def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Mobility 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):
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MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
March 28,
2006
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Mobility Electronics, Inc., a Delaware
corporation, to be held at 10:00 a.m., local time, on
Wednesday, May 24, 2006 at the Scottsdale Marriott at
McDowell Mountains, 16770 North Perimeter Drive, Scottsdale,
Arizona 85260. The attached Notice of Annual Meeting and Proxy
Statement fully describe the formal business to be transacted at
the meeting, which includes the election of two directors to
serve until the annual meeting of stockholders in 2009, the
ratification of the appointment of KPMG LLP as our independent
registered public accounting firm and such other matters that
shall properly come before the meeting or any adjournments
thereof. We have also enclosed a copy of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2005.
Our directors and officers will be present to help host the
meeting and to respond to any questions that our stockholders
may have. I hope that you will be able to attend.
Our Board of Directors believes that a favorable vote on the
matters to be considered at the meeting is in the best interest
of Mobility and our stockholders and unanimously recommends a
vote FOR each such matter. Accordingly, we urge you
to review the attached material carefully and to return the
enclosed proxy card promptly. Whether or not you plan to attend
the meeting, please complete, sign, date and return your proxy
card in the enclosed envelope. If you attend the meeting, you
may vote in person if you wish, even though you have previously
returned your proxy card. If you hold your shares through an
account with a brokerage firm, bank or other nominee, please
follow the instructions you receive from them to vote your
shares.
On behalf of your Board of Directors, thank you for your support.
Sincerely,
Charles R. Mollo
Chairman of the Board, President and
Chief Executive Officer
MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 24, 2006
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Mobility Electronics, Inc. (the Company) will be
held at 10:00 a.m., local time, on Wednesday, May 24,
2006 at the Scottsdale Marriott at McDowell Mountains, 16770
North Perimeter Drive, Scottsdale, Arizona 85260, for the
following purposes:
1. To elect two members of the Board of Directors, for a
three-year term, to serve until the annual meeting of
stockholders in 2009;
2. To ratify the selection of KPMG LLP as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2006; and
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board has fixed the close of business on March 28, 2006
as the record date for determining stockholders entitled to
notice of, and to vote at, the meeting or any adjournments
thereof.
A list of stockholders entitled to vote at the meeting will be
open to examination by any stockholder, for any purpose germane
to the meeting, at the location of the meeting on May 24,
2006 and during ordinary business hours for a period of at least
ten days prior to the meeting at the Companys offices
located at 17800 North Perimeter Drive, Suite 200,
Scottsdale, Arizona 85255.
Information concerning the matters to be acted upon at the
meeting is more fully described in the accompanying Proxy
Statement.
Your vote is important. Whether or not you expect to attend
the meeting, please complete, date and sign the enclosed proxy
card and mail it promptly to assure that your shares are
represented at the meeting. A return envelope (which is postage
prepaid if mailed in the United States) is provided. Even if you
have given your proxy, you may still vote in person if you
attend the meeting. If you hold shares through an account with a
brokerage firm, bank or other nominee, please follow the
instructions you receive from them to vote your shares.
By Order of the Board of Directors,
Brian M. Roberts
Secretary
Scottsdale, Arizona
March 28, 2006
TABLE OF
CONTENTS
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MOBILITY
ELECTRONICS, INC.
17800 North Perimeter Drive,
Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
PROXY
STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 24, 2006
This proxy statement and the accompanying proxy are being first
mailed on or about April 1, 2006 to the holders of the
common stock of Mobility Electronics, Inc., a Delaware
corporation, by the Board of Directors to solicit proxies for
use at the annual meeting of stockholders to be held at
10:00 a.m., local time, on May 24, 2006 at the
Scottsdale Marriott at McDowell Mountains, 16770 North Perimeter
Drive, Scottsdale, Arizona 85260, or at such other time and
place to which the meeting may be adjourned.
At the meeting, our stockholders will consider and vote upon the
following matters:
1. the election of two members of the Board of Directors,
which currently consists of six directors, to serve until the
annual meeting of stockholders in 2009;
2. the ratification of the selection of KPMG LLP as
Mobilitys independent registered public accounting firm
for the fiscal year ending December 31, 2006; and
3. such other business as may properly come before the
meeting or any adjournments thereof.
REVOCABILITY
OF PROXIES
A proxy may be revoked before it is exercised by delivering
written notice of such revocation to Computershare Investor
Services, 350 Indiana Street, Suite 800, Golden CO 80401,
Attention: Proxy Department, which revocation must be received
before May 24, 2006. If notice of revocation is not
received by such date, a stockholder may nevertheless revoke a
proxy by attending the meeting and voting in person. If your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, please follow the instructions
you receive from them to vote your shares.
RECORD
DATE AND VOTING SECURITIES
The Board has set the record date for determining the
stockholders entitled to vote at the meeting as of the close of
business on March 28, 2006. Mobilitys common stock,
par value $0.01 per share, constitutes the only class of
securities entitled to notice of, or to vote at, the meeting. As
of the record date, we had issued and outstanding
31,021,236 shares of common stock. A holder of common stock
on the record date shall be entitled to cast one vote for each
share of common stock registered in his or her name.
QUORUM
AND VOTING
Our bylaws require the presence at the meeting, in person or
represented by proxy, of the holders of a majority of the shares
issued and outstanding and entitled to vote to constitute a
quorum to transact business. Abstentions and broker
non-votes (shares held by a broker or nominee that does
not have the authority, either express or discretionary, to vote
on a particular matter) will be treated as shares that are
present for purposes of determining the presence of a quorum. In
the election of directors, abstentions will have no effect on
the outcome of the vote, however, in the votes on the other
matters that properly come before the meeting, including the
proposal to ratify the appointment of KPMG LLP as the
Companys independent registered public accounting firm for
fiscal 2006, abstentions will have the effect of votes
against the proposals. Broker non-votes are not
considered to be shares entitled to vote and will not affect the
outcome of any vote at the meeting.
If a quorum is present, in order to be elected as a director, a
nominee must receive the affirmative vote of a plurality of the
votes of the shares of common stock present, either in person or
by proxy, and entitled to vote on the election of directors. If
a quorum is present, approval of all other matters that properly
come before the meeting, including the proposal to ratify the
appointment of KPMG LLP as the Companys independent
registered public accounting firm for fiscal 2006, requires the
affirmative vote of a majority of the shares of common stock
present, either in person or by proxy, and entitled to vote on
the matter presented at the meeting.
Unless contrary instructions are indicated on the enclosed
proxy, all shares represented by valid proxies received pursuant
to this solicitation (and which have not been revoked in
accordance with the procedures set forth above) will be voted
(i) FOR the election of the nominees for director
named under Proposal No. 1, (ii) FOR the
ratification of the appointment of KPMG LLP as the
Companys independent registered public accounting firm for
fiscal 2006, and (iii) in accordance with the best judgment
of the named proxies on any other matters properly brought
before the meeting. In the event you specify a different choice
by means of the enclosed proxy, your shares will be voted in
accordance with those instructions.
Under the Delaware General Corporation Law, stockholders do not
have any rights of appraisal or similar rights of dissenters
with respect to the proposals set forth in this proxy statement.
PROPOSAL NO. 1 ELECTION
OF DIRECTORS
Nominees
The Board has nominated Charles R. Mollo and Robert W. Shaner
for re-election to the Board as Class III directors at the
meeting, to serve until the 2009 annual meeting of stockholders
and until their respective successors have been elected and
qualified. Unless otherwise directed, the persons named in the
proxy intend to vote all proxies FOR the election of
Messrs. Mollo and Shaner to the Board. The nominees have
consented to serve as directors of the Company if elected. If,
at the time of the meeting, any of the nominees is unable or
declines to serve as a director, the discretionary authority
provided in the enclosed proxy will be exercised to vote for a
substitute candidate designated by the Board. The Board has no
reason to believe any of the nominees will be unable or will
decline to serve as a director.
Vote
Required
In order to be elected as a director, a nominee must receive the
affirmative vote of a plurality of the votes of the shares of
common stock present, either in person or by proxy, and entitled
to vote on the election of directors. The Board recommends a
vote FOR the election of Messrs. Mollo and
Shaner to the Board.
Board of
Directors
Our Board has authorized seven director positions and our Board
currently consists of six members. Although there is currently
one vacancy on the Board, you may not vote for a greater number
of persons than the number of nominees named in this proxy
statement. The Board, along with the assistance of the Corporate
Governance and Nominating Committee, has considered, and
continues to consider, whether to fill the current vacancy on
the Board. At this time, the Board has determined not to fill
such vacancy. In the event such appointment is made, however,
the newly appointed director will be elected by the Board to
serve on one of the three classes of our Board until that class
is next up for re-election by our stockholders.
Each director holds office until the directors term
expires, the director resigns, is removed or dies, or until the
directors successor is duly elected and qualified. Our
bylaws provide for a classified Board. In accordance with the
terms of our bylaws, our Board is divided into three classes
whose terms expire at different times. The three classes are
comprised of the following directors:
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Class I consists of Jerre L. Stead and Larry M. Carr, who
will serve until the annual meeting of stockholders to be held
in 2007.
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Class II consists of Jeffrey R. Harris and William O. Hunt,
who will serve until the annual meeting of stockholders to be
held in 2008.
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Class III consists of Charles R. Mollo and Robert W.
Shaner, who, if elected at the meeting, will serve until the
annual meeting of stockholders to be held in 2009, and each is a
nominee under this Proposal No. 1.
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At each annual meeting of stockholders, the successors to
directors whose terms will then expire will be elected to serve
from the time of election and qualification until the third
annual meeting following election and until their successors
have been duly elected and qualified. Any additional
directorships resulting from an increase in the number of
directors will be distributed among the three classes so that,
as nearly as possible, each class will consist of an equal
number of directors.
Nominees, Continuing Directors and Named Executive Officers
Who Are Not Directors
Set forth below is information furnished to the Company by the
director nominees, each incumbent director whose terms will
continue following the meeting, and each named executive officer
who is not a director. There are no family relationships among
any directors or executive officers of the Company. None of the
corporations or other organizations referenced in the
biographical information below is a parent, subsidiary or other
affiliate of the Company.
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Nominee or Continuing Director
and Term /
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Named Executive
Officer
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Charles R. Mollo
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Chairman of the Board, President
and Chief Executive
Officer and nominee with term expiring in 2006
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Larry M. Carr(1) (2)
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Director with term expiring in 2007
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Jeffrey R. Harris(1) (2)
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Director with term expiring in 2008
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William O.
Hunt(1) (2) (3) (4)
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Director with term expiring in 2008
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Robert W. Shaner(2) (3)
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Director and nominee with term
expiring in 2006
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Jerre L. Stead(2) (3)
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Director with term expiring in 2007
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Joan W. Brubacher(5)
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Executive Vice President, Chief
Financial Officer
and Treasurer
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Timothy S. Jeffries(5)
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Executive Vice President and Chief
Operating Officer
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Lead Independent Director |
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Named Executive Officer Who Is Not A Director |
Charles R. Mollo is one of our founders and has been
Chief Executive Officer and Chairman of the Board of Directors
since our formation in May 1995, and President since July 1999,
having previously served as President between March 1997 and
June 1998. From September 1992 to May 1995, Mr. Mollo was
the director of the Wireless Telephone Products Division of
Andrew Corporation, a communications equipment services and
systems company. From September 1986 to July 1992,
Mr. Mollo was the Vice President of Corporate Development
of Alliance Telecommunications Corporation, a wireless
telecommunications company. Between 1980 and 1986,
Mr. Mollo was a Vice President of Meadows Resources, Inc.,
where he managed a venture capital and investment portfolio of
approximately $150 million. In the past, he has served on
the boards of a number of companies, including Alliance
Telecommunications Corporation. Mr. Mollo holds a
bachelors degree in Electrical Engineering from Manhattan
College, a masters degree in Electrical Engineering from
Newark College of Engineering, and an MBA from the University of
New Mexico.
Larry M. Carr has been a director since September 2000
and is Chairman of the Corporate Governance and Nominating
Committee and a member of the Audit Committee. Mr. Carr has
served as Chairman of the Board of Northwest National Bank since
1995, and has been a director since 1992. Mr. Carr has
served as Chairman of the Board of Simtrol, Inc., formerly Video
Conferencing Systems, Inc., a software company specializing in
device
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control and monitoring, since 1998, and has been a director
since 1993. Mr. Carr is also Chairman of the Board of
NurseCore Management Services, LLC, a temporary services company
in the healthcare industry, and a director of OHA Financial, Inc.
Jeffrey R. Harris has been a director since September
1995 and is Chairman of the Audit Committee and a member of the
Corporate Governance and Nominating Committee. Mr. Harris
is a Business Facilitation Consultant, having retired in 2002
from Public Service Company of New Mexico, a public utility
company, where he worked since 1972, most recently as Director,
International Business Development. Mr. Harris is also
President of New Vistas Investment Corporation, a real estate
development and management company, President of New Horizons
Enterprises, Inc., a real estate investment and management
company, Vice President of Homes By New Vistas, a custom home
builder, and was a founder and principal of Bright Beginnings
Child Development Centers, a
15-center
childcare chain in New Mexico, until its sale in 1994.
William O. Hunt has been a director since December 1999
and is a member of the Compensation and Human Resources
Committee, Audit Committee and Corporate Governance and
Nominating Committee, and also currently serves as
Mobilitys lead independent director. From 1992 to 2001,
Mr. Hunt served as Chairman of the Board of Wireless
WebConnect!, Inc., a public access telecommunications firm, and
from 1992 to 1998 served as its Chief Executive Officer. From
1993 to 1996, Mr. Hunt served as Vice Chairman of the Board
of Hogan Systems, Inc., a leading supplier of application
software for the worldwide financial and banking industry, and
from 1990 to 1993 served as its Chairman. From 1986 to 1992,
Mr. Hunt served as Chairman of the Board, Chief Executive
Officer and President of Alliance Telecommunications
Corporation, a wireless telecommunications company. He is also
currently a director of Andrew Corporation.
Robert W. Shaner has been a director since May 2004 and
is a member of the Compensation and Human Resources
Committee and Corporate Governance and Nominating Committee.
From December 2002 to September 2005, Mr. Shaner served as
a director of REMEC, Inc., a wireless equipment and military
product manufacturer, and from February 2004 to September 2004
served as its Interim Chief Executive Officer. From January 2001
to February 2003, Mr. Shaner served as the president of
Wireless Operations for Cingular Wireless, LLC, a joint venture
between the wireless divisions of SBC Communications Inc. and
BellSouth Corporation. From November 1999 to January 2001,
Mr. Shaner served as President and Chief Executive Officer
of Pacific Bell Wireless and Southwestern Bell Mobile Systems,
providers of wireless communication services to consumers and
businesses. Mr. Shaner served as the President and Chief
Executive Officer of Pacific Bell Wireless from August 1998 to
November 1999. From March 1997 to July 1998, Mr. Shaner
served as president of SBCI Europe and Middle East for SBC
International, Inc. Prior to 1997, Mr. Shaner held various
management positions at Southwestern Bell Telephone/Telecom and
Cellular One. Mr. Shaner also currently serves as the
Chairman of the Board of Curators of Central Methodist
University. Mr. Shaner is also currently a director of
Interdigital Communications Corporation.
Jerre L. Stead has been a director since November 2000
and is Chairman of the Compensation and Human Resources
Committee and a member of the Corporate Governance and
Nominating Committee. Mr. Stead is currently the Executive
Chairman of the Board of IHS Inc. From 1996 through 2000,
Mr. Stead served as Chairman of the Board and Chief
Executive Officer of Ingram Micro, Inc., a worldwide distributor
of information technology products and services. He is past
Chairman of the Board of the Center of Ethics and Values at
Garret Seminary on the Northwestern University campus.
Mr. Stead is also on the board of the Salk Institute and
the National Board of Alzheimers Association.
Mr. Stead is also currently a director of Armstrong World
Industries, Inc., Brightpoint, Inc., Conexant Systems, Inc., and
Mindspeed Technologies, Inc.
Named
Executive Officers Who Are Not Directors
Joan W. Brubacher began working for us in 1998 as our
Senior Financial Analyst, was appointed Controller in 1999 and
promoted to Vice President in 2000. She was appointed to the
position of Vice President and Chief Financial Officer in 2001
and Executive Vice President and Chief Financial Officer in
2002. Prior to joining us, Ms. Brubacher served as Chief
Financial Officer for Phase Laser Systems, Inc., an electronics
development/manufacturing firm. Previously, she served as Chief
Financial Officer and subsequently as Chief Operating Officer
for Laserex, Inc., a laser pointer manufacturing company.
Ms. Brubacher began her career with the international
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public accounting firm Ernst & Whinney (now
Ernst & Young) and holds a bachelors degree in
Business Administration with concentration in Accounting from
Kansas State University.
Timothy S. Jeffries joined us in 2002 as Vice President
of Worldwide Sales. Mr. Jeffries was appointed Executive
Vice President of Worldwide Sales & Services in August
2002, and was appointed Executive Vice President, Global Sales,
Marketing & Services in February 2003. He was appointed
Executive Vice President and Chief Operating Officer in May
2003. Prior to joining us, Mr. Jeffries served as Vice
President, Client Solutions for Viacore, Inc., a provider of
supply chain software and services, from 2000 to 2001.
Previously, he served as Vice President, Vendor Sales, and later
Vice President, Product Management, for Ingram Micro, Inc., a
worldwide distributor of information technology products and
services, from 1997 to 1999. Mr. Jeffries has also held
several sales and marketing leadership roles in the high
technology industry with companies such as Intelligent
Electronics, Inc., a full service home entertainment specialty
store, and Novell, Inc., a provider of proprietary and open
source software for use in business solutions. Mr. Jeffries
holds a bachelors degree in Political Science from
Santa Clara University and an Executive MBA from Duke
Universitys Global Executive program.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF MESSRS. MOLLO AND SHANER TO THE BOARD OF
DIRECTORS.
BOARD
COMMITTEES, INDEPENDENCE AND MEETING ATTENDANCE
Board and
Committee Independence
The Board of Directors has determined each of the following
directors to be an independent director as such term
is defined in Marketplace Rule 4200(a)(15) of the rules of
the Nasdaq National Market:
Larry M. Carr
Jeffrey R. Harris
William O. Hunt
Robert W. Shaner
Jerre L. Stead
In this proxy statement these five directors are referred to
individually as an Independent Director and
collectively as the Independent Directors.
The Board of Directors has also determined that each member of
the Audit, Compensation and Human Resources, and Corporate
Governance and Nominating committees meets the independence
requirements applicable to those committees prescribed by the
rules of the Nasdaq National Market, the Securities and Exchange
Commission and the Internal Revenue Service.
Meetings
of Independent Directors
The Independent Directors meet in executive session at least
twice annually. These meetings are chaired by the Lead
Independent Director, who is appointed by the Board on an annual
basis. Only Independent Directors are eligible to serve as the
Lead Independent Director. Mr. Hunt currently serves as
Lead Independent Director.
Board and
Committee Meetings
Our Board meets on a regularly scheduled basis to review
significant developments affecting the Company and to act on
matters requiring approval of the Board. It also holds special
meetings when an important matter requires action by the Board
between scheduled meetings. During 2006, the Board held nine
meetings, the Compensation and Human Resources Committee held
four meetings, the Audit Committee held ten meetings, and the
Corporate Governance and Nominating Committee held four
meetings. During 2006, each member of the Board participated in
at least 75% of all Board and applicable committee meetings held
during the period for which he was a director.
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Board
Committees
During 2005, the Board had three standing committees: the
Compensation and Human Resources Committee, the Audit Committee,
and the Corporate Governance and Nominating Committee.
Audit Committee. The Companys Audit
Committee is a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the
Exchange Act. The Audit Committee of the Board consists of
Messrs. Harris (Chair), Carr and Hunt. The Audit Committee
aids management in the establishment and supervision of our
financial controls, evaluates the scope of the annual audit,
reviews audit results, makes recommendations to our Board
regarding the selection of our independent registered public
accounting firm, consults with management and our independent
registered public accounting firm prior to the presentation of
financial statements to stockholders and, as appropriate,
initiates inquiries into aspects of our financial affairs.
The Board has determined that each member of the Audit
Committee Messrs. Harris, Hunt and
Carr is an audit committee financial
expert as such term is defined in Item 401(h) of
Regulation S-K
promulgated by the Securities and Exchange Commission.
A current copy of the Audit Committee Charter is attached to
this proxy statement as Appendix A.
Compensation and Human Resources
Committee. The Compensation and Human Resources
Committee of the Board consists of Messrs. Stead (Chair),
Hunt and Shaner. The Compensation and Human Resources Committee
makes determinations concerning salaries and incentive
compensation for our executive officers, directors and certain
employees and consultants and administers our 2004 Omnibus
Long-Term Incentive Plan, our 2004
Non-Employee
Director Long-Term Incentive Plan, our 1996 Long-Term Incentive
Plan, our Employee Stock Purchase Plan, and our Discretionary
Bonus Plan.
Corporate Governance and Nominating
Committee. The Corporate Governance and
Nominating Committee of the Board consists of Messrs. Carr
(Chair), Harris, Hunt, Shaner and Stead. The Corporate
Governance and Nominating Committees role is to assist the
Board in identifying qualified individuals to become members of
the Board, in determining the composition of the Board and its
committees, in monitoring a process to assess Board
effectiveness and in developing and implementing the
Companys corporate governance policies and practices.
Compensation
of Directors
Each director who is also one of our employees does not receive
additional compensation for serving as a director.
Each non-employee director, upon appointment
and/or
initial election to the Board, receives a grant of 22,500
restricted stock units. At each annual meeting of our Board,
each non-employee director who is elected to serve on either the
Audit Committee, Compensation and Human Resources Committee or
Corporate Governance and Nominating Committee receives a grant
of 1,200 restricted stock units, and each non-employee director
elected to serve as chairman of a committee receives an
additional grant of 500 restricted stock units. Vesting for
restricted stock units granted upon appointment
and/or
initial election to the Board occurs three years following the
date of grant. Vesting for restricted stock units granted upon
election to a committee or as chairman of a committee occurs one
year following the date of grant. The vesting period for all
restricted stock units granted to our directors is subject to
the directors continuous service, with earlier full
vesting upon a change in control of the Company and earlier
pro-rata vesting upon a directors death, total and
permanent disability or voluntary retirement.
Each non-employee director also receives a retainer of
$1,000 per month, as well as a fee of $1,000 for each board
meeting attended in person, $500 for each telephonic board
meeting attended, and $500 for each committee meeting attended
either in person or telephonically. The Companys lead
independent director also receives an additional monthly
retainer equal to 50% of the monthly retainer paid to the
Companys other non-employee directors, which currently
amounts to $500 per month. At the beginning of each
quarter, each non-employee director may elect to receive
compensation earned during the quarter in shares of the
Companys common stock. The number of shares issued is
determined based on the average of the closing price of the
Companys common stock for each of the final 30 trading
days prior to, and including, the last trading day of each
quarter.
6
Directors may also be reimbursed for expenses in connection with
attendance at Board and committee meetings.
Director
Nominations Policy
The Companys Board of Directors has adopted a Director
Nominations Policy (the Nominations Policy). The
purpose of the Nominations Policy is to describe the process by
which candidates are selected for possible inclusion in the
Companys recommended slate of director nominees (the
Candidates). The Nominations Policy is administered
by the Corporate Governance and Nominating Committee (the
Nominating Committee) of the Board.
Minimum
Criteria for Board Members
Each Candidate must possess at least the following specific
minimum qualifications:
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Each Candidate shall be prepared to represent the best interests
of all of the Companys stockholders.
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Each Candidate shall be an individual who has demonstrated
integrity and ethics in
his/her
personal and professional life and shall have established a
record of professional accomplishment in
his/her
chosen field.
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Each Candidate shall be prepared to participate fully in Board
activities, including active membership on at least one Board
committee and attendance at, and active participation in,
meetings of the Board and the committee or committees of which
he or she is a member, and shall not have other personal or
professional commitments that would, in the Nominating
Committees sole judgment, interfere with or limit his or
her ability to do so.
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Each Candidate shall be willing to make, and shall be
financially capable of making, the required investment in the
Companys stock in the amount and within the timeframe
specified in the Companys Corporate Governance Guidelines.
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Desirable
Qualities and Skills
In addition, the Nominating Committee also considers it
desirable that Candidates possess the following qualities or
skills:
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Each Candidate should contribute positively to the existing
chemistry and collaborative culture among Board members.
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Each Candidate should possess professional and personal
experiences and expertise relevant to the Companys goal of
being the leading provider of innovative products and solutions
for the mobile electronics industry.
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Internal
Process for Identifying Candidates
The Nominating Committee has two primary methods for identifying
Candidates (other than those proposed by the Companys
stockholders, as discussed below). First, on a periodic basis,
the Nominating Committee solicits ideas for possible Candidates
from a number of sources members of the Board;
senior level Company executives; individuals personally
known to the members of the Board; and research, including
database and Internet searches.
Second, the Nominating Committee may from time to time use its
authority under its charter to retain at the Companys
expense one or more search firms to identify Candidates (and to
approve such firms fees and other retention terms). If the
Nominating Committee retains one or more search firms, they may
be asked to identify possible Candidates who meet the minimum
and desired qualifications expressed in the Nominations Policy,
to interview and screen such candidates (including conducting
appropriate background and reference checks), to act as a
liaison among the Board, the Nominating Committee and each
Candidate during the screening and evaluation process and
thereafter to be available for consultation as needed by the
Nominating Committee.
7
The Nominations Policy divides the process for Candidates
proposed by stockholders into the general nomination right of
all stockholders and proposals by Qualified
Stockholders (as defined below).
General
Nomination Right of All Stockholders
Any stockholder of the Company may nominate one or more persons
for election as a director of the Company at an annual meeting
of stockholders if the stockholder complies with the provisions
of
Rule 14a-8
of the Securities Exchange Act of 1934. In order for the
director nomination to be timely, a stockholders notice to
the Company must be delivered to the Companys principal
executive offices not less than 120 days prior to the
anniversary of the date of the Companys proxy statement
released to stockholders in connection with the previous
years annual meeting. In the event that the Company sets
an annual meeting date that is not within 30 days before or
after the date of the immediately preceding annual stockholders
meeting, notice by the stockholder must be received no later
than the close of business on the 10th day following the
day on which notice of the date of the annual meeting was mailed
or public disclosure of the date of the annual meeting was made,
whichever occurs first. The procedures described in the next
paragraph are meant to establish an additional means by which
certain stockholders can have access to the Companys
process for identifying and evaluating Candidates, and is not
meant to replace or limit stockholders general nomination
rights in any way.
Proposals
by Qualified Stockholders
In addition to those Candidates identified through its own
internal processes, in accordance with the Nominations Policy,
the Nominating Committee will evaluate a Candidate proposed by
any single stockholder or group of stockholders that has
beneficially owned more than 5% of the Common Stock for at least
one year (and will hold the required number of shares through
the annual stockholders meeting) and that satisfies the notice,
information and consent provisions in the Nominations Policy (a
Qualified Stockholder). All Candidates (whether
identified internally or by a Qualified Stockholder) who, after
evaluation, are then recommended by the Nominating Committee and
approved by the Board, will be included in the Companys
recommended slate of director nominees in its proxy statement.
In order to be considered by the Nominating Committee for an
upcoming annual meeting of stockholders, a notice from a
Qualified Stockholder regarding a potential Candidate must be
received by the Nominating Committee not less than 120 calendar
days before the anniversary of the date of the Companys
proxy statement released to stockholders in connection with the
previous years annual meeting. If the Company changes its
annual meeting date by more than 30 days from year to year,
the notice must be received by the Nominating Committee no later
than the close of business on the 10th day following the
day on which notice of the date of the upcoming annual meeting
is publicly disclosed.
Any Candidate proposed by a Qualified Stockholder must be
independent of the Qualified Stockholder in all respects as
determined by the Nominating Committee or by applicable law. Any
Candidate submitted by a Qualified Stockholder must also meet
the definition of an independent director under the
rules of the Nasdaq National Market.
Evaluation
of Candidates
The Nominating Committee will consider all Candidates identified
through the processes described above, and will evaluate each of
them, including incumbents, based on the same criteria.
If, based on the Nominating Committees initial evaluation,
a Candidate continues to be of interest to the Nominating
Committee, a member of the Nominating Committee, the Chairman of
the Board or the chief executive officer will interview the
Candidate and communicate his or her evaluation to the
Nominating Committee members, the Chairman of the Board
and/or the
chief executive officer. Later reviews will be conducted by
other members of the Nominating Committee and senior management.
Ultimately, background and reference checks will be conducted
and the Nominating Committee will meet to finalize its list of
recommended Candidates for the Boards consideration.
8
Future
Revisions to the Nominations Policy
The Nominations Policy is intended to provide a flexible set of
guidelines for the effective functioning of the Companys
director nominations process. The Nominating Committee intends
to review the Nominations Policy at least annually and
anticipates that modifications will be necessary from time to
time as the Companys needs and circumstances evolve, and
as applicable legal or listing standards change. The Nominating
Committee may amend the Nominations Policy at any time, in which
case the most current version will be available on the
Companys web site at
http://www.mobilityelectronics.com.
AUDIT
COMMITTEE REPORT
The Audit Committee has reviewed and discussed our audited
consolidated financial statements with management. The Audit
Committee has also discussed the matters required to be
discussed by SAS 61, as amended, (Codification of Statements on
Auditing Standards, AU § 380) and Securities and
Exchange Commission rules and regulations with KPMG LLP, our
independent registered public accounting firm. The Audit
Committee has received the written disclosures and the letter
from KPMG LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and
has reviewed, evaluated and discussed with KPMG LLP its
independence from the Company. The Audit Committee has also
discussed with management and KPMG LLP such other matters and
received such assurances from them as it deemed appropriate.
Based upon the review and discussion of the above, the Audit
Committee recommended to the Board that the audited consolidated
financial statements be included in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2005 filed with the
Securities and Exchange Commission. The Audit Committee has also
recommended for stockholder approval the retention of KPMG LLP
as the Companys independent registered public accounting
firm during 2006.
A current copy of the Audit Committee Charter is attached to
this proxy statement as Appendix A.
Respectfully submitted:
Jeffrey R. Harris
William O. Hunt
Larry M. Carr
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES
Our independent registered public accounting firm during the
year ended December 31, 2005 was KPMG LLP. KPMG LLP has
audited our financial statements since 1995. A representative of
KPMG LLP is expected to be present at the meeting for the
purpose of responding to appropriate questions and will be given
the opportunity to make a statement if he or she desires to do
so.
The following table sets forth the aggregate fees billed to the
Company for fiscal 2005 and fiscal 2004 by KPMG LLP:
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2005
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2004
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Audit Fees
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$
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633,150
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$
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686,480
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Audit-Related Fees
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6,950
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13,700
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Tax Fees
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13,836
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35,335
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All Other Fees
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Total
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$
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653,936
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$
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735,515
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Audit Fees consist of fees relating to the audit of our
year-end consolidated financial statements, the audit of our
internal control over financial reporting, and reviews of our
quarterly financial statements. Audit fees for 2005 also consist
of fees relating to the filing of our amended annual report on
Form 10-K
for the year ended
9
December 31, 2004 and amended quarterly reports on
Form 10-Q
for the quarters ended March 31, 2005 and June 30,
2005.
Audit-Related Fees consist primarily of fees relating to
the review of registration statements filed with the Securities
and Exchange Commission.
Tax Fees consist of fees relating to tax compliance and
advisory services.
The Audit Committee regularly determines whether specific
projects or expenditures could potentially affect KPMG
LLPs independence. The Audit Committee has considered
whether the provision of non-audit services is compatible with
maintaining the independence of KPMG LLP and has concluded that
it is compatible.
PRE-APPROVAL
OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
The Audit Committee is directly responsible for the appointment,
compensation, retention, replacement, and oversight of the work
of the independent registered public accounting firm. The Audit
Committee must approve, in advance, the provision by the
independent registered public accounting firm of all audit
services and permissible non-audit services. These services may
include audit services, audit-related services, tax services and
other services. The Audit Committee also actively engages in a
dialogue with the independent registered public accounting firm
with respect to any relationships or services that may impact
their objectivity and independence. In 2005, all fees paid to
the independent registered public accounting firm for non-audit
services were approved in advance by the Audit Committee.
REPORT OF
THE COMPENSATION AND HUMAN RESOURCES COMMITTEE
Members
of the Compensation and Human Resources Committee
Our Compensation and Human Resources Committee (the
Committee) consists of the following three members:
Jerre L. Stead, William O. Hunt and Robert W. Shaner.
Mr. Stead serves as Chairman of the Committee. Each
director who served on the Committee during 2005 qualifies as an
outside director under Section 162(m) of the
Internal Revenue Code (the Code), a
non-employee director as such term is defined in
Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the
Exchange Act) and an independent
director as such term is defined in Rule 4200(a)(15)
of the rules of the Nasdaq National Market. The Committee
operates under a written charter which is available on our
website at http://www.mobilityelectronics.com.
Executive
Compensation Philosophy
Our executive compensation plans have been designed to attract,
retain and reward high caliber executives who are expected to
formulate and execute our business plans in a manner that will
provide our stockholders with a higher than average return on
our common stock while ensuring that our compensation levels are
fair and appropriate to both our executives and stockholders.
With these goals in mind, our compensation plans and policies
have been designed to significantly link total compensation with
our operating performance. Although the Committee recognizes
that the improvement of operating performance and higher stock
prices do not necessarily move in tandem over the short term,
the Committee believes that the two criteria will correlate over
the long term.
The Committee does not expect to pay above-average base salaries
to its executive officers, but does expect to use
performance-oriented and equity-based compensation to reward
positive performance and results.
The Committee also supports the position that stock ownership by
our executive officers, encouraged by equity-based compensation
plans, aligns the interests of the executive officers with those
of our stockholders. By using equity-based compensation over a
period of time, our executive officers should become larger
holders of common stock. This is intended to strengthen their
identification with our stockholders and make increasing
stockholder value an even more important focus for our
management group. In addition, the Committee believes that the
use of equity-based compensation combined with a focus on our
operating performance will create a balance of these two
long-term objectives.
10
Our compensation policy for our chief executive officer as well
as the other executive officers reflects the following general
goals and objectives:
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to encourage growth and create increased stockholder value
through the efficient use of corporate assets;
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to recognize the contribution made by exceptional management;
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to provide the framework, as a component of the total
compensation program, to attract, retain and motivate highly
qualified management personnel; and
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to develop performance criteria measuring revenue growth, profit
and loss performance and other qualitative factors.
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In early 2004, and again in 2005, the Committee retained an
independent consultant to review our equity compensation plans
in total and the overall compensation philosophy for our
executive officers, particularly in light of the new accounting
rules that have been adopted relating to the expensing of stock
options. The independent consultant recommended a compensation
philosophy set at the 50th percentile of the market, to be
determined by a review of peer company data, with the ability to
go above or below the 50th percentile depending on the
experience and capabilities of the individual and the critical
nature of that individuals role.
Executive
Compensation Program
Compensation for Company executives consists of both cash and
equity-based opportunities. During 2005, the annual cash
compensation consisted of (i) base salary and (ii) an
annual bonus opportunity under a discretionary bonus plan
adopted by the Committee. During 2005, equity-based compensation
was granted in the form of restricted stock units issued
pursuant to our 2004 Omnibus Long-Term Incentive Plan.
Base Salary. During 2005, the Committee
determined base salaries for our executive officers based upon
an analysis prepared by an outside consultant, which included a
comparison of competitive pay practices for peer companies. The
Committee also considered other factors, such as the overall
performance of the Company and the executive officers
role, past performance, experience and capabilities.
Discretionary Bonus Plan. The Committee is
responsible for administering and interpreting our discretionary
bonus plan, determining eligibility thereunder, approving
performance goals and plans, and determining bonus awards.
During 2005, the participants in the discretionary bonus plan,
including our executive officers and other selected personnel,
were eligible for an annual award based on a percentage of base
compensation equal to 70% for our Chief Executive Officer, and
ranging from 25% to 50% for other executive officers and
selected personnel. The percentage range of potential awards
during 2005 was based upon the analysis prepared by the outside
consultant retained by the Committee and was tied to the
Companys achievement of specified consolidated adjusted
earnings before interest, taxes, depreciation and amortization
(EBITDA) targets. Potential payouts under the discretionary
bonus plan ranged from 80% to 300% based upon the Companys
achievement of the EBITDA targets.
In addition, the determination of whether to issue awards under
the discretionary bonus plan takes into account input from our
executive officers and the Committees consideration, among
other things, of one or more of the following goals:
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encouraging our growth and creating increased stockholder value
through the efficient use of assets;
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recognizing the contribution of exceptional management, and
awarding discretionary bonuses for extraordinary
performance; and
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providing incentives and rewards, as a component of the total
compensation program, to attract, retain and motivate highly
qualified management personnel.
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To achieve these goals, we integrate base compensation with
bonuses based upon a variety of factors that include our
operating performance, as well as each participants
individual initiative and performance.
While the Company achieved an EBITDA target during 2005 that
would have resulted in payouts under the discretionary bonus
plan at the 80% level, the Committee determined, based on the
operating performance of the
11
Company and its discretionary authority, that bonus awards at
this level were not appropriate. The Committee did, however,
grant discretionary bonuses at a level ranging between 6% and
10% of base compensation to reward the Companys executive
officers and select personnel for their performance in
connection with the Companys sale of a portfolio of 46
patents and patents pending related to the Companys Split
Bridge and serialized PCI intellectual property for
$13 million.
The Committee has adopted a similar discretionary bonus plan for
2006 in which our executive officers and selected personnel are
eligible for an annual award based on a percentage of base
compensation equal to 70% for our Chief Executive Officer, and
ranging from 25% to 50% for other executive officers and
selected personnel. The percentage range of potential awards
during 2006 are again tied to the Companys achievement of
specified EBITDA targets and potential payouts range from 80% to
300% based upon the Companys performance.
Equity Compensation. The Committee oversees
the Companys long-term equity-based incentive plans. In
2005, long-term, equity-based compensation was granted in the
form of restricted stock units pursuant to a Company-wide equity
compensation program adopted by the Committee in 2004. These
restricted stock units were granted under the Companys
2004 Omnibus Long-Term Incentive Plan adopted by the
Companys stockholders at its 2004 annual meeting. This
equity compensation program was developed in conjunction with an
analysis prepared by the Committees outside consultant. In
light of recently adopted rules relating to the expensing of
stock options, the Committee determined that it would be in the
Companys best interest to issue restricted stock units
rather than stock options.
Under this new equity compensation program, all full-time
Company employees, including the Companys executive
officers, received restricted stock units that allow each to
receive shares of the Companys common stock upon the
Companys achievement of a specific performance objective
tied to net income. Alternatively, if the performance objective
is not met within five years of the date of grant, the
restricted stock units will vest automatically, in full, at that
time. In addition, the restricted stock units may vest earlier,
on a pro-rata basis, upon the death, disability, termination
without cause, or retirement of the plan participants. The
Committee selected a performance objective tied to net income
that it believes will support the Companys goal of
providing superior stockholder returns.
The size of the awards granted to the Companys executive
officers in January 2005 was based upon the analysis prepared by
the Committees outside consultant, a review of awards
granted to executive officers at comparable companies, as well
as the performance of each executive officer compared to the
Companys strategic plan and an analysis of the executive
officers role, past performance, experience and
capabilities.
In addition, in March 2005, in light of the recent rules adopted
with respect to the expensing of stock options, the Committee
determined that it was in the Companys best interest to
accelerate the vesting of all of the Companys outstanding
stock options having an exercise price greater than $6.00 per
share. The Committee determined that the overall benefits to the
Company in accelerating the vesting of these stock options
outweighed the potential negative consequences. As a result of
this action, all stock options previously granted to the
Companys executive officers with an exercise price greater
than $6.00 per share are now fully vested.
Fiscal
Year 2005 CEO Compensation
The compensation for Mr. Mollo during 2005 was based upon
the procedure for determining base salaries, discretionary bonus
awards and long-term equity-based awards described above and the
factors and criteria described below.
Base Salary. As of December 31, 2005,
Mr. Mollos annual base salary was $340,000. This
salary was based upon the analysis prepared for the Committee by
its outside consultant, as well as the improved financial
performance of the Company and discretionary measures based on
Mr. Mollos strategic direction of the Company and his
managerial effectiveness, including leadership exhibited through
relationships with customers, vendors, employees and
stockholders and new product and market development.
Annual Bonus. During 2005, the Committee
granted a discretionary bonus to Mr. Mollo totaling
$34,000, or 10% of his base compensation, to reward
Mr. Mollo for his performance in connection with the
Companys sale of a
12
portfolio of 46 patents and patents pending related to the
Companys Split Bridge and serialized PCI intellectual
property for $13 million.
Long-Term Equity Compensation. In January
2005, the Committee granted Mr. Mollo an award of 100,000
restricted stock units pursuant to the long-term equity
compensation program adopted by the Committee in 2004. This
award was granted by the Committee based upon the analysis
prepared for the Committee by its outside consultant and the
Committees consideration of Mr. Mollos role in
the improved financial performance of the Company and the
relative proportion of long-term equity incentives within the
total mix of Mr. Mollos compensation.
Stock
Ownership Guidelines
During 2004, the Board adopted a new requirement pursuant to its
Corporate Governance Guidelines that each of its executive
officers and directors own a minimum of 1,000 shares of the
Companys common stock within three years of the date that
such individual joins the Company. The Committee believes that
its directors and executive officers should have a significant
financial stake in the Company and that this new requirement
helps to further align the interests of the Companys
directors and executive officers with its stockholders.
Respectfully submitted:
Jerre L. Stead
William O. Hunt
Robert W. Shaner
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of Messrs. Hunt, Shaner and Stead, who are all of the
members of our Compensation and Human Resources Committee, has
at any time been one of our officers or employees nor had any
relationship that required disclosure under Item 404 of
Regulation S-K.
None of our executive officers serves as a member of the board
or compensation committee of any entity which has one or more
executive officers serving as a member of our Board or
Compensation and Human Resources Committee. For a description of
the transactions between us and any member of the Compensation
and Human Resources Committee and entities affiliated with any
Compensation and Human Resources Committee member, see
Certain Relationships and Related Transactions below.
CORPORATE
GOVERNANCE
Current copies of the following materials related to the
Companys corporate governance policies and practices are
available publicly on the Companys web site at
http://www.mobilityelectronics.com.
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Audit Committee Charter
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Compensation and Human Resources Committee Charter
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Corporate Governance and Nominating Committee Charter
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Corporate Governance Guidelines
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Director Nominations Policy
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Code of Business Conduct and Ethics
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Policy for Reporting Questionable Accounting or Auditing Matters
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Copies may also be obtained, free of charge, by writing to:
Secretary, Mobility Electronics, Inc.,
17800 N. Perimeter Dr., Suite 200, Scottsdale,
Arizona 85255.
13
Stockholders may communicate directly with any or all of our
Board members or any Board committee by writing to such
individuals or committees in care of our Secretary. The
Secretary will forward any such communications to the addressee
on a regular basis. The Lead Independent Director will receive
all communications directed to the Board, and the Chairman of
each committee will receive all communications directed to that
specific committee. Please address any written communications as
follows:
Mobility Electronics, Inc.
[Addressee*]
c/o Secretary
17800 N. Perimeter Dr., Suite 200
Scottsdale, Arizona 85255
*Board of Directors
*Audit Committee
*Compensation and Human Resources Committee
*Corporate Governance and Nominating Committee
*Name of individual director
The Corporate Governance Guidelines require each Board member to
attend the Companys annual meeting of stockholders except
for absences due to causes beyond the reasonable control of the
director. There were six directors at the time of the 2005
annual meeting of stockholders and three were unable to be
present due to causes beyond their reasonable control.
PRINCIPAL
STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of March 15,
2006 by:
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each person or entity known by us to beneficially own 5% or more
of the outstanding shares of our common stock;
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each of our directors and the Named Executive Officers; and
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all of our directors and Named Executive Officers as a group.
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14
Unless otherwise noted, the persons named below have sole voting
and investment power with respect to the shares shown as
beneficially owned by them.
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Number of Shares
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Beneficially
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Name and Address of Beneficial
Owner(1)
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Owned(2)
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Percentage(3)
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Directors and Named
Executive Officers:
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Charles R. Mollo(4)
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1,795,787
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5.8
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%
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Larry M. Carr(5)
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305,818
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1.0
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%
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Jeffrey R. Harris(4)
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1,410,358
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4.5
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%
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William O. Hunt(6)
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126,000
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*
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Robert W. Shaner
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2,910
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*
|
|
Jerre L. Stead(7)
|
|
|
186,660
|
|
|
|
*
|
|
Joan W. Brubacher(8)
|
|
|
265,383
|
|
|
|
*
|
|
Timothy S. Jeffries(9)
|
|
|
229,632
|
|
|
|
*
|
|
Executive officers and directors
as a group (eight persons)
|
|
|
3,153,481
|
|
|
|
10.0
|
%
|
5% or more
Stockholders:
|
|
|
|
|
|
|
|
|
Adage Capital Partners GP, LLC(10)
|
|
|
3,538,258
|
|
|
|
11.4
|
%
|
FMR Corp(11)
|
|
|
3,365,947
|
|
|
|
10.9
|
%
|
Alydar Partners, LLC(12)
|
|
|
2,632,902
|
|
|
|
8.5
|
%
|
Fred Alger Management, Inc. and
Fred M. Alger III(13)
|
|
|
2,240,000
|
|
|
|
7.2
|
%
|
Mellon Financial Corporation(14)
|
|
|
2,098,700
|
|
|
|
6.8
|
%
|
Friess Associates LLC(15)
|
|
|
2,046,100
|
|
|
|
6.6
|
%
|
Janice L. Breeze-Mollo(4)
|
|
|
1,635,382
|
|
|
|
5.3
|
%
|
Longwood Investment Advisors,
Inc(16)
|
|
|
1,604,350
|
|
|
|
5.2
|
%
|
|
|
|
* |
|
Represents beneficial ownership of less than 1%. |
|
|
|
(1) |
|
The address of all directors and Named Executive Officers is
c/o Mobility
Electronics, Inc., 17800 N. Perimeter Dr.,
Suite 200, Scottsdale, Arizona 85255. |
|
(2) |
|
Beneficially owned shares, as defined by the
Securities and Exchange Commission, are those shares as to which
a person has voting or investment power, or both.
Beneficial ownership does not necessarily mean that
the named person is entitled to receive the dividends on, or the
proceeds from the sale of, the shares. |
|
(3) |
|
Percentage of beneficial ownership is based upon
31,004,986 shares of common stock outstanding as of
March 15, 2006. For each named person, this percentage
includes common stock that such person has the right to acquire
either currently or within 60 days of March 15, 2006,
including upon the exercise of an option or warrant. |
|
(4) |
|
The following describes the sole and shared voting power over
the shares of common stock beneficially owned by Charles R.
Mollo, Jeffrey R. Harris, and Janice L. Breeze-Mollo: |
|
|
|
(i) |
|
Sole Voting and Investment Power: |
|
|
|
|
|
Mr. Mollo has sole voting and investment power over
105,731 shares of common stock, which includes 53,724
options exercisable within 60 days of March 15, 2006. |
|
|
|
Ms. Breeze-Mollo has sole voting and investment power over
6,468 shares of common stock. |
|
|
|
Mr. Harris has sole voting and investment power over
241,291 shares of common stock, which includes 47,750
options and 27,647 warrants exercisable within 60 days of
March 15, 2006. |
|
|
|
(ii) |
|
Shared Voting and Investment Power |
15
|
|
|
|
|
Mr. Mollo shares voting and investment power over
(a) 8,000 shares of common stock held by The CRM
Revocable Trust, of which Mr. Mollo is the trustee; and
(b) 35,000 shares of common stock held by the John R.
Harris and Timothy D. Harris Irrevocable Trust, of which
Mr. Mollo is a trustee. |
|
|
|
Ms. Breeze-Mollo shares voting and investment power over
14,696 shares of common stock held by the JLM Revocable
Trust, of which Ms. Breeze-Mollo is the trustee; and
30,966 shares of common stock held by the Breeze Family
LLC, of which Ms. Breeze-Mollo is the manager. |
|
|
|
Mr. Mollo and Ms. Breeze-Mollo share voting and
investment power over (a) 85,441 shares of common
stock of which they are the holder of record as joint tenants
with right of survivorship; (b) 128,136 shares of
common stock that may be purchased upon the exercise of options
held by CJMO, LLC, a limited liability company in which
Mr. Mollo and Ms. Breeze-Mollo are members and
Mr. Mollo is the manager; (c) 71,470 shares of
common stock owned by the CRM-008 Trust, of which Mr. Mollo
and Ms. Breeze-Mollo are trustees;
(d) 165,056 shares of common stock held by La Luz
Enterprises, L.L.C., of which Mr. Mollo is the sole
manager, and the CRM-008 Trust, of which Mr. Mollo and
Ms. Breeze-Mollo are trustees, is the sole member; and
(e) 27,886 shares of common stock held by La Luz
Enterprises-II, L.L.C., of which Ms. Breeze-Mollo is the
sole manager, and the JLM-008 Trust, of which Mr. Mollo and
Ms. Breeze-Mollo are trustees, is the sole member. |
|
|
|
Mr. Mollo and Mr. Harris share voting and investment
power over 63,804 shares of common stock held by the Harris
Family LLC, of which Mr. Harris is the manager and the John
R. Harris and Timothy D. Harris Irrevocable Trust, of which
Mr. Mollo is a co-trustee, is the majority member. |
|
|
|
Mr. Mollo, Ms. Breeze-Mollo and Mr. Harris share
voting and investment power over 411,768 shares of common
stock held by New Horizons Enterprises, Inc. The CRM-008 Trust
and the JLM-008 Trust, both of which Mr. Mollo and
Ms. Breeze-Mollo are trustees, together own approximately
74% of New Horizons Enterprises, Inc. Mr. Harris owns
approximately 26%, and is president and director of New Horizons
Enterprises, Inc. Mr. Mollo, Ms. Breeze-Mollo and
Mr. Harris also share voting and investment power over
693,495 shares of common stock held by New Vistas
Investment Corporation. The CRM-008 Trust and the JLM-008 Trust,
both of which Mr. Mollo and Ms. Breeze-Mollo are
trustees, together own approximately 61% of New Vistas
Investment Corporation. Mr. Harris owns approximately 20%,
and is president and director of New Vistas Investment
Corporation. Ms. Breeze-Mollo is also a director and vice
president of New Vistas Investment Corporation. |
|
|
|
The address for Ms. Breeze-Mollo is 5528 Eubank Blvd. NE,
Suite 3, Albuquerque, New Mexico 87111. |
|
(5) |
|
Includes 140,149 shares of common stock held by OHA
Financial, Inc., of which Mr. Carr is a director and
majority stockholder; 56,230 shares held with
Ms. Sharon Carr as tenants in common; 13,823 warrants and
38,500 options exercisable within 60 days of March 15,
2006. |
|
(6) |
|
Includes 90,000 shares of common stock owned by B&G
Partnership Limited, which Mr. Hunt co-owns with his
spouse; and 36,000 options exercisable within 60 days of
March 15, 2006. |
|
(7) |
|
Includes 63,500 options exercisable within 60 days of
March 15, 2006. |
|
|
|
(8) |
|
Includes 63,571 options exercisable within 60 days of
March 15, 2006. |
|
|
|
(9) |
|
Includes 93,562 options exercisable within 60 days of
March 15, 2006. |
|
(10) |
|
Based on a Form 3 filed with the Securities and Exchange
Commission on March 23, 2006, reflecting ownership of these
shares as of March 13, 2006. The Form 3 indicates that
these shares are held directly by Adage Capital Partners, L.P.,
a limited partnership of which Adage Capital Partners GP, L.L.C.
is the general partner. The Form 3 indicates that Adage
Capital Partners GP, L.L.C. has discretion over these shares,
but disclaims beneficial ownership except to the extent of its
pecuniary interest therein. The address for Adage Capital
Partners GP, L.L.C. is 200 Clarendon Street, 52nd Floor,
Boston, MA 02116. |
|
(11) |
|
Based solely on a Schedule 13G/A filed with the Securities
and Exchange Commission on February 14, 2006, which
indicates that these shares are beneficially owned by FMR Corp.
and various subsidiaries and related persons and entities. The
Schedule 13G/A reports sole power to vote, or direct the
voting, of 918,600 shares and sole power to dispose, or
direct the disposition, of 3,365,947 shares. The address
for FMR Corp. is 82 Devonshire Street, Boston, MA 02109. |
16
|
|
|
(12) |
|
Based solely on a Schedule 13G/A filed with the Securities
and Exchange Commission on February 14, 2006, which
indicates that these shares are beneficially owned by Alydar
Partners, LLC and various related persons and entities. The
Schedule 13G/A reports shared power to vote, or direct the
voting, and shared power to dispose, or direct the disposition,
of a total of 2,632,902 shares. The address for Alydar
Partners, LLC is 222 Berkeley Street, 17th floor, Boston,
MA 02116. |
|
(13) |
|
Based solely on a Schedule 13G filed with the Securities
and Exchange Commission on March 10, 2006, which indicates
that these shares are beneficially owned by Fred Alger
Management, Inc. and Fred M. Alger III. The
Schedule 13G reports sole power to vote, or direct the
voting, and dispose, or direct the disposition, of a total of
2,240,000 shares. The address for Fred Alger Management,
Inc. and Fred M. Alger III is 111 Fifth Avenue, New York,
New York 10003. |
|
(14) |
|
Based solely on a Schedule 13G filed with the Securities
and Exchange Commission on February 15, 2006, which
indicates that these shares are beneficially owned by Mellon
Financial Corporation and various subsidiaries and related
persons and entities. The Schedule 13G reports sole power
to vote, or direct the voting, of 1,861,200 shares, and
dispose, or direct the disposition of 2,098,700 shares. The
address for Mellon Financial Corporation is One Mellon Center,
Pittsburgh, Pennsylvania 15258. |
|
(15) |
|
Based solely on a Schedule 13G filed with the Securities
and Exchange Commission on February 15, 2006, which
indicates that these shares are beneficially owned by Friess
Associates LLC. The Schedule 13G reports sole power to
vote, or direct the voting, and dispose, or direct the
disposition, of a total of 2,046,100 shares. The address
for Friess Associates LLC is 115 E. Snow King,
Jackson, WY 83001. |
|
(16) |
|
Based solely on a Schedule 13G filed with the Securities
and Exchange Commission on February 10, 2006, which
indicates that these shares are beneficially owned by Longwood
Investment Advisors, Inc. The Schedule 13G reports sole
power to vote, or direct the voting, and dispose, or direct the
disposition, of a total of 1,604,350 shares. The address
for Longwood Investment Advisors, Inc. is 1275 Drummers Lane,
Suite 207, Wayne, PA 19087. |
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2005 regarding the number of shares of our common stock that may
be issued upon the exercise of options, warrants and rights
under our equity compensation plans. Our stockholder approved
plans include the 1996 Long Term Incentive Plan, the 2001
Employee Stock Purchase Plan, the 2004 Non-Employee Director
Long-Term Incentive Plan, and the 2004 Omnibus Long-Term
Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
remaining available For
|
|
|
|
Number of Securities
|
|
|
|
|
|
future Issuance under
|
|
|
|
to be Issued upon
|
|
|
Weighted-average Exercise
|
|
|
Equity Compensation
|
|
|
|
Exercise of
|
|
|
Price of Outstanding
|
|
|
Plans (excluding
|
|
|
|
Outstanding Options,
|
|
|
Options, Warrants and
|
|
|
Securities reflected in
|
|
|
|
Warrants and Rights
|
|
|
Rights
|
|
|
Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved
by stockholders:
|
|
|
1,166,246
|
|
|
$
|
4.97
|
|
|
|
3,575,666(1
|
)
|
Equity compensation plans not
approved by stockholders
|
|
|
2,402,452(2
|
)
|
|
$
|
8.35
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
3,568,698
|
|
|
$
|
7.25
|
|
|
|
3,575,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 103,319 shares available under the 1996 Long Term
Incentive Plan; 1,773,037 shares available under the 2001
Employee Stock Purchase Plan; 247,234 shares available
under the 2004 Non-Employee Director Long-Term Incentive Plan;
and 1,452,076 shares available under the 2004 Omnibus
Long-Term Incentive Plan. |
|
(2) |
|
Includes 16,500 non-qualified options granted at $1.65 per
share to the employees of Mobility Texas, Inc., formerly known
as Cutting Edge Software, Inc., at the time that we acquired
Mobility Texas, Inc. in August 2002, which options are fully
vested and expire August 20, 2006; 5,000 warrants issued to
Silicon Valley Bank |
17
|
|
|
|
|
at an exercise price of $7.59 per share in connection with an
amendment to our line of credit, which are fully vested and
expire September 3, 2013; two separate warrants granted to
RadioShack Corporation in connection with the restructuring of
the Companys strategic relationship with RadioShack in
March 2005, with each warrant providing RadioShack with the
right to acquire 595,238 shares of common stock at an
exercise price of $8.40 per share upon the achievement of
certain performance results by the Company, and having
expiration dates of February 15, 2008 and February 15,
2010, respectively, that may, under certain circumstances, be
extended to August 15, 2008 and August 15, 2010,
respectively; and two separate warrants granted to Motorola,
Inc. in connection with the restructuring of the Companys
strategic relationship with Motorola in March 2005, with each
warrant providing Motorola with the right to acquire
595,238 shares of common stock at an exercise price of
$8.40 per share upon the achievement of certain performance
results by the Company, and having expiration dates of
February 15, 2008 and February 15, 2010, respectively,
that may, under certain circumstances, be extended to
August 15, 2008 and August 15, 2010, respectively. |
18
EXECUTIVE
COMPENSATION
The following table sets forth the compensation awarded to,
earned by, paid to, or accrued for services rendered to us in
all capacities during the years ended December 31, 2005,
2004, and 2003 by our chief executive officer and the other most
highly compensated executive officers whose salary and bonus
exceeded $100,000 in 2005 for services rendered in all
capacities to us during the year ended December 31, 2005
(collectively, the Named Executive Officers).
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation(1)
|
|
|
Long-Term Compensation
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Restricted
|
|
|
Securities
|
|
|
All
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
Annual
|
|
|
Stock
|
|
|
Underlying
|
|
|
Other
|
|
Name and Principal
Position
|
|
Year
|
|
|
Salary($)
|
|
|
Payouts($)
|
|
|
Compensation($)
|
|
|
Awards($)
|
|
|
Options(#)
|
|
|
Compensation($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles R. Mollo
|
|
|
2005
|
|
|
$
|
334,194
|
|
|
$
|
34,000
|
|
|
|
|
|
|
$
|
732,000(5
|
)
|
|
|
|
|
|
$
|
5,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Executive
|
|
|
2004
|
|
|
$
|
323,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and Chairman
|
|
|
2003
|
|
|
$
|
278,684
|
|
|
$
|
40,327
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
$
|
4,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy S. Jeffries
|
|
|
2005
|
|
|
$
|
232,425
|
|
|
$
|
19,080
|
|
|
|
|
|
|
$
|
549,000(6
|
)
|
|
|
|
|
|
$
|
2,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President,
|
|
|
2004
|
|
|
$
|
223,077
|
|
|
|
|
|
|
$
|
144,708(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer
|
|
|
2003
|
|
|
$
|
197,300
|
|
|
$
|
21,086
|
|
|
$
|
51,497(4
|
)
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan W. Brubacher
|
|
|
2005
|
|
|
$
|
232,425
|
|
|
$
|
19,080
|
|
|
|
|
|
|
$
|
549,000(7
|
)
|
|
|
|
|
|
$
|
10,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President,
|
|
|
2004
|
|
|
$
|
223,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer and
Treasurer
|
|
|
2003
|
|
|
$
|
194,874
|
|
|
$
|
20,481
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
$
|
8,875
|
|
|
|
|
(1) |
|
In accordance with the rules of the Securities and Exchange
Commission, the compensation described in this table does not
include medical, group life insurance or other benefits which
are available generally to all of our salaried employees and
certain perquisites and other personal benefits received which
do not exceed the lesser of $50,000 or 10% of any officers
salary and bonus disclosed in this table. |
|
(2) |
|
The amounts shown reflect matching contributions by the Company
to the Companys 401(k) Plan on behalf of Mr. Mollo,
Mr. Jeffries, and Ms. Brubacher. |
|
(3) |
|
This amount includes (a) $49,500 relating to the
reimbursement of fees and expenses incurred by Mr. Jeffries
in obtaining his Executive MBA from Duke University during
fiscal 2004; and (b) $95,208 relating to the reimbursement
of relocation, temporary housing and automotive expenses
incurred by Mr. Jeffries during fiscal 2004. The Company
has further agreed to not deduct these expenses for tax purposes. |
|
(4) |
|
This amount includes (a) $41,090 relating to the
reimbursement of fees and expenses incurred by Mr. Jeffries
in obtaining his Executive MBA from Duke University during
fiscal 2003; and (b) $10,407 relating to reimbursement of
temporary housing and automotive expenses incurred by
Mr. Jeffries during fiscal 2003. The Company has further
agreed to not deduct these expenses for tax purposes. |
|
(5) |
|
Represents the grant of restricted stock units under which the
executive has the right to receive, subject to vesting,
100,000 shares of common stock. The restricted stock units
vest five years following the date of grant, but may vest
earlier, in full, upon the Companys achievement of
specific performance criteria, and may vest earlier, on a
pro-rata basis, upon the executives death, disability,
termination without cause, or retirement. The value set forth
above is based on the closing price of the Companys common
stock on the date of grant, January 13, 2005, which was
$7.32 per share. The aggregate restricted stock holdings
held by the executive at the end of the last fiscal year
consisted of 100,000 restricted stock units having a value of
$966,000, based on the closing price of the Companys
common stock on December 30, 2005, which was $9.66 per
share. The restricted stock units are not entitled to dividends
or dividend equivalents. |
|
(6) |
|
Represents the grant of restricted stock units under which the
executive has the right to receive, subject to vesting,
75,000 shares of common stock. The restricted stock units
vest five years following the date of grant, but may vest
earlier, in full, upon the Companys achievement of
specific performance criteria, and may vest earlier, on a
pro-rata basis, upon the executives death, disability,
termination without cause, or retirement. The value set forth
above is based on the closing price of the Companys common
stock on the date of grant, January 13, 2005, which was
$7.32 per share. The aggregate restricted stock holdings
held by the executive at the end of the last fiscal year
consisted of 75,000 restricted stock units having a value of
$724,500, based on the |
19
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closing price of the Companys common stock on
December 30, 2005, which was $9.66 per share. The
restricted stock units are not entitled to dividends or dividend
equivalents. |
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(7) |
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Represents the grant of restricted stock units under which the
executive has the right to receive, subject to vesting,
75,000 shares of common stock. The restricted stock units
vest five years following the date of grant, but may vest
earlier, in full, upon the Companys achievement of
specific performance criteria, and may vest earlier, on a
pro-rata basis, upon the executives death, disability,
termination without cause, or retirement. The value set forth
above is based on the closing price of the Companys common
stock on the date of grant, January 13, 2005, which was
$7.32 per share. The aggregate restricted stock holdings
held by the executive at the end of the last fiscal year
consisted of 75,000 restricted stock units having a value of
$724,500, based on the closing price of the Companys
common stock on December 30, 2005, which was $9.66 per
share. The restricted stock units are not entitled to dividends
or dividend equivalents. |
Option
Grants in Last Fiscal Year
There were no stock options or stock appreciation rights granted
to any of our Named Executive Officers during the year ended
December 31, 2005.
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides summary information regarding stock
options exercised during 2005 and stock options held as of
December 31, 2005 by our Named Executive Officers.
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Number of Shares Under-
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Value of Unexercised
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Shares
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lying Unexercised Options
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In-the-Money
Options at
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Acquired on
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Value
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at December 31,
2005(#)
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December 31,
2005($)(1)
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Name
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Exercise(#)
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Realized($)
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Exercisable
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Unexercisable
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Exercisable
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Unexercisable
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Charles R. Mollo
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0
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$
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0
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188,526
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0
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$
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414,733
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$
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0
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Timothy S. Jeffries
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12,859
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$
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73,324
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79,282
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32,141
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$
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481,561
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$
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279,198
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Joan W. Brubacher
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134,519
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$
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736,487
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49,291
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32,141
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$
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226,124
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$
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279,198
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(1) |
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The value of unexercised options is calculated by subtracting
the aggregate exercise price of the options from the aggregate
market value of the shares of common stock subject thereto as of
December 30, 2005. |
Employment
Agreements
We have employment agreements with Mr. Mollo,
Ms. Brubacher and Mr. Jeffries. Each of these
agreements expired on June 1, 2005, but automatically
renewed on June 1, 2005 and will continue to automatically
renew on a
year-to-year
basis at the end of each annual term, unless either party to the
agreement gives the other party notice of termination at least
90 days prior to the end of the then current term. None of
the parties have provided notice 90 days prior to
June 1, 2006 and, therefore, the employment agreements will
extend until June 1, 2007. The employment agreements
provide for increases in salary as determined by the Board of
Directors.
As of December 31, 2005, Mr. Mollos annual base
salary was $340,000. Mr. Mollo has a targeted annual cash
bonus, for each fiscal year that the agreement is in effect, of
70% of his then current base salary. If Mr. Mollos
employment agreement is terminated for constructive termination,
or for any reason other than its expiration, the death or
disability of Mr. Mollo or just cause, as defined in the
agreement, Mr. Mollo is entitled to continue to receive his
salary for a period of six months following the date of
termination. If Mr. Mollos employment agreement is
terminated for constructive termination, or for any reason other
than its expiration, the death or disability of Mr. Mollo
or just cause, as defined in the agreement, and such termination
occurs within two years after a change of control in the
Company, as defined in the agreement, Mr. Mollo is entitled
to receive a lump sum payment equal to his then current salary
for one year plus his cash bonus for one year at 100%
achievement and continued health benefits. In the event of a
change of control, as defined in the agreement, all equity
compensation held by Mr. Mollo shall become immediately and
fully vested and not subject to restriction.
As of December 31, 2005, Ms. Brubachers annual
base salary was $238,500. Ms. Brubacher has a targeted
annual calendar year cash bonus of 50% of her then current
salary. If Ms. Brubachers employment agreement is
20
terminated for constructive termination, or for any reason other
than its expiration, the death or disability of
Ms. Brubacher or just cause, as defined in the agreement,
Ms. Brubacher is entitled to continue to receive her salary
for a period of six months following the date of termination. If
Ms. Brubachers employment agreement is terminated for
constructive termination, or for any reason other than its
expiration, the death or disability of Ms. Brubacher or
just cause, as defined in the agreement, and such termination
occurs within two years after a change of control in the
Company, as defined in the agreement, Ms. Brubacher is
entitled to receive a lump sum payment equal to her then current
salary for one year plus her cash bonus for one year at 100%
achievement and continued health benefits. In the event of a
change of control, as defined in the agreement, all equity
compensation held by Ms. Brubacher shall become immediately
and fully vested and not subject to restriction.
As of December 31, 2005, Mr. Jeffries annual
base salary was $238,500. Mr. Jeffries has a targeted
annual calendar year cash bonus of 50% of his then current
salary. If Mr. Jeffries employment agreement is
terminated for constructive notice, or for any reason other than
its expiration, the death or disability of Mr. Jeffries or
just cause, as defined in the agreement, Mr. Jeffries is
entitled to continue to receive his salary for a period of six
months following the date of termination. If
Mr. Jeffries employment agreement is terminated for
constructive notice, or for any reason other than its
expiration, the death or disability of Mr. Jeffries or just
cause, as defined in the agreement, and such termination occurs
within two years after a change of control in the Company, as
defined in the agreement, Mr. Jeffries is entitled to
receive a lump sum payment equal to his then current salary for
one year plus his cash bonus for one year at 100% achievement
and continued health benefits. In the event of a change of
control, as defined in the agreement, all equity compensation
held by Mr. Jeffries shall become immediately and fully
vested and not subject to restriction.
21
PERFORMANCE
GRAPH
The following chart compares the yearly percentage change in the
cumulative total stockholder return on our common stock from the
fiscal year ending December 31, 2000 through the fiscal
year ending December 31, 2005 with the cumulative total
return of (1) the S&P600 Technology Hardware &
Equipment Index, and (2) the Nasdaq Composite Market Index.
The comparison assumes $100 was invested on December 31,
2000 in Mobilitys common stock and in each of the other
indices, and assumes reinvestment of dividends. Mobility paid no
dividends during the period.
COMPARISON
OF 5-YEAR
CUMULATIVE TOTAL RETURN
AMONG MOBILITY ELECTRONICS INC.,
NASDAQ COMPOSITE MARKET INDEX, AND
S&P
600 TECHNOLOGY HARDWARE & EQUIPMENT INDEX
Source:
Bloomberg Base date = 100
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Company Name
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Dec-00
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Dec-01
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Dec-02
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Dec-03
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Dec-04
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Dec-05
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Mobility Electronics, Inc.
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100.00
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51.28
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31.18
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366.81
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352.00
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396.31
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S&P600 Tech HW & EQP
Index
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100.00
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92.89
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58.22
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86.83
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97.13
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90.14
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Nasdaq Index Composite Index
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100.00
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79.20
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54.46
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82.11
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89.63
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91.53
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22
ASSUMES
$100 INVESTED ON DECEMBER 31, 2000
ASSUMES DIVIDENDS REINVESTED
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Effective as of May 7, 2002, the Company sold
50,000 shares of common stock to each of Joan W. Brubacher,
the Companys Executive Vice President and Chief Financial
Officer, and Timothy S. Jeffries, the Companys Executive
Vice President and Chief Operating Officer, at a purchase price
of $1.40 per share. Each of these executive officers
executed and delivered to the Company a three-year promissory
note, in the principal amount of $70,000, and bearing interest
at the rate of 6% per annum. Each promissory note was
secured by the shares of common stock so issued. During 2004,
Mr. Jeffries repaid his promissory note, plus interest, in
full. In early 2005, Ms. Brubacher repaid her promissory
note, plus interest, in full.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than 10% of a registered
class of our equity securities, to file initial reports of
ownership and reports of changes in ownership with the
Securities and Exchange Commission. Such persons are required to
furnish us with copies of all Section 16(a) reports they
file. To the Companys knowledge, based solely on a review
of the copies of such reports and written representations that
no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with for 2005, except
that one Form 4 reporting one transaction was not timely
filed by each of Mr. Mollo, Ms. Brubacher,
Mr. Jeffries, Darryl S. Baker, Brian M. Roberts, one
Form 4 reporting two transactions was not timely filed by
Mr. Stead, two Forms 4 reporting one transaction each
were not timely filed by Mr. Shaner and Mr. Harris,
and three Forms 4 reporting one transaction each were not
timely filed by Mr. Carr.
PROPOSAL NO.
2 RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee requests that the stockholders ratify the
Audit Committees selection of KPMG LLP to serve as the
Companys independent registered public accounting firm for
fiscal 2006. KPMG LLP audited the consolidated financial
statements of the Company for the year ended December 31,
2005. Representatives of KPMG LLP will be present at the meeting
and will have an opportunity to make a statement if they so
desire and to respond to questions by stockholders.
If the stockholders do not ratify the appointment, the Audit
Committee will investigate the reasons for the
stockholders rejection and reconsider the appointment.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF KPMG LLP AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM OF THE COMPANY.
OTHER
BUSINESS
The Board knows of no matter other than those described herein
that will be presented for consideration at the meeting.
However, should any other matters properly come before the
meeting or any adjournment thereof, it is the intention of the
persons named in the accompanying proxy to vote on such matters
in accordance with their best judgment in the interests of the
Company.
STOCKHOLDER
PROPOSALS
A stockholder must give the Secretary of the Company written
notice, at its principal executive office, of its intent to
present a proposal at the 2007 annual meeting of stockholders by
February 15, 2007. Additionally, if a stockholder wishes to
submit a stockholder proposal pursuant to
Rule 14a-8
of the 1934 Exchange Act Rules, as amended, for inclusion in the
Companys Proxy Statement for the 2007 annual meeting of
stockholders, the Company must receive such proposal and
supporting statements, if any, at its principal executive office
no later than
23
December 2, 2006. Such proposals should be sent to the
attention of Secretary, Mobility Electronics, Inc.,
17800 N. Perimeter Drive, Suite 200, Scottsdale,
Arizona 85255.
STOCKHOLDERS
SHARING THE SAME ADDRESS
The Company has adopted a procedure called
householding, which has been approved by the SEC.
Under this procedure, the Company will deliver only one copy of
the Companys Annual Report to stockholders for fiscal 2005
(the 2005 Annual Report) and this proxy statement to
multiple stockholders who share the same address (if they appear
to be members of the same family) unless the Company has
received contrary instructions from an affected stockholder.
Stockholders who participate in householding will continue to
receive separate proxy cards. This procedure reduces the
Companys printing and mailing costs and fees.
The 2005 Annual Report and this proxy statement are available at
the Companys web site at
http://www.mobilityelectronics.com. The Company will
deliver promptly upon written or oral request a separate copy of
the 2005 Annual Report and this proxy statement to any
stockholder at a shared address to which a single copy of either
of those documents was delivered. To receipt a separate copy of
the 2005 Annual Report or this proxy statement, stockholders
should contact the Company at:
Investor Relations
Mobility Electronics, Inc.
17800 N. Perimeter Drive, Suite 200
Scottsdale, AZ 85255
(480) 596-0061
x155
ir@mobl.com
If you are a stockholder, share an address and last name with
one or more other stockholders and would like to revoke your
householding consent and receive a separate copy of the
Companys annual report or proxy statement in the future,
please contact Automatic Data Processing, Inc.
(ADP), either by calling toll free at
(800) 542-1061
or by writing to ADP, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. You will be removed from the
householding programs within 30 days of receipt of the
revocation of your consent.
A number of brokerage firms have instituted householding. If you
hold your shares in street name, please contact your
bank, broker or other holder of record to request information
about householding.
EXPENSES
OF SOLICITATION
All costs incurred in the solicitation of proxies will be borne
by us. We estimate those costs to be approximately $15,000. In
addition to solicitation by mail, our officers and employees may
solicit proxies by telephone, telegraph or personally, without
additional compensation. We may also make arrangements with
brokerage houses and other custodians, nominees and fiduciaries
for the forwarding of solicitation materials to the beneficial
owners of shares of common stock held of record by such persons,
and we may reimburse such brokerage houses and other custodians,
nominees and fiduciaries for their
out-of-pocket
expenses incurred in connection therewith.
24
MOBILITY
ELECTRONICS, INC.
FORM 10-K
Accompanying this proxy statement is a copy of our Annual Report
for the fiscal year ended December 31, 2005 on
Form 10-K.
You should rely only on the information contained in or
incorporated by reference in this proxy statement to vote on the
matters proposed herein. We have not authorized anyone to
provide you with information that is different from what is
contained in this proxy statement. You should not assume that
the information contained in the proxy statement is accurate as
of any date other than the date hereof, and the mailing of this
proxy statement to our stockholders shall not create any
implication to the contrary.
By Order of the Board of Directors,
Brian M. Roberts
Secretary
Scottsdale, Arizona
March 28, 2006
25
APPENDIX A
MOBILITY
ELECTRONICS, INC.
AUDIT COMMITTEE CHARTER
The Board of Directors (the Board) of Mobility
Electronics, Inc., a Delaware corporation (the
Company), approves and adopts the following Audit
Committee Charter to specify the composition, roles and
responsibilities of the Audit Committee. As used in this
Charter, (i) Company includes the Company and
its subsidiaries unless the context otherwise requires,
(ii) Nasdaq means the Nasdaq National Market
and (iii) SEC means the Securities and Exchange
Commission.
PURPOSE
The function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities with respect to the
accounting and financial reporting processes of the Company, the
adequacy of the Companys systems of internal controls, the
audits of the Companys financial statements, the quality
and integrity of publicly reported financial disclosures, and
the related matters described in this Charter.
COMPOSITION
The Audit Committee shall consist of not less than three members
of the Board, each of whom shall meet the independence and
experience requirements of the Nasdaq Marketplace Rules and the
rules and regulations of the SEC. Each member will be free of
any relationship that, in the opinion of the Board, would
interfere with his or her individual exercise of independent
judgment. Each member of the Audit Committee shall be able to
read and understand fundamental financial statements and at
least one member shall be a financial expert as defined by the
SEC. The members of the Audit Committee will be elected by the
Board who will also designate the Chairman.
ROLES AND
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee
believes that its policies and procedures should remain flexible
in order to react to changing conditions and to ensure the
effective oversight of the Companys reporting process and
internal control system. In addition to any responsibilities
assigned to the Audit Committee from time to time by the Board,
the following is a summary of the Audit Committees primary
responsibilities.
Oversight
of Outside Auditors
The Companys outside auditors shall report directly to the
Audit Committee. The Audit Committee is directly responsible for
the appointment, compensation, retention, replacement, and
oversight of the work of the outside auditors, including, to the
extent they arise, the resolution of any disagreements between
management and the outside auditor regarding financial
reporting. The Audit Committee shall approve, in advance, the
provision by the outside auditors of all audit services and
permissible non-audit services.
The Audit Committee has the authority and responsibility to
review the fees charged by the outside auditors, the scope of
their engagement and proposed audit approach and to recommend
such review or auditing steps as the Audit Committee may
consider desirable.
The Audit Committee shall review and confirm the independence of
the outside auditors by reviewing non-audit services provided as
well as the outside auditors assertion of independence in
accordance with professional standards and other requirements.
The Audit Committee will be responsible for ensuring that it
receives a formal written statement delineating all
relationships between the outside auditors and the Company. The
Audit Committee will actively engage in a dialogue with the
outside auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of the
outside auditors.
The Audit Committee shall engage in a formal process every three
years of soliciting proposals from various accounting firms
regarding their potential engagement as the Companys
outside auditor.
A-1
Internal
Controls
In consultation with management and the outside auditors, the
Audit Committee shall consider the Companys significant
financial risk exposures and the steps management has taken to
monitor, control and report such exposures.
The Audit Committee shall consider the extent to which internal
control recommendations made by outside auditors have been
implemented by management.
The Audit Committee shall request that the outside auditors keep
the Audit Committee informed about fraud, illegal acts and
deficiencies in internal controls that come to their attention
and such other matters as the outside auditors conclude should
be brought to the attention of the Audit Committee.
Financial
Reporting
Review
of Significant Accounting and Reporting Issues
The Audit Committee shall review with management and the outside
auditors significant accounting and reporting issues applicable
to the Company, including recent professional and regulatory
pronouncements, and their impact on the financial statements.
Financial
Statements
The Audit Committee shall review the Companys annual and
interim financial statements and related press releases and
filings with the SEC and discuss such items with management and
the outside auditors prior to issuance.
The Audit Committee shall consider managements handling of
proposed audit adjustments identified by the outside auditors.
The Audit Committee shall discuss with management and the
outside auditors any significant changes to the Companys
accounting principles, the degree of aggressiveness or
conservatism of the accounting principles and underlying
estimates used in the preparation of the Companys
financial statements, and any items required to be communicated
by the outside auditors in accordance with Statement of Auditing
Standards (SAS) No. 61.
Based on the review and discussions with management and outside
auditors contemplated by this Charter, the Audit Committee shall
recommend to the Board whether the audited annual financial
statements be included in the Companys Annual Report on
Form 10-K.
Compliance
with Laws and Regulations
The Audit Committee shall review the effectiveness of the
Companys system for monitoring compliance with laws and
regulations, including the Companys Code of Business
Conduct and Ethics, and the results of managements
investigation of and
follow-up
(including disciplinary action) on any fraudulent acts or
accounting irregularities.
The Audit Committee shall review, with the Companys
counsel, any legal matters that could have a significant impact
on the Companys financial statements.
Corporate
Governance
The Audit Committee, or a comparable body of the Board, shall
review and approve all related party transactions.
The Audit Committee shall establish procedures for the following:
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The receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting controls,
or auditing matters; and
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A-2
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The confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or
auditing matters.
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Charter
Scope
The Audit Committee shall review and reassess the adequacy of
this Charter on a periodic basis, at least annually, and revise
it as necessary. The Audit Committee shall submit this Charter
to the Board for approval, and have the Charter published in
accordance with the rules of the SEC from time to time in effect.
Reporting
Responsibilities
The Audit Committee shall regularly update the Board about Audit
Committee activities and make appropriate recommendations from
time to time as necessary.
The Audit Committee shall annually prepare a report to
stockholders as required by SEC rules for inclusion in the
Companys proxy statement.
General
Scope of Responsibilities
The Audit Committee relies on the expertise and knowledge of
management and the outside auditor in carrying out its oversight
responsibilities. Management is responsible for preparing the
Companys financial statements. The Companys outside
auditors are responsible for auditing the financial statements.
The activities of the Audit Committee are in no way designed to
supersede or alter these traditional responsibilities.
MEETINGS
The Audit Committee shall meet at least four times annually and
may meet more frequently as circumstances dictate. Meetings of
the Audit Committee may be in person or by conference call in
accordance with the Bylaws of the Company. Meetings of the Audit
Committee shall be held at such time and place, and upon such
notice, as the Chairman of the Audit Committee may from time to
time determine. The Chairman of the Audit Committee shall
develop the agenda for each meeting and in doing so may consult
with management and the outside auditors. Except as specifically
provided in this Charter, the provisions of the Bylaws of the
Company with respect to committees of the Board shall apply to
the Audit Committee.
AUTHORITY
The Audit Committee shall have the authority to conduct any
investigation appropriate to fulfilling its responsibilities and
shall have direct access to the outside auditors, management and
any employee of the Company to discuss any matters within the
Audit Committees purview, in separate executive sessions,
to discuss any matters that the Audit Committee, or these
persons, believe should be discussed privately.
The Audit Committee shall have the ability to retain, at the
Companys expense, such special legal, accounting or other
consultants or experts it deems necessary in the performance of
its duties. The Company shall provide appropriate funding, as
determined by the Audit Committee, for the compensation of the
outside auditor and any advisers that the Audit Committee
chooses to engage.
The Audit Committee may from time to time delegate to its
Chairman or any of its members the responsibility for any
particular matters that the Audit Committee deems appropriate.
As adopted, originally effective March 4, 2004, and as
amended and restated on May 25, 2004.
A-3
Proxy Card for Common Stockholders
Mobility Electronics, Inc.
This Proxy is solicited on behalf of the Companys Board of Directors.
The undersigned hereby (1) acknowledges receipt of the Notice of Annual Meeting of
Stockholders of Mobility Electronics, Inc. (the Company) to be held at the Scottsdale Marriott at
McDowell Mountains, 16770 North Perimeter Drive, Scottsdale, Arizona 85260 at 10:00 a.m. local
time on May 24, 2006 (the Meeting), and the Proxy Statement and Annual Report mailed therewith
and (2) appoints Charles R. Mollo and Joan W. Brubacher, or either of them, the undersigneds proxy
with full power of substitution for and in the name, place and stead of the undersigned to vote all
shares of Common Stock of the Company owned by the undersigned standing in the name of the
undersigned, or with respect to which the undersigned is entitled to vote at the Meeting and any
adjournments thereof, on the following matters as indicated below and such other business as may
properly come before the Meeting.
This Proxy, when properly executed and timely returned, will be voted in the manner directed
herein by the stockholder. If no direction is made, this Proxy will be voted FOR all nominees as
directors, FOR ratification of KPMG LLP as the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2006, and in the discretion of the proxies on any
other matters that may properly come before the Meeting and any adjournments thereof.
The undersigned hereby revokes any proxy heretofore given to vote or act with respect to the
Common Stock of the Company and hereby ratifies and confirms all that the proxies, their
substitutes, or any of them lawfully do by virtue hereof.
PLEASE mark, sign, date and return the proxy card promptly using the enclosed envelope. No
postage is required if mailed in the United States.
(Continued and to be signed on the other side)
MOBILITY ELECTRONICS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2006
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1.
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FOR the election of Charles R. Mollo as director
WITHHOLD AUTHORITY to elect Charles R. Mollo as director
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such. If a corporation, please sign in full corporate name by President of other authorized officer.
If a partnership, please sign in partnership name by authorized person. |
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FOR the election of Robert W. Shaner as director |
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DATED: , 2006 |
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WITHHOLD AUTHORITY to elect Robert W. Shaner as director |
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2.
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FOR the ratification of KPMG LLP as independent registered public accounting firm for fiscal year ending December 31, 2006 |
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Signature of Stockholder |
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AGAINST the ratification of KPMG LLP as independent registered public accounting firm
for fiscal year ending December 31, 2006 |
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Signature if held jointly |
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ABSTAIN |
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5.
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In the discretion of the proxies on any other matters that may properly come before the
Meeting or any adjournments thereof
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Please mark, date, sign and mail your proxy promptly
in the envelope provided. |
Please
date this proxy and sign exactly as your name appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as