UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN
PROXY
STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
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the Registrant x
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a Party other than the Registrant o
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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HENRY BROS. 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.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
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unit price or other underlying value of transaction computed pursuant to
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maximum aggregate value of transaction:
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fee paid:
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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:
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Schedule or Registration Statement No.:
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Party:
(4) Date
Filed:
HENRY
BROS. ELECTRONICS,
INC.
17-01
Pollitt Drive
Fair
Lawn, New Jersey 07410
______________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held November 11, 2009
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TO:
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THE
SHAREHOLDERS OF
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HENRY
BROS. ELECTRONICS, INC.:
NOTICE IS
HEREBY GIVEN that the 2009 Annual Meeting of Shareholders of HENRY BROS.
ELECTRONICS, INC. (the “Company”) will be held at the Company’s offices at 17-01
Pollitt Drive, Fair Lawn, NJ 07410, on Wednesday, November 11, 2009, at 10:00
a.m., Eastern Time, for the following purposes:
1. To
elect seven directors to serve, subject to the provisions of the By-laws, until
the next Annual Meeting of Shareholders and until their respective successors
have been duly elected and qualified;
2. To amend the Company's
Certificate of Incorporation to increase the number of the Company's authorized
shares of Common Stock from 10,000,000 shares to 20,000,000 shares;
3. To
ratify and approve the selection of Amper, Politziner and Mattia, LLP as the
Company’s independent auditors for 2009 and;
4. To
transact such other business as may properly come before the Annual Meeting or
any adjournment or adjournments thereof.
The Board
of Directors has fixed the close of business on October 7, 2009 as the record
date for the Annual Meeting and only holders of shares of record at that time
will be entitled to notice of and to vote at the Annual Meeting of Shareholders
or any adjournment or adjournments thereof.
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By
Order of the Board of Directors,
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/s/
JAMES E. HENRY
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James
E. Henry
Chairman
of the Board
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Fair
Lawn, New Jersey
October
13, 2009
INTERNET
AVAILABILITY OF PROXY MATERIALS
Under
rules recently adopted by the Securities and Exchange Commission, we are now
furnishing our proxy statement and annual report on the Internet in addition to
mailing paper copies of the materials to each shareholder of
record. Instructions on how to access and review the proxy materials
on the Internet can also be found on the proxy card sent to shareholders of
record.
Important
Notice Regarding the Availability of Proxy Materials
for
the Shareholder Meeting to be Held on November 11, 2009
This Proxy Statement and
our 2008 Annual Report are available and can be accessed directly at the
following Internet address: http://phx.corporate-ir.net/phoenix.zhtml?c=130008&p=irol-irhome
HENRY
BROS. ELECTRONICS, INC.
17-01
Pollitt Drive
Fair
Lawn, New Jersey 07410
______________
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF SHAREHOLDERS
To
Be Held November 11, 2009
Dated:
October 13, 2009
The
enclosed proxy is solicited by the Board of Directors (the “Board”) of Henry
Bros. Electronics, Inc., a Delaware corporation (the “Company”) from the holders
of common stock, par value $.01 per share, of the Company (the “Common Stock”),
in connection with its 2009 Annual Meeting of Shareholders to be held at the
Company’s offices at 17-01 Pollitt Drive, Fair Lawn, NJ 07410 on Wednesday,
November 11, 2009, at 10:00 a.m., Eastern Time, ("Annual Meeting") and any
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting.
SOLICITATIONS
The cost
of preparing, assembling and mailing this Proxy Statement, the Notice of Annual
Meeting and the enclosed proxy is to be borne by the Company. In addition to the
use of mail, employees of the Company may solicit personally and by telephone.
The Company’s employees will receive no compensation for soliciting proxies
other than their regular salaries. The Company may request banks, brokers and
other custodians, nominees and fiduciaries to forward copies of the proxy
material to their principals and to request authority for the execution of
proxies. The Company may reimburse such persons for their expenses in so
doing.
VOTING
If a
proxy in the accompanying form is duly executed and returned, the shares
represented by the Proxy will be voted as directed. If no direction is given,
the shares represented by the Proxy will be voted (i) for the election of the
seven nominees named herein as directors, (ii) to amend the Company’s
Certificate of Incorporation and (iii) to ratify the appointment of Amper,
Politziner and Mattia, LLP as the Company’s independent auditors for
2009. If you are a record holder, your Proxy may be revoked at any
time before it is voted by submitting a written revocation or a Proxy bearing a
later date to the Secretary of the Company, at the address set forth above, or
by attending the Annual Meeting and voting in person. Attending the Annual
Meeting will not, in and of itself, revoke your Proxy. If you hold
your shares in “street name” you may revoke or change your vote only by
submitting new instructions to your broker or nominee, as specified by
them.
The Board
does not know of any other matters that may be brought before the Annual Meeting
nor does it foresee or have reason to believe that proxy holders will have to
vote for substitute or alternate director nominees. In the event that any other
matter should come before the Annual Meeting, the persons named in the enclosed
proxy will have discretionary authority to vote all proxies not marked to the
contrary with respect to such matters in accordance with their best
judgment.
The
record date with respect to this solicitation is the close of business on
October 7, 2009 and only shareholders of record at that time will be entitled to
vote at the Annual Meeting. The shares represented by all validly executed
proxies received in time to be taken to the Annual Meeting and not previously
revoked will be voted at the Annual Meeting. This proxy statement and the
accompanying proxy were mailed to you on or about October 13, 2009.
Methods
of voting:
If you are the record
holder:
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By
Mail. If you choose to vote by mail, mark your proxy, date
and sign it, and return it in the postage-paid envelope provided. Your
vote by mail must be received by the close of voting at the Annual Meeting
on November 11, 2009.
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By Attending the
Annual Meeting. If you attend the Annual Meeting, you can vote your
shares in person.
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If your stock is held by brokers,
banks or other nominees:
If your
Common Stock is held by a broker, bank or other nominee, you will receive
instructions from such nominee that you must follow in order to have your shares
voted.
If you
plan to attend the Annual Meeting and vote in person, you will need to contact
the broker, bank or other nominee to obtain evidence of your ownership of Common
Stock on October 7, 2009.
If you
hold your shares through a broker, your shares may be voted even if you do not
vote or attend the Annual Meeting.
The
method by which you vote will in no way limit your right to vote at the Annual
Meeting if you later decide to attend in person.
PRINCIPAL
OFFICE
The
principal executive office of the Company is 17-01 Pollitt Drive, Fair Lawn, New
Jersey 07410, and its telephone number is (201) 794-6500.
QUORUM
AND REQUIRED VOTE
The
number of outstanding shares entitled to vote at the Annual Meeting is 6,030,366
shares of Common Stock. Each share of Common Stock is entitled to one vote on
each matter to come before the Annual Meeting. There is no cumulative
voting. The presence in person or by proxy at the Annual Meeting of
the holders of a majority of the outstanding shares of the Company’s Common
Stock shall constitute a quorum. Votes withheld in the election of
directors, and abstentions and broker non-votes, if any, on any matter, are
included in determining whether a quorum is present.
If you
hold your shares in “street name” and do not give instructions to your broker,
your broker can vote your shares with respect to “discretionary” items, but not
with respect to “non-discretionary” items. Discretionary items are
proposals considered routine under the rules of the New York Stock Exchange
(“NYSE”), which govern proxy voting by most brokers, on which your broker may
vote shares held in “street name” in the absence of your voting
instructions. If a broker that is the record holder of shares does
not have discretionary authority to vote those shares on a proposal, those
non-voted shares will be treated as broker non-votes. Proposals 1, 2
and 3 to be acted upon at the Annual Meeting are considered “discretionary”
under NYSE rules.
Directors
are elected by a plurality of the votes cast at the Annual
Meeting. Votes withheld in the election of directors and abstentions
or broker non-votes, if any, will not be counted towards the election of any
person as a director.
The
adoption of the amendment to the Certificate of Incorporation will require the
affirmative vote of at least a majority of the Company’s outstanding shares of
Common Stock. Abstentions and broker non-votes, if any, will have the
effect of a vote against amendment to the Company’s Certificate of
Incorporation.
