TECH/OPS SEVCON, INC.
40 North Avenue
Burlington, Massachusetts 01803
December 13, 1999
BY DIRECT TRANSMISSION
- -----------------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Tech/Ops Sevcon, Inc.
Definitive Proxy Material
Pursuant to Rule 14a-6(b) under the Securities Exchange Act
of 1934 and Rule 101(a)(1)(iii) of Regulation S-T, Tech/Ops
Sevcon, Inc. hereby files by direct transmission a definitive
copy of the proxy statement and form of proxy for its 2000 Annual
Meeting of Stockholders. In accordance with the Note to Rule
14a-4(a)(3), the form of proxy is filed as Appendix A to the
proxy statement. It is expected that the definitive proxy state-
ment and proxy will be sent to stockholders on or about December
28, 1999.
Yours very truly,
/s/ Paul B. Rosenberg
-----------------
Paul B. Rosenberg
Treasurer
cc: David R. Pokross, Jr., Esq.
American Stock Exchange (3 copies)
1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Check the Appropriate Box
[X] Definitive Proxy Statement
Tech/Ops Sevcon, Inc.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
2
TECH/OPS SEVCON, INC.
40 North Avenue, Burlington, Massachusetts 01803
TELEPHONE (617) 523-2030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of the stock-
holders of Tech/Ops Sevcon, Inc., a Delaware corporation, will be
held at the offices of Palmer & Dodge, 24th Floor, One Beacon
Street, Boston, Massachusetts, at 5:00 p.m. on Wednesday, January
26, 2000 for the following purposes:
(1) To elect two directors to hold office for a term of
three years.
(2) To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on De-
cember 10, 1999 are entitled to notice of the meeting or to vote
thereat.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE YOUR PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU AT-
TEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT
BE USED.
By order of the Board of Directors,
David R. Pokross, Jr.
Secretary
Dated December 28, 1999
3
PROXY STATEMENT
APPROXIMATE DATE OF MAILING: DECEMBER 28, 1998
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the
Board of Directors of Tech/Ops Sevcon, Inc. (the "Company") for
use at the annual meeting of stockholders of the Company to be
held on January 26, 2000 at 5:00 p.m. at the offices of Palmer &
Dodge, 24th Floor, One Beacon Street, Boston, Massachusetts, or
any adjournments or postponements thereof. It is subject to
revocation at any time prior to the exercise thereof by giving
written notice to the Company, by submission of a later dated
proxy or by voting in person at the meeting. The costs of so-
licitation, including the preparation, assembly and mailing of
proxy statements, notices and proxies, will be paid by the Com-
pany. Such solicitation will be made by mail and in addition may
be made by the officers and employees of the Company personally
or by telephone or telegram. Forms of proxies and proxy material
may also be distributed, at the expense of the Company, through
brokers, custodians and other similar parties to the beneficial
owners of the Common Stock.
On December 10, 1999, the Company had outstanding 3,115,306
shares of Common Stock, $.10 par value, which is its only class
of voting stock. Stockholders of record at the close of business
on December 10, 1999 will be entitled to vote at the meeting.
With respect to all matters which will come before the meeting,
each stockholder may cast one vote for each share registered in
his name on the record date. The shares represented by every
proxy received will be voted, and where a choice has been speci-
fied, the shares will be voted in accordance with the specifica-
tion so made. If no choice has been specified on the proxy, the
shares will be voted FOR the election of the nominees as direc-
tors.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as to the ownership
of the Company's Common Stock as of December 10, 1999 by (i) per-
sons known to the Company to be the beneficial owners of more
than 5% of the Company's outstanding Common Stock, (ii) the ex-
ecutive officer named in the Summary Compensation Table below,
and (iii) all current executive officers and directors of the
Company as a group. Beneficial ownership by individual directors
is shown in the table on pages 3 and 4 below.
4
Amount
Name and Address Beneficially Percent
of Beneficial Owner Owned (1) of Class
------------------- --------- --------
Dr. Marvin G. Schorr 355,278 (2) 11.4%
Tech/Ops Corporation
330 Beacon Street
Boston, MA 02116
Bernard F. Start 233,477 (2) 7.5%
Tech/Ops Sevcon, Inc.
Dotland Grange
Hexham, NE462JY, United Kingdom
Dimensional Fund Advisors, Inc. 184,400 (3) 5.9%
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
Matthew Boyle. . .... . . . 10,400 (4) #
Tech/Ops Sevcon, Inc.
40 North Avenue
Burlington, MA 01803
All current executive officers and
directors as a group (8 persons).. 813,210 (5) 25.9%
___________
# Less than 1%
(1) Unless otherwise indicated, each owner has sole voting
and investment power with respect to the shares listed.
(2) Includes 500 shares subject to stock options exercis-
able within sixty days.
(3) As reported on Schedule 13G filed with the Securities
and Exchange Commission on December 31, 1998.
(4) Includes 10,000 shares subject to stock options exer
cisable within sixty days.
(5) Includes 39,000 shares subject to stock options exer-
cisable within sixty days. Includes 39,000 shares held
by Mr. Roth and 1,000 shares subject to options held by
Mr. Roth which are exercisable with in sixty days. Mr.
Roth will retire at the time of the annual meeting.
5
ELECTION OF DIRECTORS
The Company's Board of Directors has fixed the number of
directors at seven, effective at the annual meeting. Members of
the Board of Directors are divided into three classes serving
staggered three-year terms. The term of three of the Company's
current directors, Paul B. Rosenberg, Herbert Roth, Jr., and Ber-
nard F. Start, expires at the annual meeting. Mr. Roth will re-
tire at the time of the annual meeting, for medical reasons, as a
director after 29 years of service with the Company and its
predecessor. Mr. Rosenberg and Mr. Start are the Board's nomi-
nees for re-election to three-year terms by the stockholders at
the annual meeting. The Company is not presently aware of any
reason that would prevent any nominee from serving as a director
if he is elected. If a nominee should become unavailable for
election, the proxies will be voted for another nominee selected
by the Board.
Pursuant to the Company's by-laws, directors will be elected
by a plurality of the votes properly cast at the annual meeting.
Abstentions, votes withheld and broker non-votes will not be
treated as votes cast and will not affect the outcome of the
election. A "broker non-vote" occurs when a broker holding a
customer's shares indicates on the proxy that the broker has not
received voting instructions on a matter from the customer and is
barred by applicable rules from exercising discretionary author-
ity to vote on the matter.
The following table contains information on the two nominees
for election at the annual meeting and each other person whose
term of office as a director will continue after the meeting.
The nominees for election at the meeting are indicated by an as-
terisk.
Number
of Common
Has Been Shares of
a Director the Company
of the Owned
Company Benefici-
Business or its Pre- -ally on
Experience decessor Dec. 10
During Past Tech/Ops, 1999 and
Term Five Years and Inc. Percent of
Name Expires Other Directorships Since Class (1)
- ---- ------- ------------------- ----- --------
Gideon Argov 2002 President and Chief 1997 -
Boyle Executive Officer, (#)
Age -- 43 since 1991, of Koll-
morgen Corp., Waltham,
Mass., a manufacturer
of electronic motion
control products and
systems, and Chairman
of the Board since
1996. Mr. Argov is a
6
director of Trans-
Technology Corp., a
manufacturer of indust-
rial fasteners and
aerospace equipment.
Matthew Boyle 2002 President and Chief 1997 10,400
Age -- 37 Executive Officer of (#)
the Company since (2)
November 1997. Vice
President and Chief
Operating Officer of
the Company from Nov-
ember 1996 to November
1997. From 1994 to
1996, Mr. Boyle was
General Manager of GEC
Alsthom Regulateurs
Europa, Colchester,
England, an electronic
controls company and
from 1991 to 1994, Gen-
eral Manager of the IACD
Scottish division of
Honeywell Control Systems
Ltd., Aberdeen, Scotland,
an electronics and con-
trols systems company.
* Paul B. 2000 Treasurer of the Company 1988 85,480
Rosenberg (4)(5) since January 1988. He (2.7%)
Age -- 67 is a director of Land- (3)
auer, Inc., Glenwood, Ill-
inois, a provider of pers-
onnel dosimetry services.
Dr. Marvin 2001 Chairman of the Company's 1951 354,838
G. Schorr (4) Board of Directors since (11.4%)
Age -- 74 January 1988. Chairman of (3)
the Board of Directors and
President of Tech/Ops, Inc.,
the Company's predecessor.
Dr. Schorr is Chairman of
Helix Technology Corporation,
Mansfield, Massachusetts, a
manufacturer of cryogenic
equipment.
* Bernard F. 2000 Vice-Chairman of the Board 1988 233,477
Start since November 1997. Pres- (7.5%)
Age -- 61 ident and Chief Executive (3)
Officer of the Company from
January 1988 to November
1997.
7
David R. 2001 President of Atlantic Man- 1997 3,000
Steadman (5)(6) agement Associates, a man- (#)
Age -- 61 agement services firm, (3)
since 1988. Chairman of
the Board and Chief Exec-
utive Officer of Visibil-
ity, Inc., a software
company, since 1996. Mr.
Steadman is currently a
director of Aavid Thermal
Technologies, Inc., a man-
ufacturer of thermal man-
agement products
C. Vincent 2002 Until May 1991, Chairman 1971 9,000
Vappi (5)(6) and Chief Executive Officer (#)
Age -- 73 of Vappi & Company, Inc., (3)
Cambridge, Mass., a gen-
eral building contractor.
- ------------------------------------
# Less than 1%
(1) Unless otherwise indicated, each director has sole
voting and investment power with respect to the
shares listed.
(2) Includes 10,000 shares subject to stock options exer
cisable within sixty days.
(3) Includes 1,000 shares subject to stock options exercis-
able within sixty days.
(4) Member of the Executive Committee.
(5) Member of the Audit Committee.
(6) Member of the Compensation Committee.
During the fiscal year ended September 30, 1999, the Board
of Directors held a total of five meetings. During such year,
all directors, except for Mr. Roth, attended more than 75% of the
total number of meetings of the Board of Directors and all com-
mittees of the Board on which the director served. Mr. Roth was
unable, for medical reasons, to attend the last two meetings, but
was present at the first three of such meetings,
8
The Board of Directors has an Audit Committee and a Compen-
sation Committee. The Audit Committee, which met twice during
the fiscal year ended September 30, 1999, reviews the scope and
results of the external audit, including the audited financial
statements, the auditors' compensation and the adequacy of the
Company's internal financial controls, and recommends the engage-
ment of the Company's external auditors. The Compensation Com-
mittee, which met once during the fiscal year ended September 30,
1999, reviews and recommends to the Board the annual salary, bo-
nus, stock options, and other benefits of the senior executives.
The Board of Directors does not have a nominating committee.
Director Compensation
Directors of the Company (except Mr. Boyle) are each paid
$13,500 a year for their services. The Chairmen of the Audit Com-
mittee (Mr. Roth in 1999) and Compensation Committee (Mr. Vappi
in 1999), each receive an additional $1,000 a year. The Company
pays the consulting business owned by Mr. Rosenberg and Dr.
Schorr $100,000 per year, under an Agreement terminating on De-
cember 31, 1999. Of this amount, $30,000 is paid to Mr. Rosen-
berg for his services as the Company's Treasurer, and $70,000 is
applied toward the expenses of maintaining an office and support
facilities for the Company's corporate office and for Mr. Rosen-
berg and Dr. Schorr. Dr. Schorr receives no compensation from
this payment. Mr. Start received compensation at an annual rate
of $25,000 as Vice Chairman and the Board of Directors' represen-
tative in Europe, during the last fiscal year.
On January 28, 1998, the stockholders approved the 1998 Di-
rector Stock Option Plan, reserving 50,000 shares of Common Stock
to be issued pursuant to grants of options under the Plan. Fol-
lowing the vote, each of the Company's six non-employee directors
was granted an option for 5,000 shares of Common Stock at a price
of $15.1875 per share, the fair market value of the Common Stock
at that date. The options will expire 90 days after the tenth
anniversary of the date of grant and will become exercisable in
equal 500 share amounts on each of the first ten anniversaries of
the date of grant, commencing January 28, 1999. On September 21,
1999, Gideon Argov, newly elected as a director by the Board on
that date, was granted an option for 5,000 shares of Common Stock
at a price of $11.1875 per share, the fair market value of the
stock at that date. The options will expire 90 days after the
tenth anniversary of the date of grant and will become exercis-
able in equal 500 share amounts on each of the first ten anniver-
saries of the date of grant, commencing September 21, 2000. All
outstanding options issued under the Plan become immediately ex-
ercisable in full in the event of a "Change in Control" of the
Company (as defined in the Plan).
9
EXECUTIVE COMPENSATION
The following tables provide information for the last three
fiscal years concerning the compensation of the only executive
officer of the Company whose total compensation exceeded $100,000
in the most recent fiscal year, and the value of unexercised
stock options held by him at the end of such years. Information
concerning the President and Chief Executive Officer of the Com-
pany is included for the period since November 1996, the date he
joined the Company,
Summary Compensation Table
Long-Term
Compens-
Name & Principal Fiscal Annual ation
Position Year Compensation Awards
- ---------------- ------ ------------------------ -----------
Other Securities
Annual Under-
Compens- lying
Salary Bonus ation(a) Options(#)
------ ----- ------- ----------
Matthew Boyle 1999 $157,500 $50,000 $ 0 0
President & Chief 1998 146,250 50,000 0 20,000
Executive Officer 1997 130,800 20,000 0 20,000
from November 1997
Vice President &
Chief Operating
Officer (Nov 96
to Nov 97)
Option Grants in Last Fiscal Year
There were no stock options granted to the named executive
officer of the Company during the fiscal year ended Septem-
ber 30, 1999.
10
Fiscal Year-End Option Values
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options In-the-Money
Options
at 9/30/99 (#) at 9/30/99
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
Matthew Boyle 6,000/34,000 $ - /$ -
(a) Based on the difference between the option exercise price and
the closing price of the underlying Common Stock on September
30, 1999, which closing price was $9.875 per share.
No named executive officer of the Company exercised any
stock options during the last fiscal year.
Retirement Plan.
Mr. Boyle participates in the Company's U. K. Retirement
Plan, a defined benefit plan, under which benefits at age 65 are
based upon 1/60th of final U. K. - based salary (as defined) for
each year of service, subject to a maximum of 2/3rds of final
U. K. - based base salary. A spouse's pension of 50% of the em-
ployee's pension is payable beginning at the death of the em-
ployee either before or during retirement. Pension payments
escalate by at least 3% per year, compounded, and at a higher
rate in certain circumstances. The employee contributes 4% of
base salary, with the balance of the cost being met by the Com-
pany.
The following table sets forth information concerning the
annual benefits payable to the employee pursuant to the U. K.
Retirement Plan upon retirement at age 65 for specified compensa-
tion levels and years of service classifications. Benefits under
the U. K. Retirement Plan are computed solely on the U. K. base
salary of participants, exclusive of bonuses, incentive and other
compensation, and are not reduced on account of U. K. Social Se-
curity entitlement.
11
U. K. Retirement Plan Table
Average Annual Earnings Estimated Annual Pension Based on
on which Years of Service Indicated
Retirement --------------------------------
Benefits are Based 15 years 20 years 25 years 30 years
- ------------------ -------- -------- -------- --------
$ 100,000 $ 25,000 $ 33,400 $ 41,700 $ 50,000
125,000 31,300 41,700 52,100 62,500
150,000 37,500 50,000 62,500 75,000
175,000 43,800 58,300 72,900 87,500
200,000 50,000 66,700 83,300 100,000
225,000 56,300 75,000 93,800 112,500
250,000 62,500 83,300 104,200 125,000
275,000 68,800 91,700 114,600 137,500
300,000 75,000 100,000 125,000 150,000
Credited years of service at September 30, 1999 were 3 for
Mr. Boyle. Mr. Boyle's compensation is entirely U. K. based.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate
and retain employees by encouraging and rewarding performance.
The program is administered by the Compensation Committee of the
Board of Directors (the "Committee"), consisting of three inde-
pendent directors who are not employees of the Company. The Com-
mittee regularly reviews and approves generally all compensation
and fringe benefit programs of the Company, and also reviews and
determines the base salary and incentive compensation of the ex-
ecutive officers named above, as well as stock option grants to
all employees. All compensation actions taken by the Committee
are reported to the full Board of Directors, which, excluding
employee directors, approves the actions of the Committee. The
Committee also reviews and makes recommendations to the Board on
policies and programs for the development of management person-
nel, as well as management structure and organization. The Com-
mittee administers the Company's Equity Incentive Plan.
The Company believes that stock options are an important
incentive to motivate executive officers and other key employees
for improved long-term performance of the Company. The Company
considers stock ownership, options currently held and options
previously granted when granting options although there are no
specific levels of ownership for such grants.
The Committee believes that the combination of salary and
incentive compensation is the best method for compensating its
executive officers and senior managers to promote uniform excel-
lence, long-term commitment and team performance. Management
salaries are determined based upon individual performance, level
of responsibility and experience. The Committee reviews these
salaries annually and measures them against compensation data
12
obtained from published compensation surveys and surveys that the
Committee makes of a group of peer companies. The Committee be-
lieves that the salaries of the Company's executive officers are
in the mid-range of these surveys. The peer companies are gener-
ally of about the same size as the Company and are in technical,
rather than consumer or distribution fields. The peer companies
may include some of the companies included in the Industrial Con-
trols Industry Index used in the Performance Graph. The Company
believes that its competitors for executive talent are not neces-
sarily only companies which engage in the same business as the
Company and, therefore, the companies used for comparative com-
pensation purposes differ somewhat from the companies included in
the Industrial Controls Industry Index.
The recommended base salary and incentive compensation award
for the President is determined each year by the Committee based
upon its subjective assessment of the overall financial perform-
ance of the Company and the performance of the President relative
to corporate objectives and other factors. Mr. Boyle's base sal-
ary during fiscal 1999 increased to $160,000, up 6.7% from fiscal
1998. In view of the financial performance of the Company, no
bonus was awarded to the President for the fiscal year ended Sep-
tember 30, 1999.
On November 1, 1999, after the end of the fiscal year, a
stock option was granted for 10,000 shares to Mr. Boyle, under
the Company's Equity Incentive Plan.
Members of the Compensation Committee
Herbert Roth, Jr.
David R. Steadman
C. Vincent Vappi, Chairman
PERFORMANCE GRAPH
The following graph compares the cumulative total
return (change in stock price plus reinvested dividends) assuming
$100 invested in the Common Stock of the Company, in the American
Stock Exchange ("AMEX") Market Value Index, and in the Media Gen-
eral Industrial Controls Sector Index during the period from Sep-
tember 30, 1994 through September 30, 1999.
Value of Investment at September 30,
-----------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Tech/Ops Sevcon, Inc. $ 100 $155 222 161 214 149
AMEX Market Value Index 100 120 125 152 133 155
Media General Industrial
Controls Sector Index 100 102 83 151 108 119
13
AUDITORS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachu-
setts, has served as auditors for the Company and its predecessor
Tech/Ops, Inc. since the latter was formed, and upon recommenda-
tion of the Audit Committee, has been appointed as auditors for
the current year. Representatives of Arthur Andersen LLP are
expected to be present at the meeting with an opportunity to make
a statement if they desire to do so and are expected to be avail-
able to respond to appropriate questions.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
In order for a stockholder proposal to be considered for
inclusion in the Company's proxy materials for the annual meeting
in 2001, it must be received by the Company at 40 North Avenue,
Burlington, Massachusetts 01803, Attention: Treasurer, no later
than August 30, 2000
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The by-laws of the Company provide that in order for a
stockholder to bring business before or propose director nomina-
tions at an annual meeting, the stockholder must give written
notice to the Secretary or other specified officer of the Company
not less than 50 days nor more than 75 days prior to the meeting.
The notice must contain specified information about the proposed
business or each nominee and the stockholder making the proposal
or nomination. If the annual meeting is scheduled for a date
other than the fourth Wednesday in January and notice thereof is
mailed to stockholders or publicly disclosed less than 65 days in
advance, the notice given by the stockholder must be received not
later than the 15th day following the day on which the notice of
such annual meeting date was mailed or public disclosure made,
whichever occurs first.
OTHER BUSINESS
The Board of Directors does not know of any business which
will come before the meeting except the matters described in the
notice. If other business is properly presented for considera-
tion at the meeting, the enclosed proxy authorizes the persons
named therein to vote the shares in their discretion.
Dated December 28, 1999
14
(FORM OF PROXY CARD) Appendix A
TECH/OPS SEVCON, INC.
Proxy Solicited by the Board of Directors for Annual Meeting
of Stockholders to be held January 26, 2000
The undersigned appoints Marvin G. Schorr, Paul B. Rosenberg
and David R. Pokross, Jr. and each of them, the attorneys and
proxies of the undersigned, with power of substitution, to vote
all the shares of Tech/Ops Sevcon, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held
January 26, 2000 at the offices of Palmer & Dodge, 24th Floor,
One Beacon Street, Boston, Massachusetts at 5:00 p. m. and at any
adjournments thereof.
Please complete, sign and date on reverse side
and mail in enclosed envelope
- ------------------------------------------------------------
_____
\ \ Please mark
\ X \ votes as in
\____\ this example
This proxy will be voted FOR both nominees for Director below
if no contrary instructions are given.
1. ELECTION OF DIRECTORS
Nominees for three-year terms: Rosenberg, Start
For Both Withheld from
Nominees both nominees
\__\ \__\
\__\_______________________
For both nominees except as MARK HERE FOR ADDRESS
noted above CHANGE AND NOTE AT LEFT
\___\
This proxy should be signed by the registered holder. Where
stock is registered in the names of more than one person,
all such persons should sign. When signing as executors,
administrators, trustees, guardians, etc. please indicate
your title as such.
Signature___________ Date________
Signature___________ Date________
15