertson is the President of TM Capital Corporation, a financial
services company which he founded in 1989. From 1985 to 1989, he was employed by
Thompson McKinnon Securities Inc., as head of investment banking and public
finance. Mr. Robertson's current term on the Board ends in May 2007.
6
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors has a number of committees including the Executive
Committee, the Compensation Committee, the Audit Committee and the Nominating
Committee. All independent directors are members of each of the Committees.
The Executive Committee is chaired by Mr. Darby and meets in special
situations when the full Board cannot be convened. The Committee met twice
during the last fiscal year.
The Compensation Committee consists of Messrs. Neumann (Chairman), Maloney,
Robertson and Roche, all of whom are non-employee directors. The function of the
Compensation Committee is to establish and approve the appropriate compensation
for Mr. Darby, recommend the award of stock options, and to review the
recommendations of the CEO with respect to the compensation of all other
officers. The Committee met twice during the last fiscal year.
The Audit Committee consists of Messrs. Roche (Chairman), Maloney, Neumann,
and Robertson, each of whom is an "independent director" as defined by American
Stock Exchange Listing Standards. The primary function of the Audit Committee is
to assist the Board of Directors in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, including
review of the financial reports and other financial information of the Company,
the Company's system of internal accounting controls, the Company's compliance
with legal and regulatory requirements, the qualifications and independence of
the Company's independent auditors and the performance of the Company's
independent auditors. The Audit Committee has sole authority to appoint, retain,
compensate, evaluate and terminate the independent auditors and to approve all
engagement fees and terms for the independent auditors. The Board has determined
that Mr. Roche is an "Audit Committee financial expert" under the rules of the
Securities and Exchange Commission. The Audit Committee will periodically review
the Audit Committee Charter in light of new developments in applicable
regulations and may make additional recommendations to the Board of Directors
for further revision of the Audit Committee Charter to reflect evolving best
practices. A copy of the Company's Charter is available on its website at
HTTP://www.vicon-cctv.com. The Committee met five times during the last fiscal
year.
The Nominating Committee consists of Messrs. Roche (Chairman), Maloney,
Neumann and Robertson. The primary function of the Nominating Committee is to
recommend individuals qualified to serve as directors and on committees of the
Board; to advise the Board with respect to Board composition, procedures and
committees; and to evaluate the overall Board and Committee effectiveness. All
director candidates, including those recommended by stockholders, are evaluated
on the same basis. In its evaluation of director candidates, the Nominating
Committee considers a variety of characteristics, including, but not limited to,
core competencies, experience, independence, level of commitment, board and
company needs and considerations, and personal characteristics. The Nominating
Committee may engage a third party to assist it in identifying potential
director nominees. The Committee has generally identified nominees based upon
recommendations from existing directors and will consider candidates recommended
by stockholders if submitted to the Committee in writing and complying with
shareholder proposal requirements outlined elsewhere in this proxy statement.
The Board of Directors has determined that each member of the Nominating
Committee meets the definition of an "independent director" as defined by
American Stock Exchange Listing Standards. The Committee does not have a formal
written charter and met once last fiscal year.
7
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. Outside
members of the Board are kept informed of the Company's business through various
reports and documents sent to them, as well as through operating and financial
reports made at Board and committee meetings by Mr. Darby and other officers.
The Board of Directors held six meetings in the Company's 2004 fiscal year,
including all regularly scheduled and annual meetings. No Board member attended
fewer than 75% of the aggregate of (1) the total number of meetings of the Board
(held during the period for which he was a director) and (2) the total number of
meetings held by all committees on which he served (during the periods that he
served). The Company has a policy to request that all directors attend its
annual meetings. The prior year annual meeting was attended by all of the
current directors.
The directors are each compensated at the rate of $16,000 per year retainer
and $1,000 per Committee meeting attended in person or by teleconference. The
Chairman of the Audit Committee receives an additional annual retainer of
$8,000. Employee directors are not compensated for Board or committee meetings.
Directors may not stand for re-election after 70, except that any director may
serve one additional three-year term after age 70 with the unanimous consent of
the Board of Directors.
Certain Relationships and Related Transactions
The Company and CBC Company, Ltd. (CBC), a Japanese corporation which
beneficially owns 11.3% of the outstanding shares of the Company, have been
conducting business with each other for approximately twenty-five years. During
this period, CBC has served as a lender, a product supplier and sourcing agent,
and a private label reseller of the Company's products. CBC has also acted as
the Company's sourcing agent for the purchase of certain video products. In
fiscal 2004, the Company purchased approximately $651,000 of products and
components from or through CBC. CBC competes with the Company in various
markets, principally in the sale of video products and systems. Sales of all
products to CBC were $712,000 in 2004. In fiscal 2004, the Company recognized
$180,000 of revenues received from CBC pursuant to the completion of a contract
to develop certain new product technology.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business Conduct that applies
to all its employees, including its chief executive officer, chief financial and
accounting officer, controller, and any persons performing similar functions.
