SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
[LOGO]
March 31, 1995
Dear Stockholder:
Cray Research's Annual Meeting is Tuesday, May 16, 1995 at the Minnesota
Historical Society, 345 Kellogg Boulevard West, St. Paul, Minnesota. We will
begin at 10:00 a.m. and conclude at about 11:30 a.m.
The Annual Meeting is an opportunity for you to meet the directors of your
company and some of the company leadership. During the meeting we will conduct
our normal business matters, review 1994 results, and preview some of the
activities and changes for 1995 and beyond.
It is very important that your shares be represented at the meeting, and I urge
you to sign and return your proxy card in the enclosed envelope. We hope that
you can attend the Annual Meeting and look forward to seeing you there.
Sincerely,
[SIGNATURE]
Robert H. Ewald
President and
Chief Operating Officer
CRAY RESEARCH, INC.
655A Lone Oak Drive
Eagan, Minnesota 55121
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1995 Annual Meeting of Stockholders of Cray Research, Inc. (the "company")
will be held at the Minnesota Historical Society, 345 Kellogg Boulevard West,
St. Paul, Minnesota, at 10:00 a.m. on May 16, 1995, for the following purposes:
(1) To elect seven directors for the following year;
(2) To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the company for the year ending December 31, 1995; and
(3) To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 20, 1995, will be
entitled to vote at the meeting or any adjournments.
By Order of the Board of Directors,
[B]
David E. Frasch
Secretary
March 31, 1995
CRAY RESEARCH, INC.
655A Lone Oak Drive
Eagan, Minnesota 55121
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Cray Research, Inc. of proxies in the accompanying form
from holders of shares of Common Stock to be voted at the Annual Meeting of
Stockholders to be held at 10:00 a.m. on May 16, 1995, at the Minnesota
Historical Society, 345 Kellogg Boulevard West, St. Paul, Minnesota.
Stockholders of record as of the close of business on March 20, 1995, will be
entitled to vote at the meeting or any adjournments. On that date, the company
had 25,624,299 shares of Common Stock outstanding. Each share is entitled to one
vote. The presence of 12,812,150 shares, in person or by proxy, will constitute
a quorum for the meeting. A stockholder may revoke a proxy at any time before it
is exercised by filing with the Secretary of the company a written statement
revoking the proxy or another proxy bearing a later date.
When a proxy card is returned properly signed, the shares represented will be
voted in accordance with the stockholder's directions. If no directions are
indicated on the proxy card, the shares will be voted in favor of the election
of the nominees for director named herein and ratification of the appointment of
KPMG Peat Marwick LLP as the company's independent auditors, and will be deemed
to grant discretionary authority to vote upon any other matters properly coming
before the meeting. If a stockholder's proxy withholds authority to vote with
respect to any nominee for director, or abstains from voting as to any other
matter, then the shares covered by such proxy shall be deemed present for
purposes of determining a quorum and for purposes of calculating the vote, but
shall not be deemed to have been voted for such nominee or matter. If a broker
returns a "non-vote" proxy, indicating a lack of authority on the part of the
broker to vote on a particular matter, such shares shall be deemed present at
the meeting for purposes of determining a quorum but not for purposes of
calculating the vote with respect to such matter.
The cost of solicitation of proxies will be borne by the company. In addition to
solicitation by mail, the company has engaged Georgeson & Company, Inc. to
solicit on behalf of the Board of Directors proxies from beneficial owners of
the company's Common Stock including shares held by brokers, bank nominees and
other institutional holders. This firm will be paid approximately $10,000 and
will be reimbursed for certain of its expenses in connection with its proxy
solicitation. The company will also reimburse brokers and other persons holding
stock in their names or in the names of nominees for reasonable expenses
incurred in sending proxy material to beneficial owners and obtaining their
proxies. Additionally, there may be incidental personal solicitation at nominal
expense made by regular employees of the company.
This Proxy Statement and the enclosed form of proxy will be mailed to each
stockholder on or about March 31, 1995, together with the Annual Report to
stockholders of the company for the year ended December 31, 1994. Such Annual
Report to stockholders does not form any part of the material for the
solicitation of proxies.
