DIONEX CORPORATION
501 Mercury Drive
Sunnyvale, California 94085
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 2001
TO THE STOCKHOLDERS OF DIONEX CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Dionex
Corporation, a Delaware corporation (the "Company"), will be held at Dionex
Corporation, 501 Mercury Drive, Sunnyvale, California, on Friday, October 26,
2001 at 9:00 a.m. for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the Dionex Corporation Stock Option Plan to
increase the aggregate number of shares of Common Stock authorized for issuance
under the plan by 1,000,000 shares.
3. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for its fiscal year ending June 30, 2002.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on September 10,
2001 as the record date for the determination of stockholders entitled to notice
of and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
CHRISTOPHER A. WESTOVER
Secretary
Sunnyvale, California
September 17, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY. STOCKHOLDERS WITH SHARES REGISTERED DIRECTLY WITH THE
COMPANY'S TRANSFER AGENT, EQUISERVE, L.P. ("EQUISERVE"), MAY CHOOSE TO VOTE
THOSE SHARES VIA THE INTERNET AT EQUISERVE'S VOTING WEB SITE
(WWW.EPROXYVOTE.COM/DNEX), OR THEY MAY VOTE TELEPHONICALLY, WITHIN THE U.S.
ONLY, BY CALLING EQUISERVE AT 1 (877) 779-8683 (TOLL-FREE), OR FOR STOCKHOLDERS
RESIDING OUTSIDE THE U.S. BY CALLING COLLECT ON A TOUCH-TONE PHONE AT (201)
536-8073. STOCKHOLDERS HOLDING SHARES WITH A BROKER OR BANK MAY ALSO BE ELIGIBLE
TO VOTE VIA THE INTERNET OR TO VOTE TELEPHONICALLY IF THEIR BROKER OR BANK
PARTICIPATES IN THE PROXY VOTING PROGRAM PROVIDED BY ADP INVESTOR COMMUNICATION
SERVICES. SEE "VOTING VIA THE INTERNET OR BY TELEPHONE" IN THE PROXY STATEMENT
FOR FURTHER DETAILS.
DIONEX CORPORATION
501 Mercury Drive
Sunnyvale, California 94085
2001 Proxy Statement
Information Concerning Solicitation and Voting
General
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company (the "Board of Directors" or the "Board") for use at the Annual Meeting
of Stockholders to be held on Friday, October26, 2001, at 9:00 a.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at Dionex Corporation, 501 Mercury Drive, Sunnyvale,
California.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
The Company intends to mail this proxy statement and accompanying proxy
card on or about September 14, 2001, to all stockholders entitled to vote at the
Annual Meeting.
Voting Via the Internet or by Telephone
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If you hold your shares directly If you hold your shares in an
registered in your name with account with a broker or bank that
EquiServe: participates in the ADP Investor
Communication Services program:
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To vote by phone (within the U.S. To vote by phone: your voting form
only, call toll-free) 1 (877) from your broker or bank will show
779-8683, or (outside of the U.S., the telephone number to call.
call collect on a touch-tone
phone), (201) 536-8073 To vote via the Internet:
To vote via the Internet: www.proxyvote.com
WWW.EPROXYVOTE.COM/DNEX
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For Shares Directly Registered in the Name of the Stockholder. Stockholders
with shares registered directly with EquiServe may vote those shares
telephonically by calling EquiServe at 1 (877) 779-8683 (within the U.S. only,
toll-free), or via the Internet at EquiServe's voting Web site
(www.eproxyvote.com/dnex).
2
For Shares Registered in the Name of a Broker or Bank. A number of brokers
and banks are participating in a program provided through ADP Investor
Communication Services that offers telephone and Internet voting options. This
program is different from the program provided by EquiServe for shares
registered directly in the name of the stockholder. If your shares are held in
an account with a broker or bank participating in the ADP Investor Communication
Services program, you may vote those shares telephonically by calling the
telephone number shown on the voting form received from your broker or bank, or
via the Internet at ADP Investor Communication Services' voting Web site
(www.proxyvote.com).
General Information for All Shares Voted Via the Internet or By Telephone.
Votes submitted via the Internet or by telephone must be received by 12:00
midnight, Eastern Standard Time, on October 25, 2001. Submitting your proxy via
the Internet or by telephone will not affect your right to vote in person should
you decide to attend the Annual Meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the meeting, you must bring to the meeting a letter from the broker,
bank or other nominee confirming your beneficial ownership of the shares.
Additionally, in order to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
The telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. Stockholders granting a proxy to vote via the Internet should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by the stockholder.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on
September 10, 2001 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on September 10, 2001, the Company had
outstanding and entitled to vote 22,139,489 shares of Common Stock. Each holder
of record of Common Stock on such date will be entitled to one vote for each
share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 501
Mercury Drive, Sunnyvale, California 94085, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
3
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission (the "SEC") is May 20, 2002. The deadline for submitting a
stockholder proposal or a nomination for director that is not to be included in
such proxy statement and proxy is July 30, 2002. Stockholders are also advised
to review the Company's Bylaws, which contain additional requirements with
respect to advance notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
There are five nominees for the five Board positions presently authorized
in the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of stockholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, having been elected
by the stockholders.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five nominees named below. If any
nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected, and management has no reason to believe that any nominee
will be unable to serve. Directors are elected by a plurality of the votes of
the holders of Common Stock present in person or represented by proxy and
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
Nominees
The following information pertains to the nominees, their principal
occupations for the preceding five-year period, certain directorships, and their
ages as of August 31, 2001.
Principal Occupation/Positions
Name Age Held with the Company
---- --- ---------------------
David L. Anderson ..... 57 Managing Director of the general partner of
Sutter Hill Ventures
James F. Battey ....... 80 Independent Investor
A. Blaine Bowman ...... 55 President and Chief Executive Officer
B.J. Moore ............ 65 Management Consultant
Riccardo Pigliucci .... 54 Chairman and Chief Executive Officer, Discovery
Partners International
Mr. Anderson has been the managing director of the general partner of
Sutter Hill Ventures, a venture capital investment partnership, since 1974. Mr.
Anderson has served as a director of the Company since it began operations in
1980 and previously served as a director of the predecessor of the Company. Mr.
Anderson is also a director of BroadVision, Inc. and Molecular Devices
Corporation and various private companies.
4
Dr. Battey was President and Chief Executive Officer of Psi Star, Inc.,
which manufactures equipment used in the production of computer circuit boards,
from 1981 until May 1987, and Chairman of the Board of Psi Star from May 1987
until his retirement in May 1990. Dr. Battey has served as a director of the
Company since it began operations in 1980 and previously served as a director of
the predecessor of the Company.