Ratification
of the appointment of Amper, Politziner and Mattia, LLP as the Company’s
independent auditors for the fiscal year ending December 31, 2009 requires the
affirmative vote of a majority of votes cast at the Annual Meeting on this
proposal. Abstentions and broker non-votes, if any, will not be
counted as votes “cast” with respect to such matter.
2
Prior to
the Annual Meeting, we will select one or more inspectors of election for the
Annual Meeting. Such inspector will canvas the shareholders present in person at
the Annual Meeting, count their votes and count the votes represented by proxies
presented.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
persons named in the accompanying proxy will vote for the election of the
following seven persons as directors, all are currently members of the Board, to
hold office until the next annual meeting of shareholders and until their
respective successors have been elected and qualified. Unless directed
otherwise, each proxy will be voted for the nominees named below. If a nominee
becomes unable or declines to serve as a director at the date of the Annual
Meeting, the persons named in the proxy card have the right to use their
discretion to vote for a substitute. All of the nominees have consented to serve
as directors if elected.
DIRECTORS
AND EXECUTIVE OFFICERS
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Name
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Age
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Position(s) with the Company
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James
E. Henry
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55
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Chairman,
Chief Executive Officer, Treasurer and Director
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Brian
Reach.
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54
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President,
Chief Operating Officer, Secretary and Director
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Robert
L. De Lia Sr
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61
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Director
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James
W. Power
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80
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Director
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Joseph
P. Ritorto
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78
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Director
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Richard
D. Rockwell
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54
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Director
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David
Sands
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52
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Director
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John
P. Hopkins
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49
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Chief
Financial Officer
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Brian
J. Smith
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55
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Corporate
Controller
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Christopher
Peckham
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44
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Chief
Information Officer / Chief Security
Officer
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Information
about Directors and Nominees
James E.
Henry co-founded the Company's predecessor company in 1989 and has been a member
of the Company's Board since then. From the Company's
founding through December 2001, Mr. Henry served as President and
Chief Executive Officer. Currently, Mr. Henry serves as Treasurer,
Chairman of the Board and Chief Executive Officer. Mr. Henry
graduated from the University of New Hampshire with a Bachelor of Science degree
in electrical engineering. In addition to his other responsibilities,
Mr. Henry has continued to design, install, integrate and market security
and communications systems as well as manage the Company’s research and
development.
Brian
Reach, in addition to his prior duties, was named Chief Operating Officer in
August 2006 and President in March 2007. Mr. Reach has been a member
of the Company’s Board since February 2004 and has served as the Company’s
Vice-Chairman since June 2004 and as its Secretary since November 2004. From
September 1999 until April 2002, Mr. Reach was the Chief Financial Officer
of Globix Corporation, a provider of application, media and infrastructure
management services. Globix’s common stock is traded on the OTC Bulletin Board.
From May 1997 to August 1999, Mr. Reach was the Chief Financial Officer of
IPC Communications, a provider of integrated telecommunications equipment and
services to the financial industry. During his tenure at IPC, Mr. Reach
successfully guided IPC through its leveraged recapitalization and financially
restructured IPC enabling it to invest in strategic acquisitions and next
generation technologies. Prior to IPC, Mr. Reach was the Chief Financial
Officer of Celadon Group, Inc. and Cantel Industries, Inc. Mr. Reach became
a certified public accountant in 1980 and received his Bachelor of Science
degree in accounting from the University of Scranton in 1977.
3
James W.
Power has been a member of our Board since December 2005. Mr. Power is Chairman
of the Board of MDI, Inc, a Nasdaq listed provider of integrated access control
and physical security products for government and commercial organizations;
director of RAE Systems, Inc., a manufacturer of equipment used to detect
weapons of mass destruction, hazardous materials and toxic chemicals; and the
principal partner in J.W. Power & Associates. Mr. Power previously
served as Chairman of the Board of InfoGraphic Systems Corp.; President and
Chief Executive Officer of Martec\SAIC; President and Chief Executive Officer of
Pinkerton Control Systems and has held senior executive positions with Cardkey
Systems, Inc., Nitrol Corporation and TRW Data Systems. Previously, he has
served as a director of National Semiconductor, ICS Corporation, and Citicorp
Custom Credit and Citicorp Credit Services.
Joseph P.
Ritorto has been a member of our Board since January 2002. Mr. Ritorto is the
co-founder of First Aviation Services, Inc., which is located in Teterboro
Airport, Teterboro, New Jersey and provides a variety of aviation support
services. Mr. Ritorto has been an officer, in various capacities, of First
Aviation Services since 1986. Mr. Ritorto sold First Aviation Services to a
group led by Goldman Sachs in May 2008. From 1991, until he retired
in May 2001, Mr. Ritorto served as the Senior Executive Vice President and
Chief Operating Officer of Silverstein Properties, Inc. In this capacity,
Mr. Ritorto’s responsibilities included overseeing operations and directing
the lease administration of Silverstein owned and managed
properties.
Richard
D. Rockwell has served as a director of the Company since November 2007. In
November 2008, Mr. Rockwell was named Vice Chairman of the Company's Board and
joined the Company's Executive Committee as Chairman. Mr. Rockwell has been
Owner and Chairman of Professional Security Technologies LLC, a full service
security systems integrator since 1996. Mr. Rockwell has been Owner
and President of Main Security Surveillance, Inc. since 2005. From
1982 to 2003, Mr. Rockwell was Founder, Owner and Chief Executive Officer of
Professional Security Bureau, Ltd. (“PSB”), a security guard services
company. In 2003 PSB, with annual revenues in excess of $100 million,
was divested to Allied Security. From 1997 through 2003, Mr. Rockwell
was co-founder and Chairman of TransNational Security Group, LLC
(“TSG”). TSG afforded the member companies with opportunities for
national sales and marketing, national contracting, and combined purchasing
power. From 1995 to 2005, Mr. Rockwell was founder and owner of
PeopleVision, a full service advertising and display manufacturing
company. From 1981 to 1982, Mr. Rockwell was vice president, legal
affairs of Metropolitan Maintenance Company, a publicly-traded company listed on
the Boston stock exchange. Mr. Rockwell received a Bachelor of Arts
from Ithaca College and a Juris Doctor from Western New England College of
Law.
Non-Director
Executive Officers and Significant Employees
John P.
Hopkins was appointed Chief Financial Officer in August 2006. Prior to joining
the Company, Mr. Hopkins was Chief Financial Officer for Measurement
Specialties, Inc., a designer and manufacturer of sensors and sensor-based
consumer products. From July 2002 to August 2006, was Vice President,
Finance from April 2001 to July 2002, and was Vice President and Controller from
January 1999 to March, 2001, with Cambrex Corporation, a provider of scientific
products and services to the life sciences industry. From 1988 to 1998, he held
various senior financial positions with ARCO Chemical Company, a manufacturer
and marketer of specialty chemicals and chemical intermediates. Mr. Hopkins is a
Certified Public Accountant and was an Audit Manager for Coopers & Lybrand
prior to joining ARCO Chemical. Mr. Hopkins holds a B.S. in Accounting from West
Chester University, and an M.B.A. from Villanova University.
Brian J.
Smith was appointed Corporate Controller in April 2007. Prior to
joining the Company, Mr. Smith was VP-General Manager NetVersant of New York, a
provider of voice and data system infrastructure from 2002. From 1991
to 2002 Mr. Smith held various senior financial positions with Insilco
Technologies, a manufacturer and distributor of electronic
components. Mr. Smith is a Certified Public Accountant and began his
career as an auditor for KPMG Peat Marwick. Mr. Smith holds a B.S. in
Accounting from Fordham University.
