SCHEDULE 14A
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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by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
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SPACEHAB, INCORPORATED
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(Name of Registrant as Specified In Its Charter)
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________________________________________________________________________________
[SPACEHAB GRAPHIC HERE]
October 15, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of SPACEHAB, Incorporated (the "Company") to be held at its corporate offices
located at 300 D Street, S.W., Washington, D.C. 20024 on November 20, 2001 at
8:00 a.m. Information about the meeting, the nominees for directors and the
proposals to be considered is presented in the Notice of Annual Meeting and the
proxy statement on the following pages.
At the meeting, you will be asked (i) to elect 9 directors to the Company's
Board of Directors, eight of which shall be elected by the holders of the
Company's Common Stock and one of which shall be elected by the holders of the
Company's Series B Senior Convertible Preferred Stock, each for a one-year term
expiring at the 2002 Annual Meeting of Stockholders, and (ii) to ratify the
appointment of Ernst & Young LLP as independent public accountants for the
Company. The Board of Directors has unanimously approved these proposals and we
urge you to vote in favor of these proposals and such other matters as may be
submitted to you for a vote at the meeting.
Your participation in the Company's affairs is important, regardless of the
number of shares you hold. To ensure your representation at the meeting, we urge
you to mark, sign, date and return the enclosed proxy card promptly even if you
anticipate attending in person. If you attend, you will, of course, be entitled
to vote in person.
Thank you for your assistance in returning your proxy card promptly.
Sincerely
DR. SHELLEY A. HARRISON
Chairman and Chief Executive Officer
[SPACEHAB GRAPHIC HERE]
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of SPACEHAB, Incorporated:
The 2001 Annual Meeting of Stockholders (the "Annual Meeting") of SPACEHAB,
Incorporated (the "Company") will be held at the Company's office located at,
300 D Street, S.W., Washington, D.C. 20024 on November 20, 2001 at 8:00 a.m.,
for the following purposes:
1. To elect 9 directors to the Company's Board of Directors, each to
hold office until their successors are elected at the 2002 Annual
Meeting of Stockholders;
2. To ratify the appointment of Ernst & Young LLP as independent public
accountants for the Company; and
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
A proxy statement with respect to the Annual Meeting accompanies and forms
a part of this Notice. The Annual Report of the Company for the fiscal year
ended June 30, 2001 also accompanies this Notice.
The Board of Directors has fixed the close of business on September 20,
2001 as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting.
By Order of the Board of Directors,
Julia A. Pulzone
Senior Vice President, Finance and
Chief Financial Officer
Secretary and Treasurer
Washington, D.C.
October 15, 2001
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING.
SPACEHAB, Incorporated
300 D Street, SW
Suite 814
Washington, D.C. 20024
SPACEHAB, INCORPORATED
300 D Street, S.W., Suite 814
Washington, D.C. 20024
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of SPACEHAB, Incorporated, (the "Company" or "Spacehab") a
Washington corporation, of proxies to be voted at the 2001 Annual Meeting of
Stockholders on November 20, 2001 (the "Annual Meeting"). This proxy statement,
the accompanying proxy card and Annual Report on Form 10-K to Stockholders are
first being mailed to stockholders on or about October 15, 2001.
Voting Securities
The Board of Directors has fixed the close of business on September 20, 2001 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting. As of the record date, there were 11,528,145
shares of SPACEHAB's Common Stock, no par value per share, outstanding and
1,333,334 shares of SPACEHAB's Series B Senior Convertible Preferred Stock, no
par value per share. Holders of Common Stock and Series B Senior Convertible
Preferred Stock are entitled to notice of the Annual Meeting and to one vote per
share of Common Stock or Series B Senior Convertible Preferred Stock owned as of
the record date at the Annual Meeting. Holders of the Company's Common Stock and
Series B Senior Convertible Preferred Stock generally vote together as a single
class, except that the holders of Series B Senior Convertible Preferred Stock,
voting separately as a class, are entitled to elect one director and the holders
of the Company's Common Stock are entitled to elect the remaining directors of
the Company.
Proxies
Dr. Shelley A. Harrison and Mr. Michael E. Kearney, the persons named as proxies
on the proxy card accompanying this proxy statement, were selected by the Board
of Directors to serve in such capacity. Dr. Harrison is Chairman of the Board of
Directors and Chief Executive Officer and Mr. Kearney is a member of the Board
of Directors and President and Chief Operating Officer. Each stockholder giving
a proxy has the power to revoke it at any time before the shares represented by
that proxy are voted. Revocation of a proxy is effective when the Secretary of
the Company receives either (i) an instrument revoking the proxy or (ii) a duly
executed proxy bearing a later date. Additionally, a stockholder may change or
revoke a previously executed proxy by voting in person at the Annual Meeting.
Voting of Proxies
Because many SPACEHAB stockholders are unable to attend the Annual Meeting, the
Board of Directors solicits proxies to give each stockholder an opportunity to
vote on all matters scheduled to come before the meeting and set forth in this
proxy statement. Stockholders are urged to read carefully the material in this
proxy statement, specify their choice on each matter by marking the
appropriate boxes on the enclosed proxy card, and sign, date and return the card
in the enclosed stamped envelope.
If no choice is specified and the card is properly signed and returned, the
shares will be voted by the persons named as proxies in accordance with the
recommendations of the Board of Directors contained in this proxy statement.
Quorum; Method of Tabulation
The holders of at least one-third of all issued outstanding shares of Common
Stock and Series B Senior Convertible Preferred Stock entitled to vote at the
Annual Meeting, if represented in person or by proxy, will constitute a quorum
at that meeting. Under applicable law and the Company's articles of
incorporation and by-laws, and assuming that a quorum is present, in the
election of directors, the persons elected will be the persons receiving the
greatest number of votes, up to the number of directors to be elected by the
holders of Common Stock and Series B Senior Convertible Preferred Stock,
respectively, of the stockholders of the respective class present in person or
by proxy and entitled to vote thereon; provided that no stockholder shall be
allowed to cumulate his votes.
At the Annual Meeting, the vote of a majority of the outstanding shares of
Common Stock and Series B Senior Convertible Preferred Stock entitled to vote at
the meeting voting together is required to ratify the appointment of Ernst &
Young LLP as the independent public accountants of the Company's financial
statements for the fiscal year ending June 30, 2002.
One or more inspectors of election appointed for the meeting will tabulate the
votes cast in person or by proxy at the Annual Meeting and will determine
whether or not a quorum is present. The inspectors of election will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. If a broker
indicates on a proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter.
PROPOSAL 1 - ELECTION OF DIRECTORS
A Board of nine directors will be elected at the Annual Meeting, eight by the
holders of Common Stock and one by the holders of the Series B Senior
Convertible Preferred Stock. All directors shall hold office until the next
annual meeting of stockholders or until their successors are duly elected and
qualified. The Company's articles of incorporation authorize the Board of
Directors from time to time to determine the number of its members. Vacancies in
unexpired terms and any additional positions created by board action may be
filled by action of the existing Board of Directors at that time, and any
director who is appointed in this fashion will serve until the next annual
meeting of stockholders or until a successor is duly elected and qualified.