Mr. Bowman has served as the Company's President and Chief Executive
Officer and as a director since the Company began operations in 1980. Mr. Bowman
is also a director of Molecular Devices Corporation.
Mr. Moore is an independent management consultant. From December 1985 until
July 1991, he was President of Outlook Technology, Inc., a company that
manufactured and sold high performance instrumentation and was merged with
Biomation Corporation in August 1991. He has served as a director of the Company
since it began operations in 1980 and previously served as a director of the
predecessor of the Company. Mr. Moore is also a director of American Xtal
Technology, Inc.
Mr. Pigliucci is Chairman and Chief Executive Officer of Discovery Partners
International, a supplier of equipment and services to the drug discovery
market. From 1996 to 1997, Mr. Pigliucci was Chief Executive Officer of Life
Sciences International, a supplier of scientific equipment and consumables to
research, clinical and industrial markets. Prior to that, he held numerous
management positions during his 23-year career at Perkin-Elmer Corporation, a
life science and analytical instrument company, including President and Chief
Operating Officer from 1993 to 1995. He was elected as a director of the Company
in March 1998. Mr. Pigliucci is also a director of Biosphere Medical Corporation
and Epoch Pharmaceutical, Inc.
Meetings; Committees
During the fiscal year ended June 30, 2001, the Board held four meetings.
The Board has two committees, an Audit Committee and a Compensation Committee.
The Audit Committee recommends engagement of the Company's independent
auditors, evaluates the independent auditors' performance, oversees the
independence of the independent auditors, approves services performed by such
independent auditors, and reviews and evaluates the Company's accounting system
and its system of internal accounting controls. During fiscal 2001, the Audit
Committee consisted of Messrs. Moore and Pigliucci and Dr. Battey and held two
meetings. All members of the Audit Committee are independent (as independence is
defined in Rule 4200(a)(15) of the NASD listing standards). The Audit Committee
has adopted a written Audit Committee charger that is attached hereto as
Appendix A.
The Compensation Committee reviews and administers the compensation of the
Company's officers and certain members of senior management of the Company. The
members of the Compensation Committee are Messrs. Anderson, Moore and Pigliucci
and Dr. Battey. During the fiscal year ended June 30, 2001, the Compensation
Committee held four meetings.
During the fiscal year ended June 30, 2001, each Board member attended at
least 75% of the meetings of the Board and the committees upon which such member
served.
5
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS(1)
The audit committee (the "Audit Committee") oversees the Company's
financial reporting process on behalf of the Board of Directors. Management has
the primary responsibility for the financial statements and the reporting
process including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the audited financial statements
in the Company's Annual Report on Form 10-K for the year ended June 30, 2001
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States, their judgments as to the quality, not just the acceptability, of the
Company's principles and such other matters as are required to be discussed with
the Audit Committee under auditing standards generally accepted in the United
States, including those described in Statement on Auditing Standards No. 61, as
amended, "Communication with Audit Committees," and discussed and reviewed
results of the independent auditors' examination of the financial statements. In
addition, the Audit Committee has discussed with the independent auditors the
auditors' independence from management and the Company and received a letter and
other written disclosures from the independent auditors, as required by the
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Audit Committee also considered whether provision of
non-audit services are compatible with maintaining the auditors' independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audits. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Audit Committee held two meetings during fiscal year 2001.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended June 30, 2001, for filing with the Securities and
Exchange Commission. The Audit Committee and the Board have also recommended,
subject to stockholder approval, the selection of the Company's independent
auditors.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
JAMES F. BATTEY
B.J. MOORE
RICCARDO PIGLIUCCI
----------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933 (the "Securities Act") or the
Exchange Act, whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing.
6
PROPOSAL 2
APPROVAL OF INCREASE IN NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE UNDER DIONEX CORPORATION STOCK OPTION PLAN
In July 2001, the Board approved an amendment to the Dionex Corporation
Stock Option Plan (the "Plan") subject to stockholder approval, increasing the
number of shares of Common Stock authorized for issuance under the Plan by
1,000,000 shares. At June 30, 2001, options to purchase a total of 2,764,047
shares had been granted and were outstanding under the Plan and the Company's
now-expired 1984 Supplemental Stock Option Plan, and 1,306,908 shares (plus any
shares that might be returned to the Plan as a result of cancellations or
expiration of options) remained available for future grant under the Plan.
During the fiscal year ended June 30, 2001, the Company granted to employees as
a group options to purchase 5,150 shares at a weighted average exercise price of
$28.59 per share. There were 165,000 options granted to executive officers at a
weighted average exercise price of $31.74 per share in the fiscal year ended
June 30, 2001.
Stockholders are requested in Proposal 2 to approve the amendments to the
Plan. If the stockholders fail to approve Proposal 2, the number of shares
available for future grant under the Plan will remain at 1,306,908. The
affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote at the meeting will be required to approve the
amendments to the Plan. Abstentions will be counted towards the tabulation of
votes cast on proposals presented to the stockholders and will have the same
effect as negative votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether this matter has been
approved.
The essential features of the Plan, as amended, are outlined below:
The Plan provides for the grant of both incentive and nonstatutory stock
options. Incentive stock options granted under the Plan are intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Nonstatutory stock options
granted under the Plan are intended not to qualify as incentive stock options
under the Code. See "Federal Income Tax Information" below for a discussion of
the federal income tax treatment of incentive and nonstatutory stock options.
Purpose
The Plan was adopted to provide a means by which selected officers and
employees of and consultants to the Company and its affiliates could be given an
opportunity to purchase stock in the Company, to assist in retaining the
services of employees holding key positions, to secure and retain the services
of persons capable of filling such positions and to provide incentives for such
persons to exert maximum efforts for the success of the Company. As of June 30,
2001, stock options had been granted to approximately 20% of the Company's
active employees.
7
Administration
The Plan is administered by the Board. The Board has the power to construe
and interpret the Plan and, subject to the provisions of the Plan, to determine
the persons to whom and the dates on which options will be granted, the number
of shares to be subject to each option, the time or times during the term of
each option within which all or a portion of such option may be exercised, the
exercise price, the type of consideration and other terms of the option. The
Board is authorized to delegate administration of the Plan to a committee
composed of not fewer than two members of the Board. The Board has delegated
administration of the Plan to the Compensation Committee of the Board. As used
herein with respect to the Plan, the "Board" refers to the Compensation
Committee as well as to the Board itself.