Such Code of Ethics and Business Conduct is published on the Company's internet
website at HTTP://www.vicon-cctv.com.
8
Ability of Stockholders to Communicate with the Board of Directors
Shareholders may contact the Board of Directors or a specified individual
director by sending a written communication addressed to the Board of Directors
or such individual director(s) in care of the Secretary of the Company at Vicon
Industries, Inc., 89 Arkay Drive, Hauppauge, NY 11788. The Company's Corporate
Secretary will relay all such communications to the Board of Directors, or
individual members, as appropriate.
Report of the Audit Committee
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal control.
In fulfilling its oversight responsibilities, the Committee reviewed and
discussed with management the audited consolidated financial statements as of
and for the fiscal year ended September 30, 2004. Additionally, the Committee
has reviewed and discussed with management and the independent auditors the
Company's unaudited interim financial statements as of and for the end of each
fiscal quarter. Such discussions occur prior to issuance of news releases
reporting quarterly results.
The Committee discussed with the independent auditors the matters required
to be discussed by the Statement on Auditing Standards No. 61, Communication
with Audit Committees, as amended, of the Auditing Standards Board of the
American Institute of Certified Public Accountants.
The Committee received and reviewed the written disclosures and the letter
from the independent auditors required by Standard No. 1, Independence
Discussions with Audit Committees, as amended, of the Independence Standards
Board, and discussed with the auditors their firm's independence.
Based on the reviews and discussions referred to above, the Committee
recommends to the Board of Directors that the audited fiscal year-end financial
statements referred to above be included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2004.
Submitted by the Audit Committee,
Arthur D. Roche, Chairman Clifton H.W. Maloney
Peter F. Neumann W. Gregory Robertson
9
OTHER OFFICERS OF THE COMPANY
In addition to Mr. Darby, the Company has eight other officers. They are:
Thomas Finstein, age 47 Executive Vice President, Business Development and
Products
John M. Badke, age 45 Sr. Vice President, Finance and
Chief Financial Officer
Peter A. Horn, age 50 Vice President, Operations
Bret M. McGowan, age 39 Vice President, U.S. Sales and Marketing
Yacov A. Pshtissky, age 53 Vice President, Technology
and Development
Joan L. Wolf, age 50 Executive Administrator
and Corporate Secretary
Christopher J. Wall, age 51 Managing Director, Vicon Industries, Ltd.
Yigal Abiri, age 55 General Manager, Vicon Systems Ltd.
Mr. Finstein joined the Company in May 2004 as Executive Vice President,
Products and Operations. Prior to joining the Company, Mr. Finstein served as
President and CEO of ProAct Technologies, an HR and benefits software solutions
company with whom he was employed from October 2001 until May 2004. Prior to
that, he served as Vice President and General Manager of Hyperion Solutions, a
business intelligence software solutions company with whom he was employed from
January 1996 until October 2001.
Mr. Badke has been Senior Vice President, Finance since May 2004 and Chief
Financial Officer since December 1999. Previously, he was Vice President,
Finance since October 1998 and served as Controller since joining the Company in
1992. Prior to joining the Company, Mr. Badke was the Controller for NEK Cable,
Inc. and an audit manager with the international accounting firms of Arthur
Andersen & Co. and Peat Marwick Main & Co.
Mr. Horn has been Vice President, Operations since June 1999. From 1995 to
1999, he was Vice President, Compliance and Quality Assurance. Prior to that
time, he served as Vice President in various capacities since his promotion in
May 1990.
Mr. McGowan was recently promoted to Vice President, U.S. Sales and
Marketing. Previously, he served as Vice President, Marketing since October 2001
and held various marketing positions since joining the Company in 1993.
10
Mr. Pshtissky has been Vice President, Technology and Development since May
1990. Previously, he was Director of Electrical Product Development from March
1988 through April 1990.
Ms. Wolf has been Executive Administrator since she joined the Company in
1990 and was appointed to the non-operating officer position of Corporate
Secretary in May 2002.
Mr. Wall has been Managing Director, Vicon Industries, Ltd., since February
1996. Previously, he served as its Financial Director since joining the Company
in 1989. Prior to joining the Company, Mr. Wall held a variety of senior
financial positions within Westland plc, a UK aerospace company.
Mr. Abiri has been General Manager, Vicon Systems Ltd. since joining the
Company in August 1999. Previously, he served as President of QSR, Ltd., a
developer and manufacturer of remote video surveillance equipment.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for all services rendered to the Company during 2004, 2003 and 2002 by the
Chief Executive Officer and the Company's most highly compensated executive
officers whose total annual salary and bonus exceeded $100,000 during any such
year.
