SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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o | Preliminary Proxy Statement | |
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ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
Nortech Systems Incorporated |
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(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Nortech Systems Incorporated
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held May 9, 2002
TO THE SHAREHOLDERS OF NORTECH SYSTEMS INCORPORATED:
The Annual Meeting of Shareholders of Nortech Systems Incorporated (the "Company") will be held at the Wayzata Country Club, 200 West Wayzata Boulevard, Wayzata, Minnesota, on May 9, 2002, at 4:00 p.m., for the following purposes:
Only shareholders of record at the close of business on March 22, 2002, will be entitled to notice of and to vote at the meeting or any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
Your attention is called to the accompanying Proxy Statement.
By Order of the Board of Directors
Quentin
E. Finkelson
Secretary
April 8, 2002
Nortech Systems Incorporated
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 9, 2002
This Proxy Statement is furnished to shareholders of NORTECH SYSTEMS INCORPORATED, a Minnesota corporation (the "Company"), in connection with the solicitation on behalf of the Company's Board of Directors of proxies for use at the annual meeting of shareholders to be held on May 9, 2002, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
The address of the principal executive office of the Company is 1120 Wayzata Boulevard East, Suite 201, Wayzata, Minnesota 55391. This Proxy Statement and form of Proxy are being mailed to shareholders of the Company on April 8, 2002.
SOLICITATION AND REVOCATION OF PROXIES
The costs and expenses of solicitation of proxies will be paid by the Company. In addition to the use of the mails, proxies may be solicited by directors, officers and regular employees of the Company personally or by telegraph, telephone or letter with extra compensation. The Company will reimburse brokers and other custodians, nominees or fiduciaries for their expenses in forwarding proxy material to principals and obtaining their proxies.
Proxies in the form enclosed are solicited on behalf of the Board of Directors. Any shareholder giving a proxy in such form may revoke it at any time before it is exercised. Such proxies, if received in time for voting and not revoked, will be voted at the annual meeting in accordance with the specification indicated thereon.
Only shareholders of record of the Company's 2,373,087 shares of Common Stock outstanding as of the close of business on March 22, 2002, will be entitled to execute proxies or to vote. Each share of Common Stock is entitled to one vote. A majority of the outstanding shares must be represented at the meeting, in person or by proxy, to transact business.
1
The bylaws of the Company provide for a Board of Directors consisting of one or more members, and further provide that the shareholders at each annual meeting shall determine the number of directors. The Company's Board of Directors recommends that the number of directors be set at five and it is intended that the proxies accompanying this statement will be voted at the 2002 meeting to establish a Board of Directors consisting of five members. All of the nominees are presently directors of the Company. Proxies solicited by the Board of Directors will, unless otherwise directed, be voted for the election of the following four nominees:
MICHAEL J. DEGEN
QUENTIN E. FINKELSON
MYRON KUNIN
RICHARD W. PERKINS
C. TRENT RILEY
Following is information regarding the nominees:
Name |
Age |
Position |
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Michael J. Degen | 57 | Director | ||
Quentin E. Finkelson | 69 | President and Chief Executive Officer, Secretary, and Chairman of the Board of Directors | ||
Myron Kunin | 73 | Director | ||
Richard W. Perkins | 71 | Director | ||
C. Trent Riley | 62 | Director |
From 1998 until December 31, 2000, Mr. Degen was the Managing Director, Worldwide Operations, of The Toro Company, a manufacturer of lawn mowers, snow throwers and other products. From 1995 to 1998, he was the Managing Director, Worldwide Parts, of The Toro Company. Since March of 2001 he has been a Senior Manager of SSI Worldwide, a technology consulting company. He has been a director of the Company since May, 1998.
Mr. Finkelson has been President and Chief Executive Officer, Secretary, and Chairman of the Board of Directors of the Company since 1990.
Mr. Kunin has served since 1983 as Chairman of the Board of Directors of Regis Corporation, the world's largest owner, operator and franchisor of hair and retail hair product salons. He has been a director of the Company since 1990.