2
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table contains information as of February 28, 1995, regarding
beneficial ownership of Common Stock of the company, its only class of voting
securities, by each person known by the company to own 5% or more of such
outstanding shares, each director, each nominee for director, each of the
executive officers named in the "Summary Compensation Table" below and the
executive officers and directors as a group.
AMOUNT AND
NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1)(4) OF CLASS
-------------------------------------------------------------------------------------------
State Treasurer, State of Michigan 1,912,800(2) 7.4
P.O. Box 15128
Lansing, Michigan 48901
Systematic Financial Management, Inc., 1,390,827(3) 5.4
Cash Flow Investors, Inc., and
Kenneth S. Hackel
Two Executive Drive
Fort Lee, New Jersey 07024
John F. Carlson 90,106 *
5,508(5)
Lester T. Davis 94,251 *
Lawrence E. Eaton 5,000 *
Robert H. Ewald 113,341 *
Catherine M. Hapka 2,500 *
Philip G. Heasley 2,500 *
Michael J. Lindseth 48,011 *
Robert G. Potter 11,750 *
Andrew Scott 62,102 *
7,000(6) *
Jan H. Suwinski 6,350 *
Don F. Whiting 41,930 *
4,331(7) *
All executive officers and directors as a group 443,122(8) 1.7
(12 persons)
<FN>
---------
* Less than 1%.
(1) Beneficial ownership results from sole voting and investment power except
as noted in footnotes below.
(2) Information is based on the stockholder's Schedule 13D dated January 12,
1995.
(3) Information is based on the stockholders' Schedule 13G dated February 10,
1995. Systematic Financial Management, Inc., held 1,359,027 shares as of
December 31, 1994, as to which it had sole dispositive power as to all such
shares, sole voting power as to no shares and shared voting power as to
123,720 shares. Cash Flow Investors, Inc., held 26,800 shares, as to which
it had sole dispositive power and shared voting power.
3
Mr. Hackel, the majority shareholder, President and principal executive
officer of both Systematic Financial Management and Cash Flow Investors,
directly held 5,000 shares, as to which he had sole dispositive and voting
power.
(4) Includes shares which the officer or director has the right to acquire
within 60 days upon exercise of presently outstanding stock options as
follows: John F. Carlson -- 79,662; Lester T. Davis -- 64,760; Robert H.
Ewald -- 56,049; Catherine M Hapka -- 2,500; Philip G. Heasley -- 2,500;
Michael J. Lindseth -- 39,059; Robert G. Potter -- 11,500; Andrew Scott --
42,033; Jan H. Suwinski -- 5,250; Don F. Whiting -- 33,319;
(5) Mr. Carlson disclaims beneficial ownership of these shares, which are owned
by his spouse and children.
(6) Mr. Scott disclaims beneficial ownership of these shares, which are owned
by his spouse.
(7) Mr. Whiting disclaims beneficial ownership of these shares, which are owned
by his spouse.
(8) Includes shares which certain of the officers and directors have the right
to acquire within 60 days upon exercise of presently outstanding stock
options. Also included in the total number of shares beneficially owned by
the group are 16,839 shares which were individually owned by the spouses or
children of three officers and directors. Of the number of shares
beneficially owned by the group, 132,347 shares were outstanding on
February 28, 1995 and, if outstanding on the record date, would be entitled
to vote at the meeting (less than 1% of all shares entitled to vote).
ELECTION OF DIRECTORS
Seven directors of the company are to be elected at the meeting to hold office
until the next annual meeting and until their successors are elected. The
affirmative vote of stockholders holding a majority of shares of Common Stock
present in person or represented by proxy is necessary for the election of each
nominee. The proxies named on the enclosed proxy card intend to vote FOR the
election of the seven nominees named below, unless otherwise instructed. All of
the nominees are presently members of the Board of Directors. In the event any
nominee should become unable or unwilling to serve as a director, it is intended
that the persons acting under the proxy will vote for the election, in his or
her stead, of such other person as the Board of Directors of the company may
recommend.