The nominees for whom the enclosed proxy is intended to be voted are set forth
below. It is contemplated that all nominees will be available for election, but
if one or more is not, the proxy will be voted in accordance with the best
judgment of the proxy holder for such person or persons as may be designated by
the Board of Directors unless the stockholder has directed otherwise.
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Nominees for Election as Directors by Holders of Common Stock:
Hironori Aihara
Mr. Aihara (age 63) has served as a director of the Company since 1992. Mr.
Aihara is currently a Member of the Board, Senior Executive Vice President, and
Chief Executive Officer of Mitsubishi International Corporation and Regional
Chief Executive Officer for the Americas, Mitsubishi Corporation, Tokyo, a
position he assumed in 2001. Since April 1998 he has served as Executive Vice
President, Mitsubishi Corporation, and previously he was group executive to the
Information Systems and Services Group at Mitsubishi Corporation, overseeing the
company's activities in the aerospace, telecommunications, multimedia and
computer sectors. He has also been a director of Mitsubishi Corporation since
1992. Mr. Aihara's prior responsibilities include a four-year term as General
Manager of Mitsubishi's Aerospace Division, responsible for all of the company's
aerospace activities. He also spent six years working at the New York
headquarters of Mitsubishi International Corporation, the U.S. arm of Mitsubishi
Corporation. From September 1995 through May 1998, Mr. Aihara served as a
special member of the Space Activities Commission, the highest level
organization within the Japanese government overseeing space activities, on the
Sub-Committee for Space Environment Utilization to help develop a new long range
plan for Japanese space activities. Mr. Aihara also serves on the Boards of
Mitsubishi Corporation and Western Multiplex Corporation.
Melvin D. Booth
Mr. Booth (age 56) has served as a director of the Company since 1998. Mr. Booth
is currently President, Chief Operating Officer and a director of MedImmune,
Inc., a position he assumed in October 1998. From July 1995 until October 1998,
Mr. Booth was President, Chief Operating Officer and a director of Human Genome
Sciences, Inc. Prior to July 1995, Mr. Booth was with Syntex Corporation and its
subsidiaries from 1975 to 1995 in several capacities, including President of
Syntex Laboratories, Inc. Mr. Booth also serves on the Boards of NovaScreen
Biosciences (formerly Oceanix Biosciences Corporation) and Neoprobe Corporation.
Dr. Edward E. David, Jr.
Dr. David (age 76) has served as a director of the Company since 1993. Dr. David
is currently the President of Edward E. David, Inc., advisors to industry,
government and academia on technology, research and innovation. Dr. David was
Science Advisor to President Nixon and Director of the White House Office of
Science and Technology from 1970 to 1973. He has also served as President of
Exxon Research and Engineering Company from 1977 to 1986, and as Executive
Director of Bell Telephone Laboratories from 1950 to 1970. Dr. David is also a
director of Aquasearch, Inc., Medjet, Inc., and Protein Polymer Technologies
Inc. Dr. David is also Principal and Vice President of the Washington Advisory
Group, LLC.
Richard Fairbanks
Mr. Fairbanks (age 60) has served as a director of the Company since 1998. Mr.
Fairbanks has served as Managing Director and President and Chief Executive
Officer of the Center for Strategic and International Studies in Washington,
D.C. since 1992 and currently serves as a Counselor to the organization. Mr.
Fairbanks is an attorney who has engaged in private practice as well as a wide
range of government service, including Ambassador at Large. Mr. Fairbanks is
also a director
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of Hercules, Inc., SEACOR SMIT, and GATX Corporation, and founder of the
American Refugee Committee of Washington.
Dr. Shelley A. Harrison
Dr. Harrison (age 59) has served as the Company's Chief Executive Officer since
April 1996, Chairman of the Board of Directors since August 1993 and has been a
member of the Company's Board of Directors since 1987. Dr. Harrison was a Member
of Technical Staff at Bell Telephone Laboratories and a Professor of Electrical
Sciences at the State University of New York at Stony Brook. In 1973, Dr.
Harrison co-founded Symbol Technologies Inc., the world's leading provider of
bar-code laser scanners and portable terminals, where he served as Chairman and
Chief Executive Officer until 1982. As President of Harrison Enterprises from
1982 to 1986, he managed venture financings and technology start-ups. Since
1987, Dr. Harrison has been a managing general partner of a high technology
venture capital fund, Poly Ventures, L.P. Dr. Harrison is also a director of
click2learn.com, SafeNet, Inc., and NetManage, Inc., and several privately held
high technology portfolio companies.
Michael E. Kearney
Mr. Kearney (age 57) was appointed a director in January 2001 to fill a vacancy
on the Board created by the resignation of the Company's former President and
Chief Operating Officer. Mr. Kearney was appointed President and Chief Operating
Officer of the Company in January 2001. Previously, Mr. Kearney served as the
Company's Senior Vice President, Business Development from January 1998 as well
as Vice President for Marketing and Sales and Business Development, positions he
held since joining the Company in 1994. Prior to joining the Company, Mr.
Kearney served in the capacity as Director of Robotic Programs and also as the
Director of Advanced Product Development at McDonnell Douglas from 1991 through
1994. Mr. Kearney served for 26 years as a U.S. Navy Aeronautical Engineering
Officer as a Weapon Systems Acquisition Specialist and Program Manager. Mr.
Kearney flew Navy fighter aircraft both in combat and in a production acceptance
role.
Gordon S. Macklin
Mr. Macklin (age 73) has served as a director of the Company since October 1996.
Mr. Macklin is Deputy Chairman of White Mountains Insurance Group, Ltd. Mr.
Macklin was Chairman of White River Corporation, an information services
company, from 1993-1998. From 1987 to 1992, Mr. Macklin was Chairman of
Hambrecht & Quist, Inc., a venture capital and investment banking company. Mr.
Macklin served as President of the National Association of Securities Dealers,
Inc. from 1970 to 1987. Mr. Macklin is a director, trustee, or managing general
partner, as the case may be, of 489 of the investment companies in the Franklin
Templeton Group, and also a director of Martek Biosciences Corporation,
MedImmune, Inc., Overstock.com, and WorlD.C.om, Inc.
James R. Thompson
Mr. Thompson (age 65) has served as a director of the Company since 1993. Mr.
Thompson is a director and the President and Chief Operating Officer of Orbital
Sciences Corporation. From 1993 to 1999, he served as Executive Vice President
and General Manager of the Launch Systems Group of Orbital Sciences Corporation.
Mr. Thompson served as NASA's Deputy Administrator from 1989 to 1991. Prior to
that time, Mr. Thompson served as Director of the Marshall Spaceflight Center in
Huntsville, Alabama from September 1986 to July 1989.
4
Stockholder Agreements
Four stockholders of the Company have entered into separate letter agreements in
which each agreed to vote its shares of Common Stock to elect the nominee
proposed by Mitsubishi Corporation. Mr. Aihara is that nominee.