Mr. Perkins has served since 1985 as President, Chief Executive Officer and a director of Perkins Capital Management, Inc., a registered investment advisor. He is also a director of Bio-Vascular, Inc., iNTELEFILM Corporation, CNS, Inc., PW Eagle, Inc., Harmony Holdings, Inc., Lifecore Biomedical, Inc., Paper Warehouse, Inc., Quantech Ltd. and Vital Images, Inc. He has been a director of the Company since 1993.
Mr. Riley has served since 1996 as President of Riley Dettman & Kelsey LLC, management consultants. He has been a director of the Company since October, 2001.
There were three meetings of the Board of Directors and one additional written action by the Board during the last fiscal year. All directors attended meetings of the Board and committees of the Board on which such director served.
The Company does not have a standing nominating committee of the Board. The Compensation Committee consists of Messrs. Kunin, Riley and Perkins. The Audit Committee consists of Messrs. Degen, Perkins and Riley. Each Committee met once during the last fiscal year.
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The Executive Officers of the Company are as follows:
Name |
Age |
Position |
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Quentin E. Finkelson | 69 | President, Chief Executive Officer, Secretary and Chairman of the Board of Directors | ||
Gregory D. Tweed | 51 | Executive Vice President and Chief Operating Officer | ||
Garry M. Anderly | 55 | Senior Vice President, Corporate Finance and Treasurer | ||
Peter L. Kucera | 56 | Vice President, Corporate Quality | ||
Donald E. Horne | 53 | Vice President, Corporate Procurement |
Mr. Finkelson has been President and Chief Executive Officer, Secretary and Chairman of the Board of Directors of the Company since 1990.
Mr. Tweed has been Executive Vice President and Chief Operating Officer of the Company since May, 1996. From 1993 to May, 1996, he was Senior Vice President and General Manager of the Company.
Mr. Anderly has been Senior Vice President, Corporate Finance and Treasurer of the Company since May 1996. He was Vice President of Finance and Administration from 1991 to May 1996.
Mr. Kucera has been Vice President, Corporate Quality of the Company since 1991.
Mr. Horne has been Vice President, Corporate Procurement of the Company, since December, 1997. From 1992 to November, 1997, he was Director of Materials, Bemidji operations.
The Board of Directors of the Company has adopted a charter for the Audit Committee, a copy of which was included in the Company's Proxy Statement prepared in connection with the 2001 annual shareholders' meeting. The charter charges the Committee with the responsibility for, among other things, reviewing the Company's audited financial statements and the financial reporting process. In carrying out that responsibility, the committee has reviewed and discussed the matters required to be discussed by Statement of Auditing Standards 61, as amended, with the independent auditors. In addition, the Committee has reviewed the written disclosures required by Independence Standards Board Standard No. 1, which were received from the Company's independent accountants, and has discussed the independent accounts' independence with them. Based on these reviews and discussions, the Committee recommended to the Board of Directors that the Company's audited financial statements be included in the Company's Annual Report on Form 10-K for the Company's fiscal year ended December 31, 2001.
The members of the Audit Committee are "independent" as defined in NASD Rule 4200(15)(d).
Michael
J. Degen
Richard W. Perkins
C. Trent Riley
Members of the Audit Committee
3
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of the independent outside directors whose names appear following this report. The Committee considers a variety of issues in establishing compensation policies for executive officers, with the primary basis for compensation being the financial performance of the Company. Compensation for executive officers includes three elements: base salaries, bonuses, and options to acquire Common Stock. Salaries are based on factors such as the individual's level of responsibility and the amount of salary paid to executives with similar responsibilities in comparable companies. Stock options are designed to increase the incentive for an executive's interest in the Company's long-term success as measured by the market value of its stock.
The chief executive officer's compensation for 2001 was based on the policies described above, with particular emphasis upon the Company's excellent financial performance. Further, it was determined that the compensation of the chief executive officer was comparable to compensation of chief executive officers of comparable companies. The compensation of the other executive officers was set at the level necessary to attract and retain executives performing the functions being performed by such executives.
Base salaries for executive officers are determined by evaluating the responsibilities of the position held and the experience and performance of the individual. Reference is also made to the competitive marketplace for executive talent.
The Committee decided not to grant any stock options to its executive officers in 2001.