As of the date of this Proxy Statement, the company has a search underway for a
new Chief Executive Officer. Although no decision has been made, the Board of
Directors expects to fill the position in the near future. When the appointment
is made, the Board anticipates that it will take appropriate action under the
company's by-laws to expand the Board of Directors and elect the new Chief
Executive Officer to the Board for a term ending upon the election of directors
at the Annual Meeting of Stockholders of the company to be held in 1996.
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
-------------------------------------------------------------------------------------------------
Lawrence E. Eaton 57 Executive Vice President Information, Imaging and 1994
Electronic Sector and Corporate Services, 3M
Company (Diversified Manufacturing) St. Paul,
Minnesota
Robert H. Ewald 47 President and Chief Operating Officer of the 1994
company
4
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
-------------------------------------------------------------------------------------------------
Catherine M. Hapka 40 Executive Vice President -- Markets, U S WEST 1994
Communications, Inc. (Telecommunications)
Minneapolis, Minnesota
Philip G. Heasley 45 Vice Chairman, First Bank Systems, Inc. and 1994
President Retail Product Group (Banking)
Minneapolis, Minnesota
Robert G. Potter 55 Corporate Executive Vice President, Monsanto 1990
Company (Chemicals) St. Louis, Missouri
Andrew Scott 66 Vice Chairman of the company 1973
Jan H. Suwinski 53 Executive Vice President, Opto-Electronics Group, 1992
Corning Inc. (Specialty Materials and Laboratory
Services) Corning, New York
The principal occupations of all the nominees for director are indicated in the
preceding table. All nominees except Ms. Hapka have served their respective
employers in either their present positions or other executive capacities for
more than five years. Ms. Hapka was President of Data Services Division for
Control Data Corporation from 1989-1990, prior to joining U S WEST
Communications, Inc., as Vice President, Advanced Communication Services in May,
1991.
Mr. Eaton also serves as a director of 3M Company.
During 1994 there were seven meetings of the Board of Directors. The Board's
Audit Committee met two times, its Compensation and Development Committee met
five times, its Finance Committee met two times, and its Executive Committee met
one time. The Board of Directors does not have a Nominating Committee or a
committee performing similar functions.
The Executive Committee, consisting of Robert G. Potter (Chair), Lawrence E.
Eaton, Catherine M. Hapka, Philip G. Heasley, and Jan H. Suwinski, was created
in December, 1994. The Executive Committee may exercise the powers of the full
Board, is supervising the search for a new Chief Executive Officer for the
company, and consults with senior management regarding operations.
The Audit Committee, consisting of Philip G. Heasley (Chair), Lawrence E. Eaton,
and Robert G. Potter, performs principally the following functions: recommends
to the Board of Directors the engagement of the company's independent auditors;
reviews with the independent auditors the plan and results of the auditing
engagement; reviews the adequacy of the internal accounting controls; reviews
the range of audit and non-audit professional service fees; approves such
services; and considers the independence of the company's independent auditors.
The Compensation and Development Committee (formerly the Compensation
Committee), consisting of Robert G. Potter (Chair), Lawrence E. Eaton, Catherine
M. Hapka, and Jan H. Suwinski, reviews and recommends for approval to the Board
of Directors the remuneration
5
arrangements for the company's executive officers and directors and the adoption
of compensation and stock option and award plans in which these persons and
other key employees of the company may participate. The Compensation and
Development Committee is responsible for granting all options and stock awards
to participants under the company's stock option plans (other than the 1989
Non-Employee Directors' Stock Option Plan), and it recommends to the Board
benefits payable to employees under the company's other benefit plans.
The Finance Committee, consisting of Jan H. Suwinski (Chair), Catherine M.
Hapka, and Robert G. Potter, reviews the company's current and long-range
financial position, financial policies and performance objectives; makes
recommendations to the Board of Directors on allocation of capital and banking
relationships; evaluates retirement plan investment management and fund
performance; and recommends share reserves for the company's stock programs.
COMPENSATION OF DIRECTORS
The company paid each director during the year ended December 31, 1994, other
than Messrs. Carlson, Davis, Ewald, and Scott, directors' fees of $20,000 plus
$1,000 for each Board and committee meeting attended. The chairs of the Audit,
Compensation and Development and Finance Committees each received an additional
$1,500 for chairing those committees.