Nominees for Election as Directors by Holders of Series B Senior Convertible
Preferred Stock:
The Company's articles of incorporation provide that the holders of the
Company's Series B Senior Convertible Preferred Stock, voting as a separate
class, may elect one director to the Company's Board of Directors. Astrium GmbH
(formerly DaimlerChrysler Aerospace AG), the shareholder of all of the Company's
outstanding shares of Series B Senior Convertible Preferred Stock, has informed
the Company of its intention to nominate and elect Mr. Josef Kind as a director
of the Company at the Annual Meeting.
Josef Kind
Mr. Kind (age 54) has served as a director of the Company since August 1999. He
is President of the Space Infrastructure Astrium, N.V. (formerly DaimlerChrysler
Aerospace AG) and a Member of the Board of Astrium, N.V. Astrium, N.V. is a
shareholder of Astrium, GmbH. Prior to joining Space Infrastructure Astrium in
1995, Mr. Kind served as Senior Vice President, Personnel Policy, Deutsche
Aerospace AG, Munich from 1991 to 1995 and as Vice President, Personnel
Development from 1989 to 1991.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE FOR
DIRECTOR NAMED ABOVE.
The Board of Directors and its Committees
Board Meetings
In fiscal year 2001, there were four meetings of the Board of Directors
(including regularly scheduled and special meetings). During fiscal year 2001,
two directors of the Company, Mr. Kind and Dr. Semenov, participated in fewer
than 75% of the aggregate number of meetings of the Board of Directors and the
committees thereof on which they served.
Committees of the Board of Directors
The Committees of the Board of Directors consist of the Executive Committee, the
Audit Committee, the Compensation Committee and the Stock Option Committee. The
Board of Directors does not have a Nominating Committee. Information concerning
the committees is set forth below.
The Executive Committee is responsible for all matters which arise between
regular meetings of the Board of Directors and has all the powers and authority
of the Board, except as such powers and authority may be limited by the
Company's by-laws or by applicable laws. The Executive Committee currently
consists of Dr. Harrison (Chairman), Mr. Booth, Mr. Kind, Mr. Macklin and Mr.
Thompson. During fiscal year 2001, the Executive Committee met eight times.
5
The Audit Committee recommends the appointment of a firm of independent public
accountants to audit the Company's financial statements, as well as oversee the
performance, and review the scope of the audit performed by the Company's
independent accountants. The Audit Committee also reviews audit plans and
procedures, changes in accounting policies and the use of the independent
accountants for non-audit services. The Audit Committee currently consists of
Mr. Macklin (Chairman), Mr. Fairbanks and Mr. Thompson. During fiscal year 2001,
the Audit Committee met once.
The Compensation Committee determines the compensation and benefits of all
officers of the Company and establishes general policies relating to
compensation and benefits of employees of the Company. The Compensation
Committee currently consists of Mr. Thompson (Chairman), Dr. David and Dr.
Harrison. During fiscal year 2001, the Compensation Committee met three times.
The Stock Option Committee administers the Company's 1994 Stock Incentive Plan,
the 1995 Directors' Stock Option Plan and the Employee Stock Purchase Plan in
accordance with the terms and conditions set forth in those plans. The Stock
Option Committee currently consists of Mr. Thompson (Chairman) and Dr. David.
During fiscal year 2001, the Stock Option Committee met once.
Compensation Committee Interlocks and Insider Participation
Dr. Harrison, the Company's Chairman and Chief Executive Officer, is a member of
the Compensation Committee.
Director Compensation
The Company pays each non-employee director a $10,000 annual retainer to serve
on the Board of Directors and a fee of $500 per day for each meeting attended.
In addition, all directors are reimbursed for expenses incurred in connection
with their attendance at meetings. The Company also compensates its directors
through the 1995 Directors' Stock Option Plan, pursuant to which each director
who is not an employee of the Company and who is elected or continues as a
member of the Board of Directors is entitled to receive annually options to
purchase 5,000 shares of SPACEHAB's Common Stock at an exercise price equal to
fair market value; provided, however, that no director may receive under the
1995 Director's Stock Option Plan, as currently in effect, options to purchase
an aggregate of more than 25,000 shares of Common Stock.
Executive Officers of the Company who are not Nominees
Set forth below is a summary of the background and business experience of the
executive officers of the Company who are not nominees for the Board of
Directors.
Daniel A. Bland, Jr.
Mr. Bland (age 57) has served as Senior Vice President, Flight Services since
March 2000. Mr. Bland is responsible for mission preparation and execution
activities under the Company's Research and Logistics Missions Support (REALMS)
contract with NASA as well as under multiple, non-NASA commercial space flight
services contracts. In addition to these duties, Mr. Bland served from 1999 to
2000 as the Vice President, Research and Logistics Missions and from 1997 to
1999 as the REALMS Program Manager. Mr. Bland began his career with NASA in
1966, holding key positions in NASA's astronaut training program supporting the
Apollo and Apollo-Soyuz projects from 1966 to 1975. From 1975 to 1994, Mr. Bland
managed projects with the
6
Space Shuttle, International Space Station and SPACEHAB programs at NASA's
Johnson Space Center in Houston, Texas.
John M. Lounge
Mr. Lounge (age 55) has served as Senior Vice President, Enterprise(TM) program
since March 2000. Mr. Lounge served as the Company's Senior Vice President,
Flight Systems Development from 1996 to 2000. Prior to assuming his current
responsibilities, Mr. Lounge served as the Company's Mir Program Manager from
1995 to 1996 and served as the Company's Director of Flight Operations from 1991
to 1995. Prior to joining the Company, Mr. Lounge was a NASA astronaut and flew
on three Space Shuttle missions.
Julia A. Pulzone
Ms. Pulzone (age 39) has served as the Company's Senior Vice President, Finance
and Chief Financial Officer and Secretary since February 2000. Prior to joining
the Company, Ms. Pulzone was Vice President and Chief Financial Officer of
Paragren Technologies, Inc. in Reston, Virginia, a leading provider of
high-performance marketing automation software. Before joining Paragren, Ms.
Pulzone served as Director of Accounting with AMISYS Managed Care Systems, Inc.
of Rockville, Maryland, directing the initial public offering process for the
company. She also served as Director of Financial Reporting and Taxes for Telos
Corporation of Ashburn, Virginia. Ms. Pulzone is a certified public accountant
and began her career with Grant Thornton and Price Waterhouse in Washington,
D.C.
Travis D. Robinson
Mr. Robinson (age 44) was appointed Senior Vice President of Johnson Engineering
Corporation ("JE"), a subsidiary of the Company, to fill the vacancy created by
the retirement of Mr. W. Thomas Short in July 2001. Mr. Robinson is responsible
for leading all JE operations including management of the Flight Crew Systems
Development (FCSD) Contract. This contract tasks the Company to oversee
astronaut training operations at the Neutral Buoyancy Laboratory (NBL) and to
manufacture space-flight trainers and mockups for use in NASA's Space Vehicle
Mockup Facility (SVMF). Mr. Robinson joined JE in 1997 as an Engineering
Director after 10 years in management positions within the aerospace industry.
He then served as the Deputy Program Manager of the FCSD contract. Prior to
joining this Company, he was employed at United Space Alliance as the
Maintenance and Operations Director in NASA's Mission Control Center and as a
Project Engineer for Allied-Signal Aerospace.