Pursuant to the Plan, directors who serve as members of the Compensation
Committee must be "outside directors." This limitation excludes from the
Compensation Committee (i) current employees of the Company, (ii) former
employees of the Company receiving compensation for past services (other than
benefits under a tax-qualified pension plan), (iii) current and former officers
of the Company, (iv) directors currently receiving direct or indirect
remuneration from the Company in any capacity (other than as a director), unless
any such person is otherwise considered an "outside director" for purposes of
Section 162(m) of the Code.
Eligibility
Incentive stock options may be granted under the Plan only to selected key
employees (including officers) of the Company and its affiliates. Selected key
employees (including officers) and consultants, are eligible to receive
nonstatutory stock options under the Plan. Directors who are not salaried
employees of or consultants to the Company or to any affiliate of the Company
are not eligible to participate in the Plan.
No incentive option may be granted under the Plan to any person who, at the
time of the grant, owns (or is deemed to own) stock possessing more than 10% of
the total combined voting power of the Company or any affiliate of the Company,
unless the option exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant, and the term of the option
does not exceed five years from the date of grant. For incentive stock options
granted under the Plan, the aggregate fair market value, determined at the time
of grant, of the shares of Common Stock with respect to which such options are
exercisable for the first time by an optionee during any calendar year (under
all such plans of the Company and its affiliates) may not exceed $100,000.
The Plan limits grants to 400,000 shares of Common Stock for each employee
for each twelve-month period. The purpose of this limitation is generally to
comply with requirements for options granted with an exercise price at least
equal to fair market value of the Common Stock on the date of grant to qualify
as "performance based compensation" under Code Section 162(m), such that the
Company may continue to be able to deduct for tax purposes the compensation
attributable to the exercise of such options granted under the Plan.
Stock Subject to the Plan
If options granted under the Plan expire or otherwise terminate without
being exercised, the Common Stock not purchased pursuant to such options again
becomes available for issuance under the Plan.
8
Term of Options
The following is a description of the permissible terms of options granted
under the Plan. Individual option grants may be more restrictive as to any or
all of the permissible terms described below:
Exercise Price; Payment. The exercise price of incentive stock options
under the Plan may not be less than the fair market value of the Common Stock
subject to the option on the date of the option grant, and, in some cases (see
"Eligibility" above), may not be less than 110% of such fair market value. The
exercise price of nonstatutory options under the Plan may not be less than 85%
of the fair market value of the Common Stock subject to the option on the date
of the option grant. However, if options are granted with exercise prices below
fair market value, deductions for compensation attributable to the exercise of
such options could be limited by Code Section 162(m). See "Federal Income Tax
Information." At August 2, 2001, the closing price of the Company's Common Stock
as reported on The Nasdaq National Market was $29.85 per share.
The exercise price of options granted under the Plan must be paid either:
(a) in cash at the time the option is exercised; or (b) at the discretion of the
Board, (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement, or (iii) in any other form of legal consideration
acceptable to the Board.
Option; Exercise. Options granted under the Plan may become exercisable in
cumulative increments ("vest") as determined by the Board. Shares covered by
currently outstanding options under the Plan typically vest in 25% increments
each year beginning one year from the date of the grant. Shares covered by
options granted in the future under the Plan may be subject to different vesting
terms. The Board has the power to accelerate the time during which an option may
be exercised. In addition, options granted under the Plan may permit exercise
prior to vesting, but in such event the optionee may be required to enter into
an early exercise stock purchase agreement that allows the Company to repurchase
shares not yet vested at their exercise price should the optionee leave the
service of the Company before vesting. To the extent provided by the terms of an
option, an optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by a cash payment upon
exercise, by authorizing the Company to withhold a portion of the stock
otherwise issuable to the optionee, by delivering already-owned stock of the
Company or by a combination of these means.
Term. The maximum term of options under the Plan is ten years, except that
in certain cases (see "Eligibility" above) the maximum term is five years.
Options under the Plan generally terminate 30 days after termination of the
optionee's employment or relationship as a consultant to the Company or any
affiliate of the Company, unless (a) such termination is due to such person's
permanent and total disability (as defined in the Code), in which case the
option may, but need not, provide that it may be exercised at any time within
one year of such termination; (b) the optionee dies while employed by or serving
as a consultant or director of the Company or any affiliate of the Company, or
within 30 days after termination of such relationship, in which case the option
may, but need not, provide that it may be exercised (to the extent the option
was exercisable at the time of the optionee's death) within 18 months of the
optionee's death by the person or persons to whom the rights to such option pass
by will or by the laws of descent and, distribution; or (c) the option by its
terms specifically provides otherwise. Individual options by their terms may
provide for exercise within a longer period of time following termination of
employment or the consulting relationship. The option term may also be extended
in the event that exercise of the option within these periods is prohibited for
specified reasons.
9
Adjustment Provisions
If there is any change in the stock subject to the Plan or subject to any
option granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and options outstanding
thereunder will be appropriately adjusted as to the class and the maximum number
of shares subject to the Plan, the maximum number of shares which may be granted
to an optionee during any twelve-month period, and the class, number of shares
and price per share of stock subject to such outstanding options.
Effect of Certain Corporate Events
The Plan provides that, in the event of a dissolution or liquidation of the
Company, specified type of merger or other corporate reorganization, to the
extent permitted by law, any surviving corporation will be required to either
assume options outstanding under the Plan or substitute similar options for
those outstanding under the Plan, or such outstanding options will continue in
full force and effect. In the event that any surviving corporation declines to
assume or continue options outstanding under the Plan, or to substitute similar
options, then the time during which such options may be exercised will be
accelerated and the options terminated if not exercised during such time. The
acceleration of an option in the event of an acquisition or similar corporate
event may be viewed as an antitakeover provision, which may have the effect of
discouraging a proposal to acquire or otherwise obtain control of the Company.
Duration, Amendment and Terminations
The Board may suspend or terminate the Plan without stockholder approval or
ratification at any time or from time to time. Excluding any such action by the
Board, the Plan will terminate on July 27, 2009.
The Board may also amend the Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company if the amendment requires stockholder approval in order to satisfy
the requirements of Section 422 of the Code or Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Board may submit any
other amendment to the Plan for stockholder approval, including, but not limited
to, amendments intended to satisfy the requirements of Section 162(m) of the
Code regarding the exclusion of performance-based compensation from the
limitation on the deductibility of compensation to certain employees.
Restrictions on Transfer
Under the Plan, an incentive stock option may not be transferred by the
optionee other than by will or by the laws of descent and distribution, and
during the lifetime of the optionee, may be exercised only by the optionee. A
nonstatutory stock option may not be transferred except by will or by the laws
of descent and distribution or under certain other limited circumstances. In any
case, the optionee may designate in writing a third party who may exercise the
option in the event of the optionee's death. In addition, shares subject to
repurchase by the Company under an early exercise stock purchase agreement may
be subject to restrictions on transfer as the Board deems appropriate.
10
Federal Income Tax Information
Incentive Stock Options. Incentive stock options under the Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may cause an optionee to
become subject to the alternative minimum tax or result in an increase in the
optionee's alternative minimum tax liability.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be capital gain or loss. Generally, if the optionee disposes of the
stock before the expiration of either of these holding periods (a "disqualifying
disposition"), at the time of disposition, the optionee will realize taxable
ordinary income equal to the lesser of (a) the excess of the stock's fair market
value on the date of exercise over the exercise price, or (b) the optionee's
actual gain, if any, on the purchase and sale. The optionee's additional gain,
or any loss, upon the disqualifying disposition will be a capital gain or loss,
which will be long-term or short-term depending on how long the stock was held.
Long-term capital gains currently are generally subject to lower tax rates than
ordinary income. The current maximum long-term capital gains rate for federal
income tax purposes is generally 20% for assets held more than 12 months. The
maximum ordinary income rate and short-term capital gains rate is effectively
39.6% at the present time. Slightly different rules may apply to optionees who
acquire stock subject to certain repurchase options or who are subject to
Section 16(b) of the Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonstatutory Stock Options. Nonstatutory stock options granted under the
Plan generally have the following federal income tax consequences.
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on how long the stock was held. Slightly different rules
may apply to optionees who acquire stock subject to certain repurchase options
or who are subject to Section 16(b) of the Exchange Act.
11
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain employees in a taxable year to the extent that compensation exceeds
$1,000,000 for a covered employee. It is possible that compensation attributable
to stock options, when combined with all other types of compensation received by
a covered employee from the Company, may cause this limitation to be exceeded in
any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that the option is granted by a compensation committee comprised solely
of "outside directors" and either: (i) the option plan contains a per employee
limitation on the number of shares for which options may be granted during a
specified period, the per employee limitation is approved by the stockholders
and the exercise price of the option is no less than the fair market value of
the stock on the date of grant; or (ii) the option is granted (or exercisable)
only upon the achievement (as certified in writing by the compensation
committee) of an objective performance goal established in writing by the
compensation committee while the outcome is substantially uncertain, and the
option is approved by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
12
PROPOSAL 3
APPROVAL OF INDEPENDENT AUDITORS
Deloitte & Touche LLP ("Deloitte & Touche") has served as the Company's
independent auditors with respect to the Company's books and accounts since the
Company began operations in 1980.
The stockholders are being asked to ratify the Board's selection of
Deloitte & Touche as independent auditors for the fiscal year ending June 30,
2002. Although it is not required to do so, the Board is submitting the approval
of Deloitte & Touche to the stockholders for ratification as a matter of good
corporate practice. Should the stockholders fail to provide such ratification,
the Board would reconsider its selection of Deloitte & Touche as independent
auditors for the fiscal year ending June 30, 2002. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Board determines
that such a change would be in the best interests of the Company and its
stockholders.
Representatives of Deloitte & Touche are expected to be present at the
Annual Meeting of Stockholders. They do not expect to make any statement, but
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the Common Stock
present in person or represented by proxy and entitled to vote on the proposal
at the Annual Meeting will be required to ratify the selection of Deloitte &
Touche.
Audit Fees. During the fiscal year ended June 30, 2001, the aggregate fees
billed by Deloitte & Touche for the audit of the Company's financial statements
for such fiscal year and for the review of the Company's interim financial
statements was $159,600.
Financial Information Systems Design and Implementation Fees. During the
fiscal year ended June 30, 2001, the aggregate fees billed by Deloitte & Touche
for information technology consulting fees was $-0-.
All Other Fees. During fiscal year ended June 30, 2001, the aggregate fees
billed by Deloitte & Touche for professional services other than audit and
information technology consulting fees was $296,844.
The Audit Committee has determined the rendering of the information
technology consulting services and all other non-audit services by Deloitte &
Touche is compatible with maintaining the auditors' independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
13
SECURITY OWNERSHIP
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of August 1, 2001 by (i) each director, (ii)
each Named Executive Officer (as defined under "Executive Compensation" below),
(iii) all executive officers and directors as a group and (iv) all those known
by the Company to be beneficial owners of more than five percent of its Common
Stock:
Beneficial Ownership (1)
------------------------
Name of Beneficial Owner Number of Shares Percent of Shares
------------------------ ---------------- -----------------
Janus Capital Corporation (2) ....................................... 2,661,520 12.0%
100 Fillmore Street
Denver, CO 80206
Pioneer Investment Management Corporation (3) ....................... 1,926,000 8.7%
60 State Street
Boston, MA 02109
Neuberger Berman, Inc. (4) .......................................... 1,312,651 5.9%
605 Third Avenue
New York, NY 10158-3698
Brown Capital Management, Inc. (5) .................................. 1,262,600 5.7%
1201 N. Calvert Street
Baltimore, MD 21202
A. Blaine Bowman (6) ................................................ 1,316,888 5.8%
James F. Battey ..................................................... 432,979 1.9%
Barton Evans, Jr. (6) ............................................... 362,509 1.6%
David L. Anderson (6) ............................................... 292,032 1.3%
Brent J. Middleton (6) .............................................. 75,627 *
Nebojsa Avdalovic (6) ............................................... 61,628 *
Der-Min Fan (6) ..................................................... 37,834 *
B. J. Moore (6) ..................................................... 31,040 *
Riccardo Pigliucci (6) .............................................. 16,000 *
All executive officers and directors as a group (13 persons) (7) .... 2,796,236 12.0%
-------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the SEC. Unless
otherwise indicated in the footnotes to this table, and subject to
community property laws where applicable, the Company believes that each of
the stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 22,217,014 shares outstanding on August 1, 2001,
adjusted as required by rules promulgated by the SEC.
(2) Janus Capital Corporation is a registered investment advisor. As of August
1, 2001, Janus Capital Corporation had shared dispositive and voting power
with respect to all of the shares set forth above.
14
(3) Pioneer Investment Management Corporation is a registered investment
advisor. As of August 1, 2001, Pioneer Investment Management Corporation
had sole dispositive and voting power with respect to all of the shares set
forth above.
(4) Neuberger Berman, Inc. is a registered investment advisor. As of August 1,
2001, Neuberger Berman, Inc. had sole voting power on 524,951 shares and
shared voting power on 779,700 shares. Neuberger Berman, Inc. has shared
dispositive power on all shares set forth above.
(5) Brown Capital management, Inc. is a registered investment advisor as of
August 1, 2001, Brown Capital Management, Inc. has sole dispositve and
voting power with respect to all of the shares set forth above.
(6) Includes shares subject to outstanding stock options that were exercisable
on August 1, 2001 or that could become exercisable within 60 days
thereafter, as follows: Mr. Bowman, 643,500 shares; Dr. Battey, 1,000
shares; Mr. Evans, 235,567 shares; Mr. Anderson, 10,000 shares; Dr.
Avdalovic, 56,050 shares; Mr. Moore, 6,000 shares; Mr. Pigliucci, 16,000
shares; Ms. Fan, 28,248 shares; and Mr. Middleton, 71,750 shares.
(7) Includes shares described in note 6 above and 117,287 additional shares
subject to outstanding stock options held by other executive officers of
the Company that were exercisable on August 1, 2001 or could become
exercisable within 60 days thereafter.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Executive officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended June 30, 2001, the Company's
executive officers and directors complied with applicable Section 16(a) filing
requirements.
15
EXECUTIVE COMPENSATION
Compensation of Directors
Each Non-Employee Director received an annual fee of $16,500 in fiscal 2001
and $1,250 for each regularly scheduled meeting attended, including Audit
Committee meetings, and $800 for every other meeting attended. A Non-Employee
Director is defined as a director who is not an employee of the Company or any
parent corporation or subsidiary corporation of the Company as those terms are
defined in Sections 424(e) and (f), respectively, of the Code (any such
corporation, an "Affiliate"), and has not been an employee of the Company or any
Affiliate for all or part of the preceding fiscal year. The annual fee payable
to Non-Employee Directors during fiscal 2002 will remain the same as in fiscal
2001.
In addition, each Non-Employee Director is eligible for option grants under
the Company's 1988 Directors' Stock Option Plan (the "Directors' Plan"). The
Directors' Plan is administered by the Board. On the date of the annual meeting
of stockholders, each member of the Board who is a Non-Employee Director, as
defined above, is automatically granted under the Directors' Plan, without
further action by the Company, the Board or the stockholders of the Company, an
option to purchase 4,000 shares of Common Stock of the Company. Each person who
is elected for the first time to be a Non-Employee Director is automatically
granted an option to purchase 10,000 shares of the Common Stock of the Company.
The exercise price of options granted under the Directors' Plan is 100% of the
fair market value of the Common Stock subject to the option on the date of the
option grant. Options granted under the Directors' Plan vest in 25% increments
each year beginning one year from the date of grant. The term of options granted
under the Directors' Plan is five years from the date granted.
During the last fiscal year, the Company granted options covering 16,000
shares to the Non-Employee Directors of the Company at a weighted average
exercise price per share of $30.8125. Options to purchase 11,000 shares of
Common Stock granted under the Directors' Plan were exercised during fiscal
2001, and the value realized upon exercise of such options was $128,625.
Compensation of Executive Officers
The following table sets forth, for the fiscal years ended June 30, 2001,
2000, and 1999, certain compensation awarded or paid to, or earned by, the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers at June 30, 2001 (the "Named Executive
Officers").
16
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------
Number of Shares
Annual Compensation of Common Stock All Other
Name and Principal Position Year Salary (1) Bonus (2) Underlying Options Compensation (3)
--------------------------- ---- ---------- --------- ------------------ ----------------
A. Blaine Bowman 2001 $397,019 $163,974 -- $9,919
President and 2000 376,192 340,759 (4) 190,000 8,500
Chief Executive Officer 1999 354,596 400,497 (4) -- 8,000
Barton Evans, Jr. 2001 $295,327 $92,019 80,000 $9,919
Executive Vice President and 2000 246,346 139,440 80,000 8,311
Chief Operating Officer 1999 224,539 147,369 -- 7,676
Nebojsa Avdalovic 2001 $238,212 $46,185 -- $9,602
Vice President 2000 191,808 63,496 32,000 8,669
1999 175,054 64,164 -- 8,485
Der-Min Fan (5) 2001 $200,004 $42,173 -- $9,547
Vice President 2000 150,087 34,928 37,200 7,504
Brent J. Middleton 2001 $230,828 $65,822 $9,894
Vice President 2000 175,385 94,757 60,000 8,692
1999 149,515 84,749 -- 8,664
----------
(1) Includes amounts earned but deferred at the election of the Named Executive
Officers pursuant to the Company's 401(k) Plan.
(2) Amounts shown include amounts earned under the Company's Employee Profit
Sharing Plan and the Management Bonus Plan. Under the Employee Profit
Sharing Plan, amounts earned in fiscal years 2001, 2000, and 1999,
respectively, were as follows: Mr. Bowman $38,974, $65,759 and $80,497; Mr.
Evans $27,019, $35,440 and $39,369; Dr. Avdalovic $20,185, $23,496 and
$25,164; Mr. Middleton $20,822, $24,757 and $24,749; and Ms. Fan $17,173
and $16,928. Under the Management Bonus Plan, amounts earned in fiscal
years 2001, 2000 and 1999, respectively, were as follows: Mr. Bowman
$125,000, $275,000 and $320,000; Mr. Evans $65,000, $104,000 and $108,000;
Dr. Avdalovic $26,000, $40,000 and $39,000; Mr. Middleton $45,000 , $70,000
and $60,000; and Ms. Fan $25,000 and $18,000.
(3) Amounts shown include Company contributions to the Company's 401(k) Plan.
(4) Includes $150,000 and $220,000 deferred at the election of Mr. Bowman for
fiscal 2000 and 1999, respectively, pursuant to the Company's compensation
deferral plan established by the Company for Mr. Bowman.
(5) Ms. Fan became an executive officer of the Company in April 2000.
Therefore, no amounts are shown for fiscal 1999.
17
Stock Option Grants and Exercises
The Company grants options to its executive officers under the Dionex
Corporation Stock Option Plan. As of June 30, 2001, options to purchase a total
of 2,764,047 shares had been granted and were outstanding under the Plan and the
Company's now-expired 1984 Supplemental Stock Option Plan. Options to purchase
1,306,908 shares remained available for grant under the Plan.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of
Shares of % of Total Potential Realizable
Common Options Value at Assumed
Stock Granted to Exercise Annual Rates of Stock
Underlying Employees Price Price Appreciation
Options in Fiscal Per Expiration for Option Term (3)
Name Granted (1) Year (2) Share Date 5% 10%
---- ----------- -------- ----- ---- -- ---
Mr. Bowman -- -- -- -- -- --
Mr. Evans 80,000 47.0% $33.50 1/17/11 $1,477,560 $3,639,300
-- -- -- -- -- --
Dr. Avdalovic -- -- -- -- -- --
Dr. Fan -- -- -- -- -- --
Mr. Middleton -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
All stockholders as a group (4) $419 $1,008
million million
----------
(1) Consists of nonstatutory stock options to purchase 80,000 shares of Common
Stock granted under the Plan. Each of such options has a ten-year term,
subject to earlier termination upon death, disability or termination of
employment, and vests over four years from the date of the grant. The
exercise price of such options are equal to 100% of the fair market value
of the Company's Common Stock at January 18, 2001, based on the closing
sales price of the Common Stock as reported on the Nasdaq National Market
for the business day prior to the date of grant. The Plan contains
provisions permitting the Board to accelerate vesting of outstanding
options. In addition, in the event of a dissolution or liquidation of the
Company, a specified stockholder-approved merger or a sale of all or
substantially all of the assets of the Company, to the extent permitted by
law, vesting with respect to each outstanding option will automatically be
accelerated, unless such options are either assumed by any successor
corporation (or its parent corporation) or are otherwise replaced with
comparable options to purchase shares of the capital stock of such
successor corporation or parent thereof.
(2) Based on 170,150 options granted to employees in fiscal 2001.
18
(3) In accordance with the rules of the SEC, the table sets forth the
hypothetical gains or "option spreads" that would exist for such options at
the end of their respective terms. These gains are based on assumed rates
of annual compound stock price appreciation of 5% and 10% from the date of
grant to the end of the option term (ten years). The potential realizable
value is calculated by assuming that the stock price on the date of grant
appreciates at the indicated annual rate, compounded annually for the
entire term of the option, and that the option is exercised and sold on the
last day of its term at the appreciated stock price. For example, a
stockholder who purchased one share of stock on January 18, 2001 at $33.50,
held the stock for ten years (while the stock appreciated at 5% or 10%
annual rate, respectively) and sold it on January 17, 2011, would have
profits of $18.47 and $45.49, respectively, on his or her $33.50
investment. No gain to the optionee is possible unless the price of the
Company's stock increases over the option term, benefiting all of the
Company's stockholders. These amounts represent certain assumed rates of
appreciation in accordance with the rules of the SEC and do not reflect the
Company's estimate or projection of future stock price performance. Actual
gains, if any, are dependent on the actual future performance of the
Company's Common Stock.
(4) These amounts represent the increase in the aggregate market value of the
Common Stock outstanding as of January 18, 2001 (22,152,612 shares)
assuming the annual rates of stock price appreciation set forth above over
the ten-year period used for the Named Executive Officers. These amounts do
not reflect the Company's estimate or projection of future stock price
performance. Actual gains, if any, are dependent on the actual future
performance of the Company's Common Stock.
19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Shares of Common Stock Value of Unexercised In-the-Money
Number of Shares Underlying Unexercised Options at Options at
Acquired On Fiscal Year End Fiscal Year End
Name Exercise Value Realized (1) Exercisable/Unexercisable (2) Exercisable/Unexercisable (3)
---- -------- ------------------ ----------------------------- -----------------------------
Mr. Bowman 95,000 $2,232,500 643,500/182,500 $11,144,125/$543,125
Mr. Evans 60,000 $1,574,925 234,000/150,000 $4,318,687/$161,562
Dr. Avdalovic -- -- 55,300/28,500 $797,750/$68,812
Ms. Fan 8,300 $197,619 26,374/29,526 $273,796/$44,079
Mr. Middleton -- 70,500/52,500 $813,438/$120,937
----------
(1) Represents the fair market value of the underlying shares on the date of
exercise (based upon the closing sales price reported on the Nasdaq
National Market or the actual sales price if the shares were sold by the
optionee) less the exercise price.
(2) Includes both "in-the-money" and "out-of-the-money" options. An
"in-the-money" option has an exercise price below the market price of the
Common Stock on the last day of the fiscal year.
(3) Represents the fair market value of the underlying shares on the last day
of the fiscal year ($33.25 based on the closing sales price of the Common
Stock as reported on the Nasdaq National Market) less the exercise price.
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee of the Board (the "Compensation Committee")
consists of non-employee directors and establishes compensation policies and
practices for the Company's Chief Executive Officer and its other executive
officers. All compensation at the Company is based upon a sustained high level
of individual performance and the Company's overall performance. The
Compensation Committee provides direction and makes recommendations on all
compensation matters relating to executive officers and other senior management
employees, including stock option grants.
----------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation language in
any such filing.
20
Compensation Philosophy
The goal of the compensation program is to tie compensation to the
attainment of specific business and individual objectives, while providing
compensation sufficient to attract, retain, motivate and reward executive
officers and other key employees who contribute to the long-term success of the
Company. In furtherance of these goals, annual base salaries are generally set
at levels that take into account both competitive and performance factors. The
Company also relies to a significant degree on annual longer-range incentive
compensation in order to attract and motivate its executives. Incentive
compensation is variable and is closely tied to corporate performance to
encourage profitability growth and the enhancement of stockholder value. The
Company's total compensation package, composed of base salary, bonus awards and
stock option grants, is designed to be competitive with leading separations
science and high technology companies with which the Company competes for
employees.
Cash-Based Compensation
Cash-based compensation paid to executive officers in fiscal 2001 consisted
of base salary, including amounts received pursuant to the Company's Employee
Profit Sharing Plan, and an annual incentive award under the Company's
Management Bonus Plan. For fiscal 2001, in making its competitive analysis of
cash-based executive compensation, the Compensation Committee reviewed surveys
provided by Towers Perrin, Hewitt and Associates and the Western Management
Group, all nationally recognized consulting organizations specializing in
executive compensation, of compensation paid to executive officers of
separations science and high technology companies. Generally, the Compensation
Committee sets annual base salary levels and bonus amounts to provide for a
total cash-based compensation that is within the second and third quartiles of
compensation paid to executive officers of separations science and high
technology companies with which the Company competes for talented executives.
Base Salary
The Compensation Committee annually reviews and adjusts each executive
officer's base salary. To ensure retention of qualified management, the
Compensation Committee generally targets base salaries paid to executive
officers at competitive levels, based on the surveys described above. In
addition, when reviewing base salaries, the Compensation Committee considers
both qualitative and quantitative factors relating to individual and corporate
performance, levels of responsibility, prior experience and breadth of
knowledge. The Compensation Committee does not base its considerations on any
single one of these factors nor does it specifically assign relative weights to
factors. In many instances, the qualitative factors necessarily involve a
subjective assessment by the Compensation Committee. Generally, in determining
salary adjustments for executive officers (other than the Chief Executive
Officer), the Compensation Committee relies primarily on the evaluation and
recommendations of Mr. Bowman.
Employee Profit Sharing Plan
The Company's Employee Profit Sharing Plan (the "EPSP") has been
established to reward all North American full-time employees of the Company,
including executive officers, for their contributions to the Company's
profitability for any given year. The structure of the EPSP provides for the
development of a compensation pool, the size of which is based on profits for a
given year. In fiscal 2001, each eligible employee, including each of the
executive officers, received pursuant to the EPSP an amount equal to 7.7 % of
such employee's eligible compensation.
21
Annual Incentive Award
The Management Bonus Plan (the "MBP"), an annual incentive award plan, is
the variable pay program for officers and other senior managers of the Company.
The actual bonus award earned depends on the extent to which Company and
individual performance objectives are achieved for any given year. Company
objectives consist of achieving operating, strategic and financial goals that
are considered to be critical to the Company's fundamental long-term goal of
building stockholder value. The Company does not set any specific target levels
of compensation nor does it base its bonus determinations on achievement of all
criteria. At the end of each fiscal year, the Compensation Committee evaluates
the degree to which the Company has met its goals in light of its historical and
industry-wide performance. The Compensation Committee then determines individual
awards under the MBP by evaluating each participant's contribution to the
achievement of the Company's objectives and overall individual performance as
well as by ensuring that bonus awards remain at competitive levels.
Cash-based Compensation for Fiscal 2001
The amount of the aggregate of Mr. Bowman's base salary and EPSP award for
fiscal 2001, in addition to his annual bonus under the MBP, was in the first
quartile compared to the surveyed group of leading separations science and high
technology companies. Following a review of the above-described surveys, the
Compensation Committee set Mr. Bowman's base annual salary for fiscal 2002 at
$415,000, representing an increase of 4% over his base salary for fiscal 2001.
In setting Mr. Bowman's base salary and amount of award under the MBP, the
Compensation Committee took into account, in addition to competitive
consideration, the Compensation Committee's evaluation of Mr. Bowman's
contribution to the performance of the Company in fiscal 2001. In particular,
the Compensation Committee took into consideration the Company's financial
performance, including sales growth and profitability, as well as contributions
by Mr. Bowman to achievements in strategic planning and positioning. The
Compensation Committee also considered Mr. Bowman's leadership and experience in
the separations science industry and the scope of Mr. Bowman's responsibility.
As the result of this assessment, Mr. Bowman was awarded an annual bonus of
$125,000.
Similar competitive consideration and corporate and individual performance
factors accounted for increases in base salaries and were taken into
consideration in determining awards under the MBP for other executive officers
for fiscal 2001. The percentage increase in base salaries of executive officers
ranged from 2% to 25%. The executive officers received awards under the MBP
ranging from 10 to 62% of their base salaries.
22
Long-Term Incentives
The Company utilizes a long-term incentive program, currently consisting of
the Dionex Corporation Stock Option Plan (the "Plan") to further align the
interests of stockholders and management by creating common incentives related
to the possession by management of substantial economic interest in the
long-term appreciation of the Company's stock. In determining the size of an
option to be granted to an executive officer, the Compensation Committee takes
into account the officer's position and level of responsibility within the
Company, the officer's existing stock and invested option holdings, the
potential reward to the officer if the stock price appreciates in the public
market, and the competitiveness of the officer's overall compensation
arrangements, including stock options. Additional long-term incentives are
provided through the Company's Employee Stock Participation Plan in which all
eligible employees, including eligible executive officers of the Company, may
purchase stock of the Company, subject to specified limits, at 85% of fair
market value.
In fiscal 2001, Mr. Bowman was not granted any options, and other executive
officers were granted options to purchase shares in amounts ranging from 20,000
to 80,000 shares.
In fiscal 2000, Mr. Bowman was granted an option to purchase 190,000 shares
and the other executive officers were granted options to purchase share in
amounts ranging from 32,000 to 80,000 shares.
Section 162(m) of the Code generally limits the Company's deduction, for
federal income tax purposes, to no more than $1 million of compensation paid to
certain named executive officers in a taxable year. Compensation above $1
million may be deducted if it is "performance-based compensation." The
Compensation Committee has determined that stock options granted under the Plan
with an exercise price at least equal to the fair market value of the Company's
common stock on the date of grant shall be treated as "performance-based
compensation." In fiscal 1996, the Company's stockholders approved an amendment
to the Plan that enables any compensation recognized by a Named Executive
Officer as a result of the grant of such a stock option that qualifies as
"performance-based compensation" and thus be deductible by the Company without
regard to the $1 million limit otherwise imposed by Code Section 162(m). The
Compensation Committee believes that it is unlikely that compensation, excluding
the value of any stock options granted under the Plan, paid to any Named
Executive Officer in a taxable year which is subject to the limitation will
exceed $1 million.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
DAVID L. ANDERSON
JAMES F. BATTEY
B. J. MOORE
RICCARDO PIGLIUCCI
23
PERFORMANCE MEASUREMENT COMPARISON(1)
The following chart shows total stockholder return for the Standard &
Poor's 500 Stock Index, a peer group index comprised of all public companies
using SIC Code 3826 (Laboratory Analytical Instruments) (the "Peer Group")(2)
and for the Company:
COMPARISON OF FIVE-YEAR TOTAL CUMULATIVE RETURN ON INVESTMENT(3)
THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL
1996 1997 1998 1999 2000 2001
Dionex Corporation 100.00 158.91 163.57 251.16 165.89 206.20
Industry Index 100.00 122.30 121.66 172.36 434.73 245.95
S&P 500 Index 100.00 120.46 159.68 223.77 336.71 186.46
----------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act, whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
(2) Upon written request of a stockholder, the Company will provide a list of
companies comprising the Peer Group as well as the list of companies that were
included in the prior year's Peer Group but are not included in this year's Peer
Group because such companies are no longer listed under the SIC Code 3826 and
companies that were not included in the prior year's Peer Group but are included
in this year's Peer Group because such companies are currently, but were not in
the prior year, listed under the SIC Code 3826.
(3) The total return on investment (change in year-end stock price plus
reinvested dividends) for the Company, the Standard & Poor's 500 Stock Index and
the Peer Group, based on June 30, 1996 = 100. In accordance with the rules of
the SEC, the returns of companies comprising the Peer Group are weighted
according to their respective stock market capitalization at the beginning of
each period for which a return is indicated.
24
OTHER MATTERS
The Board does not know of any other matters that may come before the
meeting. If any other matters are properly presented to the meeting, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
to act, in accordance with their best judgment on such matters.
By Order of the Board of Directors
CHRISTOPHER A. WESTOVER
Secretary
September 17, 2001
25
APPENDIX A
DIONEX CORPORATION
CHARTER OF THE AUDIT COMMITTEE
ADOPTED AS OF APRIL 12, 2000
The Charter of the Audit Committee is established as follows:
Purpose:
The purpose of the Audit Committee (the "Committee") of the Board of
Directors (the "Board") of Dionex Corporation, a Delaware corporation (the
"Company"), will be to make such examinations as the Committee deems necessary
to monitor the corporate financial reporting and the internal and external
audits of the Company, to provide to the Board the results of its examinations
and recommendations derived therefrom, to outline to the Board improvements
made, or to be made, in internal accounting controls, to nominate independent
auditors, and to provide such additional information and materials as it may
deem necessary to make the Board aware of significant financial matters that
require the Board's attention.
Composition:
The Committee will be comprised of three or more members of the Board. Such
members will meet the independence and experience requirements of the Nasdaq
Stock Market. The members of the Committee will be appointed by and serve at the
discretion of the Board.
Functions and Authority:
The operation of the Committee will be subject to the provisions of the
Bylaws of the Company, the Delaware General Corporation Law and the rules and
regulations of the Nasdaq Stock Market, each as in effect from time to time. The
Committee will have the full power and authority to carry out the following
responsibilities:
1. To recommend annually to the full Board the firm of certified public
accountants to be employed by the Company as its independent auditors
for the ensuing year. Such firm will be ultimately accountable to the
Committee and the Board, as representatives of the Company's
stockholders.
2. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be
paid therefor, and all other matters the Committee deems appropriate.
3. To evaluate, together with the Board, the performance of the
independent auditors and, if so determined by the Committee, to
recommend that the Board replace the independent auditors.
4. To review and approve all professional non-audit services provided to
the Company by its independent auditors and to consider the possible
effect of such services on the independence of the auditors.
1
5. To have familiarity, through the individual efforts of its members,
with the accounting and reporting principles and practices applied by
the Company in preparing its financial statements, including, without
limitation, the policies for recognition of revenues in financial
statements.
6. To review, with the senior management of the Company and the
independent auditors, upon completion of their audit, the financial
statements to be included in the Company's Annual Report on Form 10-K,
including their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments and
the clarity of the disclosures in the financial statements. Also, the
Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee by the
independent auditors under generally accepted accounting standards.
7. To assist and interact with the independent auditors in order that
they may carry out their duties in an efficient and cost-effective
manner.
8. To review, prior to the filing of the Company's Quarterly Report on
Form 10-Q, the Company's balance sheet, profit and loss statement and
statements of cash flows and stockholders' equity for each interim
period, and any changes in accounting policy that have occurred during
the interim.
9. To receive written statements from the independent auditors
delineating all relationships between the auditors and the Company
consistent with Independence Standards Board Standard No. 1, to
consider and discuss with the auditors any disclosed relationships or
services that could affect the auditors' objectivity and independence,
and if so determined by the Committee, take, or recommend that the
Board take, appropriate action to oversee the independence of the
auditors.
10. To consult with the independent auditors and to discuss with the
senior management of the Company the scope and quality of internal
accounting and financial reporting controls in effect.
11. To meet with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Committee,
the independent auditors or senior management believe should be
discussed privately with the Committee.
12. To prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement.
13. To review and assess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.
14. To investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel and a separate
accounting firm for this purpose if, in its judgment, such
investigation or retention is appropriate.
15. To perform such other functions and to have such power as may be
necessary or appropriate in the efficient and lawful discharge of the
foregoing.
2
16. To report to the Board of Directors from time to time, or whenever it
shall be called upon to do so.
Meetings:
The Committee will hold at least two regular meetings per year and
additional meetings as the Committee deems appropriate. The President and Chief
Executive Officer, Chairman of the Board and Chief Financial Officer may attend
any meeting of the Committee, except for portions of the meetings where her, his
or their presence would be inappropriate, as determined by the Committee
Chairman.
Minutes and Reports:
Minutes of each meeting will be kept and promptly distributed to each
member of the Committee, members of the Board who are not members of the
Committee and the Secretary of the Company. The Chairperson of the Committee
will report to the Board from time to time, or whenever so requested by the
Board.
3
PROXY
Dionex Corporation
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 26, 2001
The undersigned hereby appoints A. Blaine Bowman and Craig A. McCollam, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Dionex Corporation which
theundersigned may be entitled to vote at the Annual Meeting of Stockholders of
Dionex Corporation to be held at Dionex Corporation, 501 Mercury Drive,
Sunnyvale, California 94085 on October 26, 2001 at 9:00 a.m. local time, and at
any and all postponements, continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone 1-877-PRX-VOTE
(1-877-779-8683).
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683).
3. Enter your 14-digit Voter Control Number located on your Proxy Card above
your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately confirmed and posted.
Follow these four easy steps:
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Go to the Website http://www.eproxyvote.com/dnex
3. Enter your 14-digit Voter Control Number located on your proxy Card above
your name.
4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/dnex anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
/X/ Please mark votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW AND FOR PROPOSALS 2 AND 3.
1. To elect five directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected. Nominees:
(01) David L. Anderson, (02) James F. Battey,
(03) A. Blaine Bowman, (04) B.J. Moore and (05) Riccardo Pigliucci.
FOR ALL NOMINEES / /
/ / WITHHELD FROM ALL NOMINEES
/ / --------------------------------------
To withhold authority to vote for any nominee(s), write such nominee(s)' name(s)
above.
2. To approve an amendment to the Dionex Corporation Stock Option Plan to
increase the aggregate number of shares of Common Stock for issuance under
the Plan by 1,000,000 shares.
/ /FOR / /AGAINST / /ABSTAIN
3. To ratify the selection of Deloitte & Touche LLP as the Company's independent
auditors for its fiscal year ending June 30, 2002.
/ /FOR / /AGAINST / /ABSTAIN
Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
Signature:_________ Date:_____ Signature:________ Date:_____