Under a retirement income plan established for non-employee directors, after
retirement from the Board, each director will receive a retirement benefit equal
to the final annual retainer times the number of years served on the Board of
Directors or 15 years, whichever is less. The amount is payable annually for a
period not to exceed 15 years, or in a lump sum equivalent, at the director's
option. In 1994, the company accrued $142,061 of expense and made payments
totalling $147,786 under the plan.
The 1989 Non-Employee Directors' Stock Option Plan (the "Directors' Plan")
provides for the issuance to non-employee directors of the company of options to
purchase authorized but unissued or reacquired Common Stock. The Directors' Plan
provides for the granting of an initial option for 10,000 shares of Common Stock
on the date the director first assumes office as a director and the grant of an
option for an additional 1,000 shares upon the reelection of such director at
each subsequent annual stockholders' meeting. The options granted under the
Directors' Plan are "nonstatutory options" not qualifying under Section 422A or
other similar provisions of the Internal Revenue Code. The option price per
share for options granted under the Directors' Plan is the closing price for the
Common Stock on the New York Stock Exchange on the date of grant. The options
granted are exercisable in four successive 25% cumulative annual installments
commencing one year after the date of grant and expire ten years from the date
of grant if unexercised.
6
EXECUTIVE COMPENSATION
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Composed entirely of outside directors, the Compensation and Development
Committee of the Board of Directors (the "Committee") is responsible for
reviewing and approving remuneration for the company's executive officers
including those named in the Summary Compensation Table below ("named executive
officers") and the administration of compensation and stock option and award
plans in which these individuals and other key employees participate. In
addition, the Committee reviews and provides direction for the development of
future leadership to meet the long-term organization and growth requirements of
the company.
The company's executive compensation philosophy is to pay for individual and
company results in a manner that is competitive with companies of similar
revenue size in the computer industry. Standard industry compensation surveys,
which include companies in the S&P 500 Computer Systems Index and other computer
companies, are used. Competitiveness is measured taking into consideration base
salary, annual bonus, and long-term incentive compensation plans. An executive
officer's total cash compensation (salary and bonus) is targeted at the average
of the comparison group.
BASE SALARY: Salaries for individual positions are evaluated to assure
competitiveness of total cash compensation in relation to the comparison group.
Executive officers receive merit increases based principally on individual
performance, overall company financial performance, and general market
conditions. During 1994, executive officers received merit increases ranging
from 4% to 13.8%. In 1993 executive officers received no merit increases,
although some received increases upon promotion to new positions. Compensation
for the majority of the named executive officers was below market.
SHORT-TERM INCENTIVES: In 1994, executive officers were eligible for cash
bonuses under the company's Annual Incentive Plan, a broad-based incentive plan
covering mid- and upper-level management and technical employees. Target
incentive levels are set between 45% and 65% of salary for executive officers.
Payouts to the executive officers with respect to 1994 were based on company
performance, and in some cases on supercomputer operations business unit
performance as well, and on individual performance against objectives which
directly supported the achievement of these goals. Company performance for 1994
was measured on the basis of annual revenue, return on capital employed
(calculated by dividing operating income by noncash assets) and earnings per
share growth. The business unit performance in 1994 for supercomputer operations
was measured on the basis of financial goals including revenue growth, return on
capital employed and operating income, and on a set of operational goals
including sales, technical development and reliability objectives.
The company's revenue growth target was an increase of 11% over 1993, the return
on capital employed target was 11%, and the earnings per share growth target was
a 10% increase over 1993 earnings per share of $2.33. In determining company
performance, the revenue growth goal was weighted 25%, the earnings per share
growth goal was weighted 50% and the return on capital employed goal was
weighted 25%. If a measure was below a minimum level established, no credit was
given that measure in the determination of company performance.
7
In 1994, the company's revenue growth goal was below target but above the
minimum; however, performance on the earnings per share growth and the return on
capital employed goals were below the minimum. Company performance against these
measures resulted in a lower than target level payout, expressed as a Company
Performance Ratio of approximately 6.9%. In 1994, plan participants' individual
performances against their own objectives were evaluated and individual award
percentages were determined. Actual payouts (as a percentage of salary) to most
executive officers including four of the named executive officers were
calculated by multiplying each officer's individual award percentage by the
Company Performance Ratio. Payouts to some executive officers were calculated by
multiplying a portion of their individual award percentage by the Company
Performance Ratio and the balance by the performance ratio calculated for
supercomputer operations business unit.