SUMMARY COMPENSATION TABLE
Long Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
---------------------- ------------------------ ----------------------
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Position Year Salary($) Bonus($) Compensation Award Options Payouts Compensation
------------------ ---- --------- -------- ------------ -------------------------------------------------
Kenneth M. Darby 2004 $310,000 $ 75,000 (1) - - - - -
Chairman and Chief 2003 310,000 75,000 (1) - - 100,000 - -
Executive Officer 2002 310,000 75,000 (1) - - - - -
Thomas Finstein 2004 $ 90,000 $ 20,000 (2) - - 20,000 - -
Executive 2003 - - - - - - -
Vice President 2002 - - - - - - -
John M. Badke 2004 $152,000 $ 35,000 (1) - - - - -
Senior Vice President2003 145,000 35,000 (1) - - 25,000 - -
and Chief Financial 2002 140,000 35,000 (1) - - 16,000 - -
Officer
Christopher J. Wall 2004 $148,000 $113,000 (3) - - - - -
Managing Director 2003 129,000 89,000 (3) - - 20,000 - -
Vicon Industries,Ltd.2002 115,000 27,000 (3) - - - - -
Yigal Abiri 2004 $160,000 $ - - - - - $ 66,946 (5)
General Manager 2003 125,000 25,000 (4) - - 10,000 - 620,000 (6)
Vicon Systems, Ltd.2002 125,000 - - - - - -
(1) Represents cash bonus which was approved by the Board of Directors upon the
recommendation of its Compensation Committee.
(2) Represents an incentive sign-on bonus.
11
(3) Represents sales and profit related bonus based on financial results of
Vicon Industries, Ltd.
(4) Represents discretionary bonus.
(5) Represents $43,938 of severance pay paid into a management insurance policy
and $23,008 paid as compensation for accrued vacation.
(6) Represents performance based compensation associated with the introduction
of the Company's new digital video product line.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Individual Grants Value at Assumed
------------------------- Annual Rates of Stock
% of Total Price Appreciation
No.of Granted to Exercise for Option Term
Options Employees in Price Expiration -------------------
Name Granted Fiscal Year Per Share Date 5% 10%
-------------- ------- --------------- ----- ---------- ----- -----
Thomas Finstein 20,000 57.1% 5.40 5/10 $36,730 $83,329
Options granted in the year ended September 30, 2004 were issued under the 2002
Incentive Stock Option Plan and are exercisable as follows: up to 30% of the
shares on the second anniversary of the grant date, an additional 30% of the
shares on the third anniversary of the grant date and the balance of the shares
on the fourth anniversary of the grant date, except that no option is
exercisable after the expiration of six years from the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
At September 30, 2004
---------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-money
Options Options (2)
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized (1) Unexercisable Unexercisable
---------------- -------------- ------------ ------------- -------------
Kenneth M. Darby -0- -0- 28,356/93,183 $38,852/$126,226
Thomas Finstein -0- -0- -0- /20,000 -0- / -0-
John M. Badke -0- -0- 15,911/27,450 25,929/40,043
Christopher J. Wall -0- -0- -0- /20,000 -0- /26,500
Yigal Abiri -0- -0- 22,000/18,000 21,480/21,820
(1) Calculated based on the difference between the closing quoted market prices
per share at the dates of exercise and the exercise prices.
(2) Calculated based on the difference between the closing quoted market price
($4.70) and the exercise price.
12
Employment Agreements
Mr. Darby is a party to an employment agreement with the Company that
provides for an annual salary of $310,000 through fiscal year 2005. Messrs.
Finstein and Badke are parties to employment agreements that provide for annual
salaries of $225,000 and $150,000, respectively, through fiscal year 2006. Each
of these agreements provide for payment in an amount up to three times the
average annual compensation for the previous five years if there is a change in
control of the Company without Board of Director approval. Messrs. Wall and
Abiri are parties to employment agreements that provide for annual salaries of
$172,000 and $160,000, respectively, through fiscal year 2005. In addition, the
agreements provide for severance benefits of $620,000, $112,500 and $300,000 for
Messrs. Darby, Finstein and Badke, respectively, under certain occurrences.
Report of the Compensation Committee
The Compensation Committee's compensation policies applicable to the
Company's officers for 2004 were to pay a competitive market price for the
services of such officers, taking into account the overall performance and
financial capabilities of the Company and the officer's individual level of
performance.