Myron
Kunin
Richard W. Perkins
C. Trent Riley
Members of the Compensation Committee
4
The following table shows, for the fiscal years ended December 31, 2001, 2000 and 1999, the cash compensation paid by the Company, as well as certain other compensation paid or accrued for those years, to the Company's chief executive officer, and each of the other executive officers whose total annual compensation in 2001 exceeded $100,000.
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Long-Term Compensation Awards |
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All Other Compensation ($)(1) |
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Name and Principal Position |
Year |
Salary($) |
Bonus($) |
Options(#) |
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Quentin E. Finkelson President/Chief Executive Officer, Secretary, and Director |
2001 2000 1999 |
165,360 165,360 150,320 |
62,700 59,530 15,000 |
0 6,000 0 |
14,882 15,000 |
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Gregory D. Tweed Executive Vice President and Chief Operating Officer |
2001 2000 1999 |
131,560 131,331 119,622 |
53,200 47,362 15,000 |
0 6,000 0 |
40,495 8,100 |
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Garry Anderly Senior Vice President, Corporate Finance and Treasurer |
2001 2000 1999 |
115,773 115,570 105,248 |
43,700 41,678 15,000 |
0 6,000 0 |
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Peter Kucera Vice President, Corporate Quality |
2001 2000 1999 |
88,733 83,315 73,320 |
33,719 31,944 10,000 |
0 6,000 0 |
12,798 |
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Donald E. Horne Vice President, Corporate Procurement |
2001 2000 1999 |
85,342 79,706 65,523 |
32,430 30,724 7,500 |
0 6,000 0 |
Option Grants in Last Fiscal Year
There were no stock options granted by the Company to any of the named executives in fiscal 2001.
5
STOCK OPTION EXERCISES AND OPTION VALUES
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table contains information concerning stock options exercised during 2001 and stock options unexercised at the end of 2001 with respect to each of the Named Executive Officers.
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Number of Unexercised Options/ at Fiscal Year-End (#) |
Value of Unexercised In-the-Money Options/ at Fiscal Year-End ($)(1) |
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Name |
Shares Acquired on Exercise(#) |
Value Realized($) |
Exercisable/ Unexercisable |
Exercisable/ Unexercisable |
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Quentin E. Finkelson | 0 | 0 | 116,120/14,800 | 172,649/24,096 | ||||
Gregory D. Tweed | 0 | 0 | 44,700/8,800 | 67,219/17,976 | ||||
Garry Anderly | 0 | 0 | 32,200/8,800 | 48,844/17,976 | ||||
Peter Kucera | 0 | 0 | 14,200/6,800 | 15,484/15,936 | ||||
Donald E. Horne | 0 | 0 | 2,400/3,600 | 6,948/10,422 |
The directors received no monetary compensation for their services as directors during the last fiscal year.
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COMPARATIVE STOCK PRICE PERFORMANCE
The graph below compares total shareholder return on the Company's Common Stock for the last five fiscal years with the total return on The JPM Company (a peer issuer) and the NASDAQ Composite Index for the same periods. The graph assumes $100 invested on December 31, 1996.
Nortech Systems Incorporated
Comparative Stock Price Performance
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1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
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Nortech | 100 | 93 | 65 | 40 | 151 | 115 | ||||||
The JPM Company | 100 | 121 | 80 | 45 | 4 | 0.1 | ||||||
NASDAQ Composite | 100 | 100 | 140 | 259 | 157 | 124 |
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 2002, the ownership of Common Stock of the Company by each shareholder who is known by the Company to own beneficially more than 5% of the outstanding shares of the Company, by each director and by each executive officer identified in the Summary Compensation Table, and by all executive officers and directors as a group. The parties listed in the table have the voting and investment powers with respect to the shares indicated.
Name of Beneficial Owner |
Number of Shares Beneficially Owned(1) |
Percent of Class |
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Myron Kunin 7201 Metro Boulevard Edina, MN 55439 |
1,137,145 |
47.9 |
% |
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Quentin E. Finkelson |
235,438 |
9.9 |
% |
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Richard W. Perkins |
25,000 |
1.1 |
% |
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Gregory D. Tweed |
50,400 |
2.1 |
% |
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Garry M. Anderly |
37,400 |
1.6 |
% |
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Michael J. Degen |
6,000 |
* |
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Peter Kucera |
21,648 |
* |
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Donald E. Horne |
2,400 |
* |
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C. Trent Riley |
2,000 |
* |
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All executive officers and directors as a group (nine persons) |
1,517,431 |
(2) |
63.9 |
% |
The Company will mail its annual report for the year 2001 on or about April 8, 2002, to all shareholders of the Company of record on March 22, 2002.