In addition, executive officers participate in the Incentive Cash Profit Sharing
Plan, a company-wide plan which generates cash awards to employees based on
achievement of preestablished levels of financial performance for the company
and its business units. For 1994, the plan performance measure was operating
income. Executive officers received a payout under this Plan equal to slightly
less than 1% of base salary.
Executive officers may elect to defer payment of a portion of their annual
compensation under a Deferred Compensation Plan adopted by the company for
certain highly compensated employees. Compensation generally must be deferred
for five years or longer.
Finally, executive officers participate in a deferred profit sharing program
under the Retirement Savings Plus Plan, which generates the only
company-sponsored retirement benefits. For 1994 contributions of four percent of
eligible wages were made by the company to deferred profit sharing, and the
company 401(k) match was fifty cents per dollar of employee contribution, up to
a maximum of $1,000.
LONG-TERM INCENTIVES: The company grants stock options to a broad base of
employees under the 1989 Employee Benefit Stock Plan. The level of stock option
grants for executive officers is intended to be competitive with those of the
comparison group. Options are granted at fair market value on the date of grant.
The plan also permits the company to make grants of restricted and nonrestricted
stock. The purpose of the plan is to align the interests of employees and the
company.
In 1994, some executive officers, including two of the named executive officers,
were granted stock options. These options have value only as the company stock
price increases.
Four of the named executive officers received grants of restricted stock in
1994. Vesting of the stock was dependent on achieving a minimum growth in
earnings per share in each year of a three year period. All of the shares of
restricted stock were forfeited because earnings per share growth in 1994 was
less than the 10% minimum.
Section 162(m) of the Internal Revenue Code generally limits the corporate tax
deduction for compensation paid to an executive officer named in the Summary
Compensation Table to $1 million, unless certain requirements are met. While the
company's compensation plans are
8
performance based plans, they do not presently meet all the requirements set
forth in current proposed regulations. There is some uncertainty as to what the
final interpretation of the law will be. The proposed regulations do contain a
"grandfather" provision for certain compensation paid under existing plans.
The Committee has determined that, based on information currently available, it
is not necessary to modify the company's compensation plans at this time since
the compensation paid to executive officers is likely to either be less than the
$1 million limit or would be exempted under the "grandfather" provision of the
regulations and, therefore, would be deductible. The Committee will continue to
monitor and assess various alternatives concerning this issue in order to
maximize corporate tax deductions without limiting the company's flexibility to
attract and retain qualified executives.
CEO REMUNERATION: As Chairman of the Board and Chief Executive Officer, Mr.
Carlson's 1994 compensation was tied directly to company performance. His 1994
base salary was $410,042. He received a 13.8% increase over his 1993 base salary
in January 1994. Based on comparison group data, Mr. Carlson's 1994 base salary
after the increase was below the market average by more than 18%. Mr. Carlson's
individual objectives under the Annual Incentive Plan for 1994 were
substantially the same as the company's objectives of revenue, return on capital
employed and earnings per share growth. Company performance was substantially
below target and Mr. Carlson received a bonus of 4.5% of his eligible wages for
the year, a total bonus of $18,452. In January, 1994, the Committee also awarded
him a stock option covering 25,000 shares, granted at the fair market value of
$26.50 on the date of grant, and made a grant of 15,000 shares of restricted
stock in March, 1994. The shares of restricted stock have been forfeited to the
company because the required 10% minimum earnings per share growth was not
achieved.
Compensation and Development
Committee
Robert G. Potter Catherine M. Hapka
Lawrence E. Eaton Jan H. Suwinski
In connection with the retirement of John F. Carlson as Chief Executive Officer
effective December 31, 1994, and as a director effective May 16, 1995, in
addition to accrued vacation of $39,652, the company has agreed to pay Mr.