John B. Satrom
Mr. Satrom (age 40) was appointed Senior Vice President of Astrotech Space
Operations, Inc., a subsidiary of the Company, in July 2001. Previously, Mr.
Satrom held the positions of Vice President and General Manager of Astrotech
Space Operations, Inc. ("Astrotech") since April 2000. Mr. Satrom is responsible
for management of the Astrotech business unit, including both the Payload
Processing and Sounding Rocket divisions. Prior to joining Astrotech in 1998,
Mr. Satrom was Manager of the Launch Integration and Operations Department for
Space Systems/Loral in Palo Alto, California and worked on the Atlas program at
Cape Canaveral for General Dynamics Space System Division. From 1983 to 1990,
Mr. Satrom served as an Air Force officer both at Vandenberg Air Force Base in
California and Cape Canaveral Air Station in Florida, working on the missile
flight test program and the Space Shuttle program.
7
W. Thomas Short
Mr. Short (age 68) was formerly the President of Johnson Engineering
Corporation, ("JE"), and a Senior Vice President of SPACEHAB until his
retirement in July 2001. JE became a wholly owned subsidiary of SPACEHAB on July
1, 1998. Mr. Short's involvement in JE began in 1994, where he was the
President, Chief Operating Officer and one of the principal owners. He began his
career in the aerospace industry in 1959 after serving for three years as a
pilot in the United States Air Force. He was a senior manager for North American
Aviation on the Apollo program, a division Vice President with Rockwell
International in the early days of the Space Shuttle program, and has been the
President and owner of several successful engineering service companies.
PROPOSAL 2 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
General
The Audit Committee has recommended, and the Board of Directors has approved,
the appointment of Ernst & Young LLP as independent accountants for fiscal year
2002, subject to stockholder ratification. The Audit Committee, in arriving at
its recommendation to the Board, reviewed the performance of Ernst & Young LLP
in the prior year as well as the firm's reputation for integrity and competence
in the fields of accounting and auditing. The Audit Committee has expressed its
satisfaction with Ernst & Young LLP in these respects.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the appointment is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors determines that such a change would be in the Company's and its
stockholders' best interests.
Ernst & Young LLP has audited the Company's financial statements annually since
the Company's fiscal year 2000. Representatives of Ernst & Young are expected to
be present at the Annual Meeting and will have the opportunity to make such
statements as they may desire. They are also expected to be available to respond
to appropriate questions from the stockholders present.
Audit Fees
Ernst & Young LLP has billed the Company $166,920, in the aggregate, for
professional services rendered by Ernst & Young LLP for the audit of the
Company's annual financial statements for the Company's 2001 fiscal year end and
the reviews of the interim financial statements included in the Company's
Quarterly Reports on Form 10-Q for the Company's 2001 fiscal year.
All Other Fees
Ernst & Young LLP has billed the Company $131,465, in the aggregate, for
professional services rendered by Ernst & Young LLP for all services other than
those services covered in the section captioned "Audit Fees" for the Company's
2001 fiscal year. These other services include (i) tax planning and assistance
with the preparation of returns, and (ii) consultations on the effects of
various accounting issues and changes in professional standards.
In making its recommendation to ratify the appointment of Ernst & Young LLP as
the Company's independent accountants for the fiscal year ending June 30, 2002,
the Audit Committee has
8
considered whether the non-audit services provided by Ernst & Young LLP are
compatible with maintaining the independence of Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANT OF THE COMPANY FOR THE FISCAL
YEAR ENDING JUNE 30, 2002.
9
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of June 30, 2001, certain information
regarding the beneficial ownership of the Company's outstanding Common Stock and
Series B Senior Convertible Preferred Stock held by (i) each person known by the
Company to be a beneficial owner of more than five percent (5%) of any
outstanding class of the Company's capital stock, (ii) each of the Company's
directors and director nominees, (iii) the Named Executive Officers (as
identified in the Summary Compensation table of this proxy statement) and (iv)
all directors and executive officers of the Company as a group:
Amount and
Nature of
Beneficial Percentage
Ownership of Class(1)
------------ ------------
Name and Address Beneficial Owners:
Series B Senior Convertible Preferred Stock 1,333,334
Astrium N.V............................................................ 100%
Common Stock
Dimension Fund Advisors................................................ 692,700(2) 6.0%
Investment Counselors of Maryland ..................................... 568,700(3) 7.2%
Franklin Resources, Inc. .............................................. 333,890(4) 2.9%
Mitsubishi Corporation. ............................................... 614,582(5) 5.3%
SPACEHAB Taiwan, Inc. ................................................. 791,666(6) 6.9%
Special Situations Fund III, L.P ...................................... 815,600(7) 7.1%
Special Situations Technology Fund, L.P ............................... 241,000(7) 2.1%
Special Situations Cayman Fund, L.P ................................... 270,500(7) 2.4%
State of Wisconsin Investment Board ................................... 1,392,000(8) 12.1%
Non-Employee Directors:
Hironori Aihara ....................................................... 25,000(9) *
Melvin D. Booth ....................................................... 10,000(10) *
Dr. Edward E. David, Jr. .............................................. 26,000(11) *
Richard Fairbanks ..................................................... 50,000(12) *
Josef Kind ............................................................ 10,000(13) *
Gordon S. Macklin ..................................................... 70,000(14) *
Dr. Yury P. Semenov ................................................... - *
James R. Thompson ..................................................... 25,000(15) *
Named Executive Officers:
Daniel A. Bland ....................................................... 83,911(16) *
Dr. Shelley A. Harrison ............................................... 674,657(17) 5.6%
Michael E. Kearney .................................................... 103,082(18) *
John M. Lounge ........................................................ 155,852(19) *
Julia A. Pulzone ...................................................... 32,624(20) *
Travis D. Robinson .................................................... 11,000(21) *
John B. Satrom ........................................................ 15,425(22) *
W. Thomas Short ....................................................... 44,747(23) *
All Directors and Executive Officers as a Group (16 persons) .......... 1,337,298 10.6%
------------
(*) Indicates beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
10
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Under Rule 13d-3(d), shares not outstanding which are subject to
options, warrants, rights or conversion privileges exercisable within
60 days are deemed outstanding for the purpose of calculating the
number and percentage owned by a person, but not deemed outstanding for
the purpose of calculating the number and percentage owned by any other
person listed. As of June 30, 2001, the Company had 11,528,145 shares
of Common Stock outstanding.
(2) Represents 692,700 shares of Common Stock held by Dimension Fund
Advisors in discretionary accounts for the benefit of its clients. This
holder disclaims beneficial ownership of all shares of Common Stock
held by it. This holder's address is 1299 Ocean Avenue, Santa Monica,
CA 90401.
(3) Includes an aggregate of 568,700 shares of Common Stock held by
Investment Counselors of Maryland ("ICM") in discretionary accounts for
the benefit of its clients. ICM disclaims beneficial ownership of
shares of Common Stock held by it. ICM's address is 803 Cathedral
Street, Baltimore, MD 21201.
(4) Includes an aggregate of 333,890 shares of Common Stock held by
Franklin Resources, Inc. ("FRI") in discretionary accounts for the
benefit of its clients. FRI disclaims beneficial ownership of shares of
Common Stock held by it. FRI's address is 777 Mariners Island
Boulevard, San Mateo, CA 94404.