Mr. Darby makes recommendations to the Compensation Committee as to the
base salary and incentive compensation of all officers other than himself. The
Committee reviews these recommendations with Mr. Darby, and after such review,
determines compensation. In the case of Mr. Darby, the Compensation Committee
makes its determination after direct negotiation with him. For each officer, the
Committee's determinations are based on its conclusions concerning each
officer's performance and comparable compensation levels for similarly situated
officers at comparable companies. The overall level of performance of the
Company is taken into account but is not specifically related to the base salary
of these officers. The Company also has established an incentive compensation
plan for certain officers, which provides a specified bonus to each officer
based upon the Company's achievement of certain annual sales and profitability
targets.
The Compensation Committee grants options to officers to link compensation
to the performance of the Company. Options are exercisable in the future at the
fair market value at the time of grant, so that an officer granted an option is
rewarded by the increase in the price of the Company's stock. The Committee
grants options to officers based on significant contributions of such officers
to the performance of the Company. In addition, in determining Mr. Darby's
salary and bonus for service as Chief Executive Officer, the Committee considers
the responsibility assumed by him in formulating, implementing and managing the
operational and strategic objectives of the Company.
Submitted by the Compensation Committee
Peter F. Neumann, Chairman Clifton H. W. Maloney
W. Gregory Robertson Arthur D. Roche
13
STOCK PERFORMANCE GRAPH
This graph compares the return of $100 invested in the Company's stock on
October 1, 1999, with the return on the same investment in the AMEX U.S. Market
Index and the AMEX Technology Index.
(The following table was represented by a chart in the printed material)
Vicon AMEX U.S. AMEX Technology
Date Industries, Inc. Market Index Index
-------- ---------------- --------------- ----------------
10/01/99 100 100 100
10/01/00 46 123 117
10/01/01 49 89 95
10/01/02 44 78 59
10/01/03 59 100 85
10/01/04 67 116 96
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On February 3, 2004, the Audit Committee of the Board of Directors of the
Company engaged BDO Seidman, LLP as its independent auditors for fiscal year
ending September 30, 2004, replacing KPMG LLP who had been engaged as the
Company's auditors since 1973.
The Audit Committee of the Company has directed that management submit the
Committee's appointment of BDO Seidman, LLP as independent auditors for fiscal
year ending September 30, 2005 to the shareholders at the Annual Meeting for
ratification.
Fees billed to the Company by its independent Auditors for services
provided during the 2004 and 2003 fiscal years were as follows:
Audit Fees
The aggregate fees billed by BDO Seidman, LLP for professional services
rendered for the audit of the Company's consolidated annual financial statements
and the review of the financial statements included in the Company's quarterly
reports on Form 10-Q for fiscal year 2004 were approximately $143,000. The
aggregate fees billed by KPMG LLP for such services for fiscal year 2003 were
$352,000.
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Tax Fees
The aggregate fees billed by BDO Seidman, LLP for tax compliance, tax
advice and tax planning during fiscal tax year 2004 were approximately $41,000.
The aggregate fees billed by KPMG LLP for such tax services for fiscal year 2003
were $50,000. All these fees were pre-approved by the Audit Committee.
Audit Related Fees
Fees billed by KPMG LLP for professional services on audit related matters
were $8,500 during fiscal year 2003.
All Other Fees
None.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Audit Committee pre-approves all audit and permissible non-audit
services provided by the independent auditors. These services may include audit
services, audit related services, tax services and other services. The Audit
Committee has adopted a policy for the pre-approval of services provided by the
independent auditors. Under the policy, pre-approval generally is provided for
an annual period and any pre-approval is detailed as to the particular service
or category of services and is subject to a specific limit. In addition, the
Audit Committee may also pre-approve particular services on a case-by-case
basis, which must be accompanied by a detailed explanation for each proposed
service. The Audit Committee may delegate pre-approval authority to one or more
of its members. Such member must report any decisions to the Audit Committee at
the next scheduled meeting.
The Audit Committee has considered whether the non-audit services provided
by BDO Seidman, LLP were compatible with maintaining their independence.
BDO Seidman, LLP will have a representative at the Annual Meeting of
Shareholders, who will have an opportunity to make a statement, if they should
so desire.
Unless marked to the contrary, the shares represented
by the enclosed proxy will be voted FOR the
ratification of the appointment of BDO Seidman,
LLP as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
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As of this date, management is not aware of any matters to be presented for
action at the Annual Meeting, other than those referred to in the Notice of
Annual Meeting of Shareholders, but the proxy form included with this proxy
statement, if executed and returned, gives discretionary authority to management
with respect to any other matters that may come before the meeting.
MISCELLANEOUS
Solicitation of proxies is being made by mail and may also be made in
person or by telephone or fax by officers, directors and regular employees of
the Company.
The cost of the solicitation will be borne by the Company.
By order of the Board of Directors
Hauppauge, New York Joan L. Wolf
April 15, 2005 Secretary
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