Carlson $679,478 in installments from May, 1995 through December, 1996. The
company will also reimburse Mr. Carlson for certain tax preparation and
financial planning fees up to $25,000 and for certain membership dues, and will
pay $61,800 for outplacement services to be provided to Mr. Carlson. In
consideration of these payments Mr. Carlson has accepted certain restrictions on
his business activities, including a one year noncompete agreement.
In January, 1995, the Company paid Lester T. Davis, who retired at the end of
1994, a special bonus of $159,352 in recognition of Mr. Davis' 22 years of
service to the company.
9
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below includes individual compensation
information for the Chief Executive Officer and the four other most highly paid
executive officers for services rendered in all capacities during the fiscal
years ended December 31, 1994, 1993 and 1992.
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------------
-------------------------------------------- NUMBER OF SHARES
NAME AND OTHER ANNUAL RESTRICTED STOCK UNDERLYING STOCK
PRINCIPAL POSITION (1) YEAR SALARY BONUS (2) COMPENSATION (3) AWARDED (4) OPTIONS GRANTED
------------------------ --------- --------- ----------- -------------------- ---------------- -----------------
John F. Carlson 1994 $ 410,042 $ 22,395 $ 14,865 $ 493,125 25,000
Chairman and Chief 1993 357,442 267,092 17,190 -0- 60,000
Executive Officer 1992 314,766 -0- 3,695 -0- -0-
Lester T. Davis 1994 $ 335,902 $ 11,342 -0- $ 493,125 -0-
Chief Operating 1993 301,662 178,352 -0- -0- 48,000
Officer 1992 301,662 -0- -0- -0- -0-
Robert H. Ewald 1994 $ 334,497 $ 15,910 $ 6,756 $ 493,125 -0-
President and 1993 296,317 159,782 3,380 -0- 40,000
Chief Operating 1992 287,548 -0- 446 -0- -0-
Officer
Michael J. Lindseth 1994 $ 230,367 $ 9,368 $ 8,245 $ 493,125 -0-
Executive Vice 1993 200,387 102,845 5,200 -0- 29,500
President, Sales 1992 200,387 -0- 1,722 -0- -0-
Don F. Whiting 1994 $ 194,171 $ 51,575 $ 3,835 -0- 7,500
Senior Vice President, 1993 168,750 99,770 4,113 -0- 29,500
Operations 1992 168,750 14,766 8,315 -0- -0-
NAME AND ALL OTHER
PRINCIPAL POSITION (1) COMPENSATION (5)
------------------------ --------------------
John F. Carlson $ 7,348
Chairman and Chief 10,749
Executive Officer 10,664
Lester T. Davis $ 7,324
Chief Operating 10,736
Officer 10,643
Robert H. Ewald $ 7,326
President and 10,731
Chief Operating 10,619
Officer
Michael J. Lindseth $ 7,223
Executive Vice 9,208
President, Sales 9,341
Don F. Whiting $ 7,188
Senior Vice President, 7,912
Operations 8,024
<FN>
-------------
(1) Principal position represents the capacity in which the executive served as
of December 31, 1994.
(2) Consists of cash compensation accrued during the fiscal year pursuant to
the Annual Incentive Plan and the cash bonus under the Incentive Cash
Profit Sharing Plan.
(3) Amounts in this column represent compensation related to professional
income tax services provided to the executive. All executive officers of
the company are offered professional income tax services. The cost of these
services and the personal income taxes owed by the executive on the imputed
income resulting from the receipt of this benefit are paid by the company
and are reflected in this column.
(4) Grants of 15,000 shares of restricted stock were made to each of four named
executive officers. The price per share on the date of grant was $32.875
for a market value on the date of grant of $493,125 for the shares held by
each officer. On December 31, 1994, the price per share was $15.75,
resulting in a valuation of $236,250 for the shares held by each officer as
of such date. The shares were subject to vesting conditions based on growth
in earnings per share over a three year period. A minimum of 10% earnings
per share growth was required in each year of the three year period. The
10% minimum was not met in 1994, and all of these shares were forfeited to
the company as of January 31, 1995. The shares are not currently
outstanding and no dividends were paid on such shares.
(5) Represents contributions to the Company's Retirement Savings Plus Plan and
term life insurance premiums (less than $348 in any one year for each
executive officer) paid by the company for the benefit of the executive
officer.