(5) Represents 614,582 shares of Common Stock beneficially owned by
Mitsubishi Corporation and its affiliates. The address of
Mitsubishi Corporation is 3-1, Marunouchi 2-chome, Chiyoda-ku, Tokyo,
Japan.
(6) Except for its ownership of shares of Common Stock, SPACEHAB
Taiwan, Inc. has no other affiliation with the Company. Its
address is 14th Floor No. 180, Chang-Shiao E. Road, Sec. 4, Taipei,
Taiwan, R.O.C.
(7) Represents a total of 815,600 shares held by Special Situations, L.P.,
Special Situations Technology Fund, L.P. and Special Situations Cayman
Fund, L.P., collectively the "Special Situations Funds". Austin W.
Marxe and David M. Greenhouse are the primary owners of the investment
advisory general partner of each of the Special Situations Funds.
Special Situations Funds disclaims beneficial ownership of all shares
of Common Stock held by it. Special Situations Funds' address is 153
East 53rd Street, New York NY 10022. The principal address of Special
Situations Cayman Fund, L.P. is c/o CIBA Bank and Trust Company
(Cayman) Limited, CIBC Bank Building, P.O. Box 694, Grand Cayman,
Cayman Islands, British West Indies.
(8) Includes an aggregate of 1,392,000 shares of Common Stock held by
State of Wisconsin Investment Board in discretionary accounts for
the benefit of its clients. Its address is P.O. Box 7842, Madison,
Wisconsin 53707.
(9) Represents options to purchase 25,000 shares of Common Stock.
Excludes 614,582 shares of Common Stock held by Mitsubishi
Corporation and its affiliates. Mr. Aihara is currently President
and Chief Executive Officer of Mitsubishi International
Corporation. Mr. Aihara disclaims beneficial ownership of all shares
of Common Stock held by Mitsubishi Corporation and its affiliates.
(10) Includes options to purchase 10,000 shares of Common Stock.
(11) Includes options to purchase 25,000 shares of Common Stock.
(12) Includes options to purchase 10,000 shares of Common Stock.
(13) Includes options to purchase 10,000 shares of Common Stock.
(14) Represents (i) 35,000 shares of Common Stock held in the Gordon S.
Macklin Family Trust, and (ii) options to purchase 35,000 shares of
Common Stock.
(15) Represents options to purchase 20,000 shares of Common Stock.
(16) Includes options to purchase 77,139 shares of Common Stock and 6,772
shares of Common Stock purchased through the Company's 1997
Employee Stock Purchase Plan.
(17) Includes (i) 23,238 shares of Common Stock; (ii) options to purchase
569,128 shares of Common Stock; and (iii) 82,291shares of Common
Stock held by Harrison Enterprises, Inc., of which Dr. Harrison is a
director and officer and retains sole voting and investment power
with respect to such shares.
11
(18) Includes options to purchase 92,388 shares of Common Stock and
10,694 shares of Common Stock, 8,694 of such shares were
purchased through the Company's 1997 Employee Stock Purchase Plan.
(19) Includes options to purchase 145,798 shares of Common Stock and
10,054 shares of Common Stock purchased through the Company's
1997 Employee Stock Purchase Plan.
(20) Includes options to purchase 28,750 shares of Common Stock and 3,874
shares of Common Stock purchased through the Company's 1997 Employee
Stock Purchase Plan.
(21) Includes options to purchase 11,000 shares of Common Stock.
(22) Includes options to purchase 11,000 shares of Common Stock
(23) Includes options to purchase 30,000 shares of Common Stock and 14,747
shares of Common Stock purchased through the Company's 1997 Employee
Stock Purchase Plan.
12
Executive Compensation
Summary Compensation Table
The following table summarizes the compensation paid by the Company for the last
three fiscal years to its Chief Executive Officer and the Company's five other
most highly compensated executive officers other than the Chief Executive
Officer. These officers are referred to in this proxy statement as the Named
Executive Officers.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------- ------------ ------------ --------------------- --------------
Securities
Name and Fiscal Year Salary ($) Bonus Underlying
Principal Position Option/SARs Other Annual
($)(1) (#) Comp.($)(2)
------------------------------------- ------------- ------------ ------------ --------------------- --------------
Dr. Shelley A. Harrison 2001 433,851 36,366 41,000 --
Chairman and Chief Executive 2000 414,733 117,401 200,000 --
Officer 1999 358,917 120,318 41,000 --
Michael E. Kearney 2001 233,683 47,559 33,000 --
President and Chief Operating 2000 214,532 55,623 40,000 --
Officer 1999 185,917 45,645 12,000 --
John M. Lounge 2001 220,964 18,528 20,000 --
Senior Vice President, 2000 207,133 45,768 60,832 --
Enterprise Program 1999 186,600 47,647 12,000 --
Julia A. Pulzone (3) 2001 191,314 41,507 20,000 --
Senior Vice President, Finance 2000 185,000 19,553 20,000 --
and Chief Financial Officer
W. Thomas Short (4) 2001 220,640 -- 20,000 --
Senior Vice President, 2000 210,077 46,683 40,000 --
Johnson Engineering 1999 187,914 46,096 90,000 --
Corporation
------------------
(1) A portion of the bonus payment made to each executive was paid in
stock of the Company subject to Rule 144 of the Securities and
Exchange Commission.
(2) Except as indicated, no executive named in the above table received
Other Annual Compensation in an amount in excess of the lesser of
either $60,000 or 10% of the total of salary and bonus reported for him
or her in the two preceding columns.
(3) Ms. Pulzone joined the Company in February 2000. The salary presented
reflects total annual salary compensation had she been employed with
the Company for a full year.
(4) Mr. Short retired from the Company on July 3, 2001.
13
Option Grants in Fiscal Year 2001
The following table sets forth information relating to the grant of stock
options by the Company during fiscal year 2001 to the Named Executive Officers
under the Company's 1994 Stock Incentive Plan. The Company did not grant any
stock appreciation rights in fiscal year 2001.
Individual Grants
----------------------------------------------------------
% of Total Potential Realizable
Options Value at Assumed Annual
Number of Granted to Exercise Rates of Stock Price
Securities Employees Price Per Appreciation For Option
Underlying in Fiscal Share Expiration Term(1)
Name Options (#) 2001 ($/sh) Date 5% 10%
---- ----------- ---- ------ ---- -- ---
Dr. Shelley A. Harrison 41,000 9.7% 3.44 February 12, 2011 88,699 224,781
Michael E. Kearney 33,000 7.8% 3.44 February 12, 2011 71,392 180,922
John M. Lounge 20,000 4.7% 3.44 February 12, 2011 43,268 109,649
Julia A. Pulzone 20,000 4.7% 3.44 February 12, 2011 43,268 109,649
W. Thomas Short 20,000 4.7% 3.44 February 12, 2011 43,268 109,649
--------------
(1) The indicated dollar amounts are the result of calculations based on
the exercise price of the options and assume five and ten percent
appreciation rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation,
if any, of the Company's stock price.
(2) The Options vest 25% on July 1, 2001, with the remaining 75% vesting
ratably over a three-year period commencing July 1, 2001.