Christopher
Peckham was appointed Chief Information Officer / Chief Security Officer in
September 2007. Prior to joining the Company, Mr. Peckham was
Director of Operations with Sungard Higher Education from 2003. From
1999 to 2003, Mr. Peckham served in several VP positions at Globix Corporation
in the areas of Network and Systems Engineering, Operations, and Information
Technology. Prior to that, he held positions in networking and
systems at Icon CMT, PFMC, and NJIT. Mr. Peckham received the B.S.,
M.S., and Ph.D. degrees in electrical engineering from the New Jersey Institute
of Technology and a MBA from Rutgers University.
4
CORPORATE
GOVERNANCE
Director
Independence; Meetings and Committees
Pursuant to the Company’s By-laws, the
Company’s business, property and affairs are managed by or under the direction
of the Board. Members of the Board are kept informed of the Company’s business
through discussions with the Chief Executive Officer and other officers, by
reviewing materials provided to them and by participating in meetings of the
Board and its committees. We currently have seven members on our Board. The
Board has determined that five of its members, Robert L. De Lia Sr., James W.
Power, Joseph P. Ritorto, Richard D. Rockwell, and David Sands are “independent” within the meaning of Rule 5605(a)(2)
of the National Association of Securities Dealers’ Marketplace Rules of the
Nasdaq Stock Market (the “NASDAQ Rules”), and for purposes of Rule 10A-3 of the
Exchange Act. During 2008, the Board held five meetings and the
committees held a total of eight meetings. Each incumbent Director attended more
than 75% of the total number of meetings of the Board and the Board committees
of which he was a member during the period he served as a Director in fiscal
year 2008. The Board has established a compensation committee, an
audit committee and a nominating committee. Each incumbent Director attended the
2008 Annual Meeting.
Audit
Committee
Messrs.
Power, Rockwell and Sands are the current members of the Audit Committee, each
of whom is independent. Each member of the Audit Committee meets the financial
literacy requirements of the NASDAQ Rules. The Audit Committee is responsible
for the appointment, compensation and oversight of the work of any independent
auditor employed by the Company. The Audit Committee also reviews with the
Company’s independent auditor the adequacy and effectiveness of the Company’s
system of internal financial controls and accounting practices. The Audit
Committee has adopted an Audit Committee Charter. This charter is
available to the shareholders on our website, www.hbe-inc.com, and is also
available in print to any stockholder upon written request to: Henry Bros.
Electronics, Inc., 17-01 Pollitt Drive, Fair Lawn, New Jersey 07410, Attention:
Secretary. The Audit Committee reviews and reassesses the adequacy of the Audit
Committee Charter on an annual basis. The Audit Committee met four times during
2008. The Board has determined that Mr. Sands qualifies as an “audit committee
financial expert” as defined by Item 407(d) of Regulation S-K.
Audit
Committee Report
The Audit
Committee is appointed by the Board to assist the Board in
monitoring:
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the
integrity of the financial statements of Henry Bros. Electronics,
Inc.,
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the
independent auditor’s qualifications and
independence,
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the
performance of the independent auditors of Henry Bros. Electronics, Inc.,
and
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the
compliance by Henry Bros. Electronics, Inc. with legal and regulatory
requirements.
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We meet
with management periodically to consider the adequacy of the internal controls
of Henry Bros. Electronics, Inc. and the objectivity of its financial reporting.
We discuss these matters with the independent auditors of Henry Bros.
Electronics, Inc. and with appropriate Company financial personnel.
We
regularly meet privately with the independent auditors who have unrestricted
access to the committee.
We
select, evaluate and, where appropriate, replace the independent auditor, and
review periodically their performance, fees and independence from
management.
Each of
the Directors who serves on the committee is “independent” for purposes of the
NASDAQ Rules. That
is, the Board has determined that none of Messrs. Power, Rockwell, and Sands has
a relationship with Henry Bros. Electronics, Inc. that may interfere with his
independence from Henry Bros. Electronics, Inc. and its management.
5
The Board
has adopted a written charter setting out the audit related functions the
committee is to perform. Upon recommendation by the Audit Committee, the Board
amended and restated the charter effective November 8, 2007. The
Board reviews the charter on an ongoing basis to assure that the functions and
duties of the Audit Committee will continue to conform to such applicable
regulations as they may be amended or modified in the future. The charter is
available to shareholders on our website, www.hbe-inc.com.
Management
has primary responsibility for the Company’s financial statements and the
overall reporting process, including the Company’s system of internal controls.
The independent auditors audit the annual financial statements prepared by
management, express an opinion as to whether those financial statements fairly
present the financial position, results of operations and cash flows of the
Company in conformity with accounting principles generally accepted in the
United States and discuss with us any issues they believe should be raised with
us. We monitor these processes, relying without independent verification on the
information provided to us and on the representations made by management and the
independent auditors.
This
year, we reviewed Henry Bros. Electronics, Inc.’s audited financial statements
as of and for the year ended December 31, 2008, and met with both management and
Amper, Politziner & Mattia, LLP, Henry Bros. Electronics, Inc.’s independent
auditors, to discuss those financial statements. Management has represented to
us that the financial statements were prepared in accordance with accounting
principles generally accepted in the United States.
We have
received from Amper, Politziner & Mattia, LLP and discussed with them the
written disclosure and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). These items
relate to that firm’s independence from the Company. We also discussed with
Amper, Politziner & Mattia, LLP any matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
Based on
these reviews and discussions, we recommended to the Board that the Company’s
audited financial statements be included in Henry Bros. Electronics, Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2008.
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AUDIT
COMMITTEE
James
W. Power
Richard
D. Rockwell
David
Sands
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Compensation
Committee
The
Compensation Committee recommends to our Board the compensation to be paid to
our officers and directors, administers our stock option plans and approves the
grant of options under these plans. For a description of the Company’s processes
and procedures for the consideration and determination of executive and director
compensation, see the discussion contained herein under the caption “Executive
Compensation – Compensation Discussion and Analysis” beginning on page
9 The Compensation Committee met four times during 2008.
Messrs. Power, Ritorto and Rockwell are the current members of our
Compensation Committee, each of whom is independent. The Company has
not yet adopted a charter for the Compensation Committee.
Compensation
Committee Interlocks and Insider Participation
The
current members of the Compensation Committee are Messrs. Power, Ritorto, and
Rockwell. The Board made all decisions concerning executive compensation related
to 2008. No executive officer of the Corporation served as a member of the Board
of Directors of another entity during 2008. None of the members of
the Compensation Committee has ever been an officer or employee of the Company
or any of its subsidiaries, and no “compensation committee interlocks” existed
during fiscal 2008.
6
Compensation
Committee Report
Our
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with our management and based on the review and discussion
recommended to the Board that the Compensation Discussion and Analysis be
included in this Annual Report on Form 10-K. The Board accepted the Compensation
Committee’s recommendation. This report is made by the undersigned members of
the Compensation Committee:
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Joseph
P. Ritorto (Chair)
Robert
De Lia, Sr.
Richard
D. Rockwell
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Nominating
Committee
Messrs.
De Lia, Ritorto and Sands are the current members of our Nominating Committee,
each of whom is independent. The Nominating Committee did not
meet during 2008, but recommended to the Board each of the nominees who have
been nominated for election to the Board at the 2009 Annual Meeting. The
principal functions of the nominating committee are to: (i) develop policies on
the size and composition of the Board; (ii) identify individuals qualified to
become members of the Board and review candidates for Board membership; (iii)
perform board performance evaluations on an annual basis and (iv) recommend a
slate of nominees to the Board annually. The Board has adopted a written charter
setting forth the functions of the Nominating Committee and providing direction
as to nominating policies and procedures. This charter is available
to the shareholders on our website, www.hbe-inc.com. The Nominating Committee’s
charter is also available in print to any stockholder upon written request to:
Henry Bros. Electronics, Inc., 17-01 Pollitt Drive, Fair Lawn, New Jersey 07410,
Attention: Secretary.
The
Nominating Committee utilizes a variety of methods for identifying and
evaluating nominees for directors. Candidates may come to the attention of the
Nominating Committee through current board members, shareholders or other
persons. The Nominating Committee will consider all recommendations of director
nominees in a like manner. The Company has no formal procedures pursuant to
which shareholders may recommend nominees to our Board and the Board believes
that the lack of a formal procedure will not hinder the consideration of
qualified nominees. Any stockholder desiring to suggest a Board nominee should
send the name of such nominee for consideration to the attention of: Henry Bros.