The Board of Directors has appointed Larson, Allen, Weishair & Co., LLP, as independent accountants of the Company for 2002. Larson, Allen, Weishair & Co., LLP, has performed this function for the Company since 1991. Members of the firm will be available at the annual meeting of shareholders to answer questions and to make a statement if they desire to do so.
Audit Fees
The aggregate fees billed to the Company by Larson, Allen, Weishair & Co., LLP, for professional services rendered for the audit of the Company's annual financial statements for the year 2001 and the reviews of the financial statements included in the Company's Forms 10-Q for that year were $110,361.00.
8
All Other Fees
Other than audit fees, the aggregate fees billed to the Company by Larson, Allen, Weishair & Co., LLP, for the most recent fiscal year, none of which were financial information systems design and implementation fees, were $22,080.00. The Audit Committee of the Board of Directors has determined that the services performed by Larson, Allen, Weishair & Co., LLP, other than audit services, were compatible with Larson, Allen, Weishair & Co., LLP, maintaining its independence.
The presence in person or by proxy of the holders of a majority of the voting power of the shares of common stock issued, outstanding and entitled to vote at a meeting for the transaction of business is required to constitute a quorum. The election of each director will be decided by plurality votes. As a result, any shares not voted for director (whether by withholding authority, broker non-vote or otherwise) have no impact on the election of directors except to the extent the failure to vote for an individual results in another individual receiving a larger number of votes.
Any proposal by a shareholder for the annual shareholders' meeting in May, 2003, must be received by the secretary of the Company at 1120 Wayzata Boulevard East, Suite 201, Wayzata, Minnesota 55391, not later than the close of business on November 9, 2002.
Proposals received by that date will be included in the 2003 proxy statement if the proposals are proper for consideration at an annual meeting and are required for inclusion in the proxy statement by, and conform to, the rules of the Securities and Exchange Commission.
The management does not know of any business other than the hereinbefore set forth that may be presented for action at the annual meeting of shareholders. If any other matters are properly presented at the meeting for action, the persons named in the accompanying proxy will vote upon them in accordance with their best judgment.
By
Order of the Board of Directors
QUENTIN E. FINKELSON
Secretary
Minneapolis,
Minnesota
April 8, 2002
9
NORTECH SYSTEMS INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2002
NORTECH SYSTEMS INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 9, 2002
The undersigned hereby appoints Quentin E. Finkelson and Garry Anderly and either of them, proxies for the undersigned, with full power of substitution, to represent the undersigned and to vote all of the shares of the Common Stock of Nortech Systems Incorporated (the Company) which the undersigned is entitled to vote at the annual meeting of shareholders of the Company to be held on May 9, 2002, and at any and all adjournments thereof.
See reverse for voting instructions.
- Please detach here -
1. | To fix the number of directors of the Company at five. | o | For | o | Against | o | Abstain |
2. | Election of directors: NOMINEES: |
(01) Michael J. Degen (02) Quentin E. Finkelson (03) Myron Kunin |
(04) Richard W. Perkins (05) C. Trent Riley |
o | FOR all nominees above, except vote withheld from individual nominees | o | WITHHOLD AUTHORITY to vote for all nominees listed above | |||||||
To withhold authority to vote for any individual nominee strike a line through the nominee's name in the list above. |
3. | In their discretion, on such other matters as may properly come before the meeting. |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be voted as directed herein. If no direction is given, this proxy will be voted FOR all the nominees listed in paragraph 2.
Dated | , 2002 | ||||
(Signature of Shareholders) | |||||
(Signature of Shareholders) | |||||
Where stock is registered jointly in the names of two or more persons ALL should sign. Signature(s) should correspond exactly with the name(s) as shown above. Please sign and date and return promptly in the enclosed envelope. No postage need be affixed if mailed in the United States. |