Aggregated Option Exercises in Fiscal 2001 and Fiscal Year End Values
The following table sets forth the number of shares covered by stock options
held by the Named Executive Officers at June 30, 2001, and also shows the value
of "in-the-money" options (market price of the Company's stock less the exercise
price) at that date. Except as listed in the table, no other Named Executive
Officer exercised any Company stock options or beneficially owned unexercised
Company stock options.
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at June 30, 2001 at June 30, 2001(1)
(#) ($)
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Dr. Shelley A. Harrison 465,975 270,725 0 0
Michael E. Kearney 56,138 91,750 0 0
John M. Lounge 116,798 78,750 0 0
Julia A. Pulzone 18,750 96,250 0 0
W. Thomas Short 100,000 70,000 0 0
14
(1) Based on the difference between the closing market price on June 30,
2001 for the Common Stock, which was $2.25 per share, and the option
exercise price. The above valuations may not reflect the actual value
of unexercised options, as the value of unexercised options will
fluctuate with market activity.
Employment Agreements
On April 1, 1997, the Company entered into an employment agreement with Dr.
Harrison, which was amended on January 15, 1998 and was further amended and
restated on January 15, 1999. The agreement provides that Dr. Harrison will
serve the Company as Chief Executive Officer through March 31, 2002, subject to
earlier termination as provided in the agreement. Thereafter, Dr. Harrison's
employment term will automatically renew for consecutive one-year terms unless
notice is delivered, by Dr. Harrison or the Company, 90 days prior to the
expiration of such term. The agreement sets forth a minimum base salary for Dr.
Harrison of $275,000, $300,000, $325,000, $350,000 and $375,000 for the first
five years, respectively, of the agreement's term. Dr. Harrison is entitled to
participate in the employee benefit plans of the Company and is eligible for the
grant of stock options, in the sole discretion of the Compensation Committee,
under the Company's 1994 Stock Incentive Plan. In addition, pursuant to the
agreement, the Company agreed to grant 60,000 additional options to Dr. Harrison
in October 1997. In the event of a transaction constituting a change in control
of the Company (as defined in the agreement), Dr. Harrison is also entitled to a
special bonus equal to three times the highest of his last three annual bonuses.
The agreement includes provisions that are effective upon termination of Dr.
Harrison's employment under certain circumstances. Pursuant to the agreement,
following a termination of his employment other than for "cause" or a "material
breach" (each as defined in the agreement), Dr. Harrison is entitled to
continuation of his base salary and medical coverage and certain other benefits
for thirty months and immediate vesting of all unvested options. Also pursuant
to the agreement, if Dr. Harrison's employment is terminated following a change
in control of the Company other than for "cause" or a "material breach", Dr.
Harrison will be entitled to a lump-sum amount equal to three times the sum of
his then-current base salary plus the average of his last three annual bonuses,
and Dr. Harrison will also be entitled to continuation of medical coverage and
certain other benefits for thirty-six months.
On January 1, 2001, the Company entered into an employment agreement with Mr.
Kearney. The agreement provides that Mr. Kearney will serve as the Company's
President and Chief Operating Officer for a term of two years, subject to
automatic annual renewal for one year periods thereafter. The agreement sets
forth a minimum base salary of $250,000 per year for its term, subject to
increase at the sole discretion of the Compensation Committee of the Board of
Directors. Mr. Kearney is also eligible to receive at the sole discretion of the
Compensation Committee an annual performance based bonus. Mr. Kearney is
entitled to participate in the employee benefit plans of the Company and is
eligible for the grant of stock options, in the sole discretion of the
Compensation Committee, under the Company's 1994 Stock Incentive Plan. The
agreement includes provisions that are effective upon the termination of Mr.
Kearney's employment under certain circumstances. In general, Mr. Kearney is
entitled to continuation of his base salary and medical coverage and certain
other benefits for six months following a termination of employment by the
Company other than for "cause" or a "material breach".
On February 14, 2000, the Company entered into an employment agreement with Ms.
Pulzone. That agreement provides that Ms. Pulzone will serve the Company as
Senior Vice President, Finance and Chief Financial Officer through July 1, 2001
subject to automatic annual renewal for one-year terms thereafter. The agreement
sets forth a minimum base salary of $185,000 per year, subject to increase at
the sole discretion of the Compensation Committee of the Board of Directors.
15
Ms. Pulzone is also eligible to receive at the sole discretion of the
Compensation Committee an annual performance based bonus and is also entitled to
participate in the employee benefit plans of the Company and is eligible for the
grant of stock options, in the sole discretion of the Compensation Committee,
under the Company's 1994 Stock Incentive Plan. Ms. Pulzone's employment
agreement includes provisions under certain circumstances that are effective
upon the termination of Ms. Pulzone's employment. In general, Ms. Pulzone is
entitled to continuation of her base salary and medical coverage and certain
other benefits for a period of six months following a termination of employment
by the Company other than for "cause" or a "material breach".
On April 10, 1997, the Company entered into an employment agreement with Mr.
Lounge. That agreement provides that Mr. Lounge will serve the Company as Vice
President, Operations for a term of three years, subject to earlier termination
as provided in his agreement. The agreement sets forth a minimum base salary of
$125,000 per year for its term, subject to increase at the sole discretion of
the Compensation Committee of the Board of Directors. Mr. Lounge is also
eligible to receive, at the sole discretion of the Compensation Committee, an
annual performance-based bonus. Mr. Lounge is entitled to participate in the
employee benefit plans of the Company and is eligible for the grant of stock
options, in the sole discretion of the Compensation Committee, under the
Company's 1994 Stock Incentive Plan. The agreement includes provisions that are
effective upon the termination of Mr. Lounge's employment under certain
circumstances. In general, Mr. Lounge is entitled to continuation of his base
salary and medical coverage and certain other benefits for six months following
a termination of employment by the Company other than for "cause" or a "material
breach" (each as defined in the agreement).
The employment agreements for each of Dr. Harrison, Mr. Kearney, Ms. Pulzone
and Mr. Lounge include certain restrictive covenants for the benefit of
the Company relating to non-disclosure by the officers of the Company's
confidential business information, the Company's right to inventions and
technical improvements of the officers, and noncompetition by the officers with
the Company's business for a period of six months following termination of
employment under Mr. Kearney's, Ms. Pulzone's and Mr. Lounge's employment
agreement, and twelve months following termination of Dr. Harrison's employment
under his employment agreement.
Indemnification Agreements
The Company has entered into indemnification agreements with each of its
directors, Named Executive Officers and with certain other officers and senior
managers. The agreements provide that the Company shall indemnify and hold
harmless each indemnitee from liabilities incurred as a result of such
indemnitee's status as a director, officer or employee of the Company, subject
to certain limitations.
Compensation Committee Report on Executive Compensation
Compensation of the Company's executives is subject to review and approval by
the Compensation Committee of the Company's Board of Directors. The
Compensation Committee consists of two non-employee directors, James R.
Thompson (Chairman) and Dr. Edward E. David, Jr., and the Chairman and Chief
Executive Officer of the Company, Dr. Shelley A. Harrison.