Electronics, Inc., 17-01 Pollitt Drive, Fair Lawn, New Jersey 07410, Attention:
Secretary. Any such nomination must include:
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As
to each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors, or as otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any successor regulation thereto (including such person’s
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected);
and
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The nominating stockholder’s name
and address as they appear on our books, and the class and number of our
shares beneficially owned by such
stockholder.
|
SHAREHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders
who wish to communicate with the Board or with specified members of the Board
should do so by sending any communication to Henry Bros. Electronics, Inc.,
17-01 Pollitt Drive, Fair Lawn, New Jersey 07410, Attention: Secretary. Any such
communication should state the number of shares beneficially owned by the
shareholder making the communication. Our Secretary will forward such
communication to the full Board or to any individual member or members of the
Board to whom the communication is directed, unless the communication is unduly
hostile, threatening, illegal or similarly inappropriate, in which case the
Secretary has the authority to discard the communication or take appropriate
legal action regarding the communication.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table
that follows sets forth, as of October 7, 2009 certain information regarding
beneficial ownership of our Common Stock by each person who is known by us to
beneficially own more than 5% of our Common Stock. The table also identifies the
stock ownership of each of our directors, each of our officers, and all
directors and officers as a group. Except as otherwise indicated, the
shareholders listed in the table have sole voting and investment powers with
respect to the shares indicated.
7
Shares of
Common Stock which an individual or group has a right to acquire within 60 days
pursuant to the exercise or conversion of options, warrants or other similar
convertible or derivative securities are deemed to be outstanding for the
purpose of computing the percentage ownership of such individual or group, but
are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table.
The
applicable percentage of ownership is based on 6,030,366 shares outstanding as
of October 7, 2009.
|
Title
of Class
|
Name and address of beneficial
owner (1)
|
Amount
and Nature of Beneficial Ownership
|
Percentage
of Class
|
||||||
|
Common
Stock
|
James
E. Henry, Chairman, Chief Executive Officer, Treasurer and
Director
|
1,232,244
|
20.4%
|
||||||
|
Common
Stock
|
Brian
Reach, President, Chief Operating Officer, Secretary, and Director
(2)
|
257,000
|
4.3%
|
||||||
|
Common
Stock
|
John
P. Hopkins, Chief Financial Officer (3)
|
94,500
|
1.6%
|
||||||
|
Common
Stock
|
Brian
J. Smith, Corporate Controller (4)
|
20,000
|
*
|
||||||
|
Common
Stock
|
Christopher
Peckham, Chief Information Officer /Chief Security Officer
(5)
|
20,000
|
*
|
||||||
|
Common
Stock
|
Robert
De Lia, Sr., Director (6)
|
68,694
|
1.1%
|
||||||
|
Common
Stock
|
James
W. Power, Director (7)
|
12,000
|
*
|
||||||
|
Common
Stock
|
Joseph
P. Ritorto, Director (8)
|
54,000
|
*
|
||||||
|
Common
Stock
|
Richard
D. Rockwell (9)
|
2,060,529
|
34.2%
|
||||||
|
Common
Stock
|
David
Sands, Director (10)
|
12,000
|
*
|
||||||
|
Common
Stock
|
All
executive officers and directors as a group (10 persons)
(11)
|
3,830,967
|
63.5%
|
||||||
|
* Less
than 1%
|
(1) Except
as otherwise indicated, the address of each individual listed is c/o the Company
at 17-01 Pollitt Drive, Fair Lawn, NJ 07410.
(2) The
amount shown for Mr. Reach includes a currently exercisable option to purchase
100,000 shares of the Company’s Common Stock at a price of $7.10 per share and a
currently exercisable option to purchase 30,000 shares of the Company’s Common
Stock at a price of $3.71 per share.
(3) The
amount shown for Mr. Hopkins includes a currently exercisable option to purchase
90,000 shares of the Company’s Common Stock at a price of $3.71 per
share.
8
(4) The
amount shown for Mr. Smith includes a currently exercisable option to purchase
16,000 shares of the Company’s Common Stock at a price of $4.26 per share and
4,000 shares of the Company’s Common Stock at a price of $4.11 per
share.
(5) The
amount shown for Mr. Peckham includes a currently exercisable option to purchase
20,000 shares of the Company’s Common Stock at a price of $4.65 per
share.
(6) The
amount shown for Mr. De Lia, Sr. includes five currently exercisable options to
purchase 2,000 shares each of the Company’s Common Stock at a price of $7.19,
$4.90, $3.33, $4.65 and $6.43 per share, respectively, and one currently
exercisable option to purchase 4,000 shares of the Company’s Common Stock at a
price of $5.60 per share.
(7) The
amount shown for Mr. Power includes four currently exercisable options to
purchase 2,000 shares each of the Company’s Common Stock at a price of $6.08,
$3.33, $4.65 and $6.43 per share, respectively, and one currently exercisable
option to purchase 4,000 shares of the Company’s Common Stock at a price of
$5.60 per share.
(9) The
amount shown for Mr. Rockwell includes two currently exercisable options to
purchase 2,000 shares each of the Company’s Common Stock at a price of $5.60 and
$6.43.
(10) The
amount shown for Mr. Sands includes four currently exercisable options to
purchase 2,000 shares each of the Company’s Common Stock at a price of $4.90,
$3.33, $4.65 and $6.43 per share, respectively, and one currently exercisable
option to purchase 4,000 shares of the Company’s Common Stock at a price of
$5.60 per share.
(11) The
amount shown includes currently exercisable options to purchase 314,000 shares
of the Company’s Common Stock.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Through
the following questions and answers we explain all material elements of our
executive compensation:
What are the
objectives of our executive compensation programs?
Our
corporate goal is to maximize our total return to our shareholders through share
price appreciation. Towards this goal, we seek to compensate our executives at
levels that are competitive with peer companies so that we may attract, retain
and motivate highly capable executives. We also design our compensation programs
to align our executives’ interests with those of our shareholders.
Our 2008
executive compensation reflects our effort to realize these
objectives.
What
are the principal components of our executive compensation
programs?
Overview: Our executive
compensation programs consist of three principal components: (i) a base salary;
(ii) annual bonuses; and (iii) stock option grants. The Company’s policy for
compensating our executive officers is intended to provide significant annual
long-term performance incentives. We describe each of these principal components
below.
Relationship of the principal
components: We have allocated the
three principal components of our executive compensation programs in a manner
that we believe optimizes each executive’s contribution to us. We have not
established specific formulae for making the allocation.
Base Salary: We do
not have employment agreements with any of our executives. Base salaries for
executive officers are determined by evaluating a variety of factors, including
the experience of the individual, the competitive marketplace for managerial
talent, the Company’s performance, the executive’s performance, and the
responsibilities of the executive. Although our Compensation
Committee annually reviews salaries of our executive officers, our Compensation
Committee does not automatically adjust base salaries if it concludes that
adjustments to other components of the executive’s compensation would be more
appropriate.
9
Annual Bonus: Cash bonus
awards are based on a variety of factors, including the individual performance
of the executive and the Company’s performance.
Long-Term Incentive Compensation
(Stock Options for Common Shares): The Compensation
Committee believes that stock-based compensation arrangements are essential in
aligning the interests of management and the shareholders. The Company’s 2002,
2006 and 2007 Stock Plans provides for the issuance of stock options to its
executive officers and other employees. Stock options to purchase shares of the
Company’s Common Stock are issued at an exercise price equal to the fair market
value of such stock on the date immediately preceding the date on which the
stock option is granted. These options typically vest over a three to five year
period from the date of grant and are granted to the Company’s executive
officers and other employees as part of their employment with the Company or as
a reward for past individual and corporate performance. The size of awards is
determined by the Committee based on factors such as the executive’s position,
individual performance and the Company’s performance.
What
do we seek to reward and accomplish through our executive compensation
programs?
We
believe that our compensation programs, collectively, enable us to attract,
retain and motivate high quality executives. We provide annual bonus awards
primarily to provide performance incentives to employees to meet corporate
performance objectives. Our corporate objectives are measured by sales
increases, operating margins, net income and other items of performance as
determined on an annual basis. We design long-term incentive awards primarily to
motivate and reward employees over longer periods. Through vesting and
forfeiture provisions that we include in awards of stock options we provide an
additional incentive to executives to act in furtherance of our longer-term
interests. An executive whose employment with us terminates before equity-based
awards have vested, either because the executive has not performed in accordance
with our expectations or because the executive chooses to leave, will generally
forfeit the unvested portion of the award.
Why have we
selected each principal component of our executive compensation
programs?
We have
selected programs that we believe are commonly used by public companies, both
within and outside of our industry, because we believe commonly used programs
are well understood by our shareholders, employees and analysts. Moreover, we
selected each program only after we first confirmed, with the assistance of
outside professional advisors, that the program comports with settled legal and
tax rules.
How
do we determine the amount of each principal component of compensation to our
executives?
Our
Compensation Committee exercises judgment and discretion in setting compensation
for our senior executives. The Committee exercises its judgment and discretion
only after it has first evaluated the recommendations of our Chief Executive
Officer and Chief Operating Officer and evaluated our corporate
performance.
What
specific items of corporate performance do we take into account in setting
compensation policies and making compensation decisions?
Our
corporate performance primarily impacts the annual bonuses and long-term
incentive compensation that we provide our executive officers. We use or weight
items of corporate performance differently in our annual bonus and long-term
compensation awards and some items are more determinative than
others.
Goals for
executives in 2008 varied because the areas of responsibility of executives
differ. Goals are generally developed around metrics tied to our growth and
profitability, including increases in revenue and operating profit, decreases in
expenses, execution of acquisitions, enhanced operational efficiencies and
development of additional opportunities for our long-term growth.
How
do we determine when awards are granted, including awards of equity-based
compensation?
Historically,
our Compensation Committee has awarded annual bonuses in the quarter following
the year end. The Compensation Committee makes awards of stock options on an ad
hoc basis, but generally quarterly, following review of pertinent financial
information and industry data. In addition, the Compensation Committee conducts
a thorough review of stock option awards and grant procedures annually. The date
on which the Committee has met has varied from year to year, primarily based on
the schedules of Committee members, the timing of compilation of data requested
by the Committee and the timing related to the hiring of senior
management.
10
Over the
past years our equity-based awards to executives have taken the form of stock
options. The number of stock options subject to an award has been computed by
taking into account the Company’s performance, the particular executive’s
performance, our retention objectives, and other factors.
What
factors do we consider in decisions to increase or decrease compensation
materially?
Historically,
we have generally not decreased the base salaries of our executive officers or
reduced their incentive compensation targets due to individual performance. When
an executive’s performance falls short of our expectations then we believe our
interests are best served by replacing the executive with an executive who
performs at the level we expect. The factors that we consider in decisions to
increase compensation include the individual performance of the executive,
responsibility of the executive and our corporate performance, as discussed
above.
To what extent
does our Compensation Committee consider compensation or amounts realizable from
prior compensation in setting other elements of
compensation?
The
primary focus of our Compensation Committee in setting executive compensation is
the executive’s current level of compensation, including recent awards of
long-term incentives, taking into account the executive’s performance and our
corporate performance. The Committee has not adopted a formulaic approach for
considering amounts realized by an executive from prior equity-based
awards.
How
do accounting considerations impact our compensation practices?
Accounting
consequences are not a material consideration in designing our compensation
practices. However, we design our equity awards so that its overall cost fell
within a budgeted dollar amount and so that the awards would qualify for
classification as equity awards under FAS 123R. Under FAS 123R the compensation
cost recognized for an award classified as an equity award is fixed for the
particular award and, absent modification, is not revised with subsequent
changes in market prices of our Common Stock or other assumptions used for
purposes of the valuation.
How
do tax considerations impact our compensation practices?
Prior to
implementation of a compensation program and awards under the program, we
evaluate the federal income tax consequences, both to us and to our executives,
of the program and awards. Before approving a program, our Compensation
Committee receives an explanation from our outside professionals as to the tax
treatment of the program and awards under the program and assurances from our
outside professionals that the tax treatment should be respected by taxing
authorities.
Section
162(m) of the Internal Revenue Code limits our tax deduction each year for
compensation to each of our Chief Executive Officer and our four other highest
paid executive officers to $1 million unless, in general, the compensation is
paid under a plan that is performance-related, non-discretionary and has been
approved by our shareholders. Generally, Section 162(m) has not had a
significant impact on our compensation programs.
What
are our equity or other security ownership requirements for executives and our
policies regarding hedging the economic risk of share ownership?
We do not
maintain minimum share ownership requirements for our executives. We do not have
a policy regarding hedging the economic risk of share ownership.
To
what extent do we benchmark total compensation and material elements of
compensation and what are the benchmarks that we use?
While the
Compensation Committee does not perform formal benchmarks, they do compare the
elements of total compensation to compensation provided by knowledge gained in
the industry.
11
Do we have a
policy regarding the recovery of awards or payments if corporate performance
measures upon which awards or payments are based are restated or adjusted in a
manner that would reduce the size of an award or payment?
For
non-executive officers, we have a policy that provides for a case-by-case review
to determine if a recovery of an award is necessary if a performance measure
used to calculate the award is subsequently adjusted in a manner that would have
reduced the size of the award. For executive officers, we have a
policy that requires a recovery of an award if a performance measure used to
calculate the award is subsequently adjusted in a manner that would have reduced
the size of the award.
What
is the role of our executive officers in the compensation process?
Our
Compensation Committee meets periodically with our Chief Executive Officer and
Chief Operating Officer to address executive compensation, including the
rationale for our compensation programs and the efficacy of the programs in
achieving our compensation objectives. The Compensation Committee also relies on
executive management to evaluate compensation programs to assure that they are
designed and implemented in compliance with laws and regulations, including
Securities and Exchange Commission (the “SEC”) reporting requirements. The
Compensation Committee relies on the recommendations of our Chief Executive
Officer and Chief Operating Officer regarding the performance of individual
executives. At meetings in 2008 the Compensation Committee received
recommendations from our Chief Executive Officer and Chief Operating Officer
regarding salary adjustments and annual bonus and stock option awards for our
executive officers. Our Chief Executive Officer and Chief Operating Officer play
a significant role in determining the annual cash compensation of our executive
officers. The Compensation Committee believes that it is important for it to
receive the input of the Chief Executive Officer and Chief Operating Officer on
compensation matters since they are knowledgeable about the activities of our
executive officers and the performance of their duties and responsibilities, as
well as their contributions to the growth of the Company and its business. The
Compensation Committee accepted these recommendations after concluding that the
recommendations comported with the Committee’s objectives and philosophy and the
Committee’s evaluation of our performance and industry data.
Summary
Compensation Table
The
following table sets forth summary information concerning the annual
compensation for the years ended December 31, 2008 and 2007 for our principal
executive officer (“PEO”), principal financial officer (“PFO”) and our most
highly compensated executive officers other than our PEO and our PFO for the
year ended December 31, 2008:
|
Salary
|
Bonus
|
Option
Awards
|
All
Other
compensation
|
Total
|
||||||||||||||||||
|
Name
and Principal Position
|
Year
|
($)
|
($)
|
($)(1)
|
($)
(2)
|
($)
|
||||||||||||||||
|
James
E Henry, Chairman, Chief Executive Officer, Treasurer and
Director
|
2008
|
180,131
|
36,050
|
-
|
-
|
216,181
|
||||||||||||||||
|
2007
|
174,148
|
-
|
-
|
-
|
174,148
|
|||||||||||||||||
|
2006
|
130,680
|
-
|
-
|
-
|
130,680
|
|||||||||||||||||
|
Brian
Reach, President, Chief Operating Officer, Secretary and Director
(3)
|
2008
|
180,131
|
36,050
|
-
|
6,300
|
222,481
|
||||||||||||||||
|
2007
|
173,019
|
-
|
10,626
|
6,281
|
189,926
|
|||||||||||||||||
|
2006
|
72,000
|
-
|
42,363
|
6,051
|
120,414
|
|||||||||||||||||
|
John
P. Hopkins, Chief Financial Officer (4)
|
2008
|
180,131
|
33,050
|
-
|
6,000
|
219,181
|
||||||||||||||||
|
2007
|
175,000
|
-
|
31,879
|
6,500
|
213,379
|
|||||||||||||||||
|
2006
|
69,000
|
-
|
13,283
|
2,000
|
84,283
|
|||||||||||||||||
|
Brian
J. Smith (5)
|
2008
|
147,971
|
17,803
|
-
|
6,000
|
171,774
|
||||||||||||||||
|
2007
|
100,223
|
-
|
12,035
|
4,250
|
116,508
|
|||||||||||||||||
|
Christopher
Peckham (6)
|
2008
|
125,926
|
25,189
|
-
|
4,800
|
155,915
|
||||||||||||||||
|
2007
|
36,058
|
-
|
5,407
|
1,400
|
42,865
|
|||||||||||||||||
(1) Represents
the dollar amount recognized for financial statement reporting purposes with
respect to the years ended December 31, 2007 and 2006 for the fair value of the
option granted to the named executive officer. The fair value was
estimated in accordance with FAS 123R. For a more detailed discussion
on the valuations made and assumptions used to calculate the fair value of our
options refer to Note 10 of our Annual Report on Form 10-K for the year ended
December 31, 2008.
12
(2) For
Messrs. Hopkins, Smith and Peckham represents auto allowances. For
Mr. Reach represents medical premium reimbursement.
(3) Effective
August 8, 2006, Mr. Reach assumed the position of Chief Operating
Officer. Effective March 23, 2007, Mr. Reach assumed the additional
position of President.
(4) Effective
August 8, 2006, Mr. Hopkins became the Chief Financial Officer.
(5)
Effective April 14, 2007 Mr. Smith became the Corporate Controller.
(6)
Effective September 10, 2007 Mr. Peckham became the Chief Information Officer /
Chief Security Officer.
Grants of Plan-Based Awards at Fiscal
Year-End
There
were no grants of stock options under our existing stock option plans issued by
us during 2008 to executive officers named in the Summary Compensation
Table.
Outstanding
Equity Awards at Fiscal Year-End
The
following table contains information concerning unexercised options held as of
December 31, 2008 by the executive officers named in the Summary Compensation
Table:
|
Option
Awards
|
|||||||||||||
|
Number
of
Securities
Underlying
Options
Exercisable
|
Number
of
Securities
Underlying
Options
Unexercisable
|
Option
Exercise
Price
|
Option
Expiration
Date
|
||||||||||
|
Name
|
(#)
|
(#)
|
($)
|
||||||||||
|
Brian
Reach
|
100,000
|
(1)
|
-
|
7.10
|
5/31/2009
|
||||||||
|
Brian
Reach
|
20,000
|
(2)
|
30,000
|
(2)
|
3.71
|
8/8/2012
|
|||||||
|
John
P. Hopkins
|
60,000
|
(3)
|
90,000
|
(3)
|
3.71
|
8/8/2012
|
|||||||
|
Brian
Smith
|
8,000
|
(4)
|
32,000
|
(4)
|
4.26
|
5/14/2013
|
|||||||
|
Brian
Smith
|
2,000
|
(5)
|
8,000
|
(5)
|
4.11
|
11/8/2013
|
|||||||
|
Christopher
Peckham
|
10,000
|
(6)
|
40,000
|
(6)
|
4.65
|
9/11/2013
|
|||||||
(1)
Represents grant of 100,000 incentive stock options which vested on June 30,
2004.
(2)
Represents grant of 50,000 incentive stock options which vests in five equal
installments of 10,000 on August 8, 2007, 2008, 2009, 2010, and 2011,
respectively.
(3)
Represents grant of 150,000 incentive stock options which vests in five equal
installments of 30,000 on August 8, 2007, 2008, 2009, 2010, and 2011,
respectively.
(4)
Represents grant of 40,000 incentive stock options which vests in five equal
installments of 8,000 on April 13, 2008, 2009, 2010, 2011, and 2012,
respectively.
(5)
Represents grant of 10,000 incentive stock options which vests in five equal
installments of 2,000 on November 8, 2008, 2009, 2010, 2011, and 2012,
respectively.
(6)
Represents grant of 50,000 incentive stock options which vests in five equal
installments of 10,000 on September 11, 2008, 2009, 2010, 2011, and 2012,
respectively.
13
DIRECTOR
COMPENSATION
For the
year ended December 31, 2008, all of our outside Directors, that is, Directors
who are not employees or full-time consultants of the Company, each received
compensation as follows:
|
Fees
Earned or
Paid
in Cash
|
Option
Awards
|
Total
|
||||||||||
|
Name
|
($)(1)
|
($)(2)
|
($)
|
|||||||||
|
Robert
De Lia, Sr.
|
7,750 | 10,400 | (3) | 18,150 | ||||||||
|
James
W. Power
|
9,000 | 10,400 | (4) | 19,400 | ||||||||
|
Joseph
P. Ritorto
|
9,000 | 10,400 | (5) | 19,400 | ||||||||
|
Richard
D. Rockwell
|
10,000 | 5,200 | (6) | 15,200 | ||||||||
|
David
Sands
|
10,000 | 10,400 | (7) | 20,400 | ||||||||
(1) Outside
Directors each receive a cash retainer at a rate of $5,000 per annum and $1,000
for attendance at each meeting. The Company reimburses Directors for
out-of-pocket expenses incurred travelling to Board of Director's
meetings.
(2) Represents
the dollar amount recognized for financial statement reporting purposes with
respect to the year ended December 31, 2008 for the fair value of the option
granted to the named Director. The fair value was estimated in
accordance with FAS 123R. For a more detailed discussion on the
valuations made and assumptions used to calculate the fair value of our options
refer to Note 10 of our Annual Report on Form 10-K for the year ended December
31, 2008.
(3) At
December 31, 2008, Mr. De Lia, Sr. held options to purchase 12,000 shares of
Common Stock.
(4) At
December 31, 2008, Mr. Power held options to purchase 10,000 shares of Common
Stock.
(5) At
December 31, 2008, Mr. Ritorto held options to purchase 12,000 shares of Common
Stock.
(6) At
December 31, 2008, Mr. Rockwell held options to purchase 2,000 shares of Common
Stock.
(7) At
December 31, 2008, Mr. Sands held options to purchase 10,000 shares of Common
Stock.
Directors
who are also our employees receive no additional compensation for attendance at
board meetings. Mr. Henry and Mr. Reach are the only members of the Board who
are also employees. The Company’s non-employee directors receive a
quarterly fee of $1,250 and an annual stock option grant to purchase 2,000
shares of the Company’s Common Stock at the closing share price on the day of
the grant and $1,000 for attendance at each Board or Committee
meeting.
Transactions
with Related Persons
There are
no material relationships required to be disclosed pursuant to Item 404 of
Regulation S-K between us and our directors or executive officers.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires our directors and officers, and persons who
own more than 10% of our Common Stock, to file with the SEC initial reports of
beneficial ownership and reports of changes in beneficial ownership of our
Common Stock and other equity securities. Our officers, directors and greater
than 10% beneficial owners are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.
14
To our
knowledge, for the year ended December 31, 2008, based solely on a review of the
copies of such reports furnished to the Company and representations by these
individuals that no other reports were required during the year ended December
31, 2008, all Section 16(a) filing requirements applicable to our directors,
officers and greater than 10% beneficial owners have been timely filed, except
that Messrs. DeLia, Power, Ritorto and Sands did not timely file one Form 4,
which included two transactions each that were not filed on a timely basis. Mr.
Rockwell did not timely file two Form 4's, which included one transaction
each that were not filed on a timely basis. Mr. Henry did not timely file
one Form 4, which included six transaction that were not filed on a timely
basis. These forms have since been filed.
Code
of Conduct and Code of Ethics
We have a
Code of Conduct that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer and
principal accounting officer and a Code of Ethics that applies to our senior
financial officers. You can find our Code of Conduct and Code of Ethics on our
website: www.hbe-inc.com. We will post there any amendments to
these Codes, as well as any waivers that are required to be disclosed by the
NASDAQ Rules or the rules of the SEC.
Directors
are elected by a plurality of the votes cast at the Annual
Meeting. Votes withheld in the election of directors and abstentions
or broker non-votes, if any, will be deemed as present for the purposes of
determining the presence of a quorum at the Annual Meeting, but will not be
counted towards the election of any person as a director. Brokers who
hold shares of Common Stock as nominees generally have discretionary authority
to vote such shares on this proposal if they have not received voting
instructions from the beneficial owner by the tenth day before the Annual
Meeting, provided that this Proxy Statement has been transmitted to the
beneficial holder at least 15 days prior to the Annual Meeting. In
the event that any of the nominees should become unavailable before the Annual
Meeting, it is intended that shares represented by the enclosed Proxy will be
voted for such substitute nominee as may be nominated by the Board.
THE BOARD
OF DIRECTORS IS RECOMMENDING THAT YOU VOTE FOR EACH OF THE SEVEN NOMINEES FOR
DIRECTOR LISTED ABOVE.
PROPOSAL
NO. 2
INCREASE
OF THE COMPANY’S AUTHORIZED SHARES
On
September 22, 2009, the Board unanimously declared advisable an amendment to the
Company's Certificate of Incorporation to provide for an increase in the number
of shares of Common Stock included in the authorized capital of the Company,
from 10,000,000 shares to 20,000,000 shares, subject to the approval of the
amendment by the Company's shareholders. The proposed amendment would
not change the number of shares of preferred stock that is currently authorized,
which is 2,000,000. The text of this proposed amendment is included
in the Certificate of Amendment of the Certificate of Incorporation
(“Certificate of Amendment”) attached hereto as Appendix A.
The
Company is required by Delaware law to obtain shareholder approval for any
amendment to its Certificate of Incorporation. Ownership of shares of
Common Stock entitles each shareholder to one vote per share of Common
Stock.
After
considering the Company's current number of issued and outstanding shares of
Common Stock, its current outstanding equity obligations and the potential of
future opportunities to raise capital, the Board has determined that it
is advisable to increase the number of shares of Common Stock authorized
for issuance from 10,000,000 shares to 20,000,000 shares. The Board believes
this increase will provide the Company with flexibility for issuances of equity,
thus maintaining the Company's ability to respond to any corporate opportunities
which may arise in the future while continuing to have enough shares in reserve
to satisfy current obligations. The unissued shares would be available for
issuance from time to time for various corporate purposes, including employee
compensation plans, acquisitions and public or private sales for cash as a means
of raising capital. The increase in authorized capital would mean that the
additional authorized shares would be available for issuance from time to time
at the discretion of your Board without further shareholder action except as may
be required for a particular transaction, by law, the NASDAQ Rules or any
contractual obligations of the Company that may be in effect at the time of
issuance, which will in many cases avoid expense or delay in
connection with obtaining shareholder approval for a particular issuance of
shares. The Company is not at this time party to any agreement to
issue any of the newly authorized shares of Common Stock for any purpose.
However, the Board intends to continue to pursue opportunities and transactions
to further the Company's goals and, consequently, in the future the Company may
issue all or a portion of the newly authorized shares of Common
Stock.
15
If
approved by our shareholders, the increase in authorized capital would become
effective as soon as reasonably practicable after the Annual Meeting by filing
the Certificate of Amendment of the Certificate of Incorporation with the
Secretary of State of the State of Delaware. Notwithstanding the
authorization of the proposed amendment by shareholders of the Company, the
Board may, at any time prior to the effectiveness of the filing of the
Certificate of Amendment to the Certificate of Incorporation, abandon such
proposed amendment without further action by the shareholders.
The
proposal to increase the authorized capital of the Company may affect the rights
of existing holders of Common Stock to the extent that future issuances of
Common Stock reduce each existing shareholder's proportionate ownership and
voting rights in the Company. Holders of shares of Common Stock do
not have pre-emptive rights to subscribe to additional securities that may be
issued by the Company, which means that current shareholders do not have a prior
right to purchase any new issue of capital stock of the Company in order to
maintain their proportionate ownership. In addition, possible
dilution caused by future issuances of Common Stock could lead to a decrease in
the Company's net income per share in future periods and a resulting decline in
the market price of the Company's Common Stock. It is not anticipated
that adoption of the amendment would have any other effect on the holders of the
Company's Common Stock.
Required
Vote
The
adoption of the amendment to the Certificate of Incorporation will require the
affirmative vote of at least a majority of the Company’s outstanding shares of
Common Stock. Abstentions and broker non-votes, if any, will have the
effect of a vote against amendment to the Company’s Certificate of
Incorporation.
THE BOARD
OF DIRECTORS IS RECOMMENDING THAT YOU VOTE FOR AMENDING THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF THE COMPANY'S AUTHORIZED
SHARES OF COMMON STOCK FROM 10,000,000 SHARES TO 20,000,000 SHARES.
PROPOSAL
NO. 3
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT
AUDITORS
Appointment
of Independent Auditors for 2009
The Audit
Committee has appointed Amper, Politziner and Mattia, LLP as our independent
auditors for 2009. We are not required to have the shareholders ratify the
selection of Amper, Politziner and Mattia, LLP as our independent auditors. We
are doing so because we believe it is a matter of good corporate practice. If
the shareholders do not ratify the selection, the Audit Committee will
reconsider whether or not to retain Amper, Politziner and Mattia, LLP, but may
retain such independent auditors. Even if the selection is ratified, the Audit
Committee, in its discretion, may change the appointment at any time during the
year if it determines that such a change would be in the best interests of the
Company and its shareholders.
Representatives
of Amper, Politziner and Mattia, LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and
available to respond to appropriate questions.
Changes
in Our Independent Auditors
As noted
in the Company’s Current Report on Form 8-K filed on November 7, 2007 with the
SEC, the Company notified Demetrius & Company, L.L.C. on November 5, 2007 of
its decision to dismiss Demetrius & Company, L.L.C. as the Company’s
independent auditors. Demetrius & Company, L.L.C. had served as
the Company’s independent auditor from December 31, 1998 through the date of its
dismissal.
Concurrently,
the Audit Committee and the Board approved the engagement of Amper, Politziner
and Mattia, LLP as the Company's independent auditors, effective upon
notification to Demetrius & Company, L.L.C. of dismissal, and execution of
an engagement letter. Amper, Politziner and Mattia, LLP served as the Company's
independent auditors beginning with the quarter ended September 30,
2007.
16
The
reports of Demetrius & Company, L.L.C. on the Company’s financial statements
for the years ended December 31, 2006 and 2005 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. During (1) the
years ended December 31, 2006 and 2005, and (2) the period beginning January 1,
2007 through November 5, 2007, (the date of appointment of Amper,
Politziner & Mattia, LLP), there were no disagreements with Demetrius &
Company, L.L.C. on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of Demetrius & Company, L.L.C., would have caused Demetrius
& Company, L.L.C. to make reference to the matter in its
report.
During
the period beginning January 1, 2005 through November 5, 2007 (the date Amper,
Politziner and Mattia, LLP was appointed), neither the Company nor anyone acting
on the Company’s behalf consulted with Amper, Politziner and Mattia, LLP
regarding (1) the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on the Company's
financial statements or (2) any of the matters or events set forth in Item
304(a)(2)(ii) of Regulation S-K.
Fees
Paid to our Independent Auditors
Audit
Fees
The aggregate fees paid to Amper,
Politziner & Mattia, LLP for professional services rendered for the audits
of the Company’s annual financial statements on Form 10-K in 2008 and the review
of the financial statements on Form 10-Q for the quarters ended March 31, June
30, and September 30, 2008 were $161,710.
The aggregate fees paid to Amper,
Politziner & Mattia, LLP for professional services rendered for the audits
of the Company’s annual financial statements on Form 10-K in 2007 and the review
of the financial statements on Form 10-Q for the quarter ended September 30,
2007 were $144,200.
The aggregate fees billed by Demetrius
& Company, L.L.C. for professional services rendered for the reviews of the
financial statements on Form 10-Q for the quarters ended March 30 and June 30,
2007 were $15,000.
Audit-Related
Fees
There
were no audit-related fees paid to Amper, Politziner & Mattia, LLP in 2008
and 2007.
Audit
related services include due diligence in connection with acquisitions,
consultation on accounting and internal control matters, audits in connection
with proposed or consummated acquisitions and review of registration
statements.
Tax Fees
There
were no tax fees paid to Amper, Politziner & Mattia, LLP in 2008 and
2007.
There
were no tax fees paid to Demetrius & Company, L.L.C. in 2007.
All Other
Fees
There
were no other fees paid to Amper, Politziner & Mattia, LLP in 2008 and
2007.
The
aggregate fees billed for all other professional services rendered by Demetrius
& Company, L.L.C. for the year ended December 31, 2007 was $15,000. These
fees related to a 401(k) plan audit.
Audit Committee Pre-Approval
Policies
The Audit
Committee has adopted a procedure under which all audit and non-audit services
and the respective fees charged by Amper, Politziner & Mattia, LLP must be
pre-approved by the Audit Committee. In 2008, the Audit Committee pre-approved
all such services provided by and fees paid to Amper, Politziner & Mattia,
LLP.
17
Required
Vote
The
affirmative vote of a majority of the votes cast on this proposal will be
required to ratify the appointment of Amper, Politziner & Mattia, LLP as the
independent auditors of the Company for the fiscal year ending December 31,
2009. Abstentions and broker non-votes, if any, will not be counted
as votes “cast” with respect to this matter. Unless otherwise
directed, persons named in the Proxy intend to cast all properly executed
Proxies received by the time of the Annual Meeting for the ratification of the
appointment of Amper, Politziner & Mattia, LLP as the Company’s independent
auditors for the fiscal year ending December 31, 2009. Brokers who
hold shares of Common Stock as nominees generally have discretionary authority
to vote such shares on this proposal if they have not received voting
instructions from the beneficial owners by the tenth day before the Annual
Meeting, provided that this Proxy Statement is transmitted to the beneficial
owners at least 15 days before the Annual Meeting.
THE BOARD
OF DIRECTORS IS RECOMMENDING A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
AMPER, POLITZINER AND MATTIA, LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2009.
18
MISCELLANEOUS
Shareholder
Proposals
In order
to be eligible for inclusion in our proxy statement for our 2010 Annual Meeting
under our By-laws and Rule 14a-8 of the federal proxy rules (relating to
proposals to be included in the proxy statement and form of proxy), shareholder
proposals must be received not later than June 15, 2010. In addition,
under our By-laws, shareholder proposals submitted prior to July 30, 2010, or
after August 19, 2010, will be excluded from consideration at our 2010 Annual
Meeting. The advance notice requirement in our By-laws supersedes the
notice period in Rule 14a-4(c)(1) of the federal proxy rules regarding
discretionary proxy voting authority with respect to such shareholder
business. Such proposals relating to possible director nominees
should be addressed to the attention of the Nominating Committee, c/o the
Secretary, and all other proposals should be addressed to the Secretary, in each
case at the address set forth above.
Our
By-laws contain additional requirements, including as to content, to properly
submit a proposal or to nominate a director. If you plan to submit a
proposal or nominate a director, please review our By-laws carefully. You may
obtain a copy of our By-laws by mailing a request in writing to the address set
forth above. Our By-laws are also available as Exhibit 99.3 of the
Company’s Current Report on Form 8-K filed with the SEC on November 15,
2007.
Other
Matters; Adjournments
The Board
knows of no other matters that will be presented for consideration at the Annual
Meeting. If any other matters are properly brought before the Annual Meeting,
including adjournment of the Annual Meeting and any other matters incident to
the conduct of the Annual Meeting, it is the intention of the persons named in
the accompanying proxy card to vote on such matters in accordance with their
best judgment. Discretionary authority for them to do so is contained
in the enclosed proxy card. The Annual Meeting may be adjourned from
time to time by approval of a majority of votes cast by holders of shares
present at the Annual Meeting, whether or not a quorum exists.
Proxies
All
shareholders are urged to fill in their choices with respect to the matters to
be voted on, sign and promptly return the enclosed form of Proxy.
Annual
Report to Shareholders
The
Company’s 2008 Annual Report to Shareholders has been mailed to shareholders
simultaneously with the mailing of the Proxy Statement. Such report
is not incorporated herein and is not deemed to be a part of this proxy
solicitation material.
Reduce
Duplicate Mailings
If you
are a shareholder of record and have more than one account in your name or at
the same address as other shareholders of record, you may authorize the Company
to discontinue duplicate mailings of future proxy statements and Annual Reports
(commonly referred to as “householding”). To do so, or to withdraw
any previously given authorizations, please direct your written request to the
Secretary, at the address set forth above. “Street name” shareholders
who wish to discontinue receiving duplicate mailings of future Annual Reports
should review the information provided in the proxy materials mailed to them by
their bank or broker.
|
By
Order of the Board of Directors,
|
|||
|
/s/
JAMES E. HENRY
|
|||
|
James
E. Henry
Chairman
of the Board
|
19
APPENDIX
A
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE
OF INCORPORATION
OF
HENRY
BROS. ELECTRONICS, INC.
Under Section 242 of the
Delaware General Corporation Law
Henry
Bros. Electronics, Inc., a corporation organized and existing under the laws of
the State of Delaware (the “Corporation”) hereby certifies as
follows:
1. The
Article Fourth of the Certificate of Incorporation is hereby amended in its
entirety by striking out such Article and inserting in place thereof the
following:
FOURTH:
The corporation shall be authorized to issue an aggregate of 22,000,000 shares
of stock in the following manner:
|
Class
|
Number of Shares
|
Par Value
|
||||||
|
Common
Stock
|
20,000,000 | $ | .01 | |||||
|
Preferred
Stock
|
2,000,000 | $ | .01 | |||||
The
designations and the powers, preferences and rights, and the qualifications or
restrictions of the Preferred Stock are as follows:
Shares of
Preferred Stock shall be issued from time to time in one or more series, with
such distinctive serial designations as shall be stated and expressed in the
resolution or resolutions providing for the issue of such shares from time to
time adopted by the board of directors; and in such resolution or resolutions
providing for the issue of shares of each particular series; the board of
directors is expressly authorized to fix the annual rate or rates of dividends
for the particular series; the dividend payment dates for the particular series
and the date from which dividends on all shares of such series issued prior to
the record date for the first dividend payment date shall be cumulative; the
redemption price or prices for the particular series; the voting powers for the
particular series; the rights, if any, of holders of the shares of the
particular series to convert the same into shares of any other series or class
or other securities of the corporation, with any provisions for the subsequent
adjustment of such conversion rights; and to classify or reclassify any unissued
preferred shares by fixing or altering from time to time any of the foregoing
rights, privileges and qualifications.
All
shares of Preferred Stock in any one series shall be identical with each other
in all respects, except that shares of any one series issued at different times
may differ as to the dates from which dividends thereon shall be cumulative; and
all shares of Preferred Stock shall be of equal rank, regardless of the series,
and shall be identical in all respects except as to the particulars fixed by the
board as hereinabove provided or as fixed herein.
2. The
foregoing amendment has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation law of the State of Delaware by the vote
of a majority of each class of outstanding stock of the Corporation entitled to
vote thereon.
IN
WITNESS WHEREOF, we have signed this Certificate this ___ day of ___________,
2009.
|
/s/
James E. Henry
____________________
James
E. Henry,
Chairman,
Chief Executive Officer and
Treasurer
|
A-1