Non-cash personal benefits paid to executive officers during each year in the
three-year period ended December 31, 1994 did not exceed in the aggregate the
lesser of 10% of cash compensation or $50,000 for any individual executive
officer.
10
Other than as noted in this Proxy Statement, the company is not party to any
employment agreement with any of its executive officers, and during 1994 it had
no pension, profit sharing, remuneration, incentive or other retirement,
deferred compensation or contingent compensation plans of any kind solely for
the benefit of its executive officers.
STOCK OPTIONS
The following table presents, for each of the executive officers named in the
"Summary Compensation Table" above, the number of shares of Common Stock
purchased upon exercise of stock options during fiscal year 1994, the aggregate
dollar value realized upon exercise based on the market price of the stock on
the dates of exercise, and the number of stock options held by such executive
officers as of December 31, 1994, distinguishing between options that are
exercisable as of December 31, 1994 and those that will become exercisable at
various times in the future.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND F-Y-END OPTION VALUES
NUMBER OF SHARES UNDERLYING
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY-END AT FY-END (1)
ACQUIRED ON --------------------------- ----------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- -------------- --------------- ------------- ----------- ---------- ----------
John F. Carlson -0- -0- 58,412 73,750 -0- -0-
Lester T. Davis -0- -0- 64,760(2) -0- -0- -0-
Robert H. Ewald -0- -0- 46,049 33,750 -0- -0-
Michael J.
Lindseth -0- -0- 31,684 24,625 -0- -0-
Don F. Whiting -0- -0- 24,069 30,005 -0- -0-
<FN>
------------
(1) The exercise prices of all options held by the executive officers named in
the table as of December 31, 1994 were greater than the market value of the
company's Common Stock at that date of $15.75 per share.
(2) Mr. Davis retired on December 31, 1994, and upon retirement all outstanding
options became exercisable in accordance with the terms of the 1989
Employee Benefit Stock Plan
The following table presents, for each executive officer named in the "Summary
Compensation Table" above, the number of shares underlying options granted
during 1994, the exercise price for such options, their expiration date and
their potential realizable value.
11
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS RATES OF STOCK PRICE
------------------------------------------------------------------------ APPRECIATION FOR
NUMBER OF SHARES % OF TOTAL OPTIONS EXERCISE OR OPTION TERM (2)
UNDERLYING OPTIONS GRANTED TO EMPLOYEES BASE PRICE PER EXPIRATION ---------------------
NAME GRANTED IN FISCAL YEAR SHARE (1) DATE 5% ($) 10% ($)
------------------ ------------------- --------------------- --------------- ----------- --------- ----------
John F. Carlson 25,000 3.2% $ 26.50 1/24/04 $ 416,643 $1,055,854
Lester T. Davis -- -- -- -- -- --
Robert H. Ewald -- -- -- -- -- --
Michael J.
Lindseth -- -- -- -- -- --
Don F. Whiting 7,500 1.0% $ 26.50 1/24/04 $ 124,993 $ 316,756
<FN>
------------
(1) All options were granted with an exercise price equal to the market price
on the date of grant and become exercisable in 25% annual installments
commencing one year from the date of grant.