16
Compensation Philosophy
In determining executive compensation policies, the Compensation Committee has
four primary objectives:
(1) to attract, motivate and retain key executive talent;
(2) to balance the flexibility to reward individuals'
skills with the need to structure compensation for
defined roles;
(3) to ensure that executive compensation is competitive
with that of other leading companies in related
fields; and
(4) to provide incentives to achieve corporate objectives,
thereby contributing to the overall goal of enhancing
stockholder value.
The Compensation Committee's compensation policies discussed below are designed
to achieve the foregoing objectives. The Compensation Committee expects to
continuously review and refine the Company's compensation practices as necessary
to respond to a changing business environment.
In order to evaluate and establish appropriate compensation practices, the
Company consults multiple sources of information. The Compensation Committee
uses data from benchmark companies within the aerospace or similar high
technology industries to assess the Company's performance and compensation
operations, product lines, revenues and markets served. The Compensation
Committee seeks to set its executive compensation levels competitively with the
benchmark companies, to the extent such targets are consistent with the
Compensation Committee's objectives.
Elements of Executive Compensation
The Company's executive compensation program has three components: (1) annual
cash compensation in the form of base salary and incentive bonus payments, (2)
long-term incentive compensation in the form of stock options granted under the
Company's 1994 Stock Incentive Plan and (3) other compensation and employee
benefits generally available to all employees of the Company, such as health
insurance and retirement plan contributions. Annual cash compensation is
primarily designed to reward current performance. Long-term incentives and other
compensation and employee benefits are primarily designed to create performance
incentives over the long term for executive officers and employees.
Base Salary. The base salary of each executive officer is set at a level deemed
sufficient to attract and retain qualified executive officers. The Compensation
Committee has generally determined target base salaries according to the average
base salaries paid by benchmark aerospace and similar high technology companies.
Aggregate base salary increases are intended to maintain compensation levels
that are in line with leading companies in related fields, while individual base
salary increases are set to reflect individual performance levels. The base
salaries of certain executive officers are subject to minimums set forth in
individual employment agreements.
Incentive Bonuses. Annual cash bonuses are designed to provide incentives based
on individual contribution to the achievement of the Company's annual business
goals. Bonus payments have generally been reflective of the Company's
performance in achieving revenues, profitability and other operating and
corporate objectives, as well as the scope of an executive officer's
17
responsibilities. The Compensation Committee makes a determination as to
incentive bonus payments at the end of each year based on a subjective
evaluation of the contributions of individual executive officers to the
achievement of the Company's annual business goals. The award of annual
incentive bonuses is based on achieving corporate goals and the amount of
individual incentive bonus payments is determined by percentage ranges
established annually by the Compensation Committee.
Long-Term Incentives. The grant of stock options is the Company's current method
for providing long-term incentive compensation to its employees. The
Compensation Committee believes that the use of stock options attracts and
retains qualified personnel for positions of substantial responsibility and also
serves to motivate its executive officers to promote the success of the
Company's business and maximize stockholder value.
Compensation of Chief Executive Officer
The Compensation Committee based the Chief Executive Officer's compensation for
fiscal year 2001 on the policies described above.
Dr. Shelley A. Harrison served as Chairman and CEO of the Company throughout the
fiscal year. During fiscal year 2001, Dr. Harrison received a total of $470,217
for his services. Dr. Harrison's compensation for fiscal year 2001 was deemed by
the Compensation Committee to be appropriate given Dr. Harrison's qualifications
and contributions to meeting the Company's objectives. In fiscal 2001, Dr.
Harrison received a grant of options to purchase 41,000 shares of the Company's
common stock at an exercise price of $3.44 per share. These options vest over a
four-year period from the date of grant. This grant is intended to continue to
maintain the overall competitiveness of Dr. Harrison's compensation package and
strengthen the alignment of Dr. Harrison's interests with those of the
stockholders during a crucial phase of the Company's execution of its financial
and operating plans.
Tax Deductibility of Executive Compensation
Section 162(m) of the Tax Code disallows corporate deductibility for certain
compensation paid in excess of $1 million to the Company's Chief Executive
Officer and to each of the four other most highly paid executive officers of
publicly-held companies. "Performance-based compensation," as defined in Section
162(m), is not subject to the deductibility limitation provided certain
stockholder approval and other requirements are met. The Company believes that
the stock options granted in fiscal year 2001 and prior years satisfied the
requirements of federal tax law and thus compensation recognized in connection
with such awards should be fully deductible. It is the Company's intention to
maximize the deductibility of compensation paid to its officers, to the extent
consistent with the best interests of the Company. During fiscal year 2001, the
Company did not exceed the $1 million deductibility cap with respect to any
officer covered by Section 162(m).
COMPENSATION COMMITTEE,
James R. Thompson, Chairman
Dr. Edward E. David, Jr.
Dr. Shelley A. Harrison
Notwithstanding any statement to the contrary in any of the Company's previous
or future filings with the Securities and Exchange Commission, the Report of the
Compensation Committee and the accompanying Performance Graph shall not be
deemed to be incorporated by reference as a result
18
of any general incorporation by reference of this proxy statement or any part
thereof into any such filings.
19
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be "soliciting
material" or "filed" or incorporated by reference in future filings with the
SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to
the extent that the Company specifically incorporates it by reference into a
document filed under the Securities Act of 1933, as amended, or the Exchange
Act.
The Audit Committee has reviewed and discussed with the Company's management and
Ernst & Young LLP the audited consolidated financial statements of the Company
contained in the Company's Annual Report on Form 10-K for the Company's 2001
fiscal year. The Audit Committee has also discussed with Ernst & Young LLP the
matters required to be discussed pursuant to SAS No. 61 (Codification of
Statements on Auditing Standards, AU Section 380), which includes, among other
items, matters related to the conduct of the audit of the Company's consolidated
financial statements.
The Audit Committee has received and reviewed the written disclosures and the
letter from Ernst & Young LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and has discussed with
Ernst & Young LLP its independence from the Company.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for its 2001
fiscal year for filing with the SEC.
AUDIT COMMITTEE,
Gordon S. Macklin, Chairman
Richard Fairbanks
James R. Thompson
20
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's cumulative total
stockholder return on its Common Stock since December 22, 1995, the date the
Common Stock began trading on the Nasdaq National Market (as measured by
dividing the difference between the Company's share price at the beginning and
the end of the measurement period by the share price at the beginning of the
measurement period) with (i) the cumulative total return of the Nasdaq Stock
Market Index of U.S. Companies and (ii) the cumulative total return of the
Standard & Poor's Aerospace/Defense Index.
[GRAPHIC APPEARS HERE]
NASDAQ Standard & Poor's
U.S. Company Aerospace/Defense
SPACEHAB, Inc. Index Index
-------------- ------------- -------------------
December 22, 1995 $ 100.00 $ 100.00 $ 100.00
June 30, 1996 $ 91.70 $ 113.80 $ 111.65
June 30, 1997 $ 80.70 $ 138.40 $ 139.98
June 30, 1998 $ 96.39 $ 182.54 $ 130.13
June 30, 1999 $ 42.71 $ 260.66 $ 118.69
June 30, 2000 $ 37.50 $ 385.86 $ 102.72
June 30, 2001 $ 18.75 $ 209.20 $ 144.58
-----------------
*Assumes that the value of an investment in the Company's Common Stock,
the Nasdaq Stock Market Index of U.S. Companies and the Dow Jones
Aerospace/Defense Index was $100 on December 22, 1995 and that all
dividends were reinvested.
Independent Public Accountants
On September 6, 2000 the Company engaged Ernst & Young LLP to audit the
Company's consolidated financial statements for the 2001 fiscal year. Ernst &
Young LLP replaced KPMG LLP as the principal accountants to audit the Company's
consolidated financial statements.
21
Ernst & Young has served as the Company's principal accountants since 2000.
Ernst & Young's reports on the Company's consolidated financial statements for
fiscal year 2001 contained a qualified opinion as to the uncertainty of the
Company to continue as a going concern. During the Company's two most recent
fiscal years and the subsequent interim period through October 15, 2001, (i)
there were no disagreements between the Company and Ernst & Young or its former
independent accountants KPMG LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of Ernst & Young or KPMG LLP, would have
caused Ernst & Young or KPMG LLP to make reference to the subject matter of the
disagreement in connection with its reports and (ii) there were no events of the
kind that are described in Item 304(a)(1)(v) of Regulation S-K under the
Securities Act of 1933, as amended.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting and will have the opportunity to make such statements as they may
desire. They are also expected to be available to respond to appropriate
questions from the stockholders present at that meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no matters to be presented at the
Annual Meeting other than those described in this proxy statement. In the event
that other business properly comes before the meeting, the persons named as
proxies will have discretionary authority to vote the shares represented by the
accompanying proxy in accordance with their own judgment.
Proxy Solicitation Expense
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company and its subsidiaries, without receiving any additional compensation, may
solicit proxies personally or by telephone or facsimile. The Company has
retained American Stock Transfer & Trust Company to request brokerage houses,
banks and other custodians or nominees holding stock in their names for others
to forward proxy materials to their customers or principals who are the
beneficial owners of shares and will reimburse them for their expenses in doing
so. The Company does not anticipate that the costs and expenses incurred in
connection with this proxy solicitation will exceed those normally expended for
a proxy solicitation for those matters to be voted on in the Annual Meeting.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who beneficially own more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission, or SEC. Such directors,
executive officers and greater than 10% stockholders are required by SEC
regulation to furnish to the Company copies of all Section 16(a) forms they
file.
The Company believes that during fiscal year 2001, all Section 16(a) filing
requirements were satisfied on a timely basis.
Deadline for Submission of Stockholder Proposals for Next Year's Annual Meeting
The proxy rules adopted by the SEC provide that certain stockholder proposals
must be included in the proxy statement for the Company's 2002 Annual Meeting.
For a proposal to be considered for
22
inclusion in the Company's proxy materials for the Company's Annual Meeting
of Stockholders, it must be received in writing by the Company on or before
May 15, 2002 at its principal office, 300 D Street, SW, Suite 814, Washington,
D.C. 20024, Attention: Secretary.
The Company's Annual Report on Form 10-K, including the Company's audited
financial statements for the year ended June 30, 2001, is being mailed herewith
to all stockholders of record on the record date.
By Order of the Board of Directors,
Julia A. Pulzone
Senior Vice President, Finance and
Chief Financial Officer
Secretary and Treasurer
Washington, D.C.
October 15, 2001
Each stockholder, whether or not he or she expects to be present in person at
the Annual Meeting, is requested to MARK, SIGN, DATE and RETURN THE ENCLOSED
PROXY CARD in the accompanying envelope as promptly as possible. A stockholder
may revoke his or her proxy at any time prior to voting.
23
Appendix A
SPACEHAB, INCORPORATED
Audit Committee Charter
-----------------------
The Audit Committee of the Board of Directors shall be comprised of three or
more independent directors who are not officers or employees of the Company or
any entity controlling, controlled by or under common control of the Company.
All members of the Audit Committee shall have a working familiarity with basic
financial and accounting practices.
The Board of Directors shall designate one of the members of the Audit Committee
as its Chairman. The Audit Committee shall meet at least three times a year, or
more frequently as circumstances dictate. The Audit Committee shall report all
proceedings to the Board of Directors. The Audit Committee shall keep regular
minutes of its meetings.
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities. In this regard the Audit Committee
shall: (1) recommend for approval by the Board of Directors, the selection of
independent public accountants, to be accountable to the Board of Directors and
to the Audit Committee, (2) require the independent public accountants to
annually declare relationships and/or services which may impact on their
objectivity and independence, (3) ensure that appropriate internal controls and
procedures regarding accounting, financial and legal compliance are in place,
(4) review the results of independent audits with management including the
scope, plan and results of any audits completed by the external accountants, (5)
review with the Company's outside counsel any legal and regulatory matters that
may have a material impact on the Company's financial statements, (6) meet with
the management, independent accountants and outside counsel in separate
executive sessions to discuss any matters that the Committee or each of these
groups believe should be discussed privately, (7) review with the Board of
Directors the performance of the independent accountants and (8) perform any
other activities consistent with the Company's charter, by-laws and applicable
laws and regulations as the Board of Directors deems necessary or appropriate.
24
PROXY
SPACEHAB, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - November 20, 2001
The undersigned hereby appoints Dr. Shelley A. Harrison and Michael E.
Kearney, and each of them, as proxies of the undersigned, each with full power
to act without the other and with full power of substitution and
re-substitution, to vote all the shares of Common Stock of SPACEHAB,
Incorporated that the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on November 20, 2001, at 8:00 a.m. (local time), and at
any postponements or adjournments thereof, with all the powers the undersigned
would have if personally present, as follows:
(Continued and to be signed on reverse side.)
Please Detach and Mail in the Envelope Provided
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A [X] Please mark your |
votes as in this |
example. |___
FOR all nominees WITHHOLD The Board of Directors recommands a vote FOR the following items:
listed at right (except AUTHORITY to vote
as marked to the for all nominees
contrary below) listed at right Nominees:
_____ _____ Hironori Aihara
(1) To elect to the | | | | Melvin D. Booth
Board of | | | | Dr. Edward E. David, Jr.
Directors the | | | | Richard Fairbanks
following |_____| |_____| Dr. Shelley A. Harrison
nominees for the term indicated in the proxy statement. Michael E. Kearney
Gordon S. Macklin
James R. Thompson
INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the
space provided below:
__________________________________
FOR AGAINST ABSTAIN
(2) Ratification of the appointment by the Board [ ] [ ] [ ]
of Directors of Ernst & Young LLP as
independent public accountants for fiscal
year 2002.
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting, all in accordance with the
accompanying Notice and proxy statement, receipt of which is hereby
acknowledged.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED
THEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED BY THE STOCKHOLDER, THE SHARES
WILL BE VOTED ACCORDINGLY. IF NOT OTHERWISE SPECIFIED, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Signature______________________________________________________________________________Dated______________2001
SIGNATURE IF HELD JOINTLY
NOTE: Sign exactly as name appears hereon. When signing in a representative
capacity, please give full title. Joint owners (if any) should each sign.
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