SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

F O R M  6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2016

MAGAL SECURITY SYSTEMS LTD.
(Name of Registrant)
 
P.O. Box 70, Industrial Zone, Yahud 56100 Israel
(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x     Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  o                        No x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ____________

This Report on Form 6-K is incorporated by reference into the Registrant's Form S-8 Registration Statements File Nos. 333-127340, 333-164696, 333-174127 and 333-190469.

 
 
 

Magal Security Systems Ltd.

EXPLANATORY NOTE

The following exhibits are attached:

99.1
Magal Security Systems Ltd. Proxy Statement for Annual General Meeting to be held August 8, 2016.

99.2 
Form of Proxy Card.


 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
MAGAL SECURITY SYSTEMS LTD.
 
        (Registrant)
   
 
By: /s/Saar Koursh
 
Saar Koursh
 
Chief Executive Officer
 
Date:   July 8, 2016

 
 
 
EXHIBIT INDEX

EXHIBIT NO.
DESCRIPTION
 
99.1
Magal Security Systems Ltd. Proxy Statement for Annual General Meeting to be held August 8, 2016.

99.2 
Form of Proxy Card.




 
Exhibit 99.1
 
 MAGAL SECURITY SYSTEMS LTD.
P.O. Box 70
Industrial Zone
Yehud 5610001, Israel
__________________

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
August 8, 2016
__________________
 
Dear Shareholders:
 
You are cordially invited to attend the Annual General Meeting of the Shareholders of Magal Security Systems Ltd. to be held at 5:00 pm. (Israel time) on Monday, August 8, 2016, at our offices at 17 Altalef Street, Industrial Zone, Yehud, Israel (the telephone number at that address is +972-3-539-1444). At the Meeting, shareholders will be asked to adopt the following resolutions, as further detailed in the attached proxy statement:
 
 
1.
to re-elect five (5) directors for terms expiring at our 2017 Annual General Meeting of Shareholders;
 
 
2.
to re-elect one (1) external director for a three year term;
 
 
3.
to ratify and approve the reappointment of Kost Forer Gabbay & Kasierer, registered public accountants, a member firm of Ernst & Young Global, as our independent registered public accountants for the year ending December 31, 2016, and to authorize our audit committee to fix the remuneration of such independent registered public accountants in accordance with the volume and nature of their services;
 
 
4.
to approve a private placement of our ordinary shares to our controlling shareholders, the FIMI partnerships, as part of a rights offering to raise capital; and
 
 
5.
to readopt our Compensation Policy for Office Holders.
 
In addition, our auditor’s report and consolidated financial statements for the year ended December 31, 2015, will be reviewed and discussed at the Meeting.

Shareholders of record at the close of business on July 6, 2016 are entitled to notice of and to vote at the Meeting.  You are also entitled to vote at the Meeting if you hold our ordinary shares through a bank, broker or other nominee which is one of our shareholders of record at the close of business on July 6, 2016, or which appears in the participant listing of a securities depository on that date. You can vote either by mailing in your proxy or in person by attending the Meeting.  If voting by mail, the proxy must be received by our transfer agent or at our registered office in Israel at least forty-eight (48) hours prior to the appointed time of the Meeting to be validly included in the tally of ordinary shares voted at the Meeting.  If you attend the Meeting, you may vote in person and your proxy will not be used.  Detailed proxy voting instructions are provided both in the Proxy Statement and on the enclosed proxy card.

Each ordinary share is entitled to one vote upon each of the matters to be presented at the Meeting.  The affirmative vote of the holders of a majority of the voting power represented and voting on each of the proposals in person or by proxy is required to approve each of the proposals.  In addition, a special majority vote will be required for approval of proposals nos. 2, 4 and 5.  In order to approve each of the proposals, the affirmative vote of the ordinary shares must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders and who do not have a personal interest in the approval of the proposal, or the total shares of non-controlling shareholders and non-interested shareholders voted against the proposal must not represent more than two percent of the outstanding ordinary shares.

This notice is being sent to shareholders in accordance with the requirements of the Companies Regulations (Notice of Meeting of Shareholders and Meeting of Class of Shareholders of a Public Company), 5760-2000.  The last date for submitting a request to include a proposal in accordance with Section 66(b) of the Israel Companies Law, 5759-1999, is July 8, 2016.

We will distribute a proxy statement (which will include the full version of the proposed resolutions) and a proxy card to all shareholders after the record date for the Meeting.  Shareholders may also review the proxy statement on our company’s website at www.magal-s3.com or at our principal executive offices at 17 Altalef Street, Industrial Zone, Yehud, Israel, upon prior notice and during regular working hours (telephone number: +972-3-539-1444) until the date of the Meeting.
 
 
By Order of the Board of Directors
 
Doron Kerbel
V.P. General Counsel and Secretary
 
Yehud, Israel
July 1, 2016
 
ii
 
MAGAL SECURITY SYSTEMS LTD.
P.O. Box 70
Industrial Zone
Yehud 5610001, Israel
__________________

PROXY STATEMENT

ANNUAL GENERAL MEETING OF SHAREHOLDERS
August 8, 2016

__________________
      
This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Magal Security Systems Ltd. to be voted at the Annual General Meeting of Shareholders, or the Meeting, and at any adjournment thereof, pursuant to the accompanying Notice of Annual General Meeting of Shareholders.  The Meeting will be held at 5:00 pm. (Israel time) on Monday, August 8, 2016, at our offices at 17 Altalef Street, Industrial Zone, Yehud, Israel.

This Proxy Statement, the attached Notice of Annual General Meeting and the enclosed proxy card will be mailed to shareholders on or about July 8, 2016.
 
Purpose of the Meeting
 
At the Meeting, shareholders will be asked to consider and vote upon the following matters:

  1. to re-elect five (5) directors for terms expiring at our 2017 Annual General Meeting of Shareholders;

  2. to re-elect one (1) external director for a three year term;
 
  3. to ratify and approve the reappointment of Kost Forer Gabbay & Kasierer, registered public accountants, a member firm of Ernst & Young Global, as our independent registered public accountants for the year ending December 31, 2016, and to authorize our audit committee to fix the remuneration of such independent registered public accountants in accordance with the volume and nature of their services;
 
  4. to approve a private placement of our ordinary shares to our controlling shareholders, the FIMI partnerships, the FIMI partnerships, as part of a rights offering to raise capital; and
 
  5. to readopt our Compensation Policy for Office Holders.

In addition, our auditor’s report and consolidated financial statements for the year ended December 31, 2015, will be reviewed and discussed at the Meeting.
 
Recommendation of the Board of Directors
 
Our Board of Directors recommends a vote FOR each of the nominees for director listed in this Proxy Statement and FOR each of the other proposals set forth in this Proxy Statement.
 
 
Proxy Procedure
 
Only holders of record of our ordinary shares, par value of NIS 1.00 per share, as of the close of business on July 6, 2016 are entitled to notice of, and to vote in person or by proxy at, the Meeting.  
 
As of June 30, 2016, we had 16,424,872 ordinary shares outstanding.
 
 
·
Voting in Person .  If your shares are registered directly in your name with our transfer agent (i.e. you are a “registered shareholder”), you may attend and vote in person at the Meeting.  If you are a beneficial owner of shares registered in the name of your broker, bank, trustee or nominee (i.e. your shares are held in “street name”), you are also invited to attend the Meeting; however, to vote in person at the Meeting as a beneficial owner, you must first obtain a “legal proxy” from your broker, bank, trustee or nominee authorizing you to do so at least forty-eight (48) hours prior to the appointed time of the Meeting.
 
 
·
Voting by Mail .  You may submit your proxy by mail by completing, signing and mailing the enclosed proxy card in the enclosed, postage-paid envelope, or, for shares held in street name, by following the voting instructions provided by your broker, bank trustee or nominee. The proxy must be received by our transfer agent or at our registered office in Israel at least forty-eight (48) hours prior to the appointed time of the Meeting to be validly included in the tally of ordinary shares voted at the Meeting.  If directions are not given or directions are not in accordance with the options listed on a proxy card, such shares will be voted FOR the nominees for director and each proposal for which the Board of Directors recommends a vote FOR.
 
Change or Revocation of Proxy
 
If you are a registered shareholder, you may change your vote at any time prior to the exercise of authority granted in the proxy by delivering a written notice of revocation to our Corporate Secretary, by granting a new proxy bearing a later date using, or by attending the Meeting and voting in person. Attendance at the Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
 
If your shares are held in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Meeting and voting in person.
 
Quorum
 
A quorum of shareholders is necessary to transact business at the Meeting.  The presence of two shareholders, holding at least one third (1/3) of our total voting rights, represented in person or by proxy at the Meeting, will constitute a quorum.  A Meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place or any time and place as the directors designate in a notice to the shareholders.  At the reconvened Meeting, the required quorum consists of any two shareholders present in person or by proxy.  
 
Abstentions and broker non-votes will be counted towards the quorum.  Broker non-votes occur when brokers that hold their customers’ shares in street name sign and submit proxies for such shares and vote such shares on some matters but not on others.  This occurs when brokers have not received any instructions from their customers, in which case the brokers, as the holders of record, are permitted to vote on “routine” matters, which include the ratification of the appointment of an independent registered public accounting firm, but not on non-routine matters, such as the election of directors.
 
Unsigned or unreturned proxies, including those not returned by banks, brokers, or other record holders, will not be counted for quorum or voting purposes.
 
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Vote Required for Approval of the Proposals
 
Each ordinary share entitles the holder to one vote upon each of the matters to be presented at the Meeting.  The affirmative vote of the holders of a majority of the voting power represented and voting on each of the proposals in person or by proxy is required to approve each of the proposals.

In addition, a special majority vote will be required for approval of proposals nos. 2, 4 and 5.  In order to approve each of the proposals, the affirmative vote of the ordinary shares must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders and who do not have a personal interest in the approval of the proposal, or the total shares of non-controlling shareholders and non-interested shareholders voted against the proposal must not represent more than two percent of the outstanding ordinary shares.

Cost of Soliciting Votes for the Annual Meeting
 
        We will bear the cost of soliciting proxies from our shareholders.  Proxies will be solicited by mail and may also be solicited in person, by telephone or electronic communication, by our directors, officers and employees.  We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses in accordance with the regulations of the Securities and Exchange Commission, or the SEC, concerning the sending of proxies and proxy material to the beneficial owners of our stock.
 
Voting Results of the Annual General Meeting
 
We will publish the final voting results in a Form 6-K filed with the SEC promptly following the Meeting.  You may obtain a copy of the Form 6-K through any of the following means:
 
 
·
reviewing our SEC filings under the heading “SEC Filings” within the “Investors’ Relations” section of our website at  www.magal-s3.com ; or
 
 
·
reviewing our SEC filings through the SEC’s EDGAR filing system at  www.sec.gov .
 
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BENEFICIAL OWNERSHIP OF SECURITIES
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; EXECUTIVE COMPENSATION
 
The following table sets forth certain information regarding the beneficial ownership of our ordinary shares, as of June 30, 2016, by:

  · each person or entity known by us to own beneficially 5% or more of our outstanding shares; and
 
  · all of our executive officers and directors as a group.
 
Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power.  The percentage ownership of each such person is based on the number of ordinary shares outstanding as of June 30, 2016 and includes the number of ordinary shares underlying options and warrants that are exercisable within sixty (60) days from the date of June 30, 2016.  Ordinary shares subject to these options and warrants are deemed to be outstanding for the purpose of computing the ownership percentage of the person holding these options and warrants, but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person.  The information in the table below is based on 16,424,872 ordinary shares outstanding as of June 30, 2016.  Each of our outstanding ordinary shares has identical rights in all respects. The information in the table below with respect to the beneficial ownership of shareholders is based on the public filings of such shareholders with the SEC through July 5, 2016 and information provided to us by such shareholders.  Unless otherwise noted below, each shareholder’s address is Magal Security Systems Ltd., P.O. Box 70, Industrial Zone, Yehud 5621617, Israel.
 
Name
 
Number of
Shares
   
Percentage
 
FIMI Opportunity Five (Delaware), Limited Partnership (1)
    3,046,950       18.5 %
FIMI Israel Opportunity Five, Limited Partnership(1)
    3,414,340       20.8 %
BMI Capital Corporation (2)
    1,240,937       7.6 %
Grace & White, Inc. (3).
    1,177,563       7.2 %
All directors and executive officers as group (14 persons) (3).
    275,000       1.7 %

_____________
 
* Less than 1%
 
(1) Based on Schedule 13D filed with the SEC on August 7, 2014 and other information available to us.  The address of FIMI Opportunity Five (Delaware), Limited Partnership and FIMI Israel Opportunity Five, Limited Partnership is c/o FIMI FIVE 2012 Ltd., Electra Tower, 98 Yigal Alon St., Tel-Aviv 67891, Israel.
 
(2) Based solely upon, and qualified in its entirety with reference to, a Schedule 13G filed with the SEC on January 28, 2015.  The Schedule 13G indicates that BMI Capital Corporation is a registered investment advisor.  The address of BMI Capital Corporation is 570 Lexington Avenue New York, NY 10022.
 
(3) Based solely upon, and qualified in its entirety with reference to, a Schedule 13G/A filed with the SEC on February 4, 2016.  The Schedule 13G/A indicates that Grace & White, Inc. is a registered investment adviser.  The address of Grace & White, Inc. is 515 Madison Avenue, Suite 1700, New York, NY 10022.
 
The annual compensation earned during 2015 by our five most highly-compensated senior office holders is outlined in Item 6.C. of our Annual Report on Form 20-F for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on March 29, 2016, a copy of which is available on our website at www.magal-s3.com.
 
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I.  RE-ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
 
You are being asked to reelect the following directors: Gillon Beck, Ron Ben-Haim, Jacob Berman, Avraham Bigger and Barry Stiefel.

Our Articles of Association provide for a board of directors consisting of no less than three (3) and no more than eleven (11) members, as may be determined from time to time at our annual general meeting of shareholders.  Our Board of Directors currently consists of seven (7) directors, including two external directors appointed in accordance with the Israeli Companies Law. Our directors, other than our external directors, are elected at each annual general meeting of shareholders. As set forth in Item 2 below, shareholders are being asked to re-elect Ms. Liza Singer as an external director for a period of three years.  The term of office of our other external director, Moshe Tsabari, will expire in December 2017.

You are being asked to reelect all of our current directors who are not external directors.  If all of our Board of Directors’ nominees are elected, the foregoing five directors will continue to serve as directors following the Meeting in addition to the external directors.  Each director who is elected at the Meeting will serve until next year’s annual general meeting of our shareholders and until their successors are elected and qualified. We are not aware of any reason why any one of the nominees, if elected, would be unable to serve as a director.

In accordance with the Israeli Companies Law, each of the nominees for election to our board of directors (as well as our external directors) has certified to us that he or she meets all the requirements of the Israeli Companies Law for election as a director of a public company, and possesses the necessary qualifications and has sufficient time, to fulfill his or her duties as a director of the company, taking into account the size and special needs of the company.

Biographical information concerning each of the nominees is set forth below:
 
Gillon Beck  (54)   has served as a director and Executive Chairman of our board of directors since September 2014. Mr. Beck has been, since 2003, a Senior Partner at FIMI Opportunity Funds, as well as a Director of the General Partners of the FIMI Opportunity Funds, the largest shareholder of our company. Mr. Beck currently serves as Chairman of the Boards of Directors of Ormat Technologies Inc. (NYSE), Ham-Let (Israel-Canada) Ltd. (TASE), Rivulis Irrigation Ltd., Inrom Industries Ltd., H.R. Givon Ltd. Oxygen and Argon Works Ltd and Overseas Commerce Ltd., and is a director of Inrom Construction Industries Ltd. (TASE). In the last 5 years, Mr. Beck formerly served as a member of the Boards of Directors of the following public companies:  Retalix Ltd and Ormat Industries Ltd. From 1999 to 2003, Mr. Beck served as Chief Executive Officer and President of Arad Ltd., a publicly-traded water measurement and automatic meter reading company and from 1995 to 1999, as COO of Arad Ltd. Mr. Beck received a Bachelor of Science degree (Cum Laude) in Industrial Engineering in 1990 from the Technion – Israel Institute of Technology and an M.B.A. degree in Finance in 1992 from Bar-Ilan University.
 
Ron Ben-Haim (46)  has served as a director since September 2014.  Mr. Ben-Haim has been a partner in FIMI Opportunity Funds since 2006. Mr. Ben-Haim currently serves on the boards of directors of TAT Technologies Ltd. (NASDAQ, TASE), Hadera Papers Ltd. (TASE), Politram Plastic Industries Ltd., Oxygen and Argon Works Ltd, Tadir-Gan (Precision Products) 1993, Ltd. (TASE), Rivulis Irrigation Ltd., Inrom Industries Ltd., and Overseas Commerce, Ltd. Mr. Ben Haim formerly served as a member of the boards of directors of the following public companies: Medtechnica, Ltd., Ginegar Plastic Products, Ltd., Merhav Ceramic and Building Materials Center, Ltd. and Ophir Optronics, Ltd. Mr. Ben Haim was previously with Compass Advisers, LLP, an investment banking firm based in New York and in Tel Aviv and with the Merrill Lynch Mergers and Acquisitions group in New York. Prior to Merrill Lynch, Mr. Ben-Haim worked at Teva Pharmaceuticals in production management. Mr. Ben-Haim holds a B.Sc. degree in industrial engineering from the Tel Aviv University and an M.B.A. degree from New York University.

5
Jacob Berman (68) has served as a director since November 2013.  Since November 2014, Mr. Berman serves as the chairman of the board of directors of Israel Discount Bank of New York and acted as a member of our audit committee and compensation committee between September 2014 and December 2014. Mr. Berman has been President of JB Advisors, Inc., a New York based financial advisory firm with extensive experience in international private banking, real estate investment counseling, and commercial/retail banking since 2002.  Mr. Berman serves as a director of Micronet Enertec Technologies, Inc. Previously, Mr. Berman was the founder, President and CEO of Commercial Bank of New York.

Avraham Bigger (69) has served as a director since September 2014.  Mr. Bigger has been, since 2010, the owner and a member of the Board of Directors of Bigger Investments Ltd and formerly served as the Chief Executive Officer and Chairman of the Board of Directors of Makhteshim Agam Industries Ltd., Chairman of the Boards of Directors of Supersol Ltd. (TASE), Caniel Beverages & Caniel Packaging Industries Ltd., the Edmond Benjamin de Rothschild Caesarea Foundation and as managing director of Paz Oil Company Ltd. (TASE) and Israel General Bank (U Bank). Mr. Bigger also served as a member of the Boards of Directors of Bank Leumi Le-Israel Ltd. (TASE), First International Bank of Israel Ltd. (TASE), Strauss Group Ltd. (formerly known as Strauss-Elite Ltd.)(TASE), Partner Communications Company Ltd. (TASE), Cellcom Israel Ltd. (TASE, NYSE), El-Al Israel Airlines Ltd. and various private companies. Mr. Bigger received a Bachelor of Economics degree and an M.B.A. degree, both from the Hebrew University of Jerusalem.

Barry Stiefel (66) has served as a director since November 2008 and as the chairman of our board of directors from February 2013 until September 2014.   Mr. Stiefel has served as the Manager of the Kirsh Family Office in London, England since 2006. The Kirsh Family Office administers and monitors the investments made by the Kirsh Group worldwide. Ki Corporation, which is owned by the Kirsh Group, is the former principal shareholder of our company. Mr. Stiefel also serves as a Director of Ki Corporation Limited since 2013. From 2001 to 2006, Mr. Stiefel served as a consultant for a number of companies, including Premedia Limited and its subsidiaries.  Previously, Mr. Stiefel was the chief executive officer of Meridian VAT Reclaim Group, which he founded, as a consultant in the field of trade finance and as finance director of Fisher Brothers Lumber Company Limited, a South African company.  Mr. Stiefel holds a B.Sc. degree in Mathematics and Chemistry and a B.A. degree in Accounting, both from the University of the Witwatersrand.  Mr. Stiefel is a chartered accountant in South Africa and is registered as an auditor (not in public practice) in the United Kingdom.
 
Mr. Pinchas Barel Buchris, a member of the Board of Directors until May 2016, is not standing for re-election at the Meeting.  
 
We are proposing to adopt the following resolutions:
 
RESOLVED , to reelect Gillon Beck to serve as a director on the Board of Directors of the Company until the 2017 annual meeting of shareholders and until their successors are elected and qualified ;

FURTHER RESOLVED , to reelect Ron Ben-Haim to serve as a director on the Board of Directors of the Company until the 2017 annual meeting of shareholders and until their successors are elected and qualified ;

FURTHER RESOLVED , to reelect Jacob Berman to serve as a director on the Board of Directors of the Company until the 2017 annual meeting of shareholders and until their successors are elected and qualified ;

FURTHER RESOLVED , to reelect Avraham Bigger to serve as a director on the Board of Directors of the Company until the 2017 annual meeting of shareholders and until their successors are elected and qualified ; and

6
FURTHER RESOLVED , to reelect Barry Stiefel to serve as a director on the Board of Directors of the Company until the 2017 annual meeting of shareholders and until their successors are elected and qualified .

The affirmative vote of the holders of a majority of the ordinary shares represented at the Meeting, in person or by proxy, entitled to vote and voting on the matter, is required to re-elect as directors each of the nominees named above.
 
II.   RE-ELECTION OF EXTERNAL DIRECTOR
(Item 2 on the Proxy Card)

In accordance with the Israeli Companies Law and the relevant regulations, we must have at least two external directors who meet the statutory requirements of independence.  Under the Israeli Companies Law, an external director serves for a term of three years, which may be extended for additional three-year terms.  Further, an external director can be removed from office only under very limited circumstances.  In addition, under the Israeli Companies Law, all of the external directors must serve on our Audit Committee and Compensation Committee (including one external director serving as the chair of our Audit Committee and our Compensation Committee), and at least one external director must serve on each committee of our Board of Directors.

As noted above, the current term of office of our external director Ms. Liza Singer expired and shareholders are being asked to re-elect Ms. Singer as an external director.  The term of office of our other external director, Mr. Moshe Tsabari, expires in December 2017 and he is not required to stand for reelection at the Meeting.  Biographical information concerning Ms. Singer   and Mr. Tsabari is set forth below.

Liza Singer (45) has served as an external director since June 2010.  Since 2003, Ms. Singer has served as the owner’s representative of the Lewis Trust Group, an investment assessment and development entity that focuses on tourist projects and the development of marine and hotels resorts.  During 2007, Ms. Singer also served as the chief operating officer and country manager of Brack Capital Real Estate.  Previously, Ms. Singer served as the Vice President of Business Development of the Baran Group, a provider of engineering and construction services, as investment director of Syntek Capital, a private-equity investment company and as an associate at APAX Partners & Co., a venture capital fund.  Previously Ms. Singer worked at Kesselman & Kesselman, the Israeli member firm of PriceWaterhouseCoopers and at Gornitzky & Co. a leading Israeli law firm.   Ms. Singer has an LL.B degree, a B.A. degree in accounting and an M.B.A. degree, all from Tel Aviv University.  Ms. Singer is a certified public accountant (Israel) and a registered lawyer with the Israeli Bar Association.

Moshe Tsabari (61)  has served as an external director since December 2014.  Mr. Tsabari is the owner and serves as the joint CEO of GME Trust, a company that advises on crisis management and improvement of work processes, in Israel and worldwide.  Since 2005, Mr. Tsabari has served  as the owner and director of Osher – Training & Consulting Ltd.  From 2006 to 2011 Mr. Tsabari served as a senior partner in the International Company for Defense and Rescue Ltd. and in QG Company, two companies that are engaged in the provision of consultancy and training projects in the security field in Israel.  In addition, Mr. Tsabari is the founder of the International Institute for Researching the Arab World, is a former director in Links Aviation and is the former CEO of SYS-TRY, an electronic equipment development company.  Prior to that, Mr. Tsabari served for 15 years, until 2004, in the Israeli Security Agency (ISA) in a number of positions, including Director of Personal in the Human Resources Division, Director of Security Assistance Division (rank in both positions equivalent to Major General) and Head of the Operations Division (rank equivalent to Brigadier).  Mr. Tsabari holds a B.Sc. degree in Geodetic Engineering, a M.A. degree in Industrial and Management Engineering and a PhD degree in Science, all from the Technion – The Israeli Institute of Technology. In addition, Mr. Tsabari is an A.M.P. graduate from the Wharton School of the University of Pennsylvania.

Our board of directors recommended that Ms. Singer   be re-elected as an external director at the Meeting for a three year term, and has found that Ms. Singer has all necessary qualifications required under the Israeli Companies Law to be considered an “external director” and to be considered an “independent director” pursuant to the rules of NASDAQ.

7
We are proposing to adopt the following resolution:

RESOLVED , that the re-election of Ms. Singer   to the Board of Directors of the Company to serve as an external director for a three-year term be, and it hereby is, approved; and

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is necessary to re-elect each of Ms. Singer   as an external director.  In addition, the shareholders’ approval must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders nor are they shareholders who have a personal interest in the election of the external directors (excluding a personal interest that is not related to a relationship with the controlling shareholders), or the total ordinary shares of non-controlling shareholders and non-interested shareholders voted against this proposal must not represent more than two percent of the outstanding ordinary shares.  For this purpose, you are asked to indicate on the enclosed proxy card whether you are a controlling shareholder or have a personal interest in the election of the external directors (excluding a personal interest that is not related to a relationship with a controlling shareholder).  Under The Israeli Companies Law, in general, a person will be deemed to be a controlling shareholder if the person has the power to direct the activities of the company, otherwise than by reason of being a director or other office holder of the company, and you are deemed to have a personal interest if any member of your immediate family or their spouse has a personal interest in the adoption of the proposal.  In addition, you are deemed to have a personal interest if a company, other than Magal, that is affiliated to you has a personal interest in the adoption of the proposal.  Such company is a company in which you or a member of your immediate family serves as a director or chief executive officer, has the right to appoint a director or the chief executive officer, or owns 5% or more of the outstanding shares.  However, you are not deemed to have a personal interest in the adoption of the proposal if your interest in such proposal arises solely from your ownership of our shares, or to a matter that is not related to a relationship with a controlling shareholder.

III. RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS
(Item 3 on the Proxy Card)
 
We first appointed Kost Levy & Forer, registered public accountants, as our auditors in 1984 and have reappointed the firm, which is now known as Kost Forer Gabbay & Kasierer and is a member firm of Ernst & Young Global, as our independent public accountants since such time.  Kost Forer Gabbay & Kasierer has no relationship with us or any of our affiliates, except as auditors.  As a result of Kost Forer Gabbay & Kasierer’s knowledge of our operations and its reputation in the auditing field, our audit committee and board of directors believe that such firm has the necessary personnel, professional qualifications and independence to act as our auditors.  Our board of directors has again recommended, pursuant to the recommendation of our audit committee, that Kost Forer Gabbay & Kasierer be appointed as our independent registered public accountants for the fiscal year ending December 31, 2016 and recommends that the shareholders ratify and approve the appointment.
 
At the Meeting, shareholders will also be asked to authorize the audit committee to fix the remuneration of such auditors in accordance with the volume and nature of their services.  With respect to fiscal year 2015, we paid Kost Forer Gabbay & Kasierer $276,000 for audit services, $72,000 for tax-related services and $63,000 in other fees (for reimbursement of out-of-pocket expenses, primarily traveling expenses of our auditors, as well as fees associated with due diligence examination of other potential acquisitions that we conducted during the year).
 
It is therefore proposed that our shareholders adopt the following resolution at the Meeting:
 
8
RESOLVED , that the appointment of Kost Forer Gabbay & Kasierer, registered public accountants, a member firm of Ernst & Young Global, as the independent registered public accountants of Magal Security Systems Ltd. for the year ending December 31, 2016 be and hereby is ratified and approved, and that the audit committee be, and it hereby is, authorized to fix the compensation of such independent registered public accountants in accordance with the volume and nature of their services.
 
    The affirmative vote of the holders of a majority of the ordinary shares represented at the Meeting, in person or by proxy, entitled to vote and voting thereon, is required to approve the foregoing resolution.
 
IV. APPROVAL OF PRIVATE PLACEMENT OF OUR ORDINARY SHARES TO OUR
CONTROLLING SHAREHOLDERS, THE FIMI PARTNERSHIPS, AS PART OF A RIGHTS
OFFERING TO RAISE CAPITAL
(Item 4 on the Proxy Card)

In connection with the Company’s plans to continue to grow the business, including through acquisitions or investments in complementary companies or technologies, the Company is considering various alternative routes to raise capital to fund its growth strategy, including raising capital by means of a rights offering.  A rights offering is a distribution of subscription rights on a pro rata basis to all existing shareholders of the Company, entitling them to buy a proportional number of additional securities of the Company at a given price.

Our controlling shareholders, certain limited partnerships managed by FIMI FIVE 2012 Ltd., who currently hold 39.3% of our voting rights, have informed us that they would be interested to participate in such a rights offering if and to the extent the Company elects to pursue such a rights offering.  However, under the Israeli Companies Law, the participation of the FIMI partnerships would be limited if the exercise of subscription rights by the FIMI partnerships and other Company shareholders would result in the FIMI partnerships’ holdings exceeding 45% of our voting rights.  Under the Israeli Companies Law, a shareholder’s holdings may not exceed 45% of the voting rights of a public company other than by means of a special tender offer or a private placement approved by the company’s shareholders, following recommendation and approval of the audit committee and the board of directors.

Following review and consultation, the Audit Committee of our Board of Directors determined that the full participation of the FIMI partnerships in any rights offering is a condition to the launching and to the success of a fully subscribed rights offering, and therefore it has determined that it is in the best interest of the Company and its shareholders to approve and recommend a private placement of the Company’s ordinary shares to the FIMI partnerships in the event the Company elects to launch such a rights offering, solely with respect to such number of ordinary shares that exceed 45% of the company’s voting rights (if any), with the terms of such private placement being to be set at a price per share and other terms identical to the terms of established in any such rights offering.  If and when commenced, the subscription price and other terms of the rights offering will be recommended to the Board of Directors by a special committee composed of three independent members of our Board of Directors, none of which will be affiliated with the FIMI partnerships. 

Our Board of Directors subsequently approved the Audit Committee’s recommendation and recommended that the shareholders approve such private placement in the event the Company pursues a private placement.

This Proxy Statement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of the Company by means of a rights offering, a private placement and/or in other manner.  If and to the extent the Company elects to pursue a rights offering, such offering, including all terms thereof, will be set forth in a prospectus forming a part of a registration statement approved and declared effective by the Securities and Exchange Commission.  The Company has not filed to date any such registration statement with the Securities and Exchange Commission and there is no guarantee that any such registration statement if and when filed by the Company would be approved and declared effective by the Securities and Exchange Commission and/or that the Company will pursue a rights offering in the near future or at all.

9
We are proposing to adopt the following resolution:

RESOLVED , to approve a private placement of our ordinary shares to our controlling shareholders, the FIMI partnerships, as part of the Company’s contemplated rights offering to raise capital, as set forth in Item 4 of the Proxy Statement .

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is necessary for the approval of the resolution to approve the private placement to our controlling shareholders, the FIMI partnerships.  In addition, the shareholders’ approval must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders nor are they shareholders who have a personal interest in the approval of the private placement to the FIMI partnerships, or the total ordinary shares of non-controlling shareholders and non-interested shareholders voted against this proposal must not represent more than two percent of the outstanding ordinary shares.  For this purpose, you are asked to indicate on the enclosed proxy card whether you are a controlling shareholder or have a personal interest in the in the approval of the private placement to the FIMI partnerships.
 
V. READOPTION OF THE COMPENSATION POLICY FOR OFFICE HOLDERS
(Item 5 on the Proxy Card)
 
Pursuant to the Israeli Companies Law, all public Israeli companies, including companies whose shares are only publicly-traded outside of Israel, such as Magal, are required to adopt a written compensation policy for their executives, which addresses certain items prescribed by the Israeli Companies Law.  The adoption, amendment and restatement of the policy is to be recommended by the Compensation Committee and approved by the Board of Directors and shareholders, except that the approval of the shareholders may be waived in certain circumstances prescribed by the Israeli Companies Law.

In 2013, in accordance with such Israeli law requirements, our Compensation Committee reviewed and adopted a written compensation policy for our executives and directors, which addressed the items prescribed by the Israeli Companies Law, and our Board of Directors and shareholders subsequently approved the policy.

In accordance with the Israeli law requirement that such policy must be reviewed and readopted within three years from the original adoption date, our Compensation Committee reviewed, updated and readopted the written compensation policy for our executives and directors (referred to under the Israeli Companies Law as office holders).  A copy of the proposed updated Compensation Policy for Office Holders is attached as Exhibit A to the Proxy Statement.  Our Board of Directors subsequently approved the policy and recommended that it be adopted by the shareholders.

We are proposing to adopt the following resolution:

RESOLVED , to readopt the Company’s Compensation Policy for Office Holders in the form attached as Exhibit A hereto.

The affirmative vote of the holders of a majority of the voting power represented and voting on this proposal in person or by proxy is necessary for the approval of the resolution to readopt the Compensation Policy for Office Holders.  In addition, the shareholders’ approval must either include at least a majority of the ordinary shares voted by shareholders who are not controlling shareholders nor are they shareholders who have a personal interest in the re-adoption of the Compensation Policy for Office Holders, or the total ordinary shares of non-controlling shareholders and non-interested shareholders voted against this proposal must not represent more than two percent of the outstanding ordinary shares. For this purpose, you are asked to indicate on the enclosed proxy card whether you are a controlling shareholder or have a personal interest in the in the re-adoption of the Compensation Policy for Office Holders.

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VI. REVIEW AND DISCUSSION OF THE AUDITOR’S REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
 
At the Meeting, the auditor’s report and the audited consolidated financial statements for the year ended December 31, 2015 will be presented.  We will hold a discussion with respect to the financial statements at the Meeting.  This Item will not involve a vote of the shareholders.
 
The annual report on Form 20-F for the year ended December 31, 2015, including the auditor’s report and consolidated financial statements for the year ended December 31, 2015, which was filed with the SEC on March 29, 2016, is available on our website at  www.magal-s3.com  or through the EDGAR website of the SEC at  www.sec.gov .  None of the auditors’ report, consolidated financial statements, the Form 20-F or the contents of our website form part of the proxy solicitation material.
 
 
By Order of the Board of Directors
 
Doron Kerbel
V.P. General Counsel and Secretary
 
Dated: July 6, 2016
 
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EXHIBIT A
 
MAGAL SECURITY SYSTEMS LTD.
(“MAGAL” OR THE “COMPANY”)
COMPENSATION POLICY OF OFFICE HOLDERS
August 8, 2016
 
Background
 
In accordance with recent amendments to the Israeli Companies Law 5759-1999 (the “ Companies Law ”), a public company, such as Magal, is required to adopt a compensation policy setting forth the principles to govern the terms of office and employment of the Office Holders of the company.  All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Companies Law.
 
Pursuant to the Companies Law, this Compensation Policy (the “ Policy” ) will be brought to the approval of our shareholders and, once adopted, and unless determined otherwise by our Board of Directors, shall serve as our Compensation Policy for the three years period commencing as of its adoption by our shareholders.
 
The employment terms of all new Office Holders, as well as any amendments to existing employment terms, will be determined in accordance with this Policy. We intend, in the framework of the periodic review of employment agreements that is required by law and under this Policy, to consider, amongst other considerations (that are detailed below) also the adjustment of the terms of employment to the Policy, as well as the contribution of such Office Holder to our performance, the growth of our business and the best interest of the Company.
 
Compensation Philosophy and Objectives
 
We believe that the most effective executive compensation program is one that is designed to reward achievement and that aligns executives’ interests with those of the company and its shareholders by rewarding performance, with the ultimate objective of improving shareholder value and building a sustainable company. We also seek to ensure that we maintain our ability to attract and retain superior employees in key positions and that the compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of a selected group of our peer companies and the broader marketplace from which we recruit and compete for talent.
 
In light of the above, we have established the following compensation objectives for the Company’s executives (the CEO, VPs, and all other managers directly reporting to the CEO shall be referred to herein as the “ Senior Executives” ) as indicators of our overall compensation philosophy:
 
Compensation should be related to performance.   We believe that the compensation paid to the Senior Executives should be closely aligned with the performance of the Company on both a short-term and long-term basis, with a material portion of a Senior Executive’s potential annual performance-based incentive compensation and long-term equity based compensation at risk if Company and individual performance objectives are not achieved.
 
Compensation should serve to encourage Senior Executives to remain with the Company.  The Company’s executive compensation program components are designed to retain talented executives. We believe that continuity of employment is critical to achieving the Company’s strategic objectives and building shareholder value. A significant element of the Senior Executive compensation program, therefore, is long-term equity based incentive compensation awards that vest on a rolling basis over periods of several years. As part of the retention objective, we believe that compensation should include a meaningful stock component to further align the interests of senior management with the interests of our shareholders.
 
Compensation should be reasonable for our business, our locations and our long-term, multi-year approach to achieving sustainable growth.   We believe that an appropriate compensation package will attract executives and motivate them to achieve the Company’s annual and long-term strategic objectives. At the same time, we believe that compensation should be set at reasonable and fiscally responsible levels.
 
Compensation should be managed to encourage innovation and appropriate levels of risk.    We believe incentive compensation should be structured to discourage assumption of excessive short-term risk without constraining innovation and reasonable risk-taking. To achieve this objective, we believe that the success of the Company over time will be more effectively assured by connecting a significant element of incentive compensation to longer-term Company performance.
 
General Process for Setting Compensation
 
The Compensation Committee shall first determine the appropriate level of total compensation for each Senior Executive, and then determines the appropriate allocation among annual base cash compensation, annual performance-based cash incentive compensation (cash bonus) and long-term stock incentive compensation.  Such allocation shall be based on the principles set forth in this Policy.
 
In determining the total compensation the Compensation Committee shall take into account the following considerations (collectively, the “ Compensation Considerations” ): (i) the education. professional experience and achievements of the applicable Senior Executive; (ii) the applicable Senior Executive’s position in the Company, scope of responsibilities, his contribution to the Company, the circumstances of his recruitment and the terms of prior employment agreements with the Company (if any); (iii) the financial conditions of the company, the global scope of its business (having world-wide substantial subsidiaries)`, the complexity of the Company’s business and the fact that the Company’s shares are traded in Nasdaq; (iv) comparison of the terms of employment of the applicable Senior Executive to the terms of employment of other executives in the Company, as well as to terms of employment of senior executives in the same position in equivalent companies (similar industry, similar revenues, similar market value, similar scope of activities and/or similar number of employees) in Israel; and (v) the ratio between the total compensation of the applicable Senior Executive and the Salary of all other Israeli employees of the Company (including, to the extent applicable, Employees of Manpower Contractor engaged by the Company) and especially the ratio between the total compensation and the median and average Salary of all such employees.
 
The total compensation of Senior Executives shall be reviewed annually, taking into account the Compensation Consideration and focusing mainly on the applicable Senior Executive’s functioning, performance, the Company’s business and financial status, the Company’s budget and other applicable market conditions. A change of up to 10% in the total compensation of any Executive Officer (other than the CEO) shall be deemed immaterial and shall require the approval of the Compensation Committee only. A change of up to 10% in the total compensation of the CEO shall require the approval of both the Compensation Committee and the Board of Directors. Any change in the total compensation that is greater than 10% shall require the approvals required by applicable law.

Elements of Compensation
 
The compensation of Senior Executives consists of (i) annual base cash compensation, (ii) annual performance-based cash incentive compensation, (iii) long-term equity-based (shares) compensation, and (iv) other executive benefits.
 
In addition the Board of Directors may, in its sole discretion, upon the recommendation of the Compensation Committee change the amount of the cash bonus (increase or decrease), which changes may not be based on measurable criteria, taking into account inter alia, such Senior Executive contribution to the Company’s performance as well as other events that affected the Company’s financial and operational performance (such as the effect of exchange rate).  However, such changes to the cash bonus shall be immaterial (up to 10%) in comparison to the value of the variable (performance based) components of the compensation of such Senior officer.
 
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A discussion of each element follows:

Annual Base Cash Compensation
 
Base salary is a fixed, cash component of overall compensation, which is reviewed and may be adjusted periodically based on a variety of factors, including executive performance, Company performance, general economic conditions and the subjective business judgment and general business experience of the members of the Compensation Committee, always taking into account the Compensation Considerations.  The annual base cash compensation (“base salary”) shall be at levels which will range from 50% to 70% of the Senior Executive’s potential total compensation. Base salary ranges are designed to account for varying responsibilities, experience and performance levels. The base salary may be linked to the increase of the Israeli CPI but shall not be otherwise automatically raised. Any other increase of the base salary shall be subject to the annual review process described herein.

Annual Performance-Based Incentive Cash Compensation
 
The Company’s annual performance-based incentive cash compensation ( “Bonus” ) program is designed to tie executive compensation to the company’s performance and to encourage Senior Executive’s to remain with the Company. The Bonus program for certain executives is based on the achievement of financial and/or personal thresholds. Such thresholds may be measurable financial or personal thresholds, as shall be determined for each applicable Senior Executive by the CEO and the Compensation Committee and the Board as applicable pursuant to this Policy, and subject to the approvals required under the Companies Law. The Bonus shall be at the levels which will range from 15%-30% of the Senior Executive’s potential compensation.
 
With respect to measurable financial criteria the minimum threshold for payment of a Bonus will be achieving 85% of the applicable target and the maximum threshold will be 115% of the applicable target. If the minimum threshold is not met, or if the Company failed to achieve positive Net Profit for the respective year, than no Bonus will be earned. If the maximum threshold is exceeded only the applicable maximum Bonus will be paid and no additional amounts will be deemed earned. The sums payable as Bonus will be adjusted between a minimum Bonus and maximum Bonus to reflect the ratio between the target and the actual results of the company as further detailed below.
 
The criteria for measurement of personal criteria shall be determined individually when such personal criteria are set. A list of personal criteria is attached as  Exhibit I  hereto
 
The calculation of financial component of the Bonus shall be made once a year and shall be based on Selected Financial Parameters from the Consolidated Audited Financial Statements of the Company (the  ”SFP” and “FS” respectively) for the applicable year and shall be determined individually. A list of Selected Financial Parameters is attached as Exhibit II hereto.
 
If the Company restates any of the financial data that was used in calculating any Bonus, then the applicable Bonus shall be recalculated using such restated data (the “ Restated Bonus” ). The balance between the original Bonus and the Restated Bonus, if any (the “ Balance” ) will be repaid to the Company by deducting such Balance from the first amounts payable to such Senior Executive as Bonus immediately after the completion of such restatement. To the extent that no Bonus will be payable to such Senior Executive in that year than the Balance shall be deducted from the Bonus payable in the next year.  Notwithstanding the above, if (i) the employment relationships with the Company terminates before the Balance is fully repaid to the Company, than the Balance shall be deducted from all amounts due and payable to such Senior Executive in connection with such termination (subject to the limitations of any applicable law); and (ii) the Balance is not repaid in full to the Company during the two consecutive years following the restatement, the Executive Officer shall repay the Balance, or the unpaid portion thereof (as applicable) pursuant to the terms that shall be determined by the Board of Directors, based on recommendation of the Compensation Committee.
 
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The annual Bonus (to the extent earned) (the “ Earned Bonus” ) will be paid over a period of two years as follows: (i) 75% of the applicable Earned Bonus will be paid together with first salary that will be paid after the approval of the FS of the applicable year (the “ Base Year” ) by the Board of Directors.; (ii) 25% of the Earned Bonus will be paid in full together with first salary that will be paid following the approval by the Board of the annual FS of the first year following the Base Year (the “Deferred Year” ) in which the Company’s Revenue and Operational Profit for the Deferred Year has meet a minimum threshold of 70% and 50% respectively, with respect to the Base Year Revenue and Operational Profit (the “Deferred Payment” ). In the event that employment relationship between the Company and such Senior Executive terminates (due to circumstances that negate severance payments under applicable law) prior to the payment of the Earned Bonus or Deferred Payment (if any) then the terminated Senior Executive shall be deemed to forfeit his right to receive any Earned Bonus or Deferred Payment.
 
The Bonus shall not be deemed as part of the salary for all purposes including social benefit and severance payments.
 
In the event of termination of employment during the calendar year, and provided that the Senior Executive was employed by the Company for a period of at least (i) 6 months for the first year of employment and (ii) 3 months during any year thereafter, the amount of the Bonus shall be calculated and adjusted for the entire year in accordance with the provisions of this policy, and thereafter shall be prorated in accordance with the actual days of employment of the Senior Executive by the Company during the applicable year (calculated based on 365 days in a year) and paid to the Senior Executive in full together with first salary that will be paid following the approval by the Board of the FS of such applicable year.
 
The ranges of the Bonus for the Senior Executives shall be as follows:
 
CEO:  The Bonus shall be based on the Company meeting SFP as determined in the Company’s budget approved by the Board of Directors for such applicable year.

If the Company’s SFP as determined in the FS for such applicable year shall be equal to 85%-115% of the target then the Bonus shall be prorated between two (2) to twelve (12) monthly base salaries.

Other Senior Executives: The Bonus shall be based on the Company meeting SFP as determined in the Company’s budget approved by the Board of Directors for such applicable year.  If the Company’s SFP as determined in the FS for such applicable year shall be equal to 85%-115% of the target then the Bonus shall be prorated between two (2) to six (6) monthly base salaries.

Extra-Ordinary Achievement Based Cash Compensation

We believe that Senior Executives may be also rewarded for extra-ordinary achievements. Such achievements may, for example, be related to any one of the qualitative goals set forth in Exhibit I hereto. An Extra-Ordinary Achievement Based Cash Compensation may be awarded to a Senior Executive at any time, but no more than once every calendar year. An Extra-Ordinary Achievement Based Cash Compensation shall be deemed immaterial and shall require the approval of the CEO only, provided that  it is up to 10% of the total annual potential compensation of the relevant Executive Officer (other than the CEO). An Extra-Ordinary Achievement Based Cash Compensation of up to 10% of the total annual compensation of the CEO shall require the approval of both the Compensation Committee and the Board of Directors. Any other Extra-Ordinary Achievement Based Cash Compensation, that is greater than 10% shall require the approvals required by applicable law.

The Bonus shall not be deemed as part of the salary for all purposes including social benefit and severance payments.

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Long-Term Equity Based Incentive Compensation
 
We believe that equity based incentives tied to share ownership by Senior Executives are important component of total compensation. We use grants of options to purchase our Ordinary Shares, n.v. NIS 1 each, as part of the Company’s overall incentive compensation to align the interests of Senior Executives with those of the Company’s shareholders.  The long-term equity based incentive compensation, per each relevant year, shall be at the levels which will range from 5%-30% of the Senior Executive’s potential yearly compensation.
 
We shall issue each Senior Executive options to purchase our shares in accordance with the requirements of Section 102 of the Israeli Income Tax Ordinance, as may be amended from time to time (“ ITO ”). The amounts of options that are granted shall be calculated in accordance with the ratio between the economic value (binomial/B&S) of such options and the total compensation of the applicable Senior Executive in accordance with the ranges stated herein. The options shall vest in three installments over three years period and the exercise price thereof shall be determined by the Compensation Committee but in any event shall not be lower than the closing price of the Company’s shares on NASDAQ for the last trading day prior to the allotment date.
 
Subject to the approval of the Israeli Tax authorities, the exercise price of the options shall be proportionally reduced and adjusted in the event of payment of cash dividend.
 
Subject to the approval of the Israeli Tax authorities, the exercise of the options may be made by cashless mechanism.

Other Executive Benefits
 
Each Senior Executive shall be entitled to receive from the company an executive level car for work and personal use, including all costs and grossing up of the tax value. The use of the car shall be subject to Company’s polices, including with respect to payment of the excess amount in the event of accidents and payment of traffic and parking fines. The Company shall reimburse the business expenses (that are properly documented and approved in accordance with the Company’s internal policies)of its Senior Executives.  The Company will make available to the Senior Executive, at the Company’s cost, a cellular phone, a laptop computer and a business daily newspaper. Any and all taxes and expenses which may be incurred in relation to such benefits shall be borne by the Company.
 
Each Executive Officer is entitled to receive between 18-26 paid vacation days for each 12 months of employment. Any unused vacation days will be accrued for the benefit of the Senior Executive for a period of up to 24 months. The Company may allow the Senior Executive to redeem such accrued vacation days. However, any accrued vacation days not used or otherwise redeemed at the end of each 24 months period shall be forfeited.
 
The Company and the Senior Executive shall maintain a managers insurance program and/or pension programs with pension funds, all as shall be elected by the Senior Executive, and the Company shall pay to such programs on its behalf and shall deduct and transfer to such programs from the gross base salary payable to such Senior Executive, the maximum amounts allowed by law with respect to allowances for severance payment, other social benefits (TAGMULIM) as well as Disability Insurance (OVDAN KOSHER AVODA). All the payments and allowances will be calculated with respect to the entire base Salary.
 
The Company and the Executive shall open (at the Senior Executive’s elected approved fund management company) and maintain an Education Fund (“ Keren Hishtalmut ”) (the “ Fund ”). The Company and the Senior Executive shall transfer the applicable percentages of the entire base salary to such Fund.
 
At the request of the Senior Executive, the Company will pay the Senior Executive, amounts due and payable to the Fund, to any insurance company and or pension fund, or other social benefits payable to any other institution or to the employee as part of his base salary, that are in excess of the maximum allowance for tax exemption purposes, as shall be determined from time to time (the “ Excess Payment ”). Any and all tax liabilities that are due on account of the Company’s payment to the Senior Executive of the Excess Payment shall be borne solely by the Senior Executive.
 
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It is hereby clarified that the benefits described above shall not constitute part of the compensation for all intents and purposes including with respect to payments of severance payments, allocation to managers’ insurance, education fund, redemption of vacation days, etc.

Compensation of Directors
 
Directors that are employees of the Company or otherwise engaged by the Company will not be entitled to any directors’ fees or other remuneration for their services as Directors except for reimbursement of certain business expenses associated with service as directors such as payment of travel and lodging expenses when attending meetings of the Board of Directors outside their country of usual residence.
Other directors shall be entitled to receive Directors’ fees that are equal to the fees payable to External Directors pursuant to the Companies Law and the regulations promulgated pursuant thereto. Such fees shall be composed of annual fees and per meeting fees.

Executive Chairman of the Board

The Executive Chairman of the Board has increased duties in the activities of the Company and therefore may receive compensation for such efforts in addition to the Director’s fees. Such additional compensation may be composed of annual base cash compensation and performance-based cash incentive compensation. When considering the Executive Chairman’s additional compensation, the Committee and the Board will review benchmarking data with respect to the compensation of a peer group defined by the Company. In addition to benchmarking, the Committee and the Board will review the relevant Compensation Consideration. The Committee and the Board may also consider previous and existing compensation of Executive Chairman of the Company.
 
D&O Insurance; Indemnification
 
All Directors and officers will be covered by D&O liability insurance (“ D&O Insurance ”) in such scope and such terms as shall be determined from time to time pursuant to the requirements of the Companies Law. The D&O Insurance may include “run-off” provisions, covering the Directors’ and Senior Executives’ liability for a period of seven (7) years after the termination of their services as director.
 
In addition, and subject to the requirements of the Companies Law, the Company may indemnify its Directors and Officers for their liability in certain cases, including for legal expenses incurred by them in connection with the defense against such liability. Such indemnification shall not cover any amounts payable under the D&O Insurance and the aggregate amounts payable to all Directors and Senior Executives with respect to any indemnification event shall not be greater than 25% of the Company’s shareholders equity on the date of payment of the indemnification amount.

Retirement Bonus - Adjustment Payment
 
Except as detailed below, the Company shall not make any retirement payments. However, Senior Executives shall be entitled to receive, upon the termination of his/her employment with the Company (and unless the termination is in circumstances that negate the payment of severance payment pursuant to the applicable law) adjustment payment that will be based on the employment term of each such Senior Executive with the Company.
 
The ranges of the adjustment payments of the Senior Executives are:
 
CEO:  up to three monthly base salaries per year and up to a maximum of 12 monthly base salaries in the aggregate.
 
Other Senior Executives:  up to 1.5 monthly base salaries per year and up to a maximum of six (6) monthly base salaries in the aggregate.

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Exhibit I
Qualitative Goals
 
 
§
Implementation or completion of specified projects or processes;
 
§
Customer satisfaction;
 
§
Productivity;
 
§
The formation of joint ventures;
 
§
Research or development collaborations, or the Completion of other transactions;
 
§
Market share;
 
§
Completion of acquisitions of assets;
 
§
Acquisitions of businesses or companies;
 
§
Completion of divestitures and asset sale;
 
§
Greater geographic and product diversification;
 
§
Enhancing the Company’s succession planning and performance-driven culture by adding new talent in key roles;
 
§
Defending pending litigation matters and protecting the Company’s intellectual property;
 
§
Launching research and development initiatives
 
§
Effectively representing the Company in various Legislative and regulatory matters
 
§
Expansion of customer and strategic partner base;
 
§
Production performance including buoy deployments, quality and safety;
 
§
Creation and advancement of technology;
 
§
Development and management of the employee base;
 
§
Maintenance of worldwide regulatory compliance;
 
§
Improving technical achievements;
 
§
Adherence to ethical standards;
 
§
New orders;
 
§
New customers;

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Exhibit II
Selected Financial Parameters

  § Revenue - weight between 10% - 70%
  § Order Booking - weight between 10% - 70%;
  § Operation Profit - weight between 10% - 70%;
  § Net Profit - weight between 10% - 70%.
 
In order to further align the interests of the Senior Executives with the Company and with each other, 40% (at least) of the weight allocation will be identical for all Senior Executives.

The Chairman of the Board of Directors together with the CEO will set the weight allocation.
 
 
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Exhibit 99.2
 
MAGAL  SECURITY SYSTEMS LTD.
 
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
 
The undersigned hereby appoint(s) llan Ovadia, Doron Kerbel and Tomer Hay, or any  of them, attorneys or attorney of the undersigned, for and in the name(s) of the undersigned, with power of substitution and revocation in each to vote any and all ordinary shares, par value NIS 1.00 per share, of Magal Security Systems Ltd. (the "Company"), which the undersigned would be entitled to vote as fully as the undersigned could if personally present at the Annual General Meeting of Shareholders of the Company to be held on Monday, August 8, 2016 at 5:00 p.m. (Israel time) at the registered office of the Company, 17 Altalef Street, Industrial Zone, Yehud 5610001, Israel and at any adjournment or adjournments thereof, and hereby revoking any prior proxies to vote said shares, upon the following items of business more fully described in the notice of and proxy statement for such Annual General Meeting (receipt of which is hereby acknowledged).

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER SIGNING ON THE REVERSE.
 
(Continued and to be signed on the reverse side)
 
 
 
 

ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
 
MAGAL SECURITY SYSTEMS LTD.
 
August 8, 2016
 
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS IN PROPOSALS 1 AND 2 AND "FOR"  PROPOSALS 3 THROUGH 5.
PLEASE   SIGN,   DATE   AND RETURN   PROMPTLY   IN   THE   ENCLOSED   ENVELOPE.   PLEASE   MARK   YOUR   VOTE   IN   BLUE   OR   BLACK   INK   AS   SHOWN   HERE  x
                   
      1. To re·elect five (5) directors for terms expiring at the Company's 2017 Annual General Meeting  of Shareholders. FOR AGAINST ABSTAIN  
        GILLON BECK   o o o  
                   
        RON BEN·HAIM   o o o  
                   
        JACOB BERMAN   o o o  
                   
       
AVRAHAM BIGGER
  o o o  
                   
       
BARRY STIEFEL
  o o o  
                   
      2. To re-elect one (1) external director for a three year term.        
       
LIZA SINGER
  o o o  
            YES NO    
       
Are you (a) a controlling shareholder of the Company; or (b) do you have a personal interest in the approval of Proposal 2 as such terms are explained in the proxy statement?
o o    
            FOR AGAINST ABSTAIN  
      3.
To ratify and approve the reappointment of Kost Forer Gabbay & Kasierer, registered public accountants, a member firm of Ernst & Young Global, as the Company's independent registered public accountants for the year ending December 31, 2016, and to authorize its Audit Committee to fix the remuneration of such independent reg1stered publ1c accountants in accordance with the volume and nature of their services.
o o o  
            FOR AGAINST ABSTAIN  
      4.
To  approve  a  prlvate  placement  of  the  Company's  ordinary  shares  to  its  controlling shareholders, the FIMI partnerships, as part of a rights offering to raise capital.
o o o  
          YES NO    
       
Are you (a) a controlling shareholder of the Company; or (b)   do you have a personal interest in the approval of Proposal 4 as such terms are explained 111   the proxy statement?
o o    
          FOR AGAINST ABSTAIN  
      5. To   readopt the Company's Compensation Policy for Office Holders. o o o  
          YES NO    
     
Are you (a) a controlling shareholder of the Company: or (b)   do you have a personal interest in the approval of Proposal 5   as such terms are explained in the proxy statement?
o o    
               
To change the address on your account, please check the box at right and indicate your new address in the address space above.  Please note that changes to the registered name(s) on the account may not be submitted via this method.
o
           
 
Signature of Shareholder
 
Date: 
 
Signature of Shareholder
 
Date:
 
 
Note:
Please sign exactly as your name or names  appear  on this Proxy.  When shares  are held jointly, each holder should sign.   When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such.  If signer is a partnership, please sign in partnership name by authorized person.
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