(2) These values assume options are exercised at the end of their ten year term
and assume a prescribed rate of stock price appreciation. The actual value
of these options is dependent on future performance of the Common Stock,
and there is no assurance the values reflected in the table will be
realized.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the Common
Stock of the company for the last five years with the cumulative total return on
the S&P 500 Index and the S&P 500 Computer Systems Index over the same period
(assuming the investment of $100 in the company's Common Stock, the S&P 500
Index and the S&P 500 Computer Systems Index on December 31, 1989, with
reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CRAY RESEARCH, INC. S&P 500 INDEX S&P 500 COMPUTER SYSTEMS INDEX
1989 100 100 100
1990 76.92 96.9 112.06
1991 99.58 126.42 99.58
1992 59.65 136.05 73.1
1993 65.71 149.76 75.87
1994 40.06 151.74 97.98
12
EXECUTIVES' SEVERANCE COMPENSATION PLAN
The company has adopted an Executives' Severance Compensation Plan (the
"Severance Plan") covering certain of its employees, including the persons named
in the "Summary Compensation Table" above. The Severance Plan covers employees
who have been elected by the Board of Directors of the company to a position of
Vice President or higher. The Severance Plan provides for a severance payment if
a covered employee's employment with the company is terminated within 15 months
after a "change of control" (as defined in the Severance Plan). The company will
not be required to make such payment if the termination is due to the employee's
death, voluntary retirement at or after age 65, or disability, or by the company
for "just cause" (as defined in the Severance Plan). If the employee is entitled
to a severance payment, he or she will receive a lump sum cash payment equal to
two times his or her annual compensation. The Severance Plan provides for a pro
rata adjustment for employees with less than six months of employment. For
purposes of the Severance Plan, annual compensation includes any wages, salary,
bonus or incentive compensation, including amounts deferred. It does not include
income attributable to options granted under an option plan. The company may
amend or terminate the Severance Plan at any time. However, if a change of
control occurs, the Severance Plan may not be amended or terminated.
PROPOSAL TO RATIFY THE APPOINTMENT OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
certified public accountants, as auditors of the company for the year ending
December 31, 1995. KPMG Peat Marwick LLP has audited the financial statements of
the company since incorporation.
Unless a contrary choice is specified, proxies solicited by the Board of
Directors will be voted FOR ratification of the appointment of KPMG Peat Marwick
LLP as auditors for the company for the year ending December 31, 1995.
Representatives of KPMG Peat Marwick LLP will be present at the meeting, will
have an opportunity to make a statement if they so desire, and will be available
to respond to appropriate questions.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
Any stockholder desiring to have an appropriate proposal for action presented at
next year's Annual Meeting of Stockholders, now scheduled for May 1996, and who
wishes to have it set forth in the Proxy Statement and form of proxy for the
meeting, must notify the company and submit the proposal in writing for receipt
at the company's executive offices noted above not later than December 3, 1995.
See Securities and Exchange Commission Rule 14a-8 for additional applicable
requirements and procedures.
13
The Board of Directors of the company knows of no other matters that will be
presented at this year's Annual Meeting of Stockholders. If any other matter
properly arises at the meeting, it is intended that the shares represented by
proxies in the accompanying form will be voted in accordance with the judgment
of the persons named in the proxies.
By Order of the Board of Directors,
[LOGO]
David E. Frasch
Secretary
March 31, 1995
14
CRAY RESEARCH, INC.
PROXY FOR 1995 ANNUAL MEETING OF STOCKHOLDERS ON MAY 16, 1995
The undersigned hereby appoints Robert H. Ewald and David E. Frasch, or either
of them, with full power of substitution, as proxy or proxies, to vote for the
undersigned and in the undersigned's name all shares of Common Stock of Cray
Research, Inc. of the undersigned as if the undersigned were personally present
and voting at the 1995 Annual Meeting of Stockholders on May 16, 1995, and at
any adjournments thereof, on the following matters:
1. ELECTION OF DIRECTORS:
/ / For all seven nominees listed below (except as marked to the contrary
below)
/ / Withhold authority to vote for all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Lawrence E. Eaton, Robert H. Ewald, Catherine M. Hapka,
Philip G. Heasley, Robert G. Potter, Andrew Scott and Jan H. Suwinski
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1995.
/ / FOR / / AGAINST / / ABSTAIN
(3) SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS AND, IF NO
CHOICE IS SPECIFIED, WILL BE VOTED ----------------------------------------
FOR MATTERS (1) AND (2) ABOVE, AND Signature of Stockholder
IN THE DISCRETION OF THE PROXY
HOLDER ON ALL OTHER MATTERS ----------------------------------------
(If there are co-owners, both must sign.)
The signature(s) should be exactly as the
name(s) appears printed to the left. If a
corporation, please sign the corporate name
in full by an authorized officer and
indicate the signer's office. When signing
as executor, administrator, fiduciary,
attorney, trustee or guardian, or as
custodian for a minor, please give full
title as such. If a partnership, sign in
the partnership name.
Dated: ----------------------------, 1995
(Month) (Day